Indus Motor Financial Analysis

The Islamia University Of Bahawalpur

Indus Motor Financial Analysis

The Islamia University Of Bahawalpur

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

Indus Motor Financial Analysis

The Islamia University Of Bahawalpur

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 and host 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, we have 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 of Pakistan 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.
Indus Motor Financial Analysis The Islamia University Of Bahawalpur

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:
Indus Motor Financial Analysis The Islamia University Of Bahawalpur

COMPANY REGISTRATION NUMBER NATIONAL TAX NUMBER (NTN) STATUS OF THE COMPANY Listed on Karachi Stock Exchange (Guarantee) Ltd Lahore Stock Exchange (Guarantee) Ltd Islamabad Stock Exchange (Guarantee) Ltd

0020742 0676546-7

BANKERS Askari Bank Limited Bank Alfalah Limited Barclays Bank PLC Pakistan Bank Al-Habib Limited Citibank N.A. Habib Bank Limited Habib Metropolitan Bank Limited HSBC Bank Middle East Limited MCB Bank Limited National Bank of Pakistan NIB Bank Limited Soneri Bank Limited Standard Chartered Bank (Pakistan) Limited The Bank of Tokyo-Mitsubishi UFJ, Limited United Bank Limited AUDITORS A.F. Ferguson & Co. Chartered Accountants State Life Building No. 1-C, I.I. Chundrigar Road, Karachi. LEGAL ADVISOR A.K. Brohi & Company Mansoor Ahmed Khan & Co.
Indus Motor Financial Analysis The Islamia University Of Bahawalpur

Mahmud & Co. Sayeed & Sayeed Co.

SHARE REGISTRAR Noble Computer Services (Pvt.) Ltd., First Floor, House of Habib Building, (Siddiqsons Tower), 3 Jinnah Cooperative Housing Society, Main Shahrah-e-Faisal Karachi-75350. PABX: (92-21) 34325482-87, Fax (92-21) 34325442 Email: ncsl@noble-computers.com

ADDRESS OF HEAD OFFICE / REGISTERED OFFICE / FACTORY Plot No. N.W.Z/1/P-1, Port Qasim Authority, Bin Qasim, Karachi. Phone: (PABX) (92-21) 34720041-48 (UAN) (92-21) 111-TOYOTA (869-682) Fax: (92-21) 34720056 Email: customer.relations@toyota-indus.com

MEMBERSHIPS Pakistan Automotive Manufacturers Association (PAMA) The Overseas Investors Chamber of Commerce & Industry (OICCI) Karachi Chamber of Commerce & Industry (KCCI) Pakistan Business Council (PBC)

ASSOCIATED COMPANIES Toyota Motor Corporation, Japan Toyota Tsusho Corporation, Japan Thal Limited
Indus Motor Financial Analysis The Islamia University Of Bahawalpur

Habib Insurance Co. Limited Shabbir Tiles & Ceramics Ltd. Makro-Habib Pakistan Ltd. Habib 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
Indus Motor Financial Analysis The Islamia University Of Bahawalpur

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

Indus Motor Financial Analysis

The Islamia University Of Bahawalpur

PRODUCTS

Corolla COURE HILUX LAND CRUISER PRADO

Current Ratio:
Current Asset / Current Liabilities Ratio

2007
1.82

13,560,329/7,410,926

2008
2.56

9,664,784/3,779,631

2009
1.69

16,715,319/9,884,850

2010
1.67

23791253/14224866

2011
1.84

22587737/12260958

Comments: As we know Current ratio determines short-term debt paying ability generally 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:
Indus Motor Financial Analysis The Islamia University Of Bahawalpur

Marketable Securities + Cash / Current Liabilities

Ratio 1.15 1.16 0.98

2007 2008 2009 2010

1.11

8543263/7410926 4328585/3779631 9131166/9884850 15755980/14224866

2011
0.72

8812199/12260958

Debt to Equity Ratio:

