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Indus Motor Financial Analysis The Islamia University Of Bahawalpur


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ACKNOWLEDGEMENT

I WOULD START THIS REPORT BY SAYING THAT ALLAH ALMIGHTY HAS

GRACED ME WITH ENOUGH ENERGY TO WORK IN THIS PERIOD AND

COMPLETE THIS REPORT.

FIRST OF ALL I WOULD LIKE TO ACKNOWLEDGE OUT PARENTS WHO

ENCOURAGED ME TO-DO M.COM.

THEIR PRAYERS ENABLE ME TO COMPLETE THIS REPORT. I WOULD

REALLY LIKE TO ACKNOWLEDGE OUR TEACHER MR.FARUKH

NAVEED, WHO PROVIDED ME OPPORTUNITY TO WORK ON THIS

REPORT. HE REALLY ENCOURAGES ME TO COMPLETE THIS REPORT.HE PROVIDED US HELPFUL KNOWLEDGE REGARDING THIS REPORT



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INDUSTORY INTRODUCTION:

The automotive industry rightly prides itself on being recognized as the mother of allindustries.

In its folds it carries many different kinds of vehicles to provide mobility to people and goods. While

they may appear to be simple machines, their design andmanufacturing have much deeper roots in all

the known technologies. In-depthknowledge and skillful application of mechanical, electrical,

electronics, chemical andhost of other technologies culminate in achievement and improvement of

the manufacturing base of a country, by focusing on a single product the automobile. Thisthen

provides an opportunity to produce a large number of goods and services for consumption of the

entire community. Use of the word mother for automotive industryis therefore the most appropriate

description to define the nature and importance of theindustry.In recent years, wehave witnessed that

the industrialization of South East Asian countries greatly depend on the development of their

automotive industry. Similarly, automotive industry acted as a catalyst in the overall growth of the

industry in Japan and Korea and the consequent wellbeing of their citizens

COMPANY INTRODUCTION:

The company was incorporated in Pakistan as a public limited company in December 1989 and

started

Commercial production in May 1993. The shares of company are quoted on the stock exchanges ofPakistan i.e. Karachi, Lahore and Islamabad stock exchanges. The stock code for dealer in equity

shares of Indus Motor Company Limited at KSE, LSE and ISE is INDU. Toyota Motor Corporation

and Toyota Tsusho Corporation have 25 % stake in the company equity. The majority shareholder is

the House of Habib. Indus Motor Company (IMC) is a joint venture between the House of Habib,

Toyota Motor Corporation Japan (TMC), and Toyota Tsusho Corporation Japan (TTC) for

assembling, progressive manufacturing and marketing of Toyota vehicles in Pakistan since July 01,

1990.IMC is engaged in sole distributorship of Toyota and Daihatsu Motor Company Ltd vehicles in

Pakistan through its dealership network. IMC's production facilities are located at Port Bin Qasim

Industrial Zone near Karachi in an area measuring over 105 acres. Indus Motor Companys plant is

the only manufacturing site in the world where both Toyota and Daihatsu brands are being

manufactured. Heavy investment was made to build its production facilities based on state of art

technologies. To ensure highest level of productivity world renowned Toyota Production Systems

areimplemented.IMC's Product line includes 6 variants of the newly introduced Toyota Corolla,

Toyota Hilux Single Cabin 4x2 and 4 versions of Daihatsu Cuore. We also have a wide range of

imported vehicles.



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VISION STATEMENT:

TO BE THE MOST RESPECTED AND SUCCESSFUL ENTERPRISE, DELIGHTING

CUSTOMERS WITH A WIDE RANGE OF PRODUCTS AND SOLUTIONS IN THE

AUTOMOBILE INDUSTRY WITH THE BEST PEOPLE AND THE BEST TECHNOLOGY".

MISSION STATEMENT:

TO PROVIDE SAFE & SOUND JOURNEY. TOYOTA IS DEVELOPING VARIOUS NEW

TECHNOLOGIES FROM THE PERSPECTIVE OF ENERGY SAVING AND DIVERSIFYING

ENERGY SOURCES. ENVIRONMENT HAS BEEN FIRST AND MOST IMPORTANT ISSUE IN

PRIORITIES OF TOYOTA AND WORKING TOWARD CREATING A PROSPEROUS SOCIETY

AND CLEAN WORLD.

History:

Indus Motor Company (IMC) is a joint venture between the House of Habib , Toyota Motor

Corporation Japan (TMC) , and Toyota Tsusho Corporation Japan (TTC) for assembling, progressive

manufacturing and marketing of Toyota vehicles in Pakistan since July 01, 1990. IMC is engaged in

sole distributorship of Toyota and Daihatsu Motor Company Ltd. vehicles in Pakistan through its

dealership network.

The company was incorporated in Pakistan as a public limited company in December 1989 and

started commercial production in May 1993. The shares of company are quoted on the stock

exchanges of Pakistan. Toyota Motor Corporation and Toyota Tsusho Corporation have 25 % stake

in the company equity. The majority shareholder is the House of Habib. IMC's production facilities

are located at Port Bin Qasim Industrial Zone near Karachi in an area measuring over 105 acres.

