If you’ve never heard of Panther Tyres, you’re not alone. The website, for instance, only features one lone annual report for 2021 (which was released to the Pakistan Stock Exchange on September 1). That’s because Panther Tyres only just became a publicly listed company this year, in February 2021. In fact, it was oversubscribed 4.4 times over, and managed to raise Rs2.6 billion.
That is not surprising; what is perhaps surprising is that the company did not go for an IPO sooner. After all, it was established all the way back in 1983. It is a welcome change; there are only two other publicly listed companies that manufacture tyres.
So, who is behind this company? Panther Tyres took life as Mian Tyre and Rubber Company Limited, started by, you guessed it, someone called ‘Mian’ – Mian Iftikhar Ahmed, to be precise. He graduated with an engineering degree from Idaho in 1970, and then for the next 13 years worked for multinational companies. His own manufacturing business was to start in October 1983, which was later converted to a public limited company in 2003.
Panther Tyres Limited is the first company in Pakistan to locally manufacture tyres for two wheelers, beginning in 1984, and three wheelers in 1993. Considering that Pakistan had been importing tyres before then, it is somewhat an achievement that just two years later, in 1996, the company was able to start exporting “Made in Pakistan” wheelbarrow tyres and tubes to European markets. That would kick off an exporting frenzy: today, the company exports tyres and tubes to different countries including Turkey, Poland, Macedonia, Egypt, Bangladesh, UAE, Afghanistan, Nigeria, Kenya, Sudan, Ethiopia, Algeria, Yemen and Somalia.
What about in Pakistan? Panther Tyres caters to two two broad markets locally, i.e. OEM (original equipment manufacturer) and replacement market. In that department, Panther Tyres has done very well, having maintained a long standing relationship with key OEMs such as Suzuki, Honda and Yamaha for more than 26 years. Meanwhile, the replacement market is the secondary market for tyre manufacturers, including distributors, wholesalers and retailers. This has picked up in recent years, since this market depends on increased imports, and increased sales of used vehicles. After sales from OEM, the vehicles become part of the replacement market, which means the size of the replacement market increases every year. All of this simply means more tyre demand for companies like Panther Tyres. In fact, the Company has built a large distribution network with more than 500 direct business partners. In April 2018, the company even ventured into trading automobile lubricants and spare parts, taking advantage of that distribution system.
Still, the local tyre industry only caters to 35% of demand; the remaining 65% demand is catered by imports. This is set to change. For one, the local industry, after many years, has started making high quality tyres at lower costs due to increased efficiency. Second, the federal government has started taking stricter measures against smuggling and under-invoicing.
That meant that this was the right time for the company to seek an IPO. It helped that the company had been doing financially alright. Sales in 2015 stood around Rs5.5 billion – this crossed the Rs10 billion mark in 2020. Meanwhile, profits hovered around the steady Rs200 million mark.
But nothing compares to the year 2021, which has been a record year for the company. This year, the company’s sales shot up to Rs16 billion. In fact, the compounded annual growth rate over the last five years has been at 22%. Exports sales of the company also increased from Rs878 million to Rs 1,350 million, posting a growth of 54%. While selling and distribution expenses during the year increased from Rs414 million to Rs581 million, it was offset by higher capacity utilization. This meant sales stood at an astonishing Rs851 million, compared to last year’s Rs251 million.
And Panther Tyres has been working diligently at investing back. The company generated 1,951 million cash from operations prior to working capital changes, and to support working capital requirements Rs.2,464 million were already invested. Another Rs 1,860 million was invested in plant and machinery in line with the expansion plan.
What expansion plan? The very plan that the IPO was needed for. All segments of segments of production are being increased, but especially relating to tractor.The first phase of the expansion will be completed by September 30, 2021 which will support the company’s sales plan for the year 2022. The second phase of expansion is expected to be completed by March 31, 2022, whereas the third phase is expected to be online by June 30, 2022.