Ghandhara Tyre & Rubber Company Limited

CREDIT RATING REPORT | Aug-25

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Rating History
Dissemination Date Long-Term Rating Short-Term Rating Outlook Action Rating Watch
01-Aug-25 A+ A1 Stable Maintain YES
01-Aug-24 A+ A1 Stable Maintain YES
01-Aug-23 A+ A1 Stable Maintain YES
10-Aug-22 A+ A1 Stable Maintain -
10-Aug-21 A+ A1 Stable Upgrade -
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 complete range of automotive radial tyres. At present, the Company operates with an annual production capacity of ~4.4mln tyres. The Company is majorly owned by two sponsors - Bibojee Services (Pvt.) Limited and Pak Kuwait Investment Company Limited (PKIC), holding ~28% and ~30% shares, respectively. The CEO - Mr. Hussain Kuli Khan has an overall experience of ~29 years and has been trained by Continental Germany in their plants. An able management team assists him.

Rating Rationale

Ghandhara Tyre & Rubber Company Limited (“GTR” or “The Company”) is a leading player in Pakistan’s automotive tyre manufacturing industry. The Company serves a diverse customer base that includes Original Equipment Manufacturers (OEMs), the replacement and aftermarket segment, institutional clients such as government and defense, and export markets. The ratings reflect GTR’s established market presence, strong business profile, and wide product portfolio across Passenger Car Radial (PCR), Light Truck/Bus (LTB/R), Agricultural (Agri), Off-the-Road (OTR), and two-wheeler tyre segments. As the only domestic producer of PCR tyres, GTR caters to a significant portion of OEM demand. In FY25, Pakistan’s auto industry witnessed signs of recovery supported by improving macroeconomic conditions. Stabilization of exchange rates, gradual reductions in inflation and policy rates, and improved consumer confidence contributed to a rebound in sector activity. The relaxation of restrictions on the establishment of Letters of Credit (L/Cs) further enhanced raw material availability and production continuity. According to PAMA’s latest data (11MFY25), passenger car sales grew by approximately 32%, light commercial vehicles by 66%, trucks by 95%, and buses by 91%, reflecting a broad-based recovery in vehicle demand and strengthening OEM performance. Currently, OEMs contribute 40% of GTR’s sales while the replacement market accounts for 60%. However, during 9MFY25, GTR’s topline declined by approximately 9.4% year-on-year to PKR 13.9bln. This contraction was mainly driven by a significant reduction of nearly 36% in farm tyre sales volume across OEMs and sluggish demand from the replacement market, influenced by subdued rural purchasing power amid lower wheat prices. Profitability came under further pressure from higher input costs, including raw materials and energy tariffs, which could not be fully passed on to customers. This led to margin compression across all levels and underpins the continuation of the rating watch. The financial risk profile reflects a stretched working capital cycle, modest cash flow generation, and moderate debt servicing metrics. The capital structure remains leveraged, with borrowings primarily concentrated in short-term facilities to support working capital needs. Looking ahead, GTR is focusing on consolidating its domestic market position and increasing export volumes through targeted investments in capacity enhancement and operational efficiency initiatives. The recent commissioning of a 2MW solar energy project highlights its commitment to sustainability. Engagements with new OEMs, particularly for SUV tyres, are progressing, while product innovation continues to support brand strength. Backed by robust sponsorship, a structured governance framework, and technical collaboration with Shandong Huasheng Rubber of China, GTR maintains alignment with international quality standards and is positioned to capture long-term growth opportunities.

Key Rating Drivers

The ratings are dependent on the Company’s ability to improve its business risk vis-à-vis financial risk profile along with sustainable margins. Cautious management strategies amidst a challenging industry environment are pertinent. Moreover, prudent management of financial affairs remains important

REPORT CONTENTS
  1. Rating Analysis
  2. Financial Summary
  3. Rating Scale
  4. Regulatory Disclosure

Ghandhara Tyre & Rubber Company Limited

rating analysis

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Profile
Legal Structure

Ghandhara Tyre & Rubber Company Limited (formerly known as The General Tyre & Rubber Company of Pakistan Limited) (hereinafter referred to as 'the Company' or 'GTR') is a Public Listed Entity with a free float of ~40% shares as on June 30th, 2025. It was listed on the Pakistan Stock Exchange in 1982.


Background

The Company was initially established by General Tire International Corporation (GTIC) of USA in 1963, with an initial production capacity of ~120,000 tyres per annum. Currently, Bibojee Services (Private) Limited and Pakistan Kuwait Investment Company (Private) Limited are the two major sponsors of the Company.


