Sazgar to venture into LCV, passenger car manufacturing

Company intends to set up new car plant under Greenfield Investment Category

Farhan Zaheer May 12, 2017

KARACHI: Sazgar Engineering Works Limited, the makers of Sazgar CNG auto rickshaws, has decided to explore new opportunities for the manufacturing of passenger cars and light commercial vehicles (LCVs) in Pakistan.

The company intends to set up a brand new car plant under the Greenfield Investment Category that has already been announced in the five-year Automotive Development Policy (ADP) 2016-21, according to a company notice sent to the Pakistan Stock Exchange (PSX) on Thursday.

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However, the company did not mention any amount that it wanted to invest in the project. The new auto policy, announced last year, has attracted many new players to the automobile industry. Most of the new local companies have already announced big investment plans in collaboration with leading global automakers like Kia, Hyundai, etc.

In September 2016, Sazgar Engineering announced an investment of Rs330 million to expand its production capacity from 20,000 units to 30,000 units per year. The company wants to benefit from the increasing market demand for auto rickshaws and the future growth in the automobile sector.

The expansion plan was being implemented on 27 acres of land located near Raiwind, Lahore. At present, the company’s production facilities are spread over five acres.

The company posted a net profit of Rs108 million in fiscal year 2016, up 46% from Rs74 million in the previous year.

The KSE-100 index closed at 51,426, up 322 points or 0.63% on Thursday. The news of expected investment helped Sazgar Engineering’s stock to close at Rs129.35, up 5%.

Analysts say the absence or limitation of public transport facilities in big cities has provided a wider space for auto rickshaws. Over the years, compressed natural gas (CNG) auto rickshaws have gradually replaced taxis in major cities, especially in Lahore and Karachi. Sazgar makes four-stroke CNG auto rickshaw (three-wheelers) and automotive wheel rims.

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The company also exports its products to international markets. It is capable of designing and developing moulds, tools, jigs and fixtures of all types for sheet metal components.

The company was incorporated in September 1991 as a private limited company, but later it converted into a public limited company in November 1994.

Published in The Express Tribune, May 12th, 2017.

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