PROFESSIONAL PROJECT INDUS MOTOR COMPANY LIMITED

Mansoor Humayun Student No. 623/ BBA-Hons 8th Semester (Evening) 2006-2010

Submitted to the

Department Of Management Sciences UNIVERSITY OF EDUCATION, LAHORE OKARA CAMPUS

Indus Motor Company Ltd (Financial Analysis)

Project Supervisor: Mr. Rai Imtiaz Hussain

Submitted by: Mansoor Humayun 623-E BBA(Hons) 8th Semester 2006-2010

02/03/2010

In the Name of Allah the Most Gracious, the Most Beneficent and the Most Merciful

Read (O Prophet,) in the name of yours Rub, Who created. Created man from a clot of congealed blood. Read; and your Lord is Most Generous, Who taught knowledge by the pen; taught man what he did not know.
(Al-Alaq, Surah # 96, Ayats 1-4, Para # 30)

DEDICATION
I would like to dedicate my work, “As a little token of gratitude for my Loving Parents. The wisdom and love of my parents enables me to strive towards a legacy of honor. Without their knowledge, wisdom and guidance, I would not have the goals, I have to strive and be the best to reach my dreams! To my Siblings for their gentle encouragement and valuable support. To my little and lovely Nephew.”

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ACKNOWLEDGEMENT
I find no words at my command to express my deepest sense of gratitude to the Almighty ALLAH, the most Gracious, the most Merciful and the most Beneficent, who gives me the talent to complete this task successfully, He is the one who gave me courage to do this.

I am much obliged to my loving Parents whose prayers have enabled me to reach this stage. At this occasion I can’t forget my parents for their guidance at the crucial moments of my life.

Next I owe my bottomless thanks to our esteemed resource person Mr. Rai Imtiaz Hussain who directed me well and was always available to clear my doubts and misunderstandings through out this project.

It is also a matter of immense pleasure for me to express my gratitude to the Faculty of Department of Management Sciences and professional project’s evaluation Committee of the University of Education for giving us their precious time and tried their best as helpful as possible.

I wish to thanks all my Friends and Classmates who really helped me by giving suggestions and critical review of the manuscript.

Obviously this achievement was not possible without all of you.

Mansoor Humayun

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FORWARDING SHEET
This professional project of Mansoor Humayun (Student No 623) entitled “Indus Motor Company Limited (Financial Analysis)” has been completed under by the guidance and supervision for the fulfillment of requirement for the 8th Semester of BBA (Hons) degree program of University of Education Lahore, Okara campus.

Dated: _______________

__________________ Supervisor

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DISCLAIMER
The purpose of the project is to introduce the subject matters and provide a general idea and financial information about the Indus Motors Company Limited. All the material included in this document is based on data/information gathered from various sources and is based on certain assumptions. Although, due care, diligence and reasonable efforts has been taken to compile this project, the contained information may vary due to any change in any of concerned factors and the actual results may differ substantially from the presented information.

Project does not assume any liability for any financial or other loss resulting from this document in consequence of undertaking this activity. Therefore the content of this document should not be relied upon for making any decision, investment or otherwise. The content of the information does not bind “PROJECT MAKER” in any legal or other form.

Project does not also assume any rectifications, errors, omission and misprinting between the electronic and printed version of document.

Financial Analysis of IMC doest not accept any responsibility for the validity and correctness of the information published on its project.

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Table of Contents
Page No EXECUTIVE SUMMARY 1 4 5 5 6 7

CHAPTER NO 1
1.1 1.2 1.3 1.4

INTRODUCTION

REASON FOR CHOOSING THE ORGANIZATION AIMS AND OBJECTIVES OF THE PROJECT AUTOMOBILE INDUSTRY IN PAKISTAN CURRENT SITUTATION OF CAR INDUSTRY

CHAPTER NO 2
2.1 2.2 HISTORY PRODUCT LINE 2.2.1 COROLLA 2.2.2 CUORE 2.2.3 HILUX 2.3

INDUS MOTOR COMPANY LIMITED

9 10 11 11 12 12 12 12 12 13 13 13 13 14 15 16 16 16 17 17 17 18

COMPANY’S PROFILE 2.3.1 NAME OF COMPANY 2.3.2 INDUSTRY TYPE 2.3.3 MAJOR INVESTORS 2.3.4 SLOGAN 2.3.5 VISION 2.3.6 MISSION 2.3.7 CORE VALUES 2.3.8 STRATEGIC OBJECTIVES

2.4

COMPANY’S INFORMATION 2.4.1 BOARD OF DIRECTORS 2.4.2 BANKERS 2.4.3 AUDITORS 2.4.4 LEGAL ADVISORS 2.4.5 REGISTRAR 2.4.6 FACTORY/REGISTERED OFFICE vii

Page No 2.4.7 CHIEF FINANCIAL OFFICER 2.4.8 COMPANY SECRETARY 2.4.9 AUDIT COMMITTEE MEMBERS 18 18 18

CHAPTER NO 3
3.1 SWOT ANALYSIS

COMPANY’S ANALYSIS

19 20 20 22 23 23 24 25 25 26 26 27 28 28 29 29 29

3.1.1 STRENGTHS 3.1.2 WEAKNESSES 3.1.3 OPPORTUNITIES 3.1.4 THREATS 3.2 PEST ANALYSIS 3.2.1 POLITICAL FACTORS 3.2.2 ECONOMICAL FACTORS 3.2.3 SOCIAL FACTORS 3.2.4 TECHNOLOGICAL FACTORS 3.3 BOSTON CONSULTING GROUP MATRIX 3.3.1 STARS 3.3.2 CASH COWS 3.3.3 QUESTION MARK 3.3.4 DOGS 3.4 TOYOTA COROLLA BCG MATRIX

CHAPTER NO 4
4.1 4.2 4.3 4.4 4.5 4.6 4.7 4.8 NET SALES

INCOME STATEMENT ANALYSIS

31 32 33 34 35 36 37 38 39

CONDENSED INCOME STATEMENT

COST OF GOODS SOLD GROSS PROFIT OPERATING EXPENSES OPERTAING PROFIT OTHER OPERATING EXPENSES OTHER OPERATING INCOME viii

Page No 4.9 PROFIT BEFORE INTEREST AND TAX 40 41 42 43 44

4.10 FINANCE COST 4.11 PROFIT BEFORE TAXATION 4.12 TAXATION 4.13 PROFIT AFTER TAXATION

CHAPTER NO 5
5.1 5.2 5.3 5.4 5.5 5.6 5.7

BALANCE SHEET ANALYSIS

45 46 47 48 49 50 51 52

CONDENSED BALANCE SHEET CURRENT ASSETS CURRENT LIABLITIES TOTAL FIXED ASSETS TOTAL ASSETS LONG TERM DEBT TOTAL LIABILITIES AND EQUITY

CHAPTER NO 6
6.1

RATIO ANALYSIS

53 54 54 55 56 57 58 59 59 60 61 62 63 64 64 65

SHORT TERM DEBT PAYING ABILITY 6.1.1 NET WORKING CAPITAL 6.1.2 CURRENT RATIO 6.1.3 ACID TEST RATIO 6.1.4 CASH RATIO 6.1.5 CASH FLOW FROM OPERATIONS RATIO

6.2

LONG TERM DEBT PAYING ABILITY 6.2.1 TIME INTEREST EARNED RATIO 6.2.2 FIXED CHARGED COVERAGE RATIO 6.2.3 DEBT RATIO 6.2.4 DEBT EQUITY RATIO 6.2.5 DEBT TO TANGIBLE NETWORTH

6.3

SHORT TERM LIQUIDITY 6.3.1 DAY’S SALES IN A/R 6.3.2 ACCOUNTS RECEIVABLE TURNOVER ix

Page No 6.3.3 DAY’S SALES IN INVENTORY 6.3.4 INVENTORY TURNOVER 6.4 PROFITABILITY INDEX 6.4.1 NET PROFIT MARGIN 6.4.2 TOTAL ASSETS TURNOVER 6.4.3 RETURN ON ASSETS 6.4.4 OPERATING INCOME MARGIN 6.4.5 OPERATING ASSETS TURNOVER 6.4.6 RETURN ON OPERATIN ASSETS 6.4.7 SALES TO FIXED ASSETS 6.4.8 RETURN ON EQUITY 6.4.9 GROSS PROFIT MARGIN 6.5 INVESTOR’S ANALYSIS 6.5.1 EARNING PER SHARE 6.5.2 PRICE EARNING RATIO 6.5.3 DIVIDEND PAYOUT RATIO 6.5.4 DIVIDEND YIELD RATIO 66 67 68 68 69 70 71 72 73 74 75 76 77 77 78 79 80

CONCLUSION

81

REFRENCES

83

ANNEXURES

85

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Table of Annexure
Page No I. SUMMARIZED INCOME STATEMENT I.I COMPARATIVE CHAIN BASE INCOME STAEMENT I.II PERCENATGE COMPARATIVE CHAIN BASE INCOME STATEMENT I.III PERCENTAGE COMPARATIVE 2005 BASE INCOME STATEMENT I.IV VERTICAL COMMON SIZE INCOME STATEMENT 95 93 91 89 87

II.

SUMMARIZED BALANCE SHEET II.I COMPARATIVE CHAIN BASE BALANCE SHEET II.II PERCENTAGE COMPARATIVE CHAIN BASE BALANCE SHEET II.III PERCENTAGE COMPARATIVE 2005 BASE BALANCE SHEET II.IV VERTICAL COMMON SIZE BALANCE SHEET

98

101

104

106

108

III.

SHORT TERM DEBT PAYING ABILITY

110

IV.

LONG TERM DEBT PAYING ABILITY

112

V.

SHORT TERM LIQUIDITY

114

VI.

PROFITABILITY INDEX

116

VII.

INVESTOR’S ANALYSIS

119

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INDUS MOTOR COMPANY LIMITED PROFESSIONAL PROJECT

Executive Summary
Indus Motor Company is one of the Automobile Companies which formed with the help of house of Habib, Toyota Motor Corporation, Toyota Tsusho Corporation. It manufactures and imports cars and enjoys a healthy share in the market. It is competing with the Honda, Nissan, Suzuki and Mitsubishi. To sustain its lead IMC must maintain strategic competitive advantage which is its production strength, ability to produce quality cars with respect to low cost and research and development in hybrid and bio fuel cars. But recently company is in stabilization mode trying to improve its functional area, consolidation of resources and maintaining SCA. In my Opinion it is the best move made by IMC to survive the financial holocaust.

Operating Highlights:
For the Year ended June 30, 2009 Vehicle Sales: down 30.6% to 35,276 units

Vehicle Production: down 28.9% to 34,298 units

Net Revenues: down 8.6% to Rs. 37.9 billion

Profit after tax: down 39.5% to Rs.1.4 billion

Earning per share: down 39.5% to Rs. 17.6

Manpower: down 6.7% to 1,893 employees

Total assets: up 50.5% to Rs. 20.69 billion

Share holders' equity: up 9.1% to Rs. 10.3 billion UNIVERSITY OF EDUCATION OKARA CAMPUS 1

INDUS MOTOR COMPANY LIMITED PROFESSIONAL PROJECT

1) Short Term Debt Paying Ability
a) Net Working Capital b) Current Ratio c) Acid Test Ratio d) Cash Ratio e) Cash Flow from Operations Ratio
Times Rs (bn) Times Times Times

2005
3.51 1.46 1.05 0.88

2006
4.65 1.49 1.07 0.79

2007
6.15 1.83 1.44 1.15

2008
5.89 2.56 1.86 1.16

2009
6.83 1.69 1.28 0.98

0.12

0.28

0.38

(0.21)

0.66

2) Long Term Debt Paying Ability
a) Times Interest Earned b) Fixed Charged Coverage c) Debt Ratio d) Debt Equity Ratio e) Debt to Tangible Net worth
Times Times % % %

25.48 22.60 63.30 0.00 172.86

33.08 32.10 60.45 0.00 152.99

187.44 187.40 48.65 0.00 94.78

1284.23 1284.23 31.36 0.00 45.71

78.09 78.09 50.22 0.00 100.93

3) Short term Liquidity
a) Day’s Sales in Accounts Receivable b) Accounts Receivable Turnover c) Day’s Sales in Inventory d) Inventory Turnover
Times Days Times Days

13.09

24.89

15.86

18.90

26.02

27.89 11.80 42.20

14.66 15.55 29.20

23.01 5.57 37.38

19.32 10.92 45.49

14.03 14.20 28.36

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INDUS MOTOR COMPANY LIMITED PROFESSIONAL PROJECT

4) Profitability Ratio
a) Net Profit Margin b) Total Assets Turnover c) Return on Assets d) Operating Income Margin e) Operating Assets Turnover f) Return on Operating Assets g) Sales to Fixed Assets h) Return on Equity i) Gross Profit Margin
% Times % % Times % Times % %

2005
5.38 2.26 12.17 7.73

2006
7.52 2.23 16.74 9.93

2007
7.03 2.49 17.53 9.38

2008
5.53 3.01 16.66 7.40

2009
3.66 1.83 6.70 3.97

30.63

25.02

20.53

11.53

9.71

164.77 27.63 33.17 9.80

188.06 20.53 42.32 11.77

144.29 18.66 34.13 11.37

63.73 10.27 24.28 9.29

35.51 9.62 13.45 6.14

5) Investor’s Analysis
a) Earning Per Share b) Price Earning Ratio c) Dividend Payout Ratio d) Dividend Yield Ratio
Rs Times % %

18.89 4.76 52.94 11.11

33.70 5.67 35.61 6.28

34.93 8.75 37.22 4.26

29.15 6.86 36.02 5.25

17.62 6.11 56.75 9.28

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INDUS MOTOR COMPANY LIMITED PROFESSIONAL PROJECT

1.1 REASON FOR CHOOSING THE ORGANIZATION:
When I was informed that I would have to do the financial analysis of last five years of any listed company than the primary challenge for me was to choose the organization on which I can start my working. It was bit difficult and confusing for me to select the organization. I started brainstorming and came up with many well known organizations having large operations, both in Pakistan and Worldwide. After gathering data and relevant information I ended with three business sectors, Automobile industry, Textile industry and Tobacco industry. I choose best companies in their respective class, but after applying hindsight I decided to go with Automobile industry and the organization I selected was “Indus Motor Company Limited”.

1.2 AIMS AND OBJECTIVES OF THE PROJECT:
The main objectives and aims of this project are to analyze and evaluate the overall performance of the company by applying different conceptual models and discuss the liquidity, cash flow situation and produce informative report usable by the users of the statements assessing the financial position, performance and adaptability of the organization.

The performance evaluation is based on historic and current available data about the operations of the company. Under the constantly increasing competition in the business market, these analyses portray a very clear and informative picture to the investors, shareholders, regulators and other players in the stock market.

Finally the project draws conclusions based on my analysis about the current situation and the prospects of the Indus Motor Company Limited .

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INDUS MOTOR COMPANY LIMITED PROFESSIONAL PROJECT

1.3 AUTOMOBILE INDUSTRY IN PAKISTAN:
Auto market is one of the largest segments in world trade. Changing models, improving fuel efficiency, cutting costs and enhancing user comfort without compromising quality are the most important challenges of the auto industry in a fast globalizing world.

The automotive assembling in Pakistan started in 1950 when National Motors Limited, a public limited company and the pioneer in the industry, came into existence, established by General Motors of USA. National Motors assembled passenger cars as well as commercial vehicles which carried “General Motors” brands such as Bedford, Vauxhall, Chevrolet.

The indigenized parts in these vehicles did not exceed 20% with only exception of Bed Ford trucks with a deletion level of 80%. By the end of 70s practically all automobile assembling in Pakistan ceased.

A regular car industry started in the country in 1983, when Suzuki commenced production eyeing the small and LCV car segment of 800cc-1000cc range, and introduced Suzuki car which targeted the middle-income group (constituting the larger segment of the market) by providing an affordable car.

Then there was a long gap until the early 90’s when Indus Motor Company was established to manufacture Toyota vehicles in Pakistan. Soon after Honda Atlas came with the Civic and Gandhara Nissan entered the market with Sunny.

