Tuesday, November 29, 2022

Waves shows interest in buying Heavy Electrical Complex

KARACHI: Waves Singer Pakistan has expressed intention to acquire 96.6 percent shares of Heavy Electrical Complex from the government, it said on Monday.

“The board of directors of Waves Singer Pakistan Limited (WSPL) has approved submission of an expression of interest (EOI) for the acquisition of 96.6 percent shares in Heavy Electrical Complex (Private) Limited (HEC) from the Government of Pakistan by way of privatization process,” a bourse filing said.

“The EoI will be followed by a detailed due diligence process (if the company is shortlisted) and completion of other necessary formalities. The results of the due diligence shall be placed before the Board for review and discussion and to resolve/approve further course of action in respect of the transaction.”

In November last, Cabinet Committee on Privatisation approved the transaction structure for the divestment of 96.6 per cent shares of HEC. Privatization Commission is fully geared up for achieving its specified objectives. This was the seventh transaction approved since the start of the privatisation plans adopted in October 2018 and Privatization Commission will be focusing to complete these transactions successfully along with other transactions which are currently in process, an official said.

According to the Privatization Commission, HEC is located in Hattar Industrial Estate, Haripur in close proximity to the CPEC route, a mere 2-kilometre from Kot Najeebullah Interchange on the Hazara Expressway. This provides HEC ready access to several key customers including electricity distribution companies, while approximately 20 acres of additional land is available for diversification and expansion. HEC has a high quality power transformer manufacturing facility with an annual production capacity of 3,000 MVA.

“The power sector in Pakistan is rapidly growing with further generation capacity being added and more investment to be made in the transmission and distribution network presenting significant potential to expand and diversify into distribution transformers, power transformers of voltages higher than 132KV and allied grid station, electrical equipment, using base plant facilities,” Khurram Schehzad, CEO of AB Core said.

“HEC is a high potential company and this transaction, if closes, would be the best investment for Waves Singer Pakistan,” he said. “Any investors acquiring the stake in HEC at a reasonable price and then investing in expansion would be a win-win for everybody.”

As at June 30, 2020, HEC has a paid up capital of Rs1.46 billion and net equity of Rs2.52 billion. Total assets of HEC amount to Rs3.65 billion, primarily comprising of land, building and plant and machinery of Rs2.55 billion.

HEC’s annual revenue historically touched Rs910 million. However, it experienced a dip in the past few years due to liquidity constraints. With orders worth Rs1.18 billion, HEC is well placed to achieve historical revenue levels.

Waves Singer Pakistan Limited came into being after the acquisition of Cool Industries (Pvt) Limited by Singer Pakistan during 2017. For nine-month period ended September 30, 2020, Waves Singer Pakistan posted a net profit of Rs90 million, down 71 percent from the profit of Rs313 million in the corresponding period previous year.

Leaving aside the temporary slowdown due to current economic condition in the country, in the long run an overall growth in the home appliances market shall continue to improve, Waves Singer Pakistan notes in its last financial report.

“Impact of COVID 19 is dropping down significantly and country economy is expected to revive in near future. As a result of this, we expect to introduce new models and improve our dealership network to raise our products penetration among the masses. As the future prospects of the company are inextricably linked with the overall development of the country, Waves Singer Pakistan continues its focus to exploit all available opportunities in the market.”



Source: The News

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