Ghandhara Automobiles Limited ("GAL" or "the Company") is a public limited company listed on the Pakistan Stock Exchange under the symbol GAL. The Company was incorporated on August 8, 1981 in Pakistan as a private limited company and subsequently converted into a public limited company on May 24, 1992. Formerly known as Ghandhara Nissan Limited, it changed its name to Ghandhara Automobiles Limited in April 2023. The registered office is situated at F-3, Hub Chowki Road, S.I.T.E., Karachi, the manufacturing facilities are located at Port Qasim, Karachi, and regional offices operate in Lahore and Rawalpindi. Bibojee Services (Private) Limited is the ultimate holding company of the group. GAL holds a 99.99% interest in Ghandhara DF (Private) Limited and a 17.91% equity-accounted stake in Ghandhara Industries Limited, placing the Company in an intermediate position within the group chain.

The Company traces its corporate origins to 1981, when it was established as a private limited entity for the assembly and distribution of commercial and passenger vehicles, and it moved to public limited status and a stock exchange listing in 1992, the same period in which the Bibojee group consolidated its presence in Pakistan's automotive assembly space. The Bibojee group acquired National Motors Limited in January 1992 under the privatisation scheme of the Government of Pakistan, and the Bibojee companies are owned by the heirs of Habibullah Khan Khattak, which established the family platform under which the Company has since operated. The Company's growth has been shaped by a succession of international brand associations rather than by acquisitions. A Renault assembly initiative was announced in 2016 with a subsequent partner arrangement that was later shelved, and in March 2018 a manufacturing and licensing agreement was signed with Nissan for local production of Datsun models, with discussions later suspended. In February 2021, the Company announced the assembly of Chery Tiggo vehicles in Pakistan, and in January 2025 the Company entered the pickup segment with the launch of the JAC T9 Hunter, in the same month in which the Chery assembly contract concluded, following the corporate rebranding in April 2023 under the ownership of its parent, Bibojee Services (Pvt.) Limited. The expansion trajectory has therefore been organic and brand led, funded principally through internal cash generation and retained earnings supported by measured recourse to long-term bank facilities, with the most recent phase of capacity and product development financed substantially from internally generated resources alongside a reduction in external indebtedness.

GAL is engaged in the assembly and progressive manufacturing of vehicles, including JAC trucks and pick-ups, the import and sale of spare parts, and the sale of Dongfeng and Renault vehicles in completely built-up (CBU) condition. It also assembles other vehicles under contractual arrangements. The Port Qasim facility, equipped with a paint shop, body shop, engine and axle assembly and main assembly lines, has a designed annual production capacity of 11,000 vehicles on a single-shift basis (FY25: 10,800 vehicles). During FY26, the Company assembled 11,673 vehicles (FY25: 7,799 vehicles), comprising JAC, Dongfeng and Isuzu trucks, buses and pickups, through single-shift operations supplemented by overtime. This translates into capacity utilization of ~106% (FY25: ~72%). The paint shop processed 11,505 trucks and pickups during the year (FY25: 7,590). Demand during FY26 was led by the JAC T9 Hunter and the Frison double cabin pickups. The subsidiary, Ghandhara DF (Private) Limited, holds a cooperation agreement with China Dongfeng Motor Industry Import & Export Co. Limited and distribution agreements with Dongfeng Automobile Company Limited, and it has outsourced the assembly of its vehicles to GAL. The Company's technical partners comprise Anhui Jianghuai Automobile Group Corp. Limited (China), China Dongfeng Motor Industry Import and Export Co. Limited, Dongfeng Automobile Company Limited (China) and Renault Trucks S.A.S. (France). As per management, sales and aftersales coverage is provided through a network of 33 operational dealerships, supported by regional offices in Lahore and Rawalpindi.

Bibojee Services (Private) Limited holds a 56.00% stake in the Company. Other shareholders include foreign companies (~8.55%), modarabas and mutual funds (~3.53%), NIT and ICP (~1.85%), insurance companies (~1.02%), banks, DFIs and NBFIs (~0.64%), and directors and their spouses (~0.33%). The remaining shares are held by the general public and others.

Ownership of the Company has remained anchored with the Bibojee group since the early 1990s. No change of control event, ownership dispute, or dilution of the sponsor block is evident over the review period, and the holding company's stake remained unchanged at 56% at the end of FY26. The group structure is built on the platform established by the heirs of the late General Habibullah Khan Khattak. The interposition of Bibojee Services (Private) Limited as the holding vehicle provides a formal mechanism for the orderly transmission of shareholding and decision rights, reducing succession-related uncertainty at the entity level. Sponsor commitment is reflected in the retention of the bulk of earnings within the business, with unappropriated profit rising to PKR 12,860mln at the end of FY26 from PKR 6,993mln at end-FY25.

