PACRA Maintains Entity Ratings of Ghandhara Industries Limited

Ghandhara Industries Limited (‘GIL’ or ‘the Company’) is one of the prominent automobile entities in its niche of trucks & buses. The primary business activities of the Company include; assembling & marketing trucks (Light-Duty Trucks, Medium-Duty Trucks & Heavy-Duty Trucks), 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 trucks & buses sector. During FY24, the demand for trucks and buses in Pakistan remained subdued, as it is directly related to economic activities. According to the Pakistan Automotive Manufacturers Association (PAMA) data, the trucks & buses volumes continued to decline by ~30% in FY24 (FY23: -40.7%), reflecting the overall adverse impact of cost-push inflation on the auto industry. Local bus assembling experienced a decline in FY24 as it fell by ~40.23% YoY and local truck assembling also declined by ~28.30% compared to the same period last year, mainly due to the dire situation of forex reserves, higher policy rate to curb inflation, and import restrictions due to financing limitations. During the year, GIL maintained a market share of ~50% in the trucks and buses market followed by Master, Hino Pak, and Ghandhara Automobiles Limited (JAC & DF). Subsequently, the company’s financial performance improved in FY24, with net profitability surging to PKR ~781mln, representing a net profit margin of ~5.3%. This marked an increase from the ~1.2% margin achieved in FY23, driven by enhanced operational efficiency, cost reduction measures, and a decline in finance cost. Leveraging its core competencies, the Company is strategically diversifying its offerings to create new value propositions for its customers. This expansion is expected to drive synergistic growth, enhance profitability, and solidify the Company’s market leadership. GIL’s strategic approach to managing customer advances has effectively fueled its growth and expansion. The sponsoring group’s synergistic approach and commitment to good corporate governance have been instrumental in GIL’s sustainability. Financial risk profile is signified by comfortable cash flows, coverages, and an adequate working capital cycle. Capital structure of the company is low-leveraged (majorly comprised of short-term borrowings).
The ratings are dependent on upholding of the Company’s business as well as financial risk profile amid unfavorable macroeconomic conditions. Sustenance in working capital management and intact coverages shall remain imperative. Key factor is management’s ability to maintain the sales momentum during demand crunch is quite crucial.

About the Entity
Ghandhara Industries Limited, incorporated in 1963, is engaged in the assembly and sale of ISUZU trucks, buses, and pickups, followed by body fabrication services. The group was founded by Gen. Habibullah Khattak in 1960 and has vested interests in multiple sectors including Textile, Auto, Tyres & Rubber, Insurance & Construction. The board is comprised of nine members where Mr. Ali Kuli Khan Khattak serves as the Chairman and Mr. Ahmad Kuli Khan Khattak serves as the CEO of the Company. The Company holds on to an experienced management team which has been associated for a long period.