In the late 90,s Dewan Farooque Motors set up a plant to manufacture Hyundai and Kia vehicles in Pakistan. Since then the market has changed all together. After struggling through UNIVERSITY OF EDUCATION OKARA CAMPUS 6

INDUS MOTOR COMPANY LIMITED PROFESSIONAL PROJECT nineties, a decade full of uncertainties and frequent policy the Pakistani Auto Industry has been able to achieve double digit growth consistently since the last 4 years. The industry operates under franchise and technical cooperation agreements with Japanese, European and Korean manufacturers.

Lately Few new market players entered the market such as Gandhara Nissan again with now the imported Nissan range of vehicles, Dewan Mushtaq Motors with imported Mitsubishi range of vehicles, Nexus Automotive with Chevrolet imported vehicles and others imported Chinese vehicles such as Karakoram Motors, Roma Automobiles and Foton by Dewan Innovations Limited along with Pak Cherry Automobiles. Sigma Motors made its mark with Rover recently.

Apart from these the big brands of the auto industry also entered the Pakistani market such as BMW , Mini & Rolls Royce by Dewan Motors, Porsche, Mercedes and Audi have also launched their brands in Pakistan catering to the very upper niche.

1.4 CURRENT SITUTAION OF CAR INDUSTRY:
Locally produced cars have taken an unexpected drastic downturn to the extent of frustrating all future growth prospects and projections. According to the current figures, in due comparison with the figures of year 2007 for September to December period, the sales of cars has gone down by 15 percent. As a result the production has also gone down culminating with its impact on supply schedule; both import and local. This downturn has come at a crucial time as most of the manufacturing had just increased their investment in the expansion projects and vending industry had made equally huge investment to complement the capacity expansion exercise. The local vendors have now to face the curtailed orders, which may most hit the smaller ones with closures. All this obviously has also adversely impacted the UNIVERSITY OF EDUCATION OKARA CAMPUS 7

INDUS MOTOR COMPANY LIMITED PROFESSIONAL PROJECT government revenues in substantial terms. The government has suffered a revenue loss of Rs. One billion (9%) when September to December data is compared with last year.

In the budget 2007-08, government announced a withholding @ 5 percent on purchase of cars which was reduced to 2.5 percent and imposed from 1st September 2007. The intension was obviously to enhance government revenue. The current situation however, has proved a reversal in collection of the revenue.

Last year, the ECC approved the five years policy (AIDP) for auto sector prior to announcement of budget. Levy of such tax is a deviation from the spirit of preannounced policy thus causing anxiety to thee auto manufactures.

The uplift in the car market is also suffering due to stringent regulations announced by State Bank of Pakistan recently for car financing. Moreover, the cost of financing has also increased interest rates from nearly 8 to 15 percent.

With low custom duty rates for CBUs and unprecedented import of used cars, the local industry is putting utmost effort to survive and looking at the government not to deviate from the pre-announced policy and ensure strict compliance of rules on import of used from cars and stop further release of smuggled vehicles.

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INDUS MOTOR COMPANY LIMITED PROFESSIONAL PROJECT

2.1 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. It manufactures and Imports Cars and enjoys a healthy share in the market.

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 is competing with the Honda, Nissan, Suzuki and Mitsubishi. To sustain its lead IMC must maintain Strategic Competitive Advantage which is its Production Strength, ability to produce quality cars with respect to low cost and Research and Development in Hybrid and Bio Fuel Cars. But recently Company is in Stabilization mode trying to improve its functional area, consolidation of resources and maintaining SCA.

Indus Motor is the country's second largest auto manufacturer, after the Pak Suzuki Motors. IMC's production facilities are located at Port Bin Qasim Industrial Zone near Karachi in an area measuring over 105 acres, having an assembling capacity of 55,000 units per annum.

Indus Motor Company’s plant is the only manufacturing site in the world where both Toyota and Daihatsu brands are being manufactured. Its core business is to manufacture and market UNIVERSITY OF EDUCATION OKARA CAMPUS 10

INDUS MOTOR COMPANY LIMITED PROFESSIONAL PROJECT cars. In addition, the company also sells auto parts and accessories. 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.

Its product line includes 6 variants of newly introduced Toyota Corolla, Toyota Hilux and 3 variants of Daihatsu Cuore. The company also offers six different imported vehicles namely Toyota Camry, Prado, Land Cruiser, RAV, Hilux and Hiace. Major contributor to the revenue is Corolla, having a contribution of 66.5% in company's sales.

2.2 PRODUCT LINE:
2.2.1 COROLLA:

Corolla includes six variants of cars which are: 1) XLi 2) GLi 3) Corolla Altis M/T 4) Corolla Altis A/T 5) 2.0D 6) 2.0D Saloon

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INDUS MOTOR COMPANY LIMITED PROFESSIONAL PROJECT 2.2.2 CUORE:

Cuore consist of 3 variants of cars that are as under: 1) CX 2) CX CNG 3) CX A/T 2.2.3 HILUX:

Hilux consist of following car. 1) 4 x 2 S/Cab

2.3 COMPANY’S PROFILE:
2.3.1 NAME OF COMPANY:  Indus Motor Company Limited.

2.3.2 INDUSTRY TYPE:  Automobile Industry (Cyclical) UNIVERSITY OF EDUCATION OKARA CAMPUS 12

INDUS MOTOR COMPANY LIMITED PROFESSIONAL PROJECT 2.3.3 MAJOR INVESTORS: a) House of Habib. b) Toyota Motor Corporation Japan. (TMC) c) Toyota Tsusho Corporation Japan. (TTC) 2.3.4 SLOGAN:

2.3.5 VISION: 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.

2.3.6 MISSION:

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INDUS MOTOR COMPANY LIMITED PROFESSIONAL PROJECT

IMC’s mission is Company’s Slogan.

reflected

in

ACT#1 Action, Commitment and Teamwork to become #1 in Pakistan. The Indus Team is committed to ACT so that it achieves the #1 position in the Auto Industry in:       Respect & Corporate image. Customer Satisfaction. Profitability. Quality & Safety. Production & Sales. Best Employer.

2.3.7 CORE VALUES:    Customer Satisfaction. Team Work. Ethics and Practices. UNIVERSITY OF EDUCATION OKARA CAMPUS 14

INDUS MOTOR COMPANY LIMITED PROFESSIONAL PROJECT 2.3.8 STRATEGIC OBJECTIVES: 1. Achieving Market Leadership by Delivering Value to Customers: a) Following our “Customer First” philosophy in manufacturing and providing high quality vehicles and services that meet the needs of Pakistani customers. b) Enhancing the quality and reach of our 3S Dealership Network. c) Employing customer insight and feedback for continuous corporate renewal, including product development, improving service and customer care. 2. Bringing Toyota Quality to Pakistan a) Maximizing QRD (Quality, Reliability and Durability) by built-in engineering. b) Transferring technology and promoting indigenization at IMC and Vendors. c) Raising the bar in all support functions to meet Toyota Global Standards. 3. Optimizing Cost by Kaizen a) Fostering a Kaizen culture and mindset at IMC, its Dealers and Vendors. b) Implementing Toyota Production System.
c)

Removing waste in all areas and operating in the lowest cost quartile of the industry.

4. Respecting our People a) Treating employees as the most important sustainable competitive resource. b) Providing a continuous learning environment that promotes individual creativity and teamwork. UNIVERSITY OF EDUCATION OKARA CAMPUS 15

INDUS MOTOR COMPANY LIMITED PROFESSIONAL PROJECT c) Supporting equal employment opportunities, diversity and inclusion without discrimination.
d) Building competitive value through mutual trust and mutual responsibility

between the Indus Team and the Company. 5. Becoming a Good Corporate Citizen a) Following ethical business practices and the laws of the land. b) Engaging in philanthropic and social activities that contribute to the enrichment of Pakistani society, especially in areas that are strategic to both societal and business needs e.g. Road Safety, Technical Education, Environment Protection, etc. c) Enhancing corporate value and respect while achieving a stable and longterm growth for the benefit of our shareholders.

2.4 COMPANY’S INFORMATION:
2.4.1 BOARD OF DIRECTORS: 1) Mr. Ali S. Habib (Chairman) 2) Mr. Koji Hyodo (Vice Chairman) 3) Mr. Yutaka Arae 4) Mr. Parvez Ghias (Chief Executive Officer) 5) Mr. Farhad Zulficar 6) Mr. Mohamedali R. Habib 7) Mr. M. Ilyas Suri 8) Mr. Mitsuhiro Sonoda

9) Mr. Yosuki Tsubaki
2.4.2 BANKERS:  Askari Bank Limited. UNIVERSITY OF EDUCATION OKARA CAMPUS 16

INDUS MOTOR COMPANY LIMITED PROFESSIONAL PROJECT                Bank Alfalah Limited. Barclays Bank PLC. 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 Royal Bank of Scotland Limited. The Bank of Tokyo-Mitsubishi UFJ Limited. United Bank Limited.

2.4.3 AUDITORS: F. Ferguson & Co. Chartered Accountants, State Life Building 1-C Chundrigar Road, Karachi 2.4.4 LEGAL ADVISORS:     K. Brohi & Company Mansoor Ahmed Khan & Co. Mahmud & Co. Sayeed & Sayeed Co.

2.4.5 REGISTRAR: UNIVERSITY OF EDUCATION OKARA CAMPUS 17

INDUS MOTOR COMPANY LIMITED PROFESSIONAL PROJECT Noble Computer Services (Private) Limited, Mezzanine Floor, House of Habib Building (Siddiqsons Tower), 3-Jinnah C. H. Society, Main Shahrah-e-Faisal, Karachi - 75350. 2.4.6 FACTORY/REGISTERED OFFICE: Plot No. N.W.Z/1/P-1, Port Qasim Authority, Karachi. Phones (PABX) (92-21) 34720041-48 (UAN) (92-21) 111-TOYOTA (869-682) Fax (92-21) 34720056 www.toyota-indus.com 2.4.7 CHIEF FINANCIAL OFFICER:  Muhammad Faisal

2.4.8 COMPANY SECRETARY:  Mustafa Hasan Lakhani

2.4.9 AUDIT COMMITTEE MEMBERS:      Mohamedali R. Habib (Committee Chairman) Farhad Zulficar Yutaka Arae Mitsuhiro Sonoda Ahson Tariq (Secretary)

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INDUS MOTOR COMPANY LIMITED PROFESSIONAL PROJECT

3.1 SWOT ANALYSIS:
In formulating sound strategic plans, an organization must assess its internal strengths and weaknesses in relation to the external opportunities and threats it faces. An effective strategy will take advantage of an organizations strengths and opportunities at the same time it minimizes or overcomes weaknesses and threats. Regular assessment and SWOT analysis is thus given importance.

3.1.1 STRENGTHS: Strengths are the core competencies of any organization & as far as Indus Motor Company Limited is concerned the core competencies of this organization are:  Toyota has become the generic name in the Pakistan market. Whenever the company launches the new car in the market it has always the great support of the already market orientation so the car introduced by it easily covers the introduction stage. People have a lot

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INDUS MOTOR COMPANY LIMITED PROFESSIONAL PROJECT of trust for their name and this is why Toyota is the leader in automobile industry.  Toyota has a great strength for its 2.OD car, Toyota is the hot selling diesel engine car in Pakistan and is the only company offering the diesel engine in this category of cars.  The important edge over the company editors are the ample availability of the spare parts in the markets. The price of spare parts is comparatively low and availability all over the country has proved to be beneficial for the company.  Toyota is a financially strong company. This can be seen by analysis of the financial reports of the previous years.  Toyota vehicles have got a much stronger resale value than other car in Pakistan. This is why people prefer to buy a Toyota.  Toyota vehicles are made according to the Pakistani environment. No doubt the other cars are available but Toyota has an edge because it has learnt various conditions of the Pakistan environment and people. So new additions and changes are proving to be successful.  Toyota has an edge over others because it is the only automobile company in Pakistan, while offers many variants of its vehicles. Also Toyota offered many variants of colors.  Toyota is proud to have a successful team of competent managers and skilled workers. Extensive training has enabled the employees to perform outstandingly.  Toyota is the only company having the most sophisticated network of dealerships where customers are treated by professional dealers. There UNIVERSITY OF EDUCATION OKARA CAMPUS 21

INDUS MOTOR COMPANY LIMITED PROFESSIONAL PROJECT are twenty five dealers in Pakistan where sales, service and spare parts are offered, leading to convenience for the customers. 3.1.2 WEAKNESSES: Weaknesses are the lacking points which every organization must avoid in order to make its operational effectiveness.  There is some weakness in the case of ergonomic interior of Toyota corolla as well. The power steering is not speed sensitive and the air conditioning system in severe heat is in-effective. Interior dimensions are less and heavy body and small engine sometimes create problems in hilly areas.  There are some weaknesses in the dealership network. The dealers sometimes tend to deviate from the recommended course of action and principles of Toyota. This results in customers complaints sometimes.  The company is besieged with internal operating problems which are not very serious. Because of dependency on Toyota’s principles delivery of cars is done after 4-6 months. This is because CKD kits are ordered four months before and once they arrive from Japan, assembly and delivery takes some more time.  A lot of effort is pull into the sales forecasting because of the changing political and economic scenarios. For this reasons inventory has to be kept low.  The company feels that one weakness is the changing policies of the government and also the 30% cash L/C margin. This has lead to an adverse environment.

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INDUS MOTOR COMPANY LIMITED PROFESSIONAL PROJECT 3.1.3 OPPORTUNITIES: In fact, when we study all our weaknesses critically & deeply than we come to know that we can convert our weaknesses into strengths. So basically these are our opportunities. The opportunities for IMC are:  Export is a major opportunity for Toyota Indus Motors. Vehicles were exported to Bangladesh just once in order to prove the plant capacity and efficiency of the company. This should be started again.  The contract with the government departments e.g. Motorway Police, Shaheen Force and the dignitaries where corolla has an opportunity to deal with the business markets along with dealing in consumer markets.  Toyota can do better by focusing on segments much more than presently being done.  Toyota should also try to lower its price of Corolla in the segment where Honda city has penetrated.  It can offer discounts to Government departments and large organizations on purchase of its vehicles in more quantities.  Success of the manufacturing of Daihatsu cuore is a major opportunity for Toyota to excel further careful planning and the right time to launch the new car can prove to be a success. 3.1.4 THREATS: Though Indus Motor Company Limited has a strong footing and maintain a good number of loyal customer, still bank has threats in various sectors. When we see the possible threats for IMC, the threats are prevailing such as:

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INDUS MOTOR COMPANY LIMITED PROFESSIONAL PROJECT  Even though Toyota enjoys the position of being the no.1 automobile company, still it faces some threat from competitors especially Honda. Honda has adopted aggressive strategies for capturing the market.  Even though Toyota keeps a careful eye on the changing trends, still the changing customer needs and trends can prove to be a threat.  A major threat is the changing political and economic scenarios of Pakistan. Changing government policies affect the company’s performance. Devaluation of rupee adverse shifts in foreign exchange rates, trade policies of government’s is a threat. Moreover the company is threatened by the ongoing rate of 30% cash L/C margin.  Import of re-conditioned cars is also considered as a threat for the company.  The planned car manufacturing plants of Hyundai and Daewoo can prove to be tough competition for Toyota if they are successful.

3.2 PEST ANALYSIS:
PEST analysis is the analysis which we tend to perform in order to analyze the external as well as the internal environment in which organization is currently working. PEST analysis revolves around the four things.

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INDUS MOTOR COMPANY LIMITED PROFESSIONAL PROJECT 3.2.1 POLITICAL FACTORS: Government at all levels is an important component of the general environment. No organization or industry is immune from the various decisions made by the government. The Pakistan Government’s inconsistent policies, frequent change in duty tariff and smuggling are main reasons of unstable market conduction. Like other motor companies Toyota is also affected by the current changing policies of the government. Previously the automobile industry had to cope with more than 77000 yellow cabs that were imported during the yellow cabs scheme and was later turned lose to the market after a change of government and the policy scrapped.

In 1995, all the previous taxes and duties were rolled into one import duty of 30 percent on CKD kits as well as CBU vehicles. In 1996 the sales tax on CBU was increased cost to 18 percent. In 1997 the ministry of industries and production recommended that duty on CKD be reduced form 40 percent to 35 percent while the car sales should be exempted from CVT and the deletion program should be accelerated.