Operations

The Company is only local producer of Passenger Car Radial (PCR) tyres in Pakistan, catering to approximately 75% of OEM demand. The primary business of the Company is manufacturing and sale of radial tyres for Cars, LCVs, Vans, Jeeps, Pickups, Buses and Bias Tyres for Trucks, Tractors, Rickshaws and Motorcycles. The current capacity of the Company stands at ~2.8mln for automotive tyres per annum. While the motorcycle plant capacity is ~1.6mln tyres per annum.


Ownership
Ownership Structure

The Company’s shareholding is primarily held by Bibojee Services (Private) Limited and Pakistan Kuwait Investment Company (Private) Limited, which own approximately 27.8% and 30% of the total shares, respectively. This strategic ownership structure reflects strong institutional backing and long-term stakeholder commitment.


Stability

Bibojee Services (Private) Limited is a strong conglomerate diversified into various sectors including Textile, Automobile, Insurance, Tyres & Rubber and Construction. Pakistan Kuwait Investment Company (Private) Limited is a state-owned joint venture between the Government of Pakistan and the Government of Kuwait, regarded as one of the top investment companies in Pakistan.


Business Acumen

Apart from GTR, both sponsors have strategic stakes in other sectors too. Under the ownership of current sponsors, the Company has achieved many milestones and has established a formidable position in the tyre sector, which is a representation of strong sponsor acumen.


Financial Strength

Bibojee Services (Private) Limited has strategic stakes in companies from different sectors including Textile, Insurance, Automobile and Construction. The financial strength of the group is strong. Pakistan Kuwait Investment Company (Private) Limited also holds ~30% shares in Meezan Bank Limited, ~30% in Al-Meezan Investment Management Limited and ~17.6% in National Clearing Company of Pakistan Limited.


Governance
Board Structure

The Board of Directors comprises 10 members as of June 30, 2024, including three independent directors (one of whom is a female), six non-executive directors, and one executive director. The Board is chaired by Lt. Gen. (Retd.) Ali Kuli Khan Khattak, while management control rests with Bibojee Services (Pvt.) Ltd., the Company’s principal sponsor.


Members’ Profile

Lt. Gen. (Retd.) Ali Kuli Khan Khattak, Chairman of the Board, brings a wealth of leadership experience and strategic acumen, particularly within the Auto & Allied sectors. Mr. Hussain Kuli Khan, the CEO and Executive Director, holds a Business Administration degree from Gettysburg College, USA, and has over 25 years of industry experience, including technical training at Continental AG, Europe. Other board members include professionals from diverse domains such as finance, corporate strategy, and industrial operations—such as Mr. Ahmad Kuli Khan Khattak and Mr. Muhammad Kuli Khan Khattak—ensuring a balanced and well-rounded governance structure. The presence of three independent directors, including Mrs. Nazia Qureshi, further strengthens board oversight and corporate governance.


Board Effectiveness

The Board has constituted two sub-committees: (i) the Audit Committee and (ii) the HR & Remuneration Committee, both of which play an active role in supporting governance and oversight. Attendance across board and committee meetings has been consistently strong, and proceedings are well-documented with properly maintained minutes, reflecting the Board’s commitment to transparency and effective decision-making.


Financial Transparency

An effective Internal Audit department reporting to the Audit Committee is in place. The External Auditor of the Company are M/s ShineWing Hameed Chaudhri & Co - Chartered Accountants. They expressed an unqualified opinion on the financial statements of the Company for the period ended June 30th, 2024.


Management
Organizational Structure

The Company has a comprehensive organizational structure with clearly defined departmental responsibilities and hierarchical reporting lines. The Chief Executive Officer (CEO) leads the organization, supported by departmental heads overseeing key functions including Sales & Marketing, Finance & Accounts, Operations & Manufacturing, Supply Chain, Information Technology, Internal Audit, Human Resources, and Legal & Corporate Affairs. Each department operates under its respective leadership with direct reporting to the CEO, ensuring streamlined communication, operational discipline, and alignment with the Company’s strategic objectives.


Management Team

Mr. Hussain Kuli Khan - the CEO of the Company, has an overall experience of over ~25 years. He did his degree in Business Administration from Gettysburg College, USA. He also underwent training for six months in the tyre manufacturing plants of Continental AG in Europe. He is supported by a team of experienced professionals working under various sub-divisions to ensure smooth reporting.


Effectiveness

The management committee is headed by CEO, Mr. Hussain Kuli Khan. The committee also includes the Chief Financial Officer, Executive Director Works, Executive Director Corporate Service & HR and Executive Director Marketing. Further, different departments’ heads are responsible for ensuring smooth running of their relevant departments.


