The Pakistan Credit Rating Agency Limited
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Sohail Ahmed Qureshi

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PACRA Maintains Entity Ratings of Ghandhara Nissan Limited

Rating Type Entity
Action Maintain Maintain
Long Term A A
Short Term A1 A1
Outlook Stable Stable
Rating Watch - -

Ghandhara Nissan Limited (GNL) operates in the truck segment of the automobile sector. Presently, the company deals in Chinese and European brands. Ghandhara Nissan has solidified its position in the market through the launch of JAC X-200 and Renault Trucks. Keeping in view of the current market scenario the turnout of these initiatives is pivotal. Covid19 and associated lockdown has worsened the existing economic slowdown which has hampered the overall demand, impacting the business volumes of the company. Further, under absorption of overheads on account of declining volumes has resulted in lower margins leading to inflated loss for FY20. Relatively higher losses and low cash flows have dampened the coverages. 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 company.
The ratings are dependent on upholding of the company’s business as well as financial risk profile. Improvement in margins and intact coverages are imperative. Key element is company’s stance on working capital management. Moreover, management’s ability to sustain its market share while benefiting from positive demand fundamentals is crucial.

About the Entity
Incorporated in 1981, Ghandhara Nissan Limited (GNL) is a group Company of Bibojee Services (Pvt.) Limited - founded by Gen. Habibullah Khattak in 1960’s with interests in various industrial sectors including Textile, Auto, Tyres & Rubber, Insurance and Construction. The principle business of the company is assembly/progressive marketing of vehicles including JAC trucks, import and sale of Nissan, Dongfeng and Renault vehicles in completely built up conditions and assembling of other vehicles under contract agreement. The board comprises ten members; four represent the sponsoring family. Mr. Raza Kuli Khan Khattak is Chairman of the board whereas Mr. Ahmad Kuli Khan Khattak serves as the CEO.

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.