Just a half year back the general sales tax has been increased to 16 percent promoting more price like. So there is going to be a Rs. 80,000 to Rs. 1,00,000 increase in vehicles. 3.2.2 ECONOMICAL FACTORS: Government economic policies at the federal level clearly influence the ability of the industries to survive and progress. Inflation is a major economic factor which has affected the Pakistan’s Automobile industry including Toyota. The current inflation UNIVERSITY OF EDUCATION OKARA CAMPUS 25

INDUS MOTOR COMPANY LIMITED PROFESSIONAL PROJECT rate is 21% to 23% annually prices in the auto market were deregulated in 2000 and grew almost 20 percent to 30 percent per annum to allow Toyota to bring their prices to profitable levels. After three years of “Still Market”, the market picked up.

The recent increase of 16 percent sale tax is however, going to result in a price increase. 3.2.3 SOCIAL FACTORS: Society holds a global or summary belief that an organization is proper and worthy of support. Toyota takes pride in being the most trusted name all over Pakistan. Its vehicles are regarded as a status symbol. It is the guiding principles of Toyota which has strongly developed trust in the people.

Toyota respects the culture and customs of every nation and community and contributes to the economic and social development through corporate activities in the communities. Toyota believes in honoring the language and spirit of the law of every nation and undertakes open and fair corporate activities to be a good corporate citizen of the world. This is the reason that Toyota is proud of the fact that Pakistani society considers Toyota vehicles to be a symbol of reliability, comfort, luxury and a have to be trusted. 3.2.4 TECHNOLOGICAL FACTORS: Technology is of particular importance because it has been and continues to be the main source of increases in productivity. Despite changes in the means used to motivate people and the variety of incentives that have been offered to stimulated production, the resulting increase has been negligible when compared to that of created by technology. UNIVERSITY OF EDUCATION OKARA CAMPUS 26

INDUS MOTOR COMPANY LIMITED PROFESSIONAL PROJECT The locally produced Toyota Corolla introduced in May 1993 is now in its 17 th year. Its excellent quality, low maintenance cost and high resale value has won it the support and loyalty of its customers. Product diversification and a wide range of colors has allowed customers to exercise greater options and has sustained this threat. The total company’s product range comprises of 8 variants of Corolla and 5 variants of Hilux. As a result of the “Safety First” commitment; for the first time in Pakistan SRS “Secondary Restrain System” Airbags have been introduced in the GLI Automatic and GLI manual models, side impact bars which protect vehicles for side collisions have however been routinely fitted in all Corolla variants since inception. The process of making a car more durable includes “Pitospaate Primer”, total immersion in a catholic Electro-deposit primer, which assures long term anti corrosion and an extra thick color coat that is better than all others, ensuring that “New Car” look “New” for years to come.

3.3 BOSTON CONSULTING GROUP MATRIX:
The BCG matrix measures market attractiveness by market growth rate and it assesses the firm’s ability to compete by its relative market share. The BCG matrix assumes the causal relationship between market share and profitability. BCG matrix consists of four factors which are:     Stars. Question mark. Cash cows. Dogs.

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INDUS MOTOR COMPANY LIMITED PROFESSIONAL PROJECT

3.3.1 STARS: Toyota Corolla of IMC falls into the category of Stars. It generates large amount of cash because of its strong relative market share, but also consume large amounts of cash because of its high growth rate; therefore the cash in each direction approximately nets out. However companies usually invest in star units as they are feeling that the future of their company depends on the success or failure of that particular unit or product. 3.3.2 CASH COWS: If IMC’s Toyota Corolla could maintain its large market share, it will become a Cash Cow when the market growth rate would decline. The portfolio of a diversified company always should have stars that will become the next cash cows and ensure future cash generation. Typically needs this cash to support its rapid and significant growth. It generates large amounts of cash for the organization and usually segments in which management can make additional investments and earn attractive returns. In UNIVERSITY OF EDUCATION OKARA CAMPUS 28

INDUS MOTOR COMPANY LIMITED PROFESSIONAL PROJECT case of Indus Motor Company Limited, the Hilux is a cash cow for the company which earns a lot of cash for the company and company utilize this cash to run its future units like Toyota Corolla. 3.3.3 QUESTION MARK: According to Boston consulting group matrix, a question mark is such a business unit about which you are not about the success or failure. The unit can be very successful in the market or it can be simply being ruined of. In case of IMC the question mark is actually the Cuore. It is due to the large competition of in this category of cars. As the Suzuki Aulto, Mehran, Santro and some imported vehicles like Vitz are already present in the market. 3.3.4 DOGS: This category of BCG matrix includes the product that has no market share as well as consuming the large amount of cash instead of generating the cash. The company wants to dissolve that product.

3.4 TOYOTA COROLLA BCG MATRIX:
If we analyze the position of Toyota Corolla by using the Boston consulting group matrix in a market than it will show the following result.

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INDUS MOTOR COMPANY LIMITED PROFESSIONAL PROJECT

STAR 2.0D 2.0D Saloon

CASH COWS SE Saloon GLi

QUESTION MARK Xli 1.3

DOGS

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INDUS MOTOR COMPANY LIMITED PROFESSIONAL PROJECT

4.1 CONDENSED INCOME STATEMENT:
Indus Motor Company Limited Condensed Income Statement For The Year Ended June 30,

2005 Net Sales Gross Profit Operating Profit Profit before Taxation Net Profit 27,601,034 2,706,178 2,134,221 2,302,957 1,484,646

2006 35,236,535 4,147,629 3,500,256 4,072,777 2,648,464

2007 (Rupees in '000) 39,061,226 4,440,594 3,665,306 4,229,481 2,745,701

2008 41,423,843 3,848,487 3,063,830 3,541,711 2,290,845

2009 37,864,604 2,324,186 1,501,952 2,046,013 1,385,102

It is clearly seen that net sales of the company is showing an increasing trend in all the years except that of FY 2009 which was caused due to the low productions of cars. The reason behind low production is the instable environment of Pakistan in last year.

The gross profit is also showing the same trend up to FY 2007 but there is a massive decrease in gross profit in FY 2008 which was due to the increase in cost of goods sold. Than gross profit again decrease in FY 2009. It is due to the low sales of the company.

The details and trends are all discussed below in the item wise analysis of summarized income statement of the company and the annexed notes form an integral part of this income statement.

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INDUS MOTOR COMPANY LIMITED PROFESSIONAL PROJECT 4.2

NET SALES:
2005 2006 2007 (Rupees in '000) 2008 2009

Net Sales Comparative Chain Base

27,601,034

35,236,535

39,061,226

41,423,843

37,864,604

7,635,501

3,824,691

2,362,617

(3,559,239)

Percentage Comparative Chain Base

27.66%

10.85%

6.05%

-8.59%

Percentage Comparative 2005 Base

127.66%

141.52%

150.08%

137.19%

Vertical Common Size

100.00%

100.00%

100.00%

100.00%

100.00%

In comparison with FY 2005, sales of FY 2006 have been increased by 7.63 billions. Similarly in FY 2007 and FY 2008 there is an increasing trend by 3.82 billions and 2.36 billions while there is decrease in sales of 3.55 billions in FY 2009 with respect to the preceding years.

In the term of percentage sales have increased by 27.66% in FY 2006 as compared to FY 2005. In FY 2007, as compared to FY 2006, sales increased by 10.85% whereas the increase was 6.05% in FY 2008, as compared to FY 2007, while there is a decrease of 8.59% in sales in FY 2009 as compared to the FY 2008. The sales have increased 41.52%, 50.08% and 37.19% in FY 2007, FY 2008 and FY 2009 as compare to FY 2005.

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INDUS MOTOR COMPANY LIMITED PROFESSIONAL PROJECT

4.3 COST OF GOODS SOLD:
2005 2006 2007 (Rupees in '000) 2008 2009

C.G.S

24,894,856

31,088,906

34,620,632

37,575,356

35,540,418

Comparative Chain Base

6,194,050

3,531,726

2,954,724

(2,034,938)

Percentage Comparative Chain Base

24.88%

11.36%

8.53%

-5.42%

Percentage Comparative 2005 Base

124.88%

139.07%

150.94%

142.76%

Vertical Common size

90.20%

88.23%

88.63%

90.71%

93.86%

In FY 2006, FY 2007 and FY 2008 increase in C.G.S has been recorded with 6.19 billions, 3.53 billions and 2.95 billions with respect to the preceding year. In FY 2009 C.G.S has been decreased by 2.03 billions as compared to FY 2008 due to the low production.

An increasing trend was recorded by 24.88%, 11.36% and 8.53% in FY 2006, FY 2007 and FY 2008 respectively as compare to the preceding years. While C.G.S decreased by 5.42% in FY 2009 with respect to FY 2008. As compared to FY 2005 C.G.S increased by 39.07%, 50.94% and 42.76% in FY 2007, FY 2008 and FY 2009 respectively.

There is a deceasing trend in C.G.S as a part of sales. C.G.S has decreased by 9.80%, 11.77%, 11.37%, 9.29% and 6.14% in FY 2005, FY 2006, FY 2007, FY 2008 and FY 2009 respectively. UNIVERSITY OF EDUCATION OKARA CAMPUS 34

INDUS MOTOR COMPANY LIMITED PROFESSIONAL PROJECT

4.4 GROSS PROFIT:
2005 2006 2007 (Rupees in '000) 2008 2009

Gross Profit

2,706,178

4,147,629

4,440,594

3,848,487

2,324,186

Comparative Chain Base

1,441,451

292,965

(592,107)

(1,524,301)

Percentage Comparative Chain Base

53.27%

7.06%

-13.33%

-39.61%

Percentage Comparative 2005 Base

153.27%

164.09%

142.21%

85.88%

Vertical Common Size

9.80%

11.77%

11.37%

9.29%

6.14%

G.P of FY 2006 and FY 2007 increased by 1.44 billions and 292 millions as compared to the FY 2005 and FY 2006 respectively. In FY 2008 and FY 2009 there was a decrease of 592 millions and 1.52 billions in G.P as compared to FY 2007 and FY 2008 respectively.

G.P has been increased by 53.27% and 7.06% in FY 2006 and FY 2007 as compared to the FY 2005 and FY 2006 respectively. While GP of FY 2008 and FY 2009 decreased by 13.33% and 39.61% with respect to preceding years respectively. As compared to FY 2005 G.P has been increased by 64.09% and 42.21%, in FY 2007 and FY 2008 respectively while in FY 2009 the decrease of 14.12% as compared to FY 2005 was recorded.

As compared to sales, G.P has been decreased by 90.02%, 88.23%, 88.63%, 90.71% and 93.86% in FY 2005, FY 2006, FY 2007, FY 2008 and FY 2009 respectively. UNIVERSITY OF EDUCATION OKARA CAMPUS 35

INDUS MOTOR COMPANY LIMITED PROFESSIONAL PROJECT

4.5 OPERATING EXPENSES:
2005 2006 2007 (Rupees in '000) 2008 2009

Operating Expenses

571,957

647,373

775,288

784,657

822,234

Comparative Chain Base

75,416

127,915

9,369

37,577

Percentage Comparative Chain Base

13.19%

19.76%

1.21%

4.79%

Percentage Comparative 2005 Base

113.19%

135.55%

137.19%

143.76%

Vertical Common Size

2.07%

1.84%

1.98%

1.89%

2.17%

Operating expenses have been increased by 75.1 millions, 127 millions, 9.3 millions and 37.5 millions in FY 2006, FY 2007, FY 2008 and FY 2009 respectively in comparison with the preceding years.

In terms of percentage, operating expenses have been increased by 13.19%, 19.76%, 1.21% and 4.79% in FY 2006, FY 2007, FY 2008 and FY 2009 respectively in comparison with the preceding years. As compared to FY 2005 increase of 35.55%, 37.19%, 43.76% was recorded in FY 2007, FY 2008 and FY 2009 respectively.

As compare to sales, there is a significant decrease in operating expenses by 97.93%, 98.16%, 98.02%, 98.11% and 97.83% in FY 2005, FY 2006, FY2007, FY 2008 and FY 2009 respectively.

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4.6 OPERATING PROFIT:
2005 2006 2007 (Rupees in '000) 2008 2009

Operating Profit

2,134,221

3,500,256

3,665,306

3,063,830

1,501,952

Comparative Chain Base

1,366,035

165,050

(601,476)

(1,561,878)

Percentage Comparative Chain Base

64.01%

4.72%

-16.41%

-50.98%

Percentage Comparative 2005 Base

164.01%

171.74%

143.56%

70.37%

Vertical Common Size

7.73%

9.93%

9.38%

7.40%

3.97%

Operating profit is increasing from FY 2006 to FY 2007 by 1.36 billions and 165 millions in comparison with the FY 2005 and FY 2006 respectively. While it decreased in FY 2008 and FY 2009 by 601 millions and 1.56 billions respectively with respect to the previous years.

In FY 2006 and FY 2007 operating profit increased by 64.01% and 4.72 % respectively as compared to FY 2005 and FY 2006. Then it decreased by 16.41% and 50.98% in FY 2008 and FY 2009 respectively as compared to FY 2007 and FY 2008. In FY 2007 and FY 2008 increase of 71.74% and 43.56 was recorded as compared to the FY 2005, while the decrease of 29.63% was recorded on FY 2009 as compared to FY 2005.

Operating profit is 7.73% and 9.93 % of sales in FY 2005 and FY 2006 then it decreased to 9.38%, 7.40% and 3.97 % in FY 2007, FY 2008 and FY 2009 respectively. UNIVERSITY OF EDUCATION OKARA CAMPUS 37

INDUS MOTOR COMPANY LIMITED PROFESSIONAL PROJECT

4.7 OTHER OPERATING EXPENSES:
2005 2006 2007 (Rupees in '000) 2008 2009

Other Operating Expenses

186,614

321,746

348,430

306,193

156,479

Comparative Chain Base

135,132

26,684

(42,237)

(149,714)

Percentage Comparative Chain Base

72.41%

8.29%

-12.12%

-48.90%

Percentage Comparative 2005 Base

172.41%

186.71%

164.08%

83.85%

Vertical Common Size

0.68%

0.91%

0.89%

0.74%

0.41%

In FY 2006 and FY 2007 other operating expenses increased by 135 millions and 26 millions respectively as compared to the preceding years. While the decrease of 42 millions and 149 millions was recorded in FY 2008 and FY 2009 respectively as compared to preceding years.

In terms of percentage as compared to the preceding years, in FY 2006 and FY 2007 other operating expenses increased by 72.41% and 8.89% respectively while decreased by 12.12% and 48.90% in FY 2008 and FY 2009 respectively. As compared to FY 2005 the other operating expenses increased by 86.71% and 64.08% in FY 2007 and FY 2008 respectively, while decreased by 16.15% in FY 2009.

Other operating expenses are recorded as less than 1% of the sales in all the years.

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INDUS MOTOR COMPANY LIMITED PROFESSIONAL PROJECT

4.8 OTHER OPERATING INCOME:
2005 2006 2007 (Rupees in '000) 2008 2009

Other Operating Income Comparative Chain Base Percentage Comparative Chain Base

449,443

1,021,212

935,290

786,834

727,080

571,769

(85,922)

(148,456)

(59,754)

127.22%

-8.41%

-15.87%

-7.59%

Percentage Comparative 2005 Base

227.22%

208.10%

175.07%

161.77%

Vertical Common Size

1.63%

2.90%

2.39%

1.90%

1.92%

In FY 2006 increase of 571 millions was recorded in other operating income as compared to the FY 2005 while the decrease by 85 millions, 148 millions and 59 millions was recorded in and FY 2007, FY 2008 and FY2009 respectively with respect to the preceding years.

In terms of percentage other operating income has increased by 127.22% in FY 2006 as compared to the FY 2005, while the massive decrease of 8.41%, 15.87 % and 7.59% was recorded in FY 2007, FY 2008 and FY 2009 respectively with respect to the preceding years. As compared to FY 2005 the other operating income increased by 108.10%, 75.07% and 61.77% in FY 2007, FY 2008 and FY 2009 respectively.

Other operating income as compared to sales was 1.63% in FY 2005 than it increased to 2.90% in FY 2006 than it decreased to 2.39% and 1.90% in FY 2007 and FY 2008 respectively. While in FY 2009 it decreased to 1.92%. UNIVERSITY OF EDUCATION OKARA CAMPUS 39

INDUS MOTOR COMPANY LIMITED PROFESSIONAL PROJECT

4.9 PROFIT BEFORE INTERST AND TAX:
2005 2006 2007 (Rupees in '000) 2008 2009

Profit before Interest and Tax

2,397,050

4,199,722

4,252,166

3,544,471

2,072,553

Comparative Chain Base

1,802,672

52,444

(707,695)

(1,471,918)

Percentage Comparative Chain Base

75.20%

1.25%

-16.64%

-41.53%

Percentage Comparative 2005 Base

175.20%

177.39%

147.87%

86.46%

Vertical Common Size

8.68%

11.92%

10.89%

8.56%

5.47%

In chain base comparison, EBIT was increased by 1.80 billions and 52 millions in FY 2006 and FY 2007 as compared to preceding years. It decreased by 707 millions and 1.47 billions in FY 2008 and FY 2009 respectively with respect to the preceding years.

