Amid increased activity on the PSX Baluchistan Wheels might have a new owner as RMS Private Limited has made a bid for control of the company which makes automotive wheel rims for a wide range of vehicles.
Arif Habib has informed the Pakistan Stock Exchange (PSX) that its client, RMS Private Limited, seeks to gain control of Baluchistan Wheels. RMS aims to directly acquire a staggering 63.56% — 8.47 million shares — through a formal agreement, and an additional 18.22% — equating to 2.43 million shares — through a public offer. If successful, RMS will have acquired a total of 87.78% of Baluchistan Wheels’ shares.
In compliance with the takeover regulation outlined in the Securities Act (2015), the notification to the PSX has been issued despite RMS being a private limited company. The Act mandates that the target company must convey to the PSX that an acquirer seeks to obtain shares in the company beyond a certain threshold, while the acquirer is obligated to make a public announcement of intention before proceeding with making the offer.
“We are facing a foreign exchange crisis,” laments Zeeshan Ali, Chief Executive Officer of RMS. “Imports are taking a heavy toll on the country. It’s severely affecting everyone in the local market, including local vendors.” “I perceived an opportunity to be seized by purchasing Baluchistan Wheels, and bolstering local manufacturing. It’s imperative; we need to have local manufacturing. The major automotive companies are still heavily reliant on imported parts,” Ali adds.
“We need to elevate this factory to a level where they can procure those parts here rather than resorting to imports. That was my initial thought process regarding the acquisition,” Ali elucidates. However, there’s more depth to the acquisition than merely RMS fulfilling its patriotic duty in its own unique way.
“The reality is, regardless of the current situation, our people possess latent buying power, don’t they?,” postulates Ali. He continues: “Pakistan has successfully avoided default. The International Monetary Fund’s funds are incoming. The China-Pakistan Economic Corridor is back on track, and there’s also the establishment of the Special Investment Facilitation Council. These are all positive indicators, in my estimation.”
“I am optimistic that the country will improve going forward; we have weathered the storm of panic and anxiety attacks we’ve witnessed in the recent past across the economy. Capital flows will be incoming in the near future, and we’ll require financial engines to accommodate those flows,” Ali asserts.
“The acquisition enables us to play our part in capturing as much future growth as possible when the economy rebounds — which I wholeheartedly believe it will,” reflects Ali.
Profit made inquiries to Razak H.M. Bengali, Muhammad Siddique Misri, and Muhammad Irfan Ghani of Baluchistan Wheels — all of whom declined to comment on the matter. Profit also contacted Asad Saeed, the Company Secretary of Baluchistan Wheels. However, no response was forthcoming.
So, we understand why one company desires to acquire the other. But who are these two companies to begin with?
Who are Baluchistan Wheels, and RMS?
RMS is a multifaceted conglomerate that was incorporated as a private limited company on October 5th, 2007. Its principal business is to offer construction services. However, its overall portfolio encompasses a diverse range of services, including infrastructure development, building maintenance, water supply and management, safety and security systems, and ICT solutions.
Baluchistan Wheels — as the name suggests is an automotive parts manufacturer. It was originally established in 1980 for the manufacturing of steel wheels for automobiles with technical collaboration from GKN Sankey Limited UK. Baluchistan Wheels now produces an extensive range of wheels for passenger cars, commercial vehicles, agricultural tractors, and 4×4 vehicles. The company caters to both domestic and international clientele.
The glaringly obvious question that arises when looking at both companies is, where does Baluchistan Wheels fit into a company that is already so diversified?
Where does a parts manufacturer fit into the strategy of an already very variegated conglomerate?
The simple answer is that we do not know. RMS also did not provide any specific details beyond their reasoning for making the bid
“How, one might inquire, does this endeavor fall within the purview of RMS’s portfolio? The answer lies in our managerial prowess. We are adept at project management and have a proven track record of delivering large-scale projects,” elucidates Ali. “Our particular forte lies in implementing enhancements within projects — thus, we are confident in our ability to elevate Baluchistan Wheels to new heights. The same mentality, the same team — all will be applied here,” Ali adds with conviction.
On August 8th, the stock price of Baluchistan Wheels reached a triumphant close at Rs 100.43 per share — a mere 6 paisa shy of the upper lock. This represents a substantial increase of 15.49% from the Rs 86.96 per share at which the stock traded on August 4th, the previous week’s end of day.