Total Liabilities / Total Stockholder's Equity Ratio

2007
0.92

7,410,926/8,043,975

2008
0.14

1,332,832 /9,436,340

2009
0.17

1,736,631/ 10,296,973

2010
1.15

14550663/12587650

2011
1.79

25414970/14119648

Working Capital:
Indus Motor Financial Analysis The Islamia University Of Bahawalpur

Current Asset - Current Liabilities

Rupees

2007
6149403

13,560,329 - 7,410,926

2008
5885153

9,664,784 - 3,779,631

2009
6830469

16,715,319 - 9,884,850

2010
9566387

23791253 - 14224866

2011
10326779

22587737 - 12260958

Sales To Working Capital:

Net Sales / Working Capital Times 39061226/6149403

2007
6.35

008 2009
5.54

41423843/5885153 37,864,604/6830469

7.03

2010
6.28

60,093,139/9566387

2011
5.95

61702677/10326779

Indus Motor Financial Analysis

The Islamia University Of Bahawalpur

Debt Ratio:
Total Liability / Total Asset Times 7,410,926/15,665,050

2007
0.47

2008
0.31

4,311,769/13,748,109

2009
0.50

10,388,550/20,685,523

2010
0.54

14550663/27138278

2011
0.47

12714970/26834618

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 34,620,632/2,859,951

2007
12.10

Indus Motor Financial Analysis

The Islamia University Of Bahawalpur

2008
14.24

37,575,356/2,637,629

2009
8.69

35,540,418/4,088,858

2010
10.63

55236625/5198367

2011
10.13

57613542/5690052

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 365/12.10 365/14.24 365/8.6 9 30.16 25.63

2007 2008 2009

42.00

2010 2011

365/10.63 365/10.13 Indus Motor Financial Analysis

34.33 36.03 The Islamia University Of Bahawalpur

Total asset Turnover Ratio:

Sales / Total Asset Times 39,061,226/15,665,050

2007
2.49

2008
3.01

41,423,843/13,748,109

2009
1.83

37,864,604/20,685,523

2010 2011

60,093,139/26834618 61702677/27138278

2.23 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 365/2.49 365/3.01 365/1.83 365/2.23 365/2.27 146.58 121.26 199.45 163.67 160.79

2007 2008 2009 2010 2011

Return on Asset Ratio:

Indus Motor Financial Analysis

The Islamia University Of Bahawalpur

Net Income / Average Total Asset

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

2007
0.17

2008
0.16

2290845/13748109

2009
0.06

1385102/20685523

2010
0.13

3443403/27138278

2011
0.10

2743384/26834618

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 1,385,102/10,296,973

2007
0.34

2008
0.24

2,290,845/9,436,340

2009
0.13

2,745,701/8,043,975

2010
0.27

3443403/12587615

Indus Motor Financial Analysis

The Islamia University Of Bahawalpur

2011
0.19

2743384/14119648

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 39061226/20093852

2007
1.94

2008
10.27

41423843/4033762

2009
9.62

37864604/3934473

2010
18.07

60093139/3324333

2011
14.60

61702677/4225710

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

Gross Profit Margin Ratio:

Gross Profit / Sales

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

2007
0.11

Indus Motor Financial Analysis

The Islamia University Of Bahawalpur

2008
0.092

3,848,487/41,423,843

2009
0.06

2,324,186/37,864,604

2010
0.08

4856514/60093139

2011
0.07

4089135/61702677

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
2,745,701/39,061,226

2007
0.07

2008
0.055

2,290,845/41,423,843

2009
0.036

1,385,102/37,864,604

2010
0.057

3443403/ 60093139

2011
0.044

2743384/ 61702677

Indus Motor Financial Analysis

The Islamia University Of Bahawalpur

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.

Indus Motor Financial Analysis

The Islamia University Of Bahawalpur

Indus Motor Financial Analysis

The Islamia University Of Bahawalpur

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

Indus Motor Financial Analysis

The Islamia University Of Bahawalpur

THE ISLAMIA UNIVERSITY OF BAHAWALPUR

Indus Motor Financial Analysis

The Islamia University Of Bahawalpur