Indus Motor company's plant is the only manufacturing site in the world where both Toyota and

Daihatsu brands are being manufactured. Heavy investment was made to build its production

facilities based on state of art technologies. To ensure highest level of productivity world-renowned

Toyota Production Systems are implemented. IMC's Product line includes 6 variants of the newly

introduced Toyota Corolla, Toyota Hilux Single Cabin 4x2 and 4 versions of Daihatsu Cuore. We

also have a wide range of imported vehicle

COMPANY INFORMATION:



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COMPANY REGISTRATION NUMBER 0020742

NATIONAL TAX NUMBER (NTN) 0676546-7

STATUS OF THE COMPANY

Listed on

Karachi Stock Exchange (Guarantee) Ltd

Lahore Stock Exchange (Guarantee) Ltd

Islamabad Stock Exchange (Guarantee) Ltd

BANKERS

ari Bank Limited

k Alfalah Limited

clays Bank PLC Pakistan

k Al-Habib Limited

bank N.A.

ib Bank Limited

ib Metropolitan Bank Limited

BC Bank Middle East Limited

B Bank Limitedonal Bank of Pakistan

Bank Limited

eri Bank Limited

ndard Chartered Bank (Pakistan) Limited

Bank of Tokyo-Mitsubishi UFJ, Limited

ted Bank Limited

AUDITORS

. Ferguson & Co.rtered Accountants

e Life Building No. 1-C,

Chundrigar Road,

achi.

LEGAL ADVISOR

K. Brohi & Company

nsoor Ahmed Khan & Co.

http://www.kse.com.pk/http://www.lse.com.pk/http://www.isb.com.pk/http://www.kse.com.pk/http://www.lse.com.pk/http://www.isb.com.pk/


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hmud & Co.

eed & Sayeed Co.

SHARE REGISTRAR

ble Computer Services (Pvt.) Ltd.,t Floor, House of Habib Building,

diqsons Tower), 3 Jinnah Cooperative Housing Society,

n Shahrah-e-Faisal

achi-75350.

BX: (92-21) 34325482-87, Fax (92-21) 34325442

ail: [email protected]

ADDRESS OF HEAD OFFICE / REGISTERED OFFICE / FACTORY

No. N.W.Z/1/P-1, Port Qasim Authority,

Qasim, Karachi.

ne: (PABX) (92-21) 34720041-48

AN) (92-21) 111-TOYOTA (869-682)

: (92-21) 34720056

ail: [email protected]

MEMBERSHIPS

istan Automotive Manufacturers Association (PAMA)

Overseas Investors Chamber of Commerce & Industry (OICCI)

achi Chamber of Commerce & Industry (KCCI)

istan Business Council (PBC)

ASSOCIATED COMPANIES

ota Motor Corporation, Japan

ota Tsusho Corporation, Japan

l Limited

mailto:[email protected]:[email protected]


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ib Insurance Co. Limited

bbir Tiles & Ceramics Ltd.

kro-Habib Pakistan Ltd.

ib Metropolitan Bank Limite

Board of Directors

ALI S. HABIB

Parvez Ghias

Mr. Raza Ansari

FARHAD ZULFICAR

Mr. MohamedAli R. Habib

Mr. Koji Hyodo

Mr. Mitoshi Okimoto

HIROYUKI NIWA

TAKAHIRO IWASE

MANAGEMENT TEAM:

Mr. Ali S. Habib

Chairman

Mr. K Hyodo

Vice Chairman

Mr. Parvez Ghias

Chief Executive Officer

INFORMATION TECHNOLOGY

Mr. Adnan Qazi

Chief Information Officer

FINANCE

Mr. Muhammad Faisal

Chief Financial Officer



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Mr. Muhammad Faisal

Company Secretary

HUMAN RESOURCE

Mr. Salim Azhar

Director

LOGISTICS, ADMINISTRATION & COMMERCIAL

Mr. Salim Azhar

Director

MANUFACTURING

Mr. M. Okimoto

Director

SALES & MARKETING

Mr. Raza Ansari

Director

INTERNAL AUDIT

Mr. Ahmed Waseem Khan

Chief of Internal Audit

CUSTOMER RELATIONS

Mr. Adnan Qazi

Head of Customer Relat



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PRODUCTS

Corolla

COURE

HILUX

LAND CRUISER PRADO

Current Ratio:

Current Asset / Current Liabilities Ratio

2007 13,560,329/7,410,926

1.82

2008 9,664,784/3,779,631

2.56

2009 16,715,319/9,884,850

1.69

2010 23791253/14224866

1.67

2011 22587737/12260958

1.84

Comments: As we know Current ratio determines short-term debt paying abilitygenerally the higher of current ratio the more liquid the firm is considered to be.

As there is a fluctuation in the current ratio of Indus motor that indicate the

company having fluctuation in short term debt paying ability.

