PACRA Maintains Entity Ratings of Ghandhara Tyre & Rubber Company Limited

Ghandhara Tyre & Rubber Company Limited ("GTR" or "the Company") remains a leading player in Pakistan's automotive tyre manufacturing industry and domestic producer of Passenger Car Radial (PCR) tyres, alongside an established presence across Light Truck/Bus, Agricultural, Off-the-Road, SUV, and two-wheeler segments. This diversified product slate enables the Company to serve both OEMs and the replacement/aftermarket market, supported by a long-standing nationwide dealer network and deep OEM penetration. Product quality continues to be reinforced through GTR's technical collaboration with Shandong Huasheng Rubber Co., Ltd. of China, supporting alignment with international manufacturing standards. The domestic tyre industry remains structurally exposed to imported raw materials, including natural and synthetic rubber, carbon black, and steel cord, leaving margins sensitive to international commodity prices, supply chain disruptions, and PKR/USD parity. Easing inflation, reduced policy rate, and a comparatively stable exchange rate supported improved consumer confidence and financing conditions through FY26, translating into a broad-based automotive sector recovery. As per PAMA statistics, FY26 passenger car sales grew by ~38.7% over FY25, LCV and jeep sales by ~40.9%, and truck and bus sales by ~61%, while two- and three-wheeler sales, the largest driver of tyre offtake, rose by ~29.8%; farm tractor sales declined marginally by ~1.4%. The growth momentum also absorbed the geopolitical tensions and regional escalations during 2HFY26 which contributed to firmer raw material prices and intermittent supply chain disruption. Against this backdrop, GTR's topline moved counter to the broader industry trend, declining by ~9.1% during 9MFY26, following a ~13.3% decline in FY25. This was primarily volumetric, reflecting softer farm tyre and replacement market offtake and a shift in sales mix, with margins coming under further pressure from cost inputs that could not be fully passed through. The Company's ownership and governance framework lends considerable strength and comfort to the assigned ratings and remains the primary anchor supporting the credit assessment. GTR benefits from a financially sound and diversified sponsor base, an actively engaged Board with meaningful independent representation, and an experienced management team, reflecting a mature and well-institutionalized governance structure. The financial risk profile continues to reflect pressure on coverage, internal cash flow generation, working capital, and leverage. However, the Company is undertaking extensive measures to reduce inventory and receivables, which expected to improve the working capital cycle and reliance on short-term borrowings for funding working capital requirements. Rating Watch signifies the elevated business and financial risk arising from the performance trends discussed above, and reflects the Committee's continued close monitoring of the Company's trajectory, pending demonstrated progress on management's well-defined business plan, centered on cost efficiency, planned capacity enhancement in the SUV tyre category, a renewed focus on the replacement market, and export diversification beyond Afghanistan, supported by the recent attainment of DOT certification. These developments will continue to be evaluated as part of the Committee's ongoing assessment of the Company's credit profile.
The ratings remain dependent on sustained revenue growth, meaningful margin and profitability improvement, and a better-balanced business versus financial risk profile, achieved through prudent financial management amid a challenging industry environment and demonstrated compliance with the Company's business plan.

About the Entity
GTR was incorporated in 1963 and was listed on the Karachi Stock Exchange in 1982. It is engaged in the manufacturing & marketing of a extensive range of automotive tyres. The Company is majorly owned by Bibojee Services (Pvt.) Limited and Pak Kuwait Investment Company Limited (PKIC), holding ~28% and ~30% shares, respectively. The CEO is Mr. Hussain Kuli Khan, who has extensive professional experience.