The current governments appetite for business-led growth is well known. There are, of course, externalities associated with business expansion, which should necessarily translate into economic uplifting and welfare. Welfare has different meanings; for business entities it is better margins. The appreciation of the rupee (for whatever reasons it has happened) has in fact begun to show signs of business welfare for those on the import front. Lets take a look at one such example, the Gandhara Nissan Limited (GNHL).
The company posted earnings of Rs95 million for 9M FY14 against a loss of Rs38 million in the corresponding period of last year. Reportedly, this growth was substantially triggered in 3Q FY14, the period during which there was significant rupee appreciation. Conversely, there was also a corresponding depreciation in the value of JPY, which may have further strengthened the companys earnings growth. Needless, one cannot discount other factors that have also been contributors: sales have picked up 59 percent year on year, while there are further orders of up to 166 units per quarter already in line.
According to the companys reports, "improved market conditions" have led to better profits this year. The corresponding periods for comparison are, of course, those when the previous government was still in place. Disclaimer: this does not come as attribution to any of the governments and only reflects periods of analysis of the companys accounts. Sales of locally assembled trucks also rose significantly in every quarter this year. GNHL is projected to post improved earnings over the coming months on account of higher sales of UD vehicles and also because of earnings expected from the incorporation of Gandhara DF (Pvt) Ltd, a wholly owned subsidiary of the company. Subsequent to the incorporation, a range of Dong Feng vehicles will be locally assembled and are likely to be launched by 3Q FY15.
More importantly, given that GNHL is one of the few truck assemblers in the country, sales may also pick up (or already have) with the initiation of mega infrastructure-related projects, something that the current government has always been known for.