In terms of percentage, the profit increased by 75.20% and 1.25% in FY 2006 and FY 2007 respectively with respect to the preceding years. But massive decrease of 16.64% and 41.53% was recorded in FY 2008 and FY 2009 respectively as compared to the preceding years. As compared to FY 2005 the profit increased by 77.39% and 47.87% in FY 2007 and FY 2008 respectively, while profit decreased up to 13.54% in FY 2009.

As a part of sales, EBIT is 8.68 % in FY 2005, 11.92% in FY 2006, 10.89% in FY 2007, 8.56% in FY 2008, and 5.47% in FY 2009. UNIVERSITY OF EDUCATION OKARA CAMPUS 40

INDUS MOTOR COMPANY LIMITED PROFESSIONAL PROJECT

4.10 FINANCE COST:
2005 2006 2007 (Rupees in '000) 2008 2009

Finance Costs

94,093

126,945

22,685

2,760

26,540

Comparative Chain Base

32,852

(104,260)

(19,925)

23,780

Percentage Comparative Chain Base

34.91%

-82.13%

-87.83%

861.59%

Percentage Comparative 2005 Base

134.91%

24.11%

2.93%

28.21%

Vertical Common Size

0.34%

0.36%

0.06%

0.01%

0.07%

Finance cost has increased by 32 millions in FY 2006 as compared to the FY 2005 while it decreased by 104 millions and 19 millions in FY 2007 and FY 2008 respectively as compared to the preceding years. While it increased by 23 millions in FY 2009 as compared to the FY 2008.

In comparison with the previous years it increased by 34.91% in FY 2006, while it decreased by 82.13% and 87.83% in FY 2007 and FY 2008 respectively. Than massive increase of 861.59% was recorded in FY 2009. As compared to the FY 2005 finance cost decreased by 75.89%, 97.07% and 71.79% in FY 2007, FY 2008 and FY 2009 respectively.

Finance cost is recorded as less than 1% of the sales in all the years.

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INDUS MOTOR COMPANY LIMITED PROFESSIONAL PROJECT

4.11 PROFIT BEFORE TAXATION:
2005 2006 2007 (Rupees in '000) 2008 2009

Profit before Taxation

2,302,957

4,072,777

4,229,481

3,541,711

2,046,013

Comparative Chain Base

1,769,820

156,704

(687,770)

(1,495,698)

Percentage Comparative Chain Base

76.85%

3.85%

-16.26%

-42.23%

Percentage Comparative 2005 Base

176.85%

183.65%

153.79%

88.84%

Vertical Common Size

8.34%

11.56%

10.83%

8.55%

5.40%

In FY 2006 and FY 2007 profit before taxation increased by 1.76 billions and 156 millions as compared to FY 2005 and FY 2006. Then it decreased by 687 millions and 1.49 billions in comparison with the preceding years.

Profit before tax has increased by 76.85% and 3.85% in FY 2006 and FY 2007 in comparison with the preceding years while it decreased by 16.26% and 42.23% in FY 2008 and FY 2009 as compared to the preceding years. It increased by 83.65% and 53.79% in FY 2007 and FY 2008 respectively while it decreased by 11.16% in FY 2009 in comparison with the FY 2005.

Profit before taxation is 8.34% of sales in FY 2005. It increased to 11.56% in FY 2006, and then it decreased to 10.83%, 8.55% and 5.40% in FY 2007, FY 2008 and FY 2009 respectively. UNIVERSITY OF EDUCATION OKARA CAMPUS 42

INDUS MOTOR COMPANY LIMITED PROFESSIONAL PROJECT

4.12 TAXATION:
2005 2006 2007 (Rupees in '000) 2008 2009

Taxation

818,311

1,424,313

1,483,780

1,250,866

660,911

Comparative Chain Base

606,002

59,467

(232,914)

(589,955)

Percentage Comparative Chain Base

74.06%

4.18%

-15.70%

-47.16%

Percentage Comparative 2005 Base

174.06%

181.32%

152.86%

80.77%

Vertical Common Size

2.96%

4.04%

3.80%

3.02%

1.75%

Tax revenues have increased by 606 millions 59 millions in FY 2006 and FY 2007 respectively in comparison with the previous years. While it decreased by 232 millions and 589 millions in FY 2008 and FY 2009 respectively as compared to the preceding years.

In terms of percentage, it increased by 74.06% and 4.18% in FY 2006 and FY 2007 in comparison with the preceding years, while it decreased by 15.70% and 47.16% in FY 2008 and FY 2009 respectively as compared to previous years. As compared to FY 2005 tax revenues increased by 81.32% and 52.86% in FY 2007 and FY 2008 respectively, while it decreased by 19.23% in FY 2009.

Taxation is 2.96% in FY 2005, 4.04% in FY 2006, 3.80% in FY 2007, 3.02% in FY 2008 and 1.75% in FY 2009 of sales.

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INDUS MOTOR COMPANY LIMITED PROFESSIONAL PROJECT

4.13 PROFIT AFTER TAXATION:
2005 2006 2007 (Rupees in '000) 2008 2009

Profit After Taxation

1,484,646

2,648,464

2,745,701

2,290,845

1,385,102

Comparative Chain Base

1,163,818

97,237

(454,856)

(905,743)

Percentage Comparative Chain Base

78.39%

3.67%

-16.57%

-39.54%

Percentage Comparative 2005 Base

178.39%

184.94%

154.30%

93.30%

Vertical Common Size

5.38%

7.52%

7.03%

5.53%

3.66%

As compared to the previous years, net income of the company increased by 1.16 billions and 97 millions in FY 2006 and FY 2007 respectively, while it increased by 454 millions and 905 millions in FY 2008 and FY 2009 respectively.

In terms of percentage, in comparison with the preceding years the income of company increased by 78.39% and 3.67% in FY 2006 and FY 2007 respectively, but it decreased massively by 16.57 and 39.54% in FY 2008 and FY 2009 respectively. As compared to the FY 2005 the increased of 84.94% and 54.30% was recorded in net income in FY 2007 and FY 2008, while it decreased by 6.70% in FY 2009.

As a part of sales, profit was 5.38%, 7.52%, 7.03% 5.53% and 3.66% in FY2005, FY 2006, FY 2007, FY 2008 and FY 2009 respectively. UNIVERSITY OF EDUCATION OKARA CAMPUS 44

INDUS MOTOR COMPANY LIMITED PROFESSIONAL PROJECT

5.1 CONDENSED BALANCE SHEET:
Indus Motor Company Limited Condensed Balance Sheet As on June 30,

2005

2006

2007
(Rupees in '000)

2008

2009

Current Assets Less: Current Liabilities Net Working Capital Net Fixed Assets Capital Work-in-progress Intangible Assets Other Non Current Assets Net Assets Position Non-Current Liabilities Long Term Debt Equity Net Liability and Equity Position

11,177,940 7,664,062 3,513,878 901,035 87,307 10,545 17,690 4,530,455 54,650 4,475,805 4,530,455

14,095,657 9,444,554 4,651,103 1,408,314 302,153 6,123 10,221 6,377,914 120,035 6,257,879 6,377,914

13,560,329 7,410,926 6,149,403 1,902,912 187,372 3,568 10,869 8,254,124 210,149 8,043,975 8,254,124

9,664,784 3,779,631 5,885,153 3,592,271 438,696 2,795 49,563 9,968,478 532,138 9,436,340 9,968,478

16,715,319 9,884,850 6,830,469 3,900,977 29,524 3,972 35,731 10,800,673 503,700 10,296,973 10,800,673

The condensed balance sheet of FY 2005, FY 2006, FY 2007, FY 2008 and FY 2009 is giving a clear look at the company’s resources and claims of outsiders.

Net assets of the company are showing an increasing trend from FY 2005 to FY 2009.

The long term debt position of the company is obvious and seems that company has a real strong background. There was no claim of outsiders on the company’s resources.

The detail of trends of balance sheet is discussed below item wise and the annexed notes are also at the end of the report which forms an integral part of the above sheet.

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INDUS MOTOR COMPANY LIMITED PROFESSIONAL PROJECT

5.2 CURRENT ASSETS:
2005 2006 2007
(Rupees in '000)

2008

2009

Current Assets

11,177,940

14,095,657

13,560,329

9,664,784

16,715,319

Comparative Chain Base

2,917,717

(535,328)

(3,895,545)

7,050,535

Percentage Comparative Chain Base

26.10%

-3.80%

-28.73%

72.95%

Percentage Comparative 2005 Base

126.10%

121.31%

86.46%

149.54%

Vertical Common Size

91.66%

89.09%

86.56%

70.30%

80.81%

In comparison to the preceding years, the current assets increased in FY 2006 by 2.91 billions and than decreased by 535 millions and 3.89 billions in FY 2007 and FY 2008 respectively, while again increase of 7.05 billions was recorded in FY 2009.

In terms of percentage, with respect to the preceding years the increase of 26.10% was recorded in FY 2006, while current assets decreased by 3.80% and 28.73% in FY 2007 and FY 2008 respectively, than it increased by 72.95% in FY 2009. As compared to FY 2005, increase of 21.31% was recorded in FY 2007, than it decreased by 13.54% in FY 2008 and again it increased by 49.54% in FY 2009.

Current assets were 91.66% of total assets in FY 2005, 89.09% in FY 2006, 86.56% in FY 2007, 70.30% in FY 2008 and 80.81% in FY 2009.

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47

INDUS MOTOR COMPANY LIMITED PROFESSIONAL PROJECT

5.3 CURRENT LIABILITIES:
2005 2006 2007
(Rupees in '000)

2008

2009

Current Liabilities

7,664,062

9,444,554

7,410,926

3,779,631

9,884,850

Comparative Chain Base

1,780,492

(2,033,628)

(3,631,295)

6,105,219

Percentage Comparative Chain Base

23.23%

-21.53%

-49.00%

161.53%

Percentage Comparative 2005 Base

123.23%

96.70%

49.32%

128.98%

Vertical Common Size

62.85%

59.69%

47.31%

27.49%

47.79%

As compared to the previous years, the current liabilities increased in FY 2006 by 1.78 billions and than decreased by 2.03 billions and 3.63 billions in FY 2007 and FY 2008 respectively. It again increased by 6.10 billions in FY 2009.

The percentage change was increase of 23.23% in FY 2006 than decrease of 21.53% and 49.00% in FY 2007 and FY 2008 respectively, and increase of 161.53% in FY 2009 as compared to the preceding years. In comparison with FY 2005 the decrease of 3.30% and 50.68% was recorded in FY 2007 and FY 2008 respectively, while it increased by 28.98% in FY 2009.

As a part of total liabilities and shareholder’s equity, total currents liabilities were 62.85%, 59.69%, 47.31%, 27.49% and 47.79% in FY2005, FY2006, FY 2007, FY 2008 and FY 2009 respectively.

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INDUS MOTOR COMPANY LIMITED PROFESSIONAL PROJECT

5.4 TOTAL FIXED ASSETS:
2005 2006 2007
(Rupees in '000)

2008

2009

Total Fixed Assets

998,887

1,716,590

2,093,852

4,033,762

3,934,473

Comparative Chain Base

717,703

377,262

1,939,910

(99,289)

Percentage Comparative Chain Base

71.85%

21.98%

92.65%

-2.46%

Percentage Comparative 2005 Base

171.85%

209.62%

403.83%

393.89%

Vertical Common Size

8.19%

10.85%

13.37%

29.34%

19.02%

Total fixed assets were increased by 717 millions, 377 millions and 1.93 billions in FY 2006, FY 2007 and FY 2008 as compared with FY 2005, FY 2006 and FY 2007 respectively, while the decrease of 99 millions was recorded in FY 2009 as compared to FY 2008.

There was increase of 71.85%, 21.98% and 92.65% in FY 2006, FY 2007 and FY 2008 respectively as compared to the previous years, while the decrease of 2.46% was recorded in FY 2009 in comparison with FY 2008. The increase of 109.62% in FY 2007, 303.83% in FY 2008 and 293.89% in FY 2009 was observed in total fixed assets as compare to the FY 2005.

In terms of total assets, total fixed assets were 8.19% in FY 2005, 10.85%in FY 2006, 13.37% in FY 2007, 29.34% in FY 2008 and 19.02 in FY 2009.

UNIVERSITY OF EDUCATION OKARA CAMPUS

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INDUS MOTOR COMPANY LIMITED PROFESSIONAL PROJECT

5.5 TOTAL ASSETS:
2005 2006 2007
(Rupees in '000)

2008

2009

Total Assets

12,194,517

15,822,468

15,665,050

13,748,109

20,685,523

Comparative Chain Base

3,627,951

(157,418)

(1,916,941)

6,937,414

Percentage Comparative Chain Base 29.75%

-0.99%

-12.24%

50.46%

Percentage Comparative 2005 Base

129.75%

128.46%

112.74%

169.63%

Vertical Common Size

100.00%

100.00%

100.00%

100.00%

100.00%

Total assets were increased by 3.62 billions in FY 2006 as compared to the FY 2005, while decreasing trend of 157 millions and 1.91 billions was observed in FY 2007 and FY 2008 respectively as compared to the preceding years. It again increased by 6.93 billions in FY 2009 as compared to the FY 2008.

In percentage change an increase of 29.75% was recorded in FY 2006 as compared with previous year, while it decreased by 0.99% and 12.24% in FY 2007 and FY 2008 respectively as compared to the previous years. It gain increased by 50.46% in FY 2009 in comparison with FY 2008. As compared to the FY 2005 total assets increased by 28.46%, 12.74% and 69.63% in FY 2007, FY 2008 and FY 2009 respectively.

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50

INDUS MOTOR COMPANY LIMITED PROFESSIONAL PROJECT

5.6 LONG TERM DEBT:
2005 2006 2007
(Rupees in '000)

2008

2009

Long Term Debt

-

-

-

-

-

Comparative Chain Base

-

-

-

-

Percentage Comparative Chain Base

-

-

-

-

Percentage Comparative 2005 Base

-

-

-

-

Vertical Common Size

-

-

-

-

-

There is no long term debt of the company so there is no change in percentage also.

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INDUS MOTOR COMPANY LIMITED PROFESSIONAL PROJECT

5.7 TOTAL LIABILITIES AND EQUITY:
2005 2006 2007
(Rupees in '000)

2008

2009

Total Liabilities and Equity

12,194,517

15,822,468

15,665,050

13,748,109

20,685,523

Comparative Chain Base

3,627,951

(157,418)

(1,916,941)

6,937,414

Percentage Comparative Chain Base

29.75%

-0.99%

-12.24%

50.46%

Percentage Comparative 2005 Base

129.75%

128.46%

112.74%

169.63%

Vertical Common Size

100.00%

100.00%

100.00%

100.00%

100.00%

Total liabilities and share holder’s equity were increased by 3.62 billions in FY 2006 as compared to the FY 2005, while decreasing trend of 157 millions and 1.91 billions was observed in FY 2007 and FY 2008 respectively as compared to the preceding years. It again increased by 6.93 billions in FY 2009 as compared to the FY 2008.

In percentage change an increase of 29.75% was recorded in total liabilities and share holder’s equity in FY 2006 as compared with previous year, while it decreased by 0.99% and 12.24% in FY 2007 and FY 2008 respectively as compared to the previous years. It gain increased by 50.46% in FY 2009 in comparison with FY 2008. In comparison with the FY 2005 total liabilities and share holder’s equity increased by 28.46%, 12.74% and 69.63% in FY 2007, FY 2008 and FY 2009 respectively.