MIS

The Company has implemented an all-in-one version of SAP consisting of 9 modules. A detailed business continuity plan to address risk assessment and disaster recovery policy is in place.


Control Environment

The Company operates through a strong internal control framework, supported by clearly segmented departments. An effective Management Information System (MIS) underpins real-time reporting, risk management, and decision-making. An independent Internal Audit Department plays a vital role in reinforcing governance and ensuring compliance with internal policies and regulatory standards.


Business Risk
Industry Dynamics

The estimated market size of the Tyres Sector in FY24 stood at PKR~198.3bln (FY23: PKR~158.2bln). Key players inthe tyre sector include Ghandhara Tyre and Rubber Company, Panther Tyres Ltd, Service Industries Ltd andService Long March Tyres Pvt Ltd. The demand drivers of the tyre sector in Pakistan can be broadly segmentedinto the OEM and replacement markets where the average share of the replacement market is ~80%. The majorraw material used in the production of tyres is rubber, both natural and synthetic. The market for radial tyres inPakistan's trucks and buses segment has been experiencing steady growth over the years. The sector isexperiencing a gradual shift towards radial tyres due to their superior performance, longer lifespan, better fuelefficiency, and improved safety.


Relative Position

GTR optimizes its strong competitive position in the upper niche segment of the tyres sector i.e., 4-wheeler tyres. In addition to being the only local producer of passenger car tyres in the country, it has also developed a strong grasp on the production of tractor tyres. In the 2 & 3-wheeler domain, GTR is in the process of penetrating its presence and currently holds a modest share. The Company has increased its efforts to increase its foothold in the RM segment, while catering for the requirements of OEMs.


Revenues

During 9MFY25, GTR’s topline declined by ~9.4%, standing at PKR 13,961 million, down from PKR 20,539 million reported in FY24. This contraction was primarily due to subdued volumes in the farm tyre segment (OEM/RM), impacted by weak rural purchasing power amidst low wheat prices


Margins

Profitability margins saw some compression during 9MFY25 compared to FY24: Gross profit margin declined to ~14.1% (FY24: ~16.0%) due to cost-side pressures. Operating margin also reduced to ~7.6% (FY24: ~10.0%) .Profitability was further strained due to increased C&F prices for raw materials, higher gas tariffs, and rising minimum wages, leading to a net profit margin of ~0.5% (FY24: 1.1%)


Sustainability

GTR continues to focus on cost efficiency through leaner production and product innovation in both OEM and replacement markets. Export initiatives and close coordination with new OEM clients remain in place, supporting long-term sustainability. However, the topline contraction underscores the need for diversification and volume recovery.


Financial Risk
Working capital

Short-term borrowings increased to PKR 9,036 million in 9MFY25 (FY24: PKR 6,678 million), reflecting a higher reliance on debt to support operational needs. Despite this, the gross working capital cycle increased to ~197 days (FY24: ~147 days), while net working capital days rose to ~152 days from ~106 days, driven by higher inventory levels and slower receivables turnover.


Coverages

While profitability declined, GTR maintained adequate coverage metrics. EBITDA/finance cost remained steady at ~1.7x (FY24: 1.7x), while FCFO/finance cost stood at ~1.6x (FY24: 1.7x). Free cash flows from operations dropped to PKR ~1,571 million in 9MFY25 compared to PKR ~2,707 million in FY24, largely due to weaker operating performance and higher interest expenses.


Capitalization

The Company’s capital structure remains leveraged, with total borrowings increasing to PKR ~9,593 million as of Mar’25 (FY24: PKR ~7,303 million). The gearing ratio rose to ~62.2% (FY24: ~54.9%), largely due to increased short-term debt, which now makes up ~94.2% of total borrowings (FY24: ~91.4%). This elevated leverage profile underlines the need for enhanced working capital discipline and potential deleveraging.
 
