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Atlas Honda retains two-wheeler dominance


Formerly known as Atlas Autos founded with the incorporation of an investment company called Shirazi investments back in 1962 with an initial capital of Rs500,000. Later that year, a technical collaboration agreement was signed with Honda Motors Company Limited (HMC) for the production and sales of motorcycles in Pakistan.

The company is now recognized as Atlas Honda Limited owned by Altas Group and Honda Motor Company. It is a Pakistani manufacturer and is the largest motorcycle maker and a market leader in Pakistan. It formerly has manufacturing facilities only in Karachi and in 1979, another motorcycle manufacturing plant at Sheikhupura was established by the name Panjdarya Limited.

To enhance the technological and production capabilities, a joint venture agreement was entered in the year 1988 with HMC. Both Atlas Autos Limited and Panjdarya Limited operated separately until the two were merged in 1991 and Atlas Honda Limited was formed.

Over the years, the company expanded and grew, introducing new lines and models of motorcycles that clinched a big chunk of the demand.

By 2011, the company had crossed the production of 500,000 units and surpassed 90 percent localization. The company has been debt-free for the past five years incurring no borrowing costs.

Atlas Honda is a market leader in the two-wheeler industry, today catering to about 60 percent of all local motorcycle sales. Atlas Honda produces various value-added auto parts for in-house consumption and catering to the after-sale market.

Export to other countries: The company also exports motorcycles to Sri Lanka, Afghanistan and Bangladesh, currently, exporting between 4,000 and 5,000 motorcycles a year. It also has an established wide network of over 1,600 sales services and spare parts dealership


Majority of the company’s shares are held by the group itself-with Shirazi investments Limited holding 24.4 percent of the shares and Shirazi Capital holding 24.5 percent of the shares as at March 2016.

The other major partner is Honda Motor Company that held 35 percent of the shares at the close of the company’s last financial year.

The company has investments in Atlas Hitec Private Limited (AHPL), which was incorporated in 2012 and is in the business of manufacturing automobile and allied products. Atlas Honda holds 29.23 percent of AHPL’s shares.

Keeping in view demand projections and the growing need for motorcycles as evident by the fast growth in sales, Atlas Honda decided to go through a series of expansions.

In a three-year phase, the company announced it would double the installed capacity at its Sheikhupura plant making an investment of $100 million using own capital of $50 million while $30 million and $20 million were to be invested by associated companies and parts suppliers respectively.

According to estimates provided by the company’s annual report, the expansion would generate 1,800 more jobs; 5,000 jobs at associate and partner companies and the total expansion would reach 1.3 million units annually.

The company started test production in October 2016 and the upgraded plant has the capacity to produce 3000 units of motorcycles per day.


According to numbers retrieved from Pakistan Automotive Manufacturers Association (PAMA), the company was selling over 60,000 motorcycles in the 2000, which doubled in only a few years time and increased by 13 times in the past two decades.

Today the company is selling over 800,000 units per year and with the additional capacity coming through, this number is likely to jump further.

Just looking at the past five years, Atlas Honda has grown rapidly-with revenues going from Rs32 billion in 2011 to Rs55 billion in 2016 that has become a new peak.

Between this time period, margins have also been improved, going from 8 percent to 10 percent in the outgoing financial year for the company ending March 2016.

However, cost pressures will likely persist due to the increase in customs duty on imports on certain raw materials.

In terms of profitability, the company has managed to increase its after-tax profits by three times since 2011-going from Rs1 billion to Rs3 billion in 2016 with its earnings per share climbing from Rs16 to Rs29, a growth of 81 percent during these time periods. The better sales mix and other income has contributed to a solid bottom-line.

The company’s stock has also been performing well since September, outperforming the benchmark index by a wide margin in October 2016 driven mainly by the news of the first of its expansions coming through. The strong fundamentals of the company make it strong scrip.

The company wrapped up the third quarter of its year ending March 2017 with a solid top line of Rs17 billion growing by 22 percent year on year with last year’s top line standing at Rs14 billion in Q3.

In the nine-monthly statements, as reported under a Pakistan Stock Exchange (PSX) notice, the company earned revenues of Rs45.9 billion against Rs40.5 billion last year. The revenue numbers are encouraging and speak for the expanding appetite of motorcycles across the country.

According to Pakistan Automotive Manufacturers Association (PAMA), under the period in question (Oct-December 2016), the company sold over 245,000 units against some 200,000 units during this period in 2015 while the average monthly sales since July of 2016 are about 17 percent higher than the year prior.

During this third quarter, Atlas Honda earned an after-tax profit of one billion rupees, growing by 33 percent year-on-year while the cumulative nine-months bottom line ending December 2016 was Rs2.7 billion; growing by 28 percent year on year.


Demand will remain strong in the coming years which bode well for Honda since it is a market leader at the moment also having invested in sizable expansions projects to cater to its rising base.

The two-wheeler industry is seeing a burst of energy given improving real incomes, increasing urbanization and the rising demand for own-vehicles as opposed to using public transport which is inconvenient and inefficient.

In urban centers, motorcycles are fast taking over the roads and even considered easy to use on underdeveloped or undeveloped roads and infrastructure.

The company mainly offers motorcycles up to 125cc category and will be venturing into new models in the higher engine capacity due to its piqued demand recently.


Once all the expansions come through, the company would perhaps even manage to clinch a share of the market that is currently occupied by imported Chinese motorcycles that are considered widely cheaper.

If access to financing is made easier even further, the affordability factor would help boost sales more.

Over the years, the company has enjoyed phenomenal success. With products of highest quality, state-of-the-art manufacturing facilities, largest dealership network and impeccable after sale service, the company today is considered the flag bearer of the motorcycle industry in Pakistan and is steadily moving ahead.

Today the company is widely recognized as the impetus behind the larger and growing two-wheeler industry of Pakistan as it brought about technology transfers and laid the ground for a huge and technically capable vendor base to train human resource.

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