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INDUS MOTOR COMPANY LIMITED PROFESSIONAL PROJECT

6.1 SHORT TERM DEBT PAYING ABILITY:
6.1.1 NET WORKING CAPITAL: Net working capital is a financial metric which represents operating

liquidity available to a business. Along with fixed assets such as plant and equipment, working capital is considered a part of operating capital. It is calculated by following formula: Current Assets - Current Liabilities

2005
3,513,878

2006
4,651,103

2007
6,149,403

2008
5,885,153

2009
6,830,469

Interpretation:
Working capital of the company has always been maintained very high up to FY 2007. The company then reduced it in FY 2008 to avoid excessive working capital but in FY 2009 it again increased which shows company has sufficient capital to pay its liabilities.

UNIVERSITY OF EDUCATION OKARA CAMPUS 54

INDUS MOTOR COMPANY LIMITED PROFESSIONAL PROJECT 6.1.2 CURRENT RATIO: The current ratio is a financial ratio that measures whether or not a firm has enough resources to pay its debts over the next 12 months. It compares a firm's current assets to its current liabilities. It is expressed as follows: Current Assets Current Liabilities

2005
1.46 : 1

2006
1.49 : 1

2007
1.83 : 1

2008
2.56 : 1

2009
1.69 : 1

Interpretation:
Current Ratio of the company has a increasing trend up to FY 2008. It was minimum in FY 2005. As the graph shows that current ratio remains positive in last five years so the company has the ability to pay its current liabilities with its current assets. Current ratio was maximum in FY 2008 than once again it decreased in FY 2009 due to increase in liabilities

UNIVERSITY OF EDUCATION OKARA CAMPUS 55

INDUS MOTOR COMPANY LIMITED PROFESSIONAL PROJECT 6.1.3 ACID TEST RATIO: A stringent test that indicates whether a firm has enough short-term assets to cover its immediate liabilities without selling inventory. The acid-test ratio is far more strenuous than the working capital ratio, primarily because the working capital ratio allows for the inclusion of inventory assets. Current Assets - Inventory Current Liabilities

2005
1.05 : 1

2006
1.07 : 1

2007
1.44 : 1

2008
1.86 : 1

2009
1.28 : 1

Interpretation:
Quick ratio of the company has an increasing trend up to FY 2008 showing the adequacy in paying off the current liabilities. Then it decreased slightly in FY 2009. But as a whole the graph shows that company has a tendency that the most liquid assets of the company are in a position to payoff the current liabilities.

UNIVERSITY OF EDUCATION OKARA CAMPUS 56

INDUS MOTOR COMPANY LIMITED PROFESSIONAL PROJECT 6.1.4 CASH RATIO: The cash ratio is a formula for measuring the liquidity of the company by calculating the ratio between all cash and cash equivalent assets and all the current liabilities. The formula for calculating the cash ratio is as under: Marketable Securities + Cash Current Liabilities

2005
0.88 : 1

2006
0.79 : 1

2007
1.15 : 1

2008
1.16 : 1

2009
0.98 : 1

Interpretation:
Cash ratio of the company was quite good in FY 2005 and FY 2006, than it increased in FY 2007 and FY 2008 showing that company in not using cash to its best advantage. In FY 2009 the decrease in cash ratio shows that company has now started using the cash up to its maximum advantage.

UNIVERSITY OF EDUCATION OKARA CAMPUS 57

INDUS MOTOR COMPANY LIMITED PROFESSIONAL PROJECT 6.1.5 CASH FLOW FROM OPERATIONS RATIO: Cash flow from operations or operating cash flow ratio measure of how well current liabilities are covered by the cash flow generated from a company's operations. The formula for calculating the ratio is: Cash from Operations Current Liabilities

2005
0.12 : 1

2006
0.28 : 1

2007
0.38 : 1

2008
(0.21) : 1

2009
0.66 : 1

Interpretation:
Cash flow from operations ratio of the company was low in FY 2005 showing that the operating profit of the company was not meeting the need of short term liabilities well. Ratio increased in FY 2006 and FY 2007. But the company was facing the problems in FY 2008 of meeting the need of current liabilities from its operating profit due to the negative cash flow. In FY 2009 the ratio again increased and now the company is in a position to meet its short term cash needs well in time.

UNIVERSITY OF EDUCATION OKARA CAMPUS 58

INDUS MOTOR COMPANY LIMITED PROFESSIONAL PROJECT

6.2 LONG TERM DEBT PAYING ABILITY:
6.2.1 TIME INTEREST EARNED RATIO: The times interest earned ratio is an Indicator of a company’s ability to meet the interest payments on its debt. The times interest earned calculation is a corporation’s income before interest and income tax expense, divided by interest expense. The calculating method is: Earning before Interest and Tax Interest Expense

2005
25.48

2006
33.08

2007
187.44

2008
1,284.23

2009
78.09

Interpretation:
The times interest earned ratio of the company was very low in FY 2005 and FY 2006. This is due to the high interest expense of the company. In FY 2007 and FY 2008 a increasing trend is shown in the ratio which shows that company has reduced its interest expenses. But in FY 2009, after a massive decrease, company is still able to generate 78 times the expense of interest from its operations. UNIVERSITY OF EDUCATION OKARA CAMPUS 59

INDUS MOTOR COMPANY LIMITED PROFESSIONAL PROJECT 6.2.2 FIXED CHARGED COVERAGE RATIO: A ratio that indicates a firm's ability to satisfy fixed financing expenses, such as interest and leases. A ratio calculated by dividing profits before payment of interest and income taxes by interest paid on bonds and other long-term debt. It is calculated as the following: Earning before Interest and Tax Interest + Lease Payment + Principal Payment

2005
22.60

2006
32.10

2007
187.44

2008
1,284.23

2009
78.09

Interpretation:
Fixed charged coverage ratio of the company is mostly same as time interest earned ratio. It shows that company has no long term finances on which company has to pay interest. Company has the liability against leased assets in FY 2005 and FY 2006. Figure shows the increasing trend from FY 2005 to FY 2008 which means that company has better position to pay its debt expenses. Than it decreased in FY 2009 but still company is in good position. UNIVERSITY OF EDUCATION OKARA CAMPUS 60

INDUS MOTOR COMPANY LIMITED PROFESSIONAL PROJECT 6.2.3 DEBT RATIO: The ratio gives an idea to the leverage of the company along with the potential risks the company faces in terms of its debt-load. A low percentage means that the company is less dependent on leverage. The lower the percentage, the less leverage a company is using and the stronger its equity position. In general, the higher the ratio, the more risk that company is considered to have taken on. The formula for calculating the debt ratio is:

(
2005
63.30%

Total Liabilities Total Assets

)100
2008
31.36%

2006
60.45%

2007
48.65%

2009
50.22%

Interpretation:
Debt ratio of the company is significantly decreasing from FY 2005 to FY 2008. It reached to its lowest of 31.36% in FY 2008 but than there was increase in FY 2009. The decreasing trend of the debt ratio is due to the decrease in total liabilities. That is beneficial for company. But in FY 2009 the liabilities of the company increased but the assets of the company also increased.

UNIVERSITY OF EDUCATION OKARA CAMPUS 61

INDUS MOTOR COMPANY LIMITED PROFESSIONAL PROJECT 6.2.4 DEBT EQUITY RATIO: This ratio indicates how much the company is in debt by comparing what is owed to what is owned. A high debt to equity ratio could indicate that the company may be over-leveraged, and should look for ways to reduce its debt.

(
2005
0.00%

Long Term Debt Share Holder's Equity

)100
2008 2009
0.00%

2006
0.00%

2007
0.00%

0.00%

Interpretation:
The figure shows that company had enough equity to serve over period of time. The graph shows the strategy of the company that company is totally based on equity. Debt is not taken to run the operations of the company.

UNIVERSITY OF EDUCATION OKARA CAMPUS 62

INDUS MOTOR COMPANY LIMITED PROFESSIONAL PROJECT 6.2.5 DEBT TO TANGIBLE NETWORTH: Debt to tangible net worth ratio measures the degree of protection that exists for creditors. The lower the ratio the better is for company. The value is computed by dividing total liabilities by total equity minus intangible assets. The formula is:

(
2005
172.86%

Total Liabilities Owner's Equity - Intangible Assets

)100
2009
100.93%

2006
152.99%

2007
94.78%

2008
45.71%

Interpretation:
Debt to tangible net worth ratios shows the decreasing trend from FY 2005 to FY 2008 which is very good for the company. The decrease in the ratio is due to the decrease in the intangible assets of the company. The ratios increased once again FY 2009 due to increase in intangible assets of the company.

UNIVERSITY OF EDUCATION OKARA CAMPUS 63

INDUS MOTOR COMPANY LIMITED PROFESSIONAL PROJECT

6.3 SHORT TERM LIQUIDITY:
6.3.1 DAY’S SALES IN A/R: The ratios measure of the average number of days that a company takes to collect revenue after a sale has been made. The formula of the ratio is: Gross A/R Net Sales / 365 days

2005
13.09

2006
24.89

2007
15.86

2008
18.90

2009
26.02

Interpretation:
Accounts receivable turnover in days is 13 days in FY 2005 and then it increased in FY 2006 up to 25 days but then it decreased to 16 days in FY 2007. After this it

showed an increasing trend up to FY 2009. This shows that receivables management of the company is not improving as compared to the previous years and 7 days have been increased in this manner in FY 2009 as compared to the FY 2008.

UNIVERSITY OF EDUCATION OKARA CAMPUS 64

INDUS MOTOR COMPANY LIMITED PROFESSIONAL PROJECT 6.3.2 ACCOUNTS RECEIVABLE TURNOVER: Measures the number of times accounts receivable are collected during the year. This ratio measures the efficiency of credit and collection policies and the quality of outstanding average accounts receivable. The formula of the ratio is: Net Sales Gross A/R

2005
27.89

2006
14.66

2007
23.01

2008
19.32

2009
14.03

Interpretation:
Accounts receivable turnover of the company was maximum in FY 2005 i.e. 27.89 times. Than it decreased to 14.66 times in FY 2006. Once again increase was recorded in FY 2007 of 23.01 times. Than decreasing trend was recorded in FY 2008 and FY 2009. This shows that company in not managing its receivable in better ways as compared to the previous years. Company is collecting receivable only 14.03 times in FY 2009 in comparison with the previous years. This is all due to the decrease in the volume of sales and increase in trade receivable. UNIVERSITY OF EDUCATION OKARA CAMPUS 65

INDUS MOTOR COMPANY LIMITED PROFESSIONAL PROJECT 6.3.3 DAY’S SALES IN INVENTORY: A financial measure of a company's performance that gives investors an idea of how long it takes a company to turn its inventory into sales. Generally, the lower (shorter) the day’s sale in inventory is the better. It can be calculated by following formula: Ending Inventory Cost of Goods Sold / 365 days

2005
11.80

2006
15.55

2007
5.57

2008
10.92

2009
14.20

Interpretation:
Day’s sales in inventory shows and increasing trend of 4 day in FY 2007 as compared to the previous year. Than it decreased to 5.57 days in FY 2007. After this increase is recorded in FY 2007 and FY 2008. Company is taking 14.20 days to convert its inventory into sales in FY 2009, while company was taking 10.92 days in FY 2008. The inventory management was best in FY 2007 in which company was taking 5.57 days.

UNIVERSITY OF EDUCATION OKARA CAMPUS 66

INDUS MOTOR COMPANY LIMITED PROFESSIONAL PROJECT 6.3.4 INVENTORY TURNOVER: The inventory turnover is an equation that measures the number of times inventory is sold or used over in a period such as a year. The formula is expressed as follow: Cost of Goods Sold Average Inventory

2005
42.20

2006
29.20

2007
37.38

2008
45.49

2009
28.36

Interpretation:
In FY 2005, inventory turnover was 42.20 times but then it decreased in FY 2006. In FY 2007 and FY 2008 it increased. In FY 2009, there was a decrease in inventory turnover and it reached to 28.36 times. The reason behind a low turnover is the increase in cost of sales. The cost of sales showed a massive increase because of increased cost of raw material.

UNIVERSITY OF EDUCATION OKARA CAMPUS 67

INDUS MOTOR COMPANY LIMITED PROFESSIONAL PROJECT

6.4 PROFITABILITY INDEX:
6.4.1 NET PROFIT MARGIN: A ratio of profitability calculated as net profits divided by net sales. It measures how much out of every dollar of sales a company actually keeps in earnings. The formula to calculate the net profit margin is:

(
2005
5.38%

Net Income Net Sales

)100
2008
5.53%

2006
7.52%

2007
7.03%

2009
3.66%

Interpretation:
Net profit of the company shows an increasing trend in up to FY 2006. Than from FY 2007 to FY 2009 it shows the decrease in the net profit. Net profit is minimum in FY 2009 i.e.3.66% as compared to the previous years.

UNIVERSITY OF EDUCATION OKARA CAMPUS 68

INDUS MOTOR COMPANY LIMITED PROFESSIONAL PROJECT 6.4.2 TOTAL ASSETS TURNOVER: A financial ratio that indicates the effectiveness with which a firm's management uses its assets to generate sales. A relatively high ratio tends to reflect intensive use of assets. The formula for calculating the ratio is: Net Sales Total Assets

2005
2.26

2006
2.23

2007
2.49

2008
3.01

2009
1.83

Interpretation:
The ratio has decreased to 2.23 in FY 2006 from 2.26 in FY 2005. Then it showed a very good increase in FY 2007 and FY 2008 and reached to 2.49 and 3.01 respectively. But once again ratio decreased to 1.83 in FY 2009. The reason behind this decrease is the decrease in volume of sales.

UNIVERSITY OF EDUCATION OKARA CAMPUS 69

INDUS MOTOR COMPANY LIMITED PROFESSIONAL PROJECT 6.4.3 RETURN ON ASSETS: An indicator of how profitable a company is relative to its total assets. ROA gives an idea as to how efficient management is at using its assets to generate earnings. The formula for calculating the ratio is:

(
2005
12.17%

Net Income Total Assets

)100
2008
16.66%

2006
16.74%

2007
17.53%

2009
6.70%

Interpretation:
The ratio has a increasing trend up to FY 2007. This increase is due to the increase in total assets. And then it showed the decreasing trend in FY 2008 and FY 2009. The decrease in the ratio is FY 2007 was due to the decrease in total assets as compared to the previous years while the reason of decrease in the FY 2009 is the decrease in the net income of the company.

UNIVERSITY OF EDUCATION OKARA CAMPUS 70

INDUS MOTOR COMPANY LIMITED PROFESSIONAL PROJECT 6.4.4 OPERATING INCOME MARGIN: A ratio used to measure a company's pricing strategy and operating efficiency. Operating margin is a measurement of what proportion of a company's revenue is left over after paying for variable costs of production such as wages, raw materials, etc. The formula for calculating the ratio is:

(
2005
7.73%

Operating Income Net Sales

)100
2008
7.40%

2006
9.93%

2007
9.38%

2009
3.97%

Interpretation:
The operating income margin of the company has an increasing trend up to FY 2006. But then it decreased slightly in FY 2007 to 9.38% from 9.93% in FY 2006. The trend remains decreasing in FY 2008 and FY 2009. The decrease in last two years is due to the decrease in operating profit of the company.

UNIVERSITY OF EDUCATION OKARA CAMPUS 71

INDUS MOTOR COMPANY LIMITED PROFESSIONAL PROJECT 6.4.5 OPERATING ASSETS TURNOVER: A financial ratio that indicates the effectiveness with which a firm's management uses its operating assets to generate sales. The calculation technique for the ratio is: Net Sales Operating Assets

2005
30.63

2006
25.02

2007
20.53

2008
11.53

2009
9.71

Interpretation:
The turnover is showing a decreasing trend up to FY 2009. The reason behind the trend is the increase in operating assets.

UNIVERSITY OF EDUCATION OKARA CAMPUS 72

INDUS MOTOR COMPANY LIMITED PROFESSIONAL PROJECT 6.4.6 RETURN ON OPERATING ASSETS: An indicator of how profitable a company is relative to its operating assets. Return on operating assets gives an idea as to how efficient management is at using its operating assets to generate earnings. The ratio is calculated as follow:

(
2005
164.77%

Net Income Operating Assets

)100
2008
63.77%

2006
188.06%

2007
144.29%

2009
35.51%

Interpretation:
The ratio has a increasing trend up to FY 2006. This increase is due to the increase in operating assets. And then it showed the decreasing trend in FY 2007, FY 2008 and FY 2009. The reason behind the decrease in the ratio is decrease in the net income of the company.

