Lahore, October 10, 2018 (PPI-OT): The ratings are reflective of the company’s strong foothold in its respective industry comprising 4 wheeler tyres for cars, LCVs, tractors, buses and trucks. The company is the sole manufacturer of passenger car radial tyres catering to the OEMs market. Two wheeler market, in contrast, displays a broader competitive landscape wherein General tyres is gradually building up its market share to compete with other local players.
A well-devised governance framework alongside experienced management team is considered positive. Technical collaboration with Continental AG (German Tyre Company) assures adherence to the quality standards, which remains to be the core competence of the Company. Additionally, growing demand for tyres with emergence of new entrants in the automobile sector should bode well for business prospects of the company.
Despite volatility in macro-economic conditions, the company’s topline represented a steady growth. Margins remained relatively healthy at the gross and net level, though witnessed a constraint in comparison to previous periods on account of currency devaluation and increased cost of doing business. The company’s financial risk profile is reflected by comfortable coverages and slightly leveraged capital structure. Association of General Tyre with Bibojee Services (Private) Limited and Pakistan Kuwait Investment Company Limited is a consideration.
The ratings are dependent on the management’s ability to uphold the company’s leading position, while benefiting from positive demand fundamentals; Perceptive financial policy to rationalize capital structure amidst expansion is critical. Meanwhile, sustenance of margins in context of certain duties/tax protections is important.
For more information, contact:
Analyst
The Pakistan Credit Rating Agency Limited (PACRA)
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Lahore – Pakistan
Tel: +9242 586 9504 -6
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Email: hammad.rashid@pacra.com
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