The sponsoring group holds interests across automobiles, tyre manufacturing, insurance, cotton spinning, woollen textiles, finance, construction and trading services. This gives the sponsors more than four decades of operating experience in capital-intensive, import-linked and cyclical industries in Pakistan. Their sector-specific depth is reflected in the parallel management of two listed commercial vehicle platforms. The second is Ghandhara Industries Limited, engaged in the assembly, progressive manufacturing and sale of Isuzu trucks and buses, in which GAL holds a 17.91% stake. The sponsors' ability to steer the businesses through the downcycle and to reposition once demand recovered is evidenced by the associate's performance. Long-standing relationships with international principals, including JAC, Dongfeng and Renault Trucks, further underline the sponsors' standing in the domestic automotive industry.

The sponsors' financial standing rests on diversified group holdings, which provide multiple and partially uncorrelated earnings streams at group level. At the entity level, the need for extraordinary sponsor support remains limited. Total borrowings of PKR 674mln at end-FY26 were fully covered by cash and bank balances of PKR 3,018mln, and no amounts due to related parties were outstanding at end-FY26 or end-FY25. Related party exposure on the asset side consists entirely of the equity-accounted investment in Ghandhara Industries Limited. It increased to PKR 3,296mln at end-FY26 (FY25: PKR 2,137mln), driven by the Company's share of the associate's profits.

The Board comprises ten directors: three independent directors (Mr. Manzoor Ahmed, Mr. Salman Rasheed (FCA) and Mr. Asim Arshid), six non-executive directors and one executive director. It includes two female members, in line with the Board's gender diversity policy. The Board was reconstituted at the Extraordinary General Meeting held on February 4, 2025 for a term of three years. The offices of the Chairman and the Chief Executive Officer are held by separate incumbents with clearly demarcated roles. Board oversight is exercised through two committees. The Audit Committee is chaired by an independent director, Mr. Manzoor Ahmed, and meets quarterly. The Human Resource and Remuneration Committee is chaired by Mr. Salman Rasheed (FCA), meets annually, and was additionally assigned oversight of the Company's ESG initiatives during FY26. Separate nomination and risk management committees have not been constituted, and those matters are deliberated at Board level.

The Board draws on a mix of automotive, industrial, financial and general management experience. The Chairman, Lt. Gen. (Retd.) Ali Kuli Khan Khattak, was educated at Aitchison College Lahore and the Royal Military Academy Sandhurst, holds a Master's degree from Quaid-e-Azam University, and retired from the Pakistan Army as Chief of General Staff in 1998. He subsequently joined the family business and also serves as Chairman of The General Tyre and Rubber Company of Pakistan Limited and Chief Executive of Gammon Pakistan. Mr. Ahmad Kuli Khan Khattak, the Chief Executive Officer and sole executive director, served in the Pakistan Air Force for nearly 21 years before joining the Bibojee Group. He has served on the boards of several group companies and as Chairman of APTMA and PAMA. The independent directors, including a Fellow Chartered Accountant, bring external perspective in finance, audit and corporate oversight and meet the independence criteria prescribed under the Code of Corporate Governance.

The board, comprised of skilled and diverse individuals, conducts frequent meetings to ensure clear communication and responsiveness to stakeholders. Its effectiveness is demonstrated through its strategic vision, diverse expertise, and rigorous governance practices. Minutes are meticulously documented following each meeting, facilitating seamless follow-up actions. During FY26, the Board met five times, the Audit Committee four times and the Human Resource and Remuneration Committee once. Attendance was full across all meetings except one director who attended four of the five Board meetings, with leave of absence granted. Eight directors hold Directors' Training Program certification and the remaining two are exempt on the basis of their experience on listed company boards. Board performance is evaluated annually through a questionnaire developed in conformity with the Code of Corporate Governance, and minutes are documented after each meeting to facilitate follow-up actions.

An effective Internal Audit department reporting to the Audit Committee is in place that ensures transparency & compliance, identifies risks, and provides valuable insights to the management. M/s. ShineWing Hameed Chaudhari & Company, a QCR rated firm, has expressed unmodified opinion on the financial statements of the Company for financial period ending June 30, 2026.

The Company follows a functionally organized structure in which departmental heads report to the Chief Executive Officer, who is accountable to the Board. The principal functions comprise finance, sales, marketing, supply chain and procurement, plant and production, information technology, parts, after-sales and service, research, development and coordination, and human resources and administration. The Internal Audit function reports to the Audit Committee, and the Company Secretary supports the Board's proceedings. The layering is flat, which shortens escalation paths between the plant, the commercial function and the executive office.