UNIVERSITY OF EDUCATION OKARA CAMPUS 73

INDUS MOTOR COMPANY LIMITED PROFESSIONAL PROJECT 6.4.7 SALES TO FIXED ASSETS: Sales to fixed assets ratio measures a company's ability to generate net sales from fixed asset investments specifically property, plant and equipment. A higher the ratio shows that the company has been more effective in using the investment in fixed assets to generate revenues. The ratio is calculated by following formula: Net Sales Fixed Assets

2005
27.63

2006
20.53

2007
18.66

2008
10.27

2009
9.62

Interpretation:
The ratio has shown a decreasing trend from FY 2005 to FY 2009. The ratio was highest in FY 2005 i.e. 27.63 and lowest in FY 2009 i.e. 9.62. It is all because of the greater increase in fixed assets as compared to the increase in sales volume of the company. This all shows that company is not making productive use of its fixed assets by generating good volume of sales.

UNIVERSITY OF EDUCATION OKARA CAMPUS 74

INDUS MOTOR COMPANY LIMITED PROFESSIONAL PROJECT 6.4.8 RETURN ON EQUITY: The amount of net income returned as a percentage of shareholders equity. Return on equity measures a corporation's profitability by revealing how much profit a company generates with the money shareholders have invested. The formula for the ratio is:

(
2005
33.17%

Net Income Total Equity

)100
2008
24.28%

2006
42.32%

2007
34.13%

2009
13.45%

Interpretation:
Return on equity of the company shows an increasing trend in FY 2006 as compared to the FY 2005. The increase was due to the increase in total equity of the company. Than it shows a decreasing trend from FY 2007 to FY 2009. Here total equity is still increasing but the decreasing trend is due to the decrease in net income of the company.

UNIVERSITY OF EDUCATION OKARA CAMPUS 75

INDUS MOTOR COMPANY LIMITED PROFESSIONAL PROJECT 6.4.9 GROSS PROFIT MARGIN: A financial metric used to assess a firm's financial health by revealing the proportion of money left over from revenues after accounting for the cost of goods sold. Gross profit margin serves as the source for paying additional expenses and future savings. It can be calculated as follow:

(
2005
9.80%

Gross Profit Net Sales

)100
2008
9.29%

2006
11.77%

2007
11.37%

2009
6.14%

Interpretation:
The gross shows an increasing trend up to FY 2006. Than there is a decrease in gross profit in FY 2007 and trend remains same in FY 2008 and FY 2009. The decrease in FY 2008 was due to the increase in cost of goods sold. While the decrease in FY 2009 is due to the low sales of the company.

UNIVERSITY OF EDUCATION OKARA CAMPUS 76

INDUS MOTOR COMPANY LIMITED PROFESSIONAL PROJECT

6.5 INVESTOR’S ANALYSIS:
6.5.1 EARNING PER SHARE: The portion of a company's profit allocated to each outstanding share of common stock. Earnings per share serve as an indicator of a company's profitability. It is calculated as follow: Net Income No. of Equity Shares

2005
18.89

2006
33.70

2007
34.93

2008
29.15

2009
17.62

Interpretation:
EPS of the company has increasing trend from FY 2005 to FY 2007. It is due to the high income earned by the company. Than suddenly EPS decreased in FY2008 and FY 2009 rapidly. This decrease in EPS shows that company has low earnings in last two years as compared to the previous years.

UNIVERSITY OF EDUCATION OKARA CAMPUS 77

INDUS MOTOR COMPANY LIMITED PROFESSIONAL PROJECT 6.5.2 PRICE EARNING RATIO: The price earning ratio is a way to show how a company’s earning relate to a stock price. The higher the price earning the more earnings growth investors are expecting and the higher premium they are willing to pay for that anticipated growth. The formula for the ratio is: Market Price Per Share Earning Per Share

2005
4.76

2006
5.67

2007
8.75

2008
6.86

2009
6.11

Interpretation:
The price earning ratios shows an increasing trend from FY 2005 to FY 2009. This increase is due to the increase in EPS. Than ratio decreased in FY 2008 and FY 2009. The decrease in the price earning ratio is due to decrease in EPS. But the decrease in market price of share is also recorded.

UNIVERSITY OF EDUCATION OKARA CAMPUS 78

INDUS MOTOR COMPANY LIMITED PROFESSIONAL PROJECT 6.5.3 DIVIDEND PAYOUT RATIO: The dividend payout ratio measures what a company’s payout to investors in the form of dividend. The ratio can be calculated by the following formula:

(
2005
52.94%

Dividend Per Share Earning Per Share

)100
2008
36.02%

2006
35.61%

2007
37.22%

2009
56.75%

Interpretation:
The dividend payout ratio of the company is high in the FY 2005 due to the low EPS. Than it remains stable in FY 2006, FY 2007 and FY 2008 because of almost same dividend per share of the company in these years. In FY 2009 the ratio decrease due to the decrease in EPS of the company in that year.

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INDUS MOTOR COMPANY LIMITED PROFESSIONAL PROJECT 6.5.4 DIVIDEND YIELD RATIO: The dividend yield ratio allows investors to compare the latest dividend they received with the current market value of the share as an indictor of the return they are earning on their shares. The formula for calculating the ratio is:

(
2005
11.11%

Dividend Per Common Share Market Price Per Share

)100
2008
5.25%

2006
6.28%

2007
4.26%

2009
9.28%

Interpretation:
The trend is negative in this ratio up to FY 2007 because of the increase in the prices of the shares up to FY 2007. In FY 2008 and FY 2009 ratio shows increasing trend. This increase is due to the decrease in the market price of share in those years.

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CONCLUSION
Indus Motor Company, with support from Toyota Motor Corporation has worked closely with its 62 local vendors for increased localization and technology transfer. The company has expanded its dealership network across Pakistan to 29 dealerships and this will increase further in the coming years.

IMC’s products, renowned for their quality, durability, safety, fuel economy and resale value, are appreciated by customers in Pakistan. There has been high demand for the Corolla which is the market leader in this segment. Pakistan is the highest producer of Corolla in Asia.

IMC expect 2009/10 to be a better year but a critical one for sustainable growth and development of Pakistan’s economy.

 

Profit margins are still under pressure due to foreign currency fluctuations. IMC is working on definitive plans to expand dealer network and launch new CKD/CBU products.

 

IMC will do utmost to optimize costs without compromising on quality and delivery. IMC has improved its market share in a declining market but will continue to remain aggressive, focused and innovative in their marketing activities coupled with dealership improvements.

It is essential for the government to effectively address the following challenges concerning consolidation of macroeconomic stability:

Mitigating the effects of the global economic crisis, in particular on manufacturing and exports. UNIVERSITY OF EDUCATION OKARA CAMPUS 81

INDUS MOTOR COMPANY LIMITED PROFESSIONAL PROJECT  Implementing tax policy and administration reforms and managing the security issues engulfing the nation;  Make a concrete plan to revisit the AIDP and achieve implementation recognizing the recommendations made by OEMs and the Pakistan Automobile Manufacturers Association.

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REFRENCES
1. Indus Motor Company Limited Annual Report 2005 2. Indus Motor Company Limited Annual Report 2006 3. Indus Motor Company Limited Annual Report 2007 4. Indus Motor Company Limited Annual Report 2008 5. Indus Motor Company Limited Annual Report 2009 6. James C. Van Horn, John M. Wachowicz, Jr (1992) Fundaments of Financial

Management, “12th Edition”
7. http://www.accaglobal.com 8. http://www.toyota-indus.com 9. http://economicpakistan.wordpress.com/2009/02/01/automobile-industry/ 10. http://www.wisegeek.com/what-is-trend-analysis.htm 11. http://www.finpipe.com/equity/finratan.htm 12. http://www.zenwealth.com/BusinessFinanceOnline/RA/RatioAnalysis.html 13. http://www.quickmba.com/strategy/swot/ 14. http://www.netmba.com/finance/financial/ratios/ 15. http://cbdd.wsu.edu/kewlcontent/cdoutput/TOM505/page26.htm 16. http://www.financialmodelingguide.com/financial-ratios/financial-ratio-limitations/ 17. http://www.companypartners.com/content/resource/understanding-financial-ratios#q7 18. http://www.stocktrades.ca/stock-picking/limitations-of-financial-ratios/ 19. http://www.referenceforbusiness.com/management/Pr-Sa/SWOT-Analysis.html 20. http://fmaccounting.com/basic-understanding-of-the-swot-%20analysis/ 21. http://www.pama.org.pk/historicaldata.htm 22. http://www.businessplans.org/ratios.html 23. http://dictionary.reference.com/browse/acid-test+ratio?jss=1

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INDUS MOTOR COMPANY LIMITED PROFESSIONAL PROJECT
24. http://www.opfblog.com/8447/inflation-and-its-impact-on-the-pakistan-economy/ 25. http://fingad.duedee.com/2008/7/26/Indus-Motors-Company-Limited------

Review/37451/
26. http://www.kitchaloo.com/definitions/investing-definitions/define-net-profit-ratio 27. http://www.valuebasedmanagement.net/methods_roce.html 28. http://financial-dictionary.thefreedictionary.com/Return+on+equity 29. http://www.vitalentusa.com/learn/turnover.php 30. http://www.investopedia.com/terms/g/gearingratio.asp 31. http://www.investopedia.com/terms/e/eps.asp 32. http://moneyterms.co.uk/interest_cover/ 33. http://www.egmcartech.com/2009/01/21/toyota-beats-gm-to-become-the-worlds-

largest-automaker/
34. http://www.toyota-indus.com/company/history.asp 35. http://www.toyota-indus.com/concern/environment.asp 36. http://www.toyota-indus.com/concern/default.asp 37. http://www.brecorder.com/index.php?id=948832&currPageNo=1&query=&search=&

term=&supDate
38. http://findarticles.com/p/articles/mi_hb092/is_n9_v28/ai_n28693653/ 39. http://www.mindbranch.com/listing/product/R302-1104.html 40. http://www.thenews.com.pk/daily_detail.asp?id=134844 41. http://www.pakistaneconomist.com/issue2000/issue19&20/i&e7.html

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Annexure I

Indus Motor Company Limited Summarized Income Statement For The Year Ended June 30,

2005

2006

2007 (Rupees in '000)

2008

2009

Sales

27,601,034

35,236,535

39,061,226

41,423,843

37,864,604

Raw material consumed Stores and spares consumed Salaries, wages and other benefits Rent, rate and taxes Repairs and maintenance Depreciation Legal and professional Travelling Transportation Insurance Vehicle running Communication Printing, stationery and office supplies Subscription Fuel and power Running royalty Technical fee Parts development Staff catering, transport and

21561543 475,117 149,174 1,760 64,519 260,030 592 11,741 2,289 9,272 4,533 2,684 3,079 90 88,491 184,203 39,008 4,572 -

26,677,026 607,661 215,007 1,732 86,301 346,626 334 16,021 3,033 15,766 5,068 4,128 3,211 53 88,024 220,920 29,863 3,058

27,846,974 643,887 229,973 1,833 84,910 321,653 797 17,294 1,913 19,168 4,812 4,410 3,006 288 125,738 246,314 15,968 1,836

29,654,126 578,773 290,297 10,114 98,800 410,968 406 11,714 2,154 19,423 5,932 6,675 3,819 119 107,121 278,566 21,552 2,211

29,789,139 523,311 310,377 3,137 63,221 732,376 383 10,555 1,063 26,841 10,109 5,895 2,084 75 121,542 485,092 20,547 -

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uniforms Staff training Opening work-in-process Closing work-in-process Cost of goods manufactured Opening stock Purchases Closing stock 17 104,553 (106,130) 22,862,256 374,806 2,462,855 (805,061) 82,812 3,314 106,130 (95,520) 28,425,858 805,061 3,182,129 (1,324,142) 104,726 16,737 95,520 (64,533) 29,740,106 1,324,142 4,084,717 (528,333) 105,501 21,225 64,533 (71,959) 31,629,503 528,333 6,541,304 (1,123,784) 102,413 11,638 71,959 (95,076) 32,200,995 1,123,784 3,597,898 (1,382,259)

Cost of Goods Sold Gross Profit
Distribution Expenses Administration Expenses Operating Expenses

24,894,856 2,706,178
294,304 277,653 571,957

31,088,906 4,147,629
404,917 242,456 647,373

34,620,632 4,440,594
509,986 265,302 775,288

37,575,356 3,848,487
487,373 297,284 784,657

35,540,418 2,324,186
469,985 352,249 822,234

Operating Profit 2,134,221
Other Operating Expenses 186,614 1,947,607 Other Operating Income 449,443

3,500,256
321,746 3,178,510 1,021,212

3,665,306
348,430 3,316,876 935,290

3,063,830
306,193 2,757,637 786,834

1,501,952
156,479 1,345,473 727,080

Profit before Interest and Tax
Finance Costs

2,397,050
94,093

4,199,722
126,945

4,252,166
22,685

3,544,471
2,760

2,072,553
26,540

Profit before Taxation
Taxation

2,302,957
818,311

4,072,777
1,424,313

4,229,481
1,483,780

3,541,711
1,250,866

2,046,013
660,911

Profit After Taxation

1,484,646

2,648,464

2,745,701

2,290,845

1,385,102

Earning Per Share

18.89

33.70

34.93

29.15

17.62

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Annexure I.I

Indus Motor Company Limited Comparative Chain Base Income Statement For The Year Ended June 30,

2006 Sales Raw material consumed Stores and spares consumed Salaries, wages and other benefits Rent, rate and taxes Repairs and maintenance Depreciation Legal and professional Travelling Transportation Insurance Vehicle running Communication Printing, stationery and office supplies Subscription Fuel and power Running royalty Technical fee Parts development Staff catering, transport and uniforms Staff training Others Opening work-in-process Closing work-in-process Cost of goods manufactured 7,635,501 5,115,483 132,544 65,833 (28) 21,782 86,596 (258) 4,280 744 6,494 535 1,444 132 (37) (467) 36,717 (9,145) (1,514) 82,812 3,297 4,171 1,577 10,610 5,563,602

2007 3,824,691 1,169,948 36,226 14,966 101 (1,391) (24,973) 463 1,273 (1,120) 3,402 (256) 282 (205) 235 37,714 25,394 (13,895) (1,222) 21,914 13,423 11,592 (10,610) 30,987 1,314,248

2008 2,362,617 1,807,152 (65,114) 60,324 8,281 13,890 89,315 (391) (5,580) 241 255 1,120 2,265 813 (169) (18,617) 32,252 5,584 375 775 4,488 (9,449) (30,987) (7,426) 1,889,397

2009 (3,559,239) 135,013 (55,462) 20,080 (6,977) (35,579) 321,408 (23) (1,159) (1,091) 7,418 4,177 (780) (1,735) (44) 14,421 206,526 (1,005) (2,211) (3,088) (9,587) (3,119) 7,426 (23,117) 571,492

(Rupees in '000)

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Opening stock Purchases Closing stock 430,255 719,274 (519,081) 519,081 902,588 795,809 (795,809) 2,456,587 (595,451) 595,451 (2,943,406) (258,475)

Cost of Goods Sold Gross Profit
Distribution Expenses Administration Expenses Operating Expenses

6,194,050 1,441,451
110,613 (35,197) 75,416

3,531,726 292,965
105,069 22,846 127,915

2,954,724 (592,107)
(22,613) 31,982 9,369

(2,034,938) (1,524,301)
(17,388) 54,965 37,577

Operating Profit
Other Operating Expenses

1,366,035
135,132 1,230,903

165,050
26,684 138,366 (85,922)

(601,476)
(42,237) (559,239) (148,456)

(1,561,878)
(149,714) (1,412,164) (59,754)

Other Operating Income

571,769

Profit before Interest and Tax
Finance Costs

1,802,672
32,852

52,444
(104,260)

(707,695)
(19,925)

(1,471,918)
23,780

Profit before Taxation
Taxation

1,769,820
606,002

156,704
59,467

(687,770)
(232,914)

(1,495,698)
(589,955)

Profit After Taxation

1,163,818

97,237

(454,856)

(905,743)

Earning Per Share

15

1

(6)

(12)

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Annexure I.II

Indus Motor Company Limited Percentage Comparative Chain Base Income Statement For The Year Ended June 30,