 

Aug-25

www.pacra.com

Ghandhara Tyre & Rubber Company Limited

financial summary

(PKR mln)

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Mar-25
9M		 Jun-24
12M		 Jun-23
12M		 Jun-22
12M
A. BALANCE SHEET
1. Non-Current Assets 7,154 7,344 7,709 5,531
2. Investments 0 0 0 0
3. Related Party Exposure 42 34 25 26
4. Current Assets 13,873 11,470 10,540 10,497
a. Inventories 6,625 5,078 4,812 5,299
b. Trade Receivables 4,653 3,693 2,941 2,518
5. Total Assets 21,069 18,848 18,275 16,054
6. Current Liabilities 4,825 4,839 4,697 3,881
a. Trade Payables 2,491 2,082 2,541 1,689
7. Borrowings 9,593 7,303 7,119 7,360
8. Related Party Exposure 0 0 0 0
9. Non-Current Liabilities 819 710 705 968
10. Net Assets 5,831 5,995 5,754 3,845
11. Shareholders' Equity 5,831 5,995 5,754 3,845
B. INCOME STATEMENT
1. Sales 13,961 20,539 15,019 18,588
a. Cost of Good Sold (11,991) (17,261) (12,727) (16,136)
2. Gross Profit 1,970 3,278 2,292 2,453
a. Operating Expenses (906) (1,218) (938) (1,020)
3. Operating Profit 1,064 2,060 1,353 1,433
a. Non Operating Income or (Expense) 59 116 (255) (61)
4. Profit or (Loss) before Interest and Tax 1,123 2,176 1,098 1,372
a. Total Finance Cost (1,032) (1,674) (1,292) (748)
b. Taxation (27) (267) 26 (268)
6. Net Income Or (Loss) 64 235 (167) 356
C. CASH FLOW STATEMENT
a. Free Cash Flows from Operations (FCFO) 1,571 2,707 1,432 1,556
b. Net Cash from Operating Activities before Working Capital Changes 435 1,040 337 866
c. Changes in Working Capital (2,445) (950) 391 (263)
1. Net Cash provided by Operating Activities (2,011) 89 728 603
2. Net Cash (Used in) or Available From Investing Activities (176) (149) (223) (761)
3. Net Cash (Used in) or Available From Financing Activities 1,350 (103) (2,025) 221
4. Net Cash generated or (Used) during the period (836) (162) (1,520) 63
D. RATIO ANALYSIS
1. Performance
a. Sales Growth (for the period) -9.4% 36.8% -19.2% 33.5%
b. Gross Profit Margin 14.1% 16.0% 15.3% 13.2%
c. Net Profit Margin 0.5% 1.1% -1.1% 1.9%
d. Cash Conversion Efficiency (FCFO adjusted for Working Capital/Sales) -6.3% 8.6% 12.1% 7.0%
e. Return on Equity [ Net Profit Margin * Asset Turnover * (Total Assets/Shareholders' Equity )] 1.4% 4.0% -3.5% 9.7%
2. Working Capital Management
a. Gross Working Capital (Average Days) 197 147 189 141
b. Net Working Capital (Average Days) 152 106 138 116
c. Current Ratio (Current Assets / Current Liabilities) 2.9 2.4 2.2 2.7
3. Coverages
a. EBITDA / Finance Cost 1.7 1.7 1.4 2.7
b. FCFO / Finance Cost+CMLTB+Excess STB 1.4 1.4 0.7 1.1
c. Debt Payback (Total Borrowings+Excess STB) / (FCFO-Finance Cost) 0.7 0.6 7.5 1.8
4. Capital Structure
a. Total Borrowings / (Total Borrowings+Shareholders' Equity) 62.2% 54.9% 55.3% 65.7%
b. Interest or Markup Payable (Days) 77.1 86.6 108.5 90.7
c. Entity Average Borrowing Rate 16.5% 21.8% 16.4% 9.3%

Aug-25

www.pacra.com

Ghandhara Tyre & Rubber Company Limited

rating scale

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Aug-25

www.pacra.com

Ghandhara Tyre & Rubber Company Limited

regulatory disclosure

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  1. Rating Team Statements
    1. Rating is just an opinion about the creditworthiness of the entity and does not constitute a recommendation to buy, hold, or sell any security of the entity rated or to buy, hold, or sell the security rated, as the case may be. (Chapter III; 14-3-(x))
    2. Conflict of Interest
      1. The Rating Team or any of their family members have no interest in this rating (Chapter III; 12-2-(j))
      2. PACRA, the analysts involved in the rating process, and members of its rating committee and their family members do not have any conflict of interest relating to the rating done by them (Chapter III; 12-2-(e) & (k))
      3. The analyst is not a substantial shareholder of the customer being rated by PACRA [Annexure F; d-(ii)]
      4. Explanation: for the purpose of the above clause, the term "family members" shall include only those family members who are dependent on the analyst and members of the rating committee.
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    3. PACRA does not make proposals or recommendations regarding the activities of rated entities that could impact a credit rating of the entity subject to rating. (Chapter III; 10-7-(k))
  3. Conduct of Business
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Aug-25

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