Mr. Ahmad Kuli Khan Khattak leads the Company as Chief Executive Officer. After retiring from the Pakistan Air Force in 1987 as Wing Commander, he joined the Bibojee Group and gained extensive management experience in the automobile and textile sectors. The finance function is headed by Mr. Faisal Hameed as Chief Financial Officer, and Mr. Iftikhar Ahmed Khan serves as Company Secretary. The CEO's performance is formally appraised through an evaluation system based on quantitative and qualitative parameters, covering business performance, profit objectives, organization building and succession planning. Key person risk is concentrated at the level of the Chief Executive Officer. This is mitigated by the sponsoring family's presence on the Board, documented roles at department-head level and Board-approved appointment of the CFO, Company Secretary and Head of Internal Audit. Two heads of department completed the Directors' Training Program during FY26, supporting depth in the second tier of management.

Every department head is responsible for managing the affairs of their departments. Clearly defined rules & responsibilities, operational agility, and strategic foresight of Company's management team add to the effectiveness of the Company's structure.

The Company operates the Sidat Hyder Financial Business software package as its core information platform, covering the general ledger, procurement, inventory, sales and financial reporting across the plant and head office. Management uses the system to generate periodic reports on production and dispatch volumes, model-wise sales, inventory consumption, receivable ageing and margins, which feed the quarterly and annual financial close. For business continuity, remote disaster recovery sites have been set up to maintain backup servers and data. Access to electronic records is secured through a password-protected system.

The control framework is anchored by an internal audit function that operates independently of the executive line. It reviews financial, operational and compliance controls and reports its findings to the Audit Committee and the Chief Executive. Departmental internal controls are supported by the core information system, which embeds authorization limits and segregation of duties within the transaction chain. The compliance function monitors obligations under the corporate, taxation, customs and stock exchange regimes, an area of particular consequence given the Company's dependence on imported CKD kits. The Directors have confirmed that the system of internal control is sound in design and has been effectively implemented and monitored. No material regulatory penalty or enforcement action affecting the Company has been reported over the review period.

Pakistan's commercial vehicle industry is a small, protected and assembly-led segment of the global automotive value chain. Local assemblers depend on completely knocked down (CKD) kits sourced principally from Japanese and Chinese principals, so the domestic industry adopts the technology cycle of foreign manufacturers while retaining mainly the assembly, distribution and aftersales margin locally. Barriers to entry are high. They include the capital intensity of assembly lines, the need for a technical licence from an international principal, localization obligations and the need for a nationwide sales and service footprint, which together sustain a concentrated structure with a limited number of assemblers across light, medium and heavy-duty categories. Supplier power is elevated because foreign principals determine kit pricing and supply schedules in foreign currency. Buyer power is moderate and fragmented across fleet operators, logistics companies and small transporters, although it strengthens in tenders and institutional fleet purchases. Demand is highly cyclical and closely linked to freight movement, infrastructure spending, interest rates and the availability of vehicle financing. The industry posted a broad-based recovery in FY26. According to Pakistan Automotive Manufacturers Association data, sales of heavy commercial vehicles rose ~67% to 7,439 units (FY25: 4,444 units), light commercial vehicles and pickups rose ~41% to 50,814 units (FY25: 36,057 units), and passenger cars rose ~38% to 155,631 units (FY25: 112,203 units). The upturn was underpinned by GDP growth of 3.70% in FY26 (FY25: 3.18%), a revival in large-scale manufacturing, exchange rate stability, a lower interest rate environment and improved access to auto financing. However, CPI inflation rose to 7.05% in FY26 (FY25: 4.49%) on higher global oil prices and supply disruptions, and the State Bank of Pakistan's policy rate has stood at 11.50% since April 28, 2026. Monetary easing has been a principal driver of vehicle demand, so the pause creates uncertainty over the pace of further recovery. Input cost sensitivity arises through exchange parity and through steel, rubber and freight costs embedded in kit pricing. The regulatory framework is administered by the Ministry of Industries and Production and the Engineering Development Board, with the Federal Board of Revenue governing tariffs and duties. The Automotive and Auto Parts Manufacturing Policy 2026–31 received in-principal approval from the Prime Minister in September 2026 and remains subject to legal vetting and IMF review before implementation. It envisages reducing the weighted average tariff from ~10.6% to ~7.4% by 2030 under a four-slab structure of 0%, 5%, 10% and 15%, and capping customs duty on completely built-up vehicles at 15%. Protection for existing assemblers is to remain largely intact for the first two years and decline over the following two years. The policy also introduces a minimum domestic value addition requirement and concessionary tax treatment for new energy vehicles. In parallel, the 40% regulatory duty on commercial used vehicle imports is to be reduced by ten percentage points annually, reaching zero by FY30, which will intensify competition from imported used vehicles. Overall, the principal credit risks for the sector are demand cyclicality linked to interest rates and economic activity, foreign exchange and import regime exposure on kit procurement, gradual erosion of tariff protection over the policy horizon, working capital intensity arising from long import lead times, and dependence on a single foreign principal for each product line.