2006 Sales Raw material consumed Stores and spares consumed Salaries, wages and other benefits Rent, rate and taxes Repairs and maintenance Depreciation Legal and professional Travelling Transportation Insurance Vehicle running Communication Printing, stationery and office supplies Subscription Fuel and power Running royalty Technical fee Parts development Staff catering, transport and uniforms Staff training Others Opening work-in-process Closing work-in-process Cost of goods manufactured Opening stock Purchases Closing stock 27.66% 23.73% 27.90% 44.13% -1.59% 33.76% 33.30% -43.58% 36.45% 32.50% 70.04% 11.80% 53.80% 4.29% -41.11% -0.53% 19.93% -23.44% -33.11% #DIV/0! 19394.12% 372.74% 1.51% -10.00% 24.34% 114.79% 29.20% 64.48%

2007 10.85% 4.39% 5.96% 6.96% 5.83% -1.61% -7.20% 138.62% 7.95% -36.93% 21.58% -5.05% 6.83% -6.38% 443.40% 42.85% 11.49% -46.53% -39.96% 26.46% 405.04% 219.13% -10.00% -32.44% 4.62% 64.48% 28.36% -60.10%

2008 6.05% 6.49% -10.11% 26.23% 451.77% 16.36% 27.77% -49.06% -32.27% 12.60% 1.33% 23.28% 51.36% 27.05% -58.68% -14.81% 13.09% 34.97% 20.42% 0.74% 26.81% -55.97% -32.44% 11.51% 6.35% -60.10% 60.14% 112.70%

2009 -8.59% 0.46% -9.58% 6.92% -68.98% -36.01% 78.21% -5.67% -9.89% -50.65% 38.19% 70.41% -11.69% -45.43% -36.97% 13.46% 74.14% -4.66% -100.00% -2.93% -45.17% -41.96% 11.51% 32.13% 1.81% 112.70% -45.00% 23.00%

(Rupees in '000)

Cost of Goods Sold Gross Profit
Distribution Expenses Administration Expenses

24.88% 53.27%
37.58% -12.68%

11.36% 7.06%
25.95% 9.42%

8.53% -13.33%
-4.43% 12.05%

-5.42% -39.61%
-3.57% 18.49%

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Operating Expenses 13.19% 19.76% 1.21% 4.79%

Operating Profit
Other Operating Expenses Other Operating Income

64.01%
72.41% 63.20% 127.22%

4.72%
8.29% 4.35% -8.41%

-16.41%
-12.12% -16.86% -15.87%

-50.98%
-48.90% -51.21% -7.59%

Profit before Interest and Tax
Finance Costs

75.20%
34.91%

1.25%
-82.13%

-16.64%
-87.83%

-41.53%
861.59%

Profit before Taxation
Taxation

76.85%
74.06%

3.85%
4.18%

-16.26%
-15.70%

-42.23%
-47.16%

Profit After Taxation Earning Per Share

78.39% 78.40%

3.67% 3.65%

-16.57% -16.55%

-39.54% -39.55%

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Annexure I.III

Indus Motor Company Limited Percentage Comparative 2005 Base Income Statement For The Year Ended June 30,

2006 Sales Raw material consumed Stores and spares consumed Salaries, wages and other benefits Rent, rate and taxes Repairs and maintenance Depreciation Legal and professional Travelling Transportation Insurance Vehicle running Communication Printing, stationery and office supplies Subscription Fuel and power Running royalty Technical fee Parts development Staff catering, transport and uniforms Staff training Others Opening work-in-process Closing work-in-process Cost of goods manufactured Opening stock Purchases Closing stock 127.66% 123.73% 127.90% 144.13% 98.41% 133.76% 133.30% 56.42% 136.45% 132.50% 170.04% 111.80% 153.80% 104.29% 58.89% 99.47% 119.93% 76.56% 66.89%

2007 141.52% 129.15% 135.52% 154.16% 104.15% 131.60% 123.70% 134.63% 147.30% 83.57% 206.73% 106.15% 164.31% 97.63% 320.00% 142.09% 133.72% 40.94% 40.16%

2008 150.08% 137.53% 121.82% 194.60% 574.66% 153.13% 158.05% 68.58% 99.77% 94.10% 209.48% 130.86% 248.70% 124.03% 132.22% 121.05% 151.23% 55.25% 48.36%

2009 137.19% 138.16% 110.14% 208.06% 178.24% 97.99% 281.65% 64.70% 89.90% 46.44% 289.48% 223.01% 219.63% 67.68% 83.33% 137.35% 263.35% 52.67% 0.00% #DIV/0! 68458.82% 385.52% 68.83% 89.58% 140.85% 299.83% 146.09% 171.70%

(Rupees in '000)

#DIV/0! #DIV/0! #DIV/0! 19494.12% 98452.94% 124852.94% 472.74% 1508.67% 664.25% 101.51% 90.00% 124.34% 214.79% 129.20% 164.48% 91.36% 60.81% 130.08% 353.29% 165.85% 65.63% 61.72% 67.80% 138.35% 140.96% 265.60% 139.59%

Cost of Goods Sold Gross Profit
Distribution Expenses

124.88% 153.27%
137.58%

139.07% 164.09%
173.29%

150.94% 142.21%
165.60%

142.76% 85.88%
159.69%

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Administration Expenses Operating Expenses 87.32% 113.19% 95.55% 135.55% 107.07% 137.19% 126.87% 143.76%

Operating Profit
Other Operating Expenses Other Operating Income

164.01%
172.41% 163.20% 227.22%

171.74%
186.71% 170.31% 208.10%

143.56%
164.08% 141.59% 175.07%

70.37%
83.85% 69.08% 161.77%

Profit before Interest and Tax
Finance Costs

175.20%
134.91%

177.39%
24.11%

147.87%
2.93%

86.46%
28.21%

Profit before Taxation
Taxation

176.85%
174.06%

183.65%
181.32%

153.79%
152.86%

88.84%
80.77%

Profit After Taxation Earning Per Share

178.39% 178.40%

184.94% 184.91%

154.30% 154.31%

93.30% 93.28%

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Annexure I.IV

Indus Motor Company Limited Comparative Vertical Common Size Income Statement For The Year Ended June 30,

2005 Sales Raw material consumed Stores and spares consumed Salaries, wages and other benefits Rent, rate and taxes Repairs and maintenance Depreciation Legal and professional Travelling Transportation Insurance Vehicle running Communication Printing, stationery and office supplies Subscription Fuel and power Running royalty Technical fee Parts development Staff catering, transport and uniforms Staff training Others Opening work-in-process Closing work-in-process Cost of goods manufactured Opening stock Purchases Closing stock 100.00% 78.12% 1.72% 0.54% 0.01% 0.23% 0.94% 0.00% 0.04% 0.01% 0.03% 0.02% 0.01% 0.01% 0.00% 0.32% 0.67% 0.14% 0.02% 0.00% 0.00% 0.00% 0.38% -0.38% 82.83% 1.36% 8.92% -2.92%

2006 100.00% 75.71% 1.72% 0.61% 0.00% 0.24% 0.98% 0.00% 0.05% 0.01% 0.04% 0.01% 0.01% 0.01% 0.00% 0.25% 0.63% 0.08% 0.01% 0.24% 0.01% 0.02% 0.30% -0.27% 80.67% 2.28% 9.03% -3.76%

2007 (Rupees in '000) 100.00% 71.29% 1.65% 0.59% 0.00% 0.22% 0.82% 0.00% 0.04% 0.00% 0.05% 0.01% 0.01% 0.01% 0.00% 0.32% 0.63% 0.04% 0.00% 0.27% 0.04% 0.04% 0.24% -0.17% 76.14% 3.39% 10.46% -1.35%

2008 100.00% 71.59% 1.40% 0.70% 0.02% 0.24% 0.99% 0.00% 0.03% 0.01% 0.05% 0.01% 0.02% 0.01% 0.00% 0.26% 0.67% 0.05% 0.01% 0.25% 0.05% 0.02% 0.16% -0.17% 76.36% 1.28% 15.79% -2.71%

2009 100.00% 78.67% 1.38% 0.82% 0.01% 0.17% 1.93% 0.00% 0.03% 0.00% 0.07% 0.03% 0.02% 0.01% 0.00% 0.32% 1.28% 0.05% 0.00% 0.27% 0.03% 0.01% 0.19% -0.25% 85.04% 2.97% 9.50% -3.65%

Cost of Goods Sold Gross Profit

90.20% 9.80%

88.23% 11.77%

88.63% 11.37%

90.71% 9.29% 95

93.86% 6.14%

UNIVERSITY OF EDUCATION OKARA CAMPUS

INDUS MOTOR COMPANY LIMITED PROFESSIONAL PROJECT
Distribution Expenses Administration Expenses Operating Expenses 1.07% 1.01% 2.07% 1.15% 0.69% 1.84% 1.31% 0.68% 1.98% 1.18% 0.72% 1.89% 1.24% 0.93% 2.17%

Operating Profit
Other Operating Expenses Other Operating Income

7.73%
0.68% 7.06% 1.63%

9.93%
0.91% 9.02% 2.90%

9.38%
0.89% 8.49% 2.39%

7.40%
0.74% 6.66% 1.90%

3.97%
0.41% 3.55% 1.92%

Profit before Interest and Tax
Finance Costs

8.68%
0.34%

11.92%
0.36%

10.89%
0.06%

8.56%
0.01%

5.47%
0.07%

Profit before Taxation
Taxation

8.34%
2.96%

11.56%
4.04%

10.83%
3.80%

8.55%
3.02%

5.40%
1.75%

Profit After Taxation Earning Per Share

5.38% 1889.00%

7.52% 1989.00%

7.03% 2089.00%

5.53% 2189.00%

3.66% 2289.00%

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Annexure II

Indus Motor Company Limited Summarized Balance Sheet As on June 30,

ASSETS Current Assets
Stores and Spares Raw material and components Work in process Finished goods Vehicles Spare parts Special service tools and publications Provision for slow moving stock In transit Stock-in-trade Trade debts Current maturity of finance under musharika arrangements Loans and advances Short-term prepayments Accrued mark-up Other receivables Investments Taxation-net Cash and bank balances

2005

2006

2007
(Rupees in '000)

2008

2009

137,028 1,380,676 106,130 214,482 436,479 153,755 345 876,988 3,168,855 384,511 29,259

226,169 1,627,463 95,520 744,469 413,268 165,027 1,378 912,191 3,959,316 738,281 5,811

227,191 1,108,149 64,533 59,162 283,400 185,549 222 1,158,936 2,859,951 665,647 3,710

232,142 917,921 71,959 277,233 601,065 279,052 851 (43,308) 532,856 2,637,629 1,332,832 -

128,483 1,384,179 95,076 613,117 498,823 356,487 2,846 (128,752) 1,267,082 4,088,858 1,736,631 -

302,888 4,371 46,543 302,171

414,338 9,134 76,211 1,250,217

426,165 47,523 132,634 605,725

737,372 23,148 35,012 74,360 54,171

894,459 16,876 50,944 67,902 9,731,166

82,315 6,719,999

7,416,180

48,520 8,543,263

209,533 4,328,585

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TOTAL CURRENT ASSETS

11,177,940

14,095,657

13,560,329

9,664,784

16,715,319

Non-Current Assets
Long-term loans Long-term deposits Finance under musharika arrangements TOTAL NON-CURRENT ASSETS 388 5,149 12,153 17,690 1,019 5,181 4,021 10,221 4,240 6,629 10,869 42,341 7,222 49,563 28,509 7,222 35,731

Fixed Assets
Property, plant and equipment Capital work-in-progress Intangible Assets TOTAL FIXED ASSETS 901,035 87,307 10,545 998,887 1,408,314 302,153 6,123 1,716,590 1,902,912 187,372 3,568 2,093,852 3,592,271 438,696 2,795 4,033,762 3,900,977 29,524 3,972 3,934,473

TOTAL ASSETS

12,194,517

15,822,468

15,665,050

13,748,109

20,685,523

LIABILITIES AND SHAREHOLDER'S EQUITY LIABILITIES
Current Liabilities Trade and other payables Advances from customers and dealers Accrued mark-up Short-term running finances Current portion of liabilities against assets subject to finance lease Taxation - net TOTAL CURRENT LIABILITIES

2005

2006

2007
(Rupees in '000)

2008

2009

2,022,227 5,603,342 10,568 27,925 -

2,599,911 6,620,869 22,250 5,735 195,789

2,892,017 4,514,480 715 3,714 -

2,793,554 985,972 105 -

3,942,988 5,926,529 673 14,660

7,664,062

9,444,554

7,410,926

3,779,631

9,884,850

UNIVERSITY OF EDUCATION OKARA CAMPUS

99

INDUS MOTOR COMPANY LIMITED PROFESSIONAL PROJECT
Non-current Liabilities Liabilities against assets subject to finance lease Deferred taxation TOTAL NON-CURRENT LIABILITIES 11,957 3,871 -

42,693 54,650

116,164 120,035

210,149 210,149

532,138 532,138

503,700 503,700

TOTAL LIABILITIES Shareholder's Equity Paid up capital Reserves TOTAL EQUITY

7,718,712

9,564,589

7,621,075

4,311,769

10,388,550

786,000 3,689,805 4,475,805

786,000 5,471,879 6,257,879

786,000 7,257,975 8,043,975

786,000 8,650,340 9,436,340

786,000 9,510,973 10,296,973

TOTAL LIABILITIES AND SHAREHOLDER'S EQUITY

12,194,517

15,822,468

15,665,050

13,748,109

20,685,523

UNIVERSITY OF EDUCATION OKARA CAMPUS

100

INDUS MOTOR COMPANY LIMITED PROFESSIONAL PROJECT

Annexure II.I

Indus Motor Company Limited Comparative Chain Base Balance Sheet As on June 30,

ASSETS Current Assets
Stores and Spares Raw material and components Work in process Finished goods Vehicles Spare parts Special service tools and publications Provision for slow moving stock In transit Stock-in-trade Trade debts Current maturity of finance under musharika arrangements Loans and advances Short-term prepayments Accrued mark-up Other receivables Investments Taxation-net Cash and bank balances TOTAL CURRENT ASSETS

2006

2007

2008

2009

(Rupees in '000) 89,141 246,787 (10,610) 529,987 (23,211) 11,272 1,033 35,203 790,461 353,770 (23,448) 111,450 4,763 29,668 948,046 (82,315) 696,181 2,917,717 1,022 (519,314) (30,987) (685,307) (129,868) 20,522 (1,156) 246,745 (1,099,365) (72,634) (2,101) 11,827 38,389 56,423 (644,492) 48,520 1,127,083 (535,328) 4,951 (190,228) 7,426 218,071 317,665 93,503 629 (43,308) (626,080) (222,322) 667,185 (3,710) 311,207 (24,375) (97,622) (531,365) 54,171 161,013 (4,214,678) (3,895,545) (103,659) 466,258 23,117 335,884 (102,242) 77,435 1,995 (85,444) 734,226 1,451,229 403,799 157,087 (6,272) 15,932 (6,458) (54,171) (209,533) 5,402,581 7,050,535

UNIVERSITY OF EDUCATION OKARA CAMPUS

101

INDUS MOTOR COMPANY LIMITED PROFESSIONAL PROJECT

Non-Current Assets
Long-term loans Long-term deposits Finance under musharika arrangements TOTAL NON-CURRENT ASSETS 631 32 (8,132) (7,469) 3,221 1,448 (4,021) 648 38,101 593 38,694 (13,832) (13,832)

Fixed Assets
Property, plant and equipment Capital work-in-progress Intangible Assets TOTAL FIXED ASSETS 507,279 214,846 (4,422) 717,703 494,598 (114,781) (2,555) 377,262 1,689,359 251,324 (773) 1,939,910 308,706 (409,172) 1,177 (99,289)

TOTAL ASSETS

3,627,951

(157,418) (1,916,941)

6,937,414

LIABILITIES AND SHAREHOLDER'S EQUITY LIABILITIES
Current Liabilities Trade and other payables Advances from customers and dealers Accrued mark-up Short-term running finances Current portion of liabilities against assets subject to finance lease Taxation - net

2006

2007

2008

2009

(Rupees in '000)

577,684 1,017,527 11,682 (22,190)

292,106 (2,106,389) (21,535) (2,021)

(98,463) (3,528,508) (610) (3,714)

1,149,434 4,940,557 568 -

195,789

(195,789)

-

14,660

TOTAL CURRENT LIABILITIES Non-current Liabilities Liabilities against assets subject to finance lease Deferred taxation

1,780,492

(2,033,628)

(3,631,295)

6,105,219

(8,086) 73,471

(3,871) 93,985

321,989

(28,438)

