Press Release

VIS Reaffirms Entity Ratings of Al-Ghazi Tractors Limited

Karachi, September 18, 2023: VIS Credit Rating Company Ltd. (VIS) has reaffirmed the entity ratings of Al-Ghazi Tractors Limited (‘AGTL’ or ‘the Company’) at ‘A+/A-1’ (Single A Plus/A-One). The medium to long-term rating of ‘A+’ reflects good credit quality, protection factors are adequate. Risk factors may vary with possible changes in the economy. The short-term rating of ‘A-1’ indicates high certainty of timely payment, Liquidity factors are excellent and supported by good fundamental protection factors. Risk factors are minor. Outlook on the assigned ratings is ‘Stable’. Previous rating action was announced on June 2, 2022.

The ratings incorporate strong sponsors’ profile of AGTL where majority shareholders are two multinational conglomerates; Al Futtaim Industries Company LLC and CNH Industrial (CNHI). Despite inflationary pressure and import restrictions, the company’s unit sales increased by 10% from CY21 to CY22, resulting in higher net sales. AGTL’s market share improved to 45% in CY22 from 33% in CY21. AGTL credited the increase in market share to farmer support programs, enhanced dealer alliances and penetration in new regions. However, supply chain hurdles and increase in fuel prices enhanced manufacturing and operating costs resulting in lower net profit due to pressure on margins. Meanwhile, downturn in sales volume and performance was witnessed in 1QCY23.

Funding from operations (FFO) improved consistently from CY19 to CY21. However, in CY22, FFO decreased by 17% impacted by lower profitability. However, coverages have remained strong. Increase in payables to CNHI and security deposits received from customers impacted current ratio on a timeline basis. Gearing ratio remained manageable. At end-1QCY23, the company utilized customer advances and trade creditors to finance working capital needs thereby increasing debt leverage by end-1QCY23. Government’s continuing focus on the agriculture sector, relaxation on import restrictions, with largely intact demand dynamics are expected to bode well for the sector, going forward.

Ratings remain dependent upon maintaining margins, debt and profitability levels commensurate with the assigned ratings in the ongoing year and ahead.

For further information on this rating announcement, please contact the undersigned at 021-35311861-64 (Ext. 207) or email at

Sara Ahmed

VIS Entity Rating Criteria: Industrial Corporates (May 2023)

VIS Rating Scale:

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