GAL holds a mid-tier position in Pakistan's commercial vehicle industry. Its franchise is built on a long-standing association with Anhui Jianghuai Automobile Group Corp. Limited (JAC), covering light, medium and heavy-duty trucks and pickups, and it is complemented by Dongfeng and Renault platforms. The Company's growth in FY26 was driven primarily by the double cabin pickup segment, where its JAC offerings captured demand in a category that expanded ~41% at the industry level. A distinctive feature of the Company's position is its role as the group's assembly hub. The Port Qasim plant builds vehicles for the associate and the subsidiary alongside its own JAC range, which spreads fixed costs over a larger volume base and gives the Company a utilization advantage over standalone assemblers of similar scale. The durability of this position is mixed. The Company's assembly capability, group-backed throughput and established dealership network are structural strengths that require considerable capital and time to replicate. By contrast, the pricing and feature appeal of its pickups is replicable by competing assemblers introducing comparable Chinese-origin models, and reliance on a single principal for the core truck range limits flexibility in product cycle management. The planned PHEV variant under JAC is expected to extend the Company's presence into the new energy segment, although its market traction is yet to be established. Among peers, Hinopak Motors Limited (Hino) remains the long-standing leader in medium and heavy-duty trucks and buses, and Ghandhara Industries Limited (Isuzu) competes in the truck and bus categories. Other local assemblers and the imported CBU channel compete in the light commercial and pickup categories.

The Company's topline expanded by ~36.3% to PKR 47,047mln in FY26 (FY25: PKR 34,512mln), reflecting higher volumes across the JAC pickup and commercial vehicle range amid the broader recovery in industry demand. Revenue remains concentrated in manufacturing activity, which contributed PKR 46,484mln, or ~98.8% of net sales (FY25: PKR 33,329mln; ~96.6%). Trading sales of CBU vehicles and parts declined to PKR 563mln (FY25: PKR 1,183mln). Contract assembly revenue from the associate, Ghandhara Industries Limited, rose to PKR 2,507mln (FY25: PKR 1,458mln), adding a group-linked revenue stream. Sales are entirely domestic, leaving the topline fully exposed to local freight, construction and financing conditions. The Central region accounts for ~53% of sales, followed by the South at ~29% and the North at ~18%. By channel, JAC vehicles are sold entirely through authorized dealerships. For Dongfeng vehicles, dealerships account for ~30% to ~45% of sales and the remainder is placed directly with corporate, institutional and government customers, which gives this line comparatively higher exposure to fleet and tender-based demand. Non-operating income, net of other charges, stood at PKR 394mln (FY25: PKR 170mln), equivalent to ~4.4% of profit before interest and tax (FY25: ~3.1%).

The Company's cost structure continued to benefit from operating leverage in FY26. Cost of sales grew by ~33.1%, slower than revenue, declining to ~79.6% of sales (FY25: ~81.6%) and lifting the gross margin to ~20.4% (FY25: ~18.4%). Raw material consumption, the dominant cost element given reliance on imported CKD kits, increased to PKR 36,132mln (FY25: PKR 24,966mln). Salaries, wages and benefits within cost of sales rose by ~45.7% to PKR 1,868mln in line with higher throughput and overtime. Operating expenses increased moderately to PKR 1,082mln (FY25: PKR 971mln) but declined to ~2.3% of sales from ~2.8%, taking the operating margin to ~18.0% (FY25: ~15.6%). Finance cost fell to PKR 50mln (FY25: PKR 176mln), or ~0.1% of sales (FY25: ~0.5%), as no short-term borrowings were utilized during the year. Profit before tax rose by ~67.9% to PKR 10,075mln, of which the associate's contribution accounted for ~12.3% (FY25: ~10.3%). The effective tax rate increased to ~36.3% (FY25: ~31.7%), largely due to super tax of PKR 922mln (FY25: PKR 520mln). Net profit reached PKR 6,418mln (FY25: PKR 4,096mln), a net margin of ~13.6% (FY25: ~11.9%), and return on equity improved to ~36.2% (FY25: ~31.9%). Cash conversion efficiency, measured as FCFO to sales, eased to ~11.2% (FY25: ~12.0%), primarily owing to higher taxes paid of PKR 3,292mln (FY25: PKR 1,519mln).

