Atlas Honda unveils Rs1.7bln investment plan to expand production capacity

KARACHI: Motorcycle manufacturer Atlas Honda on Monday announced more than Rs1.7 billion in investment to expand its production capacity on growing demand of two-wheelers in the country.

“Atlas Honda Limited, a joint venture of Atlas Group and Honda Motor Company, is pleased to announce an investment plan for the expansion of its motorcycle operations in Pakistan,” the company said in a statement to Pakistan Stock Exchange. “… the board of directors of the company approved a two year phase wise expansion plan to increase the installed capacity of the company to 1.5 million units per annum. The project cost is estimated at $15 million.”

Atlas Honda sold 838,395 motorcycles during the first nine months of the current fiscal year of 2018/19, up 18 percent over the corresponding period a year earlier, Pakistan Automotive Manufacturers Association’s (Pama) latest data showed. “The double digit growth prompted Atlas Honda to invest in its two wheeler plant as demand continues to rise,” an analyst at a financial institution said.

The analyst, requesting anonymity, said farm growth also showed steady growth in the past three years and the government also forecast the growth to be around 3.8 percent during the new fiscal year of 2018/19. “Buying concentration is mainly in the rural areas.”

Currently, there are three Japanese makers of motorcycles, while there are nearly 50 Chinese players operating in the country to capture 2.6 million units market with price range of Rs40,000 and Rs220,000 a bike.

Analysts said the market is ripe for expansion as whatever production line arrives, it is readily consumed. Pama data showed that sales of two- and three-wheelers stood at 1.411 million in the July-March period as compared to 1.207 million in the corresponding period a year earlier.

Sabir Sheikh, chairman of Association of Pakistan Motorcycle Assemblers said the makers of two wheelers in Pakistan have old technology “and now time is ripe to upgrade the quality and start producing electricity bikes in the country as it would save the valuable foreign exchange spent on import petroleum products”.

Meanwhile, Atlas Honda announced its financial results, saying its profit rose 24 percent for the year ended March 31. The company’s profit amounted to Rs4.66 billion with earnings per share (EPS) of Rs45.10 for the financial year (April-March 2017/18). Its profit stood at Rs3.75 billion with EPS of Rs36.29 in the previous year.

The company announced cash dividend of Rs27/share for the year ended March 31. Atlas Honda’s sales rose to Rs77 billion as compared to Rs64 billion. Sales and marketing expenses increased to Rs1.852 billion in 2018 from Rs1.630 billion in 2017. Administrative expenses rose to Rs634.594 million from Rs602.343 million, while other operating expenditures also increased to Rs445.037 million from Rs404.740 million.