Ghandhara Nissan reports 91% surge in profit

Better result comes in the wake of higher other income

KARACHI: Ghandhara Nissan registered a profit of Rs1.35 billion in fiscal year 2017-18, up 91% from earnings of Rs0.7 billion in the previous year, according to a notice sent to the Pakistan Stock Exchange (PSX) on Wednesday.

The profit went up significantly despite a decrease in revenues of the automobile manufacturer. Earnings per share (EPS) soared to Rs29.92 compared to last year’s EPS of Rs15.96, showcasing an increase of 87.5%.

The better result has been mainly due to higher other income, which jumped to Rs861 million from Rs26 million last year.

The company is reviving its idle manufacturing plant after receiving Brownfield investment status from the government in the aftermath of the Auto Development Policy 2016-21.

Under the Brownfield category, Ghandhara Nissan will be allowed to import auto parts at lower rates of customs duty for three years.

Earlier this year, the company disclosed its renewed collaboration with Japanese Nissan Motor Company for assembling Datsun cars by next year. Its capacity is expected to be 30,000 units.

The company launched X200 pickup in April this year with a capacity of 5,000 units per annum on a single-shift basis.

Revenues of the company dropped 24% from Rs6.5 billion last year to Rs4.9 billion this year. Gross profit dipped considerably by 35% from Rs1.21 billion to Rs778 million.

Ghandhara Nissan was set up on August 8, 1981 in Pakistan as a private limited company and was later converted into a public limited company on May 24, 1992.

It started vehicle production in December 1996, but after about 14 years, production activities came to a halt. Its car assembly plant has remained inactive since 2010.

In October last year, a Ghandhara Nissan delegation visited the Board of Investment (BoI) to meet its officials and discuss the possibility of reviving the company’s assembly plant under the new incentive-filled auto policy.

A presentation was given to the BoI secretary on the manufacturing of Datsun cars in Pakistan by injecting a fresh investment of Rs4.5 billion in the first four years of operation. The project is expected to create 1,810 new jobs.

The company will resume vehicle assembly with the purchase of auto parts and technical assistance from Japan’s Nissan Motor Company. Nissan currently manufactures vehicles in 20 countries around the world including Japan.

Published in The Express Tribune, September 20^th, 2018.

Like Business on Facebook, follow @TribuneBiz on Twitter to stay informed and join in the conversation.