CASH RATIO:



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Current Asset - Current Liabilities Rupees

2007 13,560,329 - 7,410,926

6149403

2008 9,664,784 - 3,779,631

5885153

2009 16,715,319 - 9,884,850

6830469

2010 23791253 - 14224866

9566387

2011 22587737 - 12260958

10326779

Sales To Working Capital:

Net Sales / Working Capital Times

2007 39061226/6149403

6.35

008 41423843/5885153 7.03

2009 37,864,604/6830469

5.54

2010 60,093,139/9566387

6.28

2011 61702677/10326779

5.95



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Debt Ratio:

Total Liability / Total Asset Times

2007 7,410,926/15,665,050

0.47

2008 4,311,769/13,748,109

0.31

2009 10,388,550/20,685,523

0.50

2010 14550663/27138278

0.54

2011 12714970/26834618

0.47

Comments: The debt ratio indicates the percentages of assets financed by

creditors, and it help to determines how well creditors are protected in case of

insolvency we know that lower this ratio better the company position ,this ratio

is improving each year it means that the lower the proportion of assets that

have been financed by creditors. But there is a decrease in 2011 as compared to

2010.

Inventory turnover :

CGS / Inventory Times

2007 34,620,632/2,859,951

12.10



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2008 37,575,356/2,637,629

14.24

2009 35,540,418/4,088,858

8.69

2010 55236625/5198367

10.63

2011 57613542/5690052

10.13

Comments: Inventory Turnover ratio depicts how quickly the company is able to

sell off its inventory. There is decrease in the ratio which indicates the deficiency

of the company.

Inventory turnover in days:

365 / Inventory Turnover Days

2007 365/12.10 30.16

2008 365/14.24 25.63

2009 365/8.6 9

42.00

2010 365/10.63 34.33

2011 365/10.13 36.03



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Total asset Turnover Ratio:

Sales / Total Asset Times

2007 39,061,226/15,665,0502.49

2008 41,423,843/13,748,109

3.01

2009 37,864,604/20,685,523

1.83

2010 60,093,139/26834618 2.23

2011 61702677/27138278 2.27

Comments: This ratio measure the activity of assets and ability of firm to

generate sales through the use of assets .As we know that it is beneficial that

this ratio would be higher that show our assets efficiency. There is variation in

each year. This is due to the fact that the company has been investing in its

fixed assets, mainly in plant, machinery and infrastructure up gradation.

Total asset Turnover in days:

365 / Total Asset Turnover Days

2007 365/2.49 146.58

2008 365/3.01 121.26

2009 365/1.83 199.45

2010 365/2.23 163.67

2011 365/2.27 160.79

Return on Asset Ratio:



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Net Income / Average Total Asset Ratio

2007 2,745,701/15,665,050

0.17

2008 2290845/13748109

0.16

2009 1385102/20685523

0.06

2010 3443403/27138278

0.13

2011 2743384/26834618

0.10

Comments: Return on assets is decreasing year by year which indicating

utilization of assets to create profit is decreasing. Firm is not utilizing its assets

to create profits

Return on Equity:

Net Income / Shareholder`s Equity Ratio

2007 1,385,102/10,296,973

0.34

2008 2,290,845/9,436,340

0.24

2009 2,745,701/8,043,975

0.13

2010 3443403/12587615

0.27



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2011 2743384/14119648

0.19

Comments: Return on equity is also decreasing with the passage of years which

is not batter for Indus motors.

SALES TO FIXED ASSETS:

Net Sales / Fixed Assets Ratio

2007 39061226/20093852

1.94

2008 41423843/4033762

10.27

2009 37864604/3934473

9.62

2010 60093139/3324333

18.07

2011 61702677/4225710

14.60

Comments: There is a fluctuation in the sales to fix asset ratio of Indus motors.

Gross Profit Margin Ratio:

Gross Profit / Sales Ratio

2007 4,440,594/ 39,061,226

0.11



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2008 3,848,487/41,423,843

0.092

2009 2,324,186/37,864,604

0.06

2010 4856514/60093139

0.08

2011 4089135/61702677

0.07

Comments: Indus Motor gross profit is decreasing every year which indicates

that it sales are increasing but due to high cost there is decrease in gross profit.

Net Profit Margin Ratio:

Net Income / Sales Ratio

2007 2,745,701/39,061,226

0.07

2008 2,290,845/41,423,843

0.055

2009 1,385,102/37,864,604

0.036

2010 3443403/ 60093139

0.057

2011 2743384/ 61702677

0.044



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Comments: Indus Motor gross profit is decreasing every year which indicates

that Indus motor facing bad business and earns low income percentage to its

sales.



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REPORT

ON

FINANCIAL STATEMENT ANALYSIS

OF

INDUS MOTORS

SUBMITTED TO:

MR. FARUKH NAVEED

SUBMITTED BY:

ZEESHAN ALYAS

ROLL NO. 32

M.COM 4TH MORNING

SESSION 2010-2012

DEPARTMENT OF COMMERCE



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THE ISLAMIA UNIVERSITY OF BAHAWALPUR

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