Although the Company generally prepares financial projections, developing prudent projections that align with industry dynamics and market trends is essential to navigate market fluctuations and ensure long-term resilience. Management's strategy centres on developing new models to address emerging demand, together with cost optimization. Under its JAC partnership, the Company plans to launch a Plug-in Hybrid Electric Vehicle (PHEV) variant in January 2027, positioning it to benefit from the concessionary treatment proposed for new energy vehicles under the upcoming auto policy. The Company is also upgrading its Paint Shop, including installation of a Robotics Top Coat Line, which is scheduled for completion by the third quarter of FY27 and is expected to enhance productivity and paint quality and reduce paint material consumption. With the plant already operating beyond its single-shift designed capacity, timely commissioning of this upgrade is important for sustaining volume growth.

The Company's working capital cycle lengthened in FY26, primarily on account of a build-up in finished goods. Gross working capital days rose to ~102 (FY25: ~91). Inventory days increased to ~86 (FY25: ~74), comprising raw material days of ~68 (FY25: ~61) and finished goods days of ~18 (FY25: ~13). Inventories stood at PKR 11,488mln at end-FY26 (FY25: PKR 10,603mln). Within this, finished goods more than doubled to PKR 3,218mln (FY25: PKR 1,449mln), while raw material stock eased to PKR 8,270mln (FY25: PKR 9,154mln). Trade receivables increased to PKR 2,543mln (FY25: PKR 1,633mln), with receivable days stable at ~16. Trade payable days eased to ~27 (FY25: ~29), taking net working capital days to ~75 (FY25: ~62). The most significant shift in funding came from customer advances, which declined by ~46.0% to PKR 6,552mln (FY25: PKR 12,135mln) as the elevated bookings carried at end-FY25 unwound, bringing current liabilities down to PKR 11,382mln (FY25: PKR 17,559mln). Working capital changes consequently absorbed PKR 8,534mln in FY26, against a release of PKR 7,078mln in FY25. This requirement was met from internal liquidity, with cash and bank balances and short-term investments together declining to PKR 6,547mln (FY25: PKR 10,659mln). The current ratio improved to ~1.6x (FY25: ~1.1x). Running finance limits of PKR 950mln remained unutilized throughout the year. Letter of credit facilities were enhanced to PKR 15,900mln (FY25: PKR 7,908mln), of which PKR 10,152mln was unutilized at end-FY26, providing substantial headroom for import financing.

The Company's debt servicing capacity strengthened further in FY26. EBITDA increased to PKR 8,561mln (FY25: PKR 5,668mln), and free cash flow from operations (FCFO) rose by ~27.0% to PKR 5,260mln (FY25: PKR 4,140mln) despite the doubling of taxes paid. FCFO covered finance cost ~104.3x (FY25: ~23.5x), and covered finance cost together with current maturities of long-term borrowings ~19.9x (FY25: ~10.3x). The accrual-based EBITDA to finance cost ratio rose to ~169.7x (FY25: ~32.2x). Debt payback improved to ~0.1 years (FY25: ~0.2 years). Liquid cover moderated to ~174.9x (FY25: ~462.8x), reflecting the drawdown of cash and short-term investments to fund working capital, though it continues to indicate an ample buffer against near-term obligations. The consistency across cash flow and accrual-based measures indicates that the Company's debt servicing strength is underpinned by its minimal debt stock and robust earnings rather than by a temporary or seasonal effect.

The Company's capital structure remains near-unlevered. Total borrowings declined to PKR 674mln at end-FY26 (FY25: PKR 880mln), bringing leverage, measured as total borrowings to total borrowings plus equity, to ~3.2% (FY25: ~5.6%). The debt stock comprises concessionary long-term loans availed under the State Bank of Pakistan's TERF and ITERF schemes, secured against 100% cash collateral, together with lease liabilities. No short-term borrowings were outstanding at either year-end, which eliminates rollover and interest rate reset risk from the near-term funding profile. Management does not expect any significant deviation in the leverage profile over the next year. Shareholders' equity grew by ~38.5% on the back of profit retention, while the share of revaluation surplus on fixed assets in total equity declined to ~24.2% (FY25: ~34.4%), improving the quality of the capital base. Off-balance sheet exposure increased materially to PKR 8,573mln (FY25: PKR 1,086mln), equivalent to ~41.6% of equity (FY25: ~7.3%).