The Pakistan Credit Rating Agency Limited
Press Release


Sohail Ahmed Qureshi

Applicable Criteria

Related Research

This press release is being transmitted for the sole purpose of dissemination through print/electronic media. The press release may be used in full or in part without changing the meaning or context thereof with due credit to PACRA

PACRA Maintains Entity Ratings of Ghandhara Industries Limited

Rating Type Entity
(21-Oct-22 )
(22-Oct-21 )
Action Maintain Upgrade
Long Term A+ A+
Short Term A1 A1
Outlook Stable Stable
Rating Watch - -

Ghandhara Industries Limited (‘GIL’ or ‘the Company’) has been one of the leading automobile entities in its niche of trucks & buses. The primary business activities of the Company includes; assembling & marketing of trucks (LDTs, MDTs & HDTs), buses, D-MAX pickups, and body fabrication services. GIL’s core strength can be defined by its alliance with ISUZU – a leading Japanese brand in the Country's trucks & buses segment. ISUZU has enabled the Company to build a strong fortress in the competitive industry of Pakistan. Though, localization level in trucks & buses segment is lowest as compared to other segments of the automobile industry. The year FY2022 was a ‘ballooning period’ for the auto sector. The buying interest among consumers started to revive after the pandemic crises as trucks sales soared by 57%, followed by 49% in jeeps & pickups, and 7% in buses. The Company managed to translate the same in its topline and achieve significant revenue growth of 62% at end Jun’22. GIL’s profitability matrix during period under review is affected by ramped up cost of doing business. The Company’s exposure to more advances has proved to be beneficial as business relies less on borrowed capital to fuel growth and other initiatives. The cash flows of GIL from its operations are considered adequate, thus strengthening coverages position. Over the years, the Company has been able to sustain its prominent edge in the domestic automotive market while managing uprising competition and secured high share. The sponsoring group built synergies between the associated concerns operating in the auto & allied sector. Besides, it upholds good corporate governance standards. Their business acumen is enriched by the group’s stake in the country’s leading tyre manufacturing company. Financial risk profile is signified by finer working capital cycle and leveraged capital structure (mainly comprising short-term borrowings).
The ratings are dependent on upholding of the Company’s business as well as financial risk profile amid unfavorable macroeconomic conditions. Improvement in margins and intact coverages are imperative. Key element is management’s ability to strategies sustenance of market share during the demand crunch is quite crucial.

About the Entity
Ghandhara Industries Limited, incorporated in 1963, is engaged in the assembly, body fabrication and sale of ISUZU trucks & buses in Pakistan. It has a total capacity of around 7,200 units per annum on a single shift basis. The group was founded by Gen. Habibullah Khattak in 1960 and has interests in various industrial sectors including Textile, Auto, Tyres & Rubber, Insurance and Construction.
The board is comprised of seven members; four represent the sponsoring family. Mr. Ahmad Kuli Khan Khattak serves as the CEO whereas day-to-day business activities are monitored by the Deputy Chief Executive (DCE), Mr. Muhammad Kuli Khan Khattak, who is the son of CEO. The Company holds on to an experienced management team which has been associated for a long period of time.

The primary function of PACRA is to evaluate the capacity and willingness of an entity to honor its obligations. Our ratings reflect an independent, professional and impartial assessment of the risks associated with a particular instrument or an entity. PACRA's comprehensive offerings include instrument and entity credit ratings, insurer financial strength ratings, fund ratings, asset manager ratings and real estate gradings. PACRA opinion is not a recommendation to purchase, sell or hold a security, in as much as it does not comment on the security's market price or suitability for a particular investor.