PACRA Maintains Entity Ratings of Ghandhara Automobiles Limited (formerly known as Ghandhara Nissan Limited)

Ghandhara Automobiles Limited (‘GAL’ or ‘the Company’) is principally an authorized automobile assembler of multiple brands in Pakistan. The ratings reflect its adequate business profile and accepted presence in the automobile sector of Pakistan. GAL holds connections with renowned multinational automobile manufacturers like JAC Motors, Dongfeng Motor Corporation, Renault trucks, and Chery Automobile Co.Ltd. The Company has solidified its position in the market through assembling & progressive manufacturing of JAC trucks and Chery SUVs, import & sale of Dongfeng and Renault trucks in complete built-up units, and assembly of other commercial MVs under contract agreements with Ghandhara Industries Limited, Ghandhara DF (Pvt.) Limited and Bibojee Services (Pvt.) Limited. During FY23, the growth in trucks & buses sector of Pakistan remained historically laggard, as it is directly related to economic activities. Local trucks segment experienced a massive decline in FY23 as it fell by ~45.15% YoY, total buses sold declined by ~6.03%, while sale of jeeps & pickups also fell by ~33.31% during same period last year. The sectoral performance remained uncertain and also kept the margins under pressure owing to macroeconomic challenges, thereby affected the overall cost of doing business. However, GAL managed to achieve topline growth of ~87.2% at end Jun’23 on account of 1200+ units sold of newly launched Chery Tiggo vehicle. Despite, augmentation in Company’s net revenue figure, it was not translated well in overall profitability matrix. Gross and net profits of the Company are affected by increased cost of doing business such as, high raw material prices, increase in minimum wage, energy prices, and finance cost, respectively. Going forward, the Company intends to cover against principal risks and uncertainties by securing long-term growth momentum in its entire product line. Financial risk profile of the GAL is considered adequate as both the cash flows and debt coverage metrics witnessed slight improvements. Further, the Company funded its expansion for assembling & distribution of Chery vehicles (launch of Tiggo 4 Pro & Tiggo 8 Pro in domestic market) by means of debt availed at concessionary rates under SBP's TERF scheme. The amount of leverage in the Company’s capital structure stands at moderate levels. The Company possesses competitive edge, high brand value, and solid sponsorship support. Majority ownership of the Company is held by Bibojee Group of Companies. Their business acumen is further enriched by the group’s stake in the Country’s leading tyre manufacturing entity, and auto companies leading in heavy commercial sector.
The ratings are dependent on upholding of the Company’s business as well as financial risk profile amidst current challenges faced by the automobile & allied industry. Improvement in margins and intact coverages shall remain imperative. Key element is Company’s stance on working capital management. Moreover, management’s ability to sustain its market share during the demand crunch is quite crucial.

About the Entity
Ghandhara Automobiles Limited, incorporated in 1981, is a group concern of Bibojee Services (Pvt.) Limited - founded by late Gen. Habibullah Khattak in 1960’s with interests in various industrial sectors including Textile, Auto, Tyres & Rubber, Insurance & Construction. The prime business profile of the Company is assembly/progressive manufacturing of vehicles including JAC trucks & Chery SUVs, import & sale of parts, Dongfeng & Renault vehicles in CBU conditions, and assembling of other vehicles under contract agreements. Product slate of the entity is dominated by Chinese brands. The BoD comprises ten members; Mr. Ali Kuli Khan Khattak is the new Chairman of the board whereas Mr. Ahmad Kuli Khan Khattak serves as the CEO.