UNIVERSITY OF EDUCATION OKARA CAMPUS

102

INDUS MOTOR COMPANY LIMITED PROFESSIONAL PROJECT
TOTAL NON-CURRENT LIABILITIES

65,385

90,114

321,989

(28,438)

TOTAL LIABILITIES Shareholder's Equity Paid up capital Reserves TOTAL EQUITY

1,845,877

(1,943,514)

(3,309,306)

6,076,781

1,782,074 1,782,074

1,786,096 1,786,096

1,392,365 1,392,365

860,633 860,633

TOTAL LIABILITIES AND SHAREHOLDER'S EQUITY

3,627,951

(157,418) (1,916,941)

6,937,414

UNIVERSITY OF EDUCATION OKARA CAMPUS

103

INDUS MOTOR COMPANY LIMITED PROFESSIONAL PROJECT

Annexure II.II

Indus Motor Company Limited Percentage Comparative Chain Base Balance Sheet As on June 30,

ASSETS Current Assets
Stores and Spares Raw material and components Work in process Finished goods Vehicles Spare parts Special service tools and publications Provision for slow moving stock In transit Stock-in-trade Trade debts Current maturity of finance under musharika arrangements Loans and advances Short-term prepayments Accrued mark-up Other receivables Investments Taxation-net Cash and bank balances TOTAL CURRENT ASSETS

2006

2007

2008

2009

(Rupees in '000) 65.05% 17.87% -10.00% 247.10% -5.32% 7.33% 299.42% #DIV/0! 4.01% 24.94% 92.01% -80.14% 36.80% 108.97% 63.74% 313.74% #DIV/0! -100.00% 10.36% 26.10% 0.45% -31.91% -32.44% -92.05% -31.42% 12.44% -83.89% #DIV/0! 27.05% -27.77% -9.84% -36.16% 2.85% 420.29% 74.04% -51.55% #DIV/0! #DIV/0! 15.20% -3.80% 2.18% -17.17% 11.51% 368.60% 112.09% 50.39% 283.33% #DIV/0! -54.02% -7.77% 100.23% -100.00% 73.03% -51.29% -73.60% -87.72% #DIV/0! 331.85% -49.33% -28.73% -44.65% 50.80% 32.13% 121.16% -17.01% 27.75% 234.43% 197.29% 137.79% 55.02% 30.30% #DIV/0! 21.30% -27.10% 45.50% -8.68% -100.00% -100.00% 124.81% 72.95%

Non-Current Assets
Long-term loans Long-term deposits Finance under musharika arrangements TOTAL NON-CURRENT ASSETS 162.63% 0.62% -66.91% -42.22% 316.09% 27.95% -100.00% 6.34% 898.61% 8.95% #DIV/0! 356.00% -32.67% 0.00% #DIV/0! -27.91%

Fixed Assets
Property, plant and equipment Capital work-in-progress 56.30% 246.08% 35.12% -37.99% 88.78% 134.13% 8.59% -93.27%

UNIVERSITY OF EDUCATION OKARA CAMPUS

104

INDUS MOTOR COMPANY LIMITED PROFESSIONAL PROJECT
Intangible Assets TOTAL FIXED ASSETS -41.93% 71.85% -41.73% 21.98% -21.66% 92.65% 42.11% -2.46%

TOTAL ASSETS

29.75%

-0.99%

-12.24%

50.46%

LIABILITIES AND SHAREHOLDER'S EQUITY LIABILITIES
Current Liabilities Trade and other payables Advances from customers and dealers Accrued mark-up Short-term running finances Current portion of liabilities against assets subject to finance lease Taxation - net TOTAL CURRENT LIABILITIES Non-current Liabilities Liabilities against assets subject to finance lease Deferred taxation TOTAL NON-CURRENT LIABILITIES TOTAL LIABILITIES Shareholder's Equity Paid up capital Reserves TOTAL EQUITY

2006

2007

2008

2009

(Rupees in '000)

28.57% 18.16% 110.54% #DIV/0! -79.46% #DIV/0! 23.23%

11.24% -31.81% -96.79% #DIV/0! -35.24% -100.00% -21.53%

-3.40% -78.16% -85.31% #DIV/0! -100.00% #DIV/0! -49.00%

41.15% 501.08% 540.95% #DIV/0! #DIV/0! #DIV/0! 161.53%

-67.63% 172.09% 119.64% 23.91%

-100.00% 80.91% 75.07% -20.32%

#DIV/0! 153.22% 153.22% -43.42%

#DIV/0! -5.34% -5.34% 140.93%

0.00% 48.30% 39.82%

0.00% 32.64% 28.54%

0.00% 19.18% 17.31%

0.00% 9.95% 9.12%

TOTAL LIABILITIES AND SHAREHOLDER'S EQUITY

29.75%

-0.99%

-12.24%

50.46%

UNIVERSITY OF EDUCATION OKARA CAMPUS

105

INDUS MOTOR COMPANY LIMITED PROFESSIONAL PROJECT

Annexure II.III

Indus Motor Company Limited Percentage Comparative 2005 Base Balance Sheet As on June 30,

ASSETS Current Assets
Stores and Spares Raw material and components Work in process Finished goods Vehicles Spare parts Special service tools and publications Provision for slow moving stock In transit Stock-in-trade Trade debts Current maturity of finance under musharika arrangements Loans and advances Short-term prepayments Accrued mark-up Other receivables Investments Taxation-net Cash and bank balances TOTAL CURRENT ASSETS

2006

2007

2008

2009

(Rupees in '000) 165.05% 117.87% 90.00% 347.10% 94.68% 107.33% 399.42% #DIV/0! 104.01% 124.94% 192.01% 19.86% 136.80% 208.97% 163.74% 413.74% #DIV/0! 0.00% 110.36% 126.10% 165.80% 80.26% 60.81% 27.58% 64.93% 120.68% 64.35% #DIV/0! 132.15% 90.25% 173.12% 12.68% 140.70% 1087.23% 284.97% 200.46% #DIV/0! 58.94% 127.13% 121.31% 169.41% 66.48% 67.80% 129.26% 137.71% 181.49% 246.67% #DIV/0! 60.76% 83.24% 346.63% 0.00% 243.45% 529.58% 75.23% 24.61% #DIV/0! 254.55% 64.41% 86.46% 93.76% 100.25% 89.58% 285.86% 114.28% 231.85% 824.93% #DIV/0! 144.48% 129.03% 451.65% 0.00% 295.31% 386.09% 109.46% 22.47% #DIV/0! 0.00% 144.81% 149.54%

Non-Current Assets
Long-term loans Long-term deposits Finance under musharika arrangements TOTAL NON-CURRENT ASSETS 262.63% 100.62% 33.09% 57.78% 1092.78% 10912.63% 128.74% 140.26% 0.00% 61.44% 0.00% 280.18% 7347.68% 140.26% 0.00% 201.98%

Fixed Assets
Property, plant and equipment Capital work-in-progress 156.30% 346.08% 211.19% 214.61% 398.68% 502.48% 432.94% 33.82%

UNIVERSITY OF EDUCATION OKARA CAMPUS

106

INDUS MOTOR COMPANY LIMITED PROFESSIONAL PROJECT
Intangible Assets TOTAL FIXED ASSETS 58.07% 171.85% 33.84% 209.62% 26.51% 403.83% 37.67% 393.89%

TOTAL ASSETS

129.75%

128.46%

112.74%

169.63%

LIABILITIES AND SHAREHOLDER'S EQUITY LIABILITIES
Current Liabilities Trade and other payables Advances from customers and dealers Accrued mark-up Short-term running finances Current portion of liabilities against assets subject to finance lease Taxation - net TOTAL CURRENT LIABILITIES Non-current Liabilities Liabilities against assets subject to finance lease Deferred taxation TOTAL NON-CURRENT LIABILITIES TOTAL LIABILITIES Shareholder's Equity Paid up capital Reserves TOTAL EQUITY

2006

2007

2008

2009

(Rupees in '000)

128.57% 118.16% 210.54% #DIV/0! 20.54% #DIV/0! 123.23%

143.01% 80.57% 6.77% #DIV/0! 13.30% #DIV/0! 96.70%

138.14% 17.60% 0.99% #DIV/0! 0.00% #DIV/0! 49.32%

194.98% 105.77% 6.37% #DIV/0! 0.00% #DIV/0! 128.98%

32.37% 272.09% 219.64% 123.91%

0.00% 492.23% 384.54% 98.74%

0.00% 1246.43% 973.72% 55.86%

0.00% 1179.82% 921.68% 134.59%

100.00% 148.30% 139.82%

100.00% 196.70% 179.72%

100.00% 234.44% 210.83%

100.00% 257.76% 230.06%

TOTAL LIABILITIES AND SHAREHOLDER'S EQUITY

129.75%

128.46%

112.74%

169.63%

UNIVERSITY OF EDUCATION OKARA CAMPUS

107

INDUS MOTOR COMPANY LIMITED PROFESSIONAL PROJECT

Annexure II.IV

Indus Motor Company Limited Comparative Vertical Common size Balance Sheet As on June 30,

ASSETS Current Assets
Stores and Spares Raw material and components Work in process Finished goods Vehicles Spare parts Special service tools and publications Provision for slow moving stock In transit Stock-in-trade Trade debts Current maturity of finance under musharika arrangements Loans and advances Short-term prepayments Accrued mark-up Other receivables Investments Taxation-net Cash and bank balances TOTAL CURRENT ASSETS

2005

2006

2007
(Rupees in '000)

2008

2009

1.12% 11.32% 0.87% 1.76% 3.58% 1.26% 0.00% 0.00% 7.19% 25.99% 3.15% 0.24% 2.48% 0.04% 0.38% 2.48% 0.00% 0.68% 55.11% 91.66%

1.43% 10.29% 0.60% 4.71% 2.61% 1.04% 0.01% 0.00% 5.77% 25.02% 4.67% 0.04% 2.62% 0.06% 0.48% 7.90% 0.00% 0.00% 46.87% 89.09%

1.45% 7.07% 0.41% 0.38% 1.81% 1.18% 0.00% 0.00% 7.40% 18.26% 4.25% 0.02% 2.72% 0.30% 0.85% 3.87% 0.00% 0.31% 54.54% 86.56%

1.69% 6.68% 0.52% 2.02% 4.37% 2.03% 0.01% -0.32% 3.88% 19.19% 9.69% 0.00% 5.36% 0.17% 0.25% 0.54% 0.39% 1.52% 31.48% 70.30%

0.62% 6.69% 0.46% 2.96% 2.41% 1.72% 0.01% -0.62% 6.13% 19.77% 8.40% 0.00% 4.32% 0.08% 0.25% 0.33% 0.00% 0.00% 47.04% 80.81%

Non-Current Assets
Long-term loans Long-term deposits Finance under musharika arrangements TOTAL NON-CURRENT ASSETS 0.00% 0.04% 0.10% 0.15% 0.01% 0.03% 0.03% 0.06% 0.03% 0.04% 0.00% 0.07% 0.31% 0.05% 0.00% 0.36% 0.14% 0.03% 0.00% 0.17%

Fixed Assets UNIVERSITY OF EDUCATION OKARA CAMPUS 108

INDUS MOTOR COMPANY LIMITED PROFESSIONAL PROJECT
Property, plant and equipment Capital work-in-progress Intangible Assets TOTAL FIXED ASSETS 7.39% 0.72% 0.09% 8.19% 8.90% 1.91% 0.04% 10.85% 12.15% 1.20% 0.02% 13.37% 26.13% 3.19% 0.02% 29.34% 18.86% 0.14% 0.02% 19.02%

TOTAL ASSETS

100.00%

100.00%

100.00%

100.00%

100.00%

LIABILITIES AND SHAREHOLDER'S EQUITY LIABILITIES
Current Liabilities Trade and other payables Advances from customers and dealers Accrued mark-up Short-term running finances Current portion of liabilities against assets subject to finance lease Taxation - net TOTAL CURRENT LIABILITIES Non-current Liabilities Liabilities against assets subject to finance lease Deferred taxation TOTAL NON-CURRENT LIABILITIES TOTAL LIABILITIES Shareholder's Equity Paid up capital Reserves TOTAL EQUITY

2005

2006

2007
(Rupees in '000)

2008

2009

16.58% 45.95% 0.09% 0.00% 0.23% 0.00% 62.85%

16.43% 41.84% 0.14% 0.00% 0.04% 1.24% 59.69%

18.46% 28.82% 0.00% 0.00% 0.02% 0.00% 47.31%

20.32% 7.17% 0.00% 0.00% 0.00% 0.00% 27.49%

19.06% 28.65% 0.00% 0.00% 0.00% 0.07% 47.79%

0.10% 0.35% 0.45% 63.30%

0.02% 0.73% 0.76% 60.45%

0.00% 1.34% 1.34% 48.65%

0.00% 3.87% 3.87% 31.36%

0.00% 2.44% 2.44% 50.22%

6.45% 30.26% 36.70%

4.97% 34.58% 39.55%

5.02% 46.33% 51.35%

5.72% 62.92% 68.64%

3.80% 45.98% 49.78%

TOTAL LIABILITIES AND SHAREHOLDER'S EQUITY

100.00%

100.00%

100.00%

100.00%

100.00%

UNIVERSITY OF EDUCATION OKARA CAMPUS

109

INDUS MOTOR COMPANY LIMITED PROFESSIONAL PROJECT
Annexure III

2005

2006

2007

2008

2009

1. Net Working Capital
11,177,940 -7,664,062 3,513,878

Current Assets - Current Liabilities
14,095,657 -9,444,554 4,651,103 13,560,329 -7,410,926 6,149,403 9,664,784 -3,779,631 5,885,153 16,715,319 -9,884,850 6,830,469

2. Current Ratio

Current Assets Current Liabilities
11,177,940 7,664,062 1.46 : 1 14,095,657 9,444,554 1.49 : 1 13,560,329 7,410,926 1.83 : 1 9,664,784 3,779,631 2.56 : 1 16,715,319 9,884,850 1.69 : 1

3. Acid Test Ratio

Current Assets - Inventory Current Liabilities
8,009,085 7,664,062 1.05 : 1 10,136,341 9,444,554 1.07 : 1 10,700,378 7,410,926 1.44 : 1 7,027,155 3,779,631 1.86 : 1 12,626,461 9,884,850 1.28 : 1

4. Cash Ratio

Marketable Securities + Cash Current Liabilities
6,719,999 7,664,062 0.88 : 1 7,416,180 9,444,554 0.79 : 1 8,543,263 7,410,926 1.15 : 1 4,382,756 3,779,631 1.16 : 1 9,731,166 9,884,850 0.98 : 1

5. Cash Flow from Operations Ratio
884,945 7,664,062 0.12 : 1

Cash from Operations Current Liabilities
2,675,847 9,444,554 0.28 : 1 2,823,727 7,410,926 0.38 : 1 (811,077) 3,779,631 (0.21) : 1 6,536,529 9,884,850 0.66 : 1

UNIVERSITY OF EDUCATION OKARA CAMPUS

111

INDUS MOTOR COMPANY LIMITED PROFESSIONAL PROJECT
Annexure IV

2005

2006

2007

2008

2009

1. Time Interest Earned Ratio
2,397,050 94,093 25.48

Earning before Interest and Tax Interest Expense
4,199,722 126,945 33.08 4,252,166 22,685 187.44 3,544,471 2,760 1,284.23 2,072,553 26,540 78.09

2. Fixed Charged Coverage Ratio

Earning before Interest and Tax Interest + Lease Payment + Principal Payment
2,397,050 106,050 22.60 4,199,722 130,816 32.10 4,252,166 22,685 187.44 3,544,471 2,760 1,284.23 2,072,553 26,540 78.09

3. Debt Ratio

(
7,718,712 12,194,517 63.30%

Total Liabilities Total Assets
9,564,589 15,822,468 60.45% 7,621,075 15,665,050 48.65%

)100
4,311,769 13,748,109 31.36% 10,388,550 20,685,523 50.22%

4. Debt Equity Ratio

(
4,475,805 0.00%

Long Term Debt Share Holder's Equity
6,257,879 0.00% 8,043,975 0.00%

)100
9,436,340 0.00% 10,296,973 0.00%

5. Debt to Tangible Net worth

(
7,718,712 4,465,260 172.86%

Total Liabilities Owner's Equity - Intangible Assets
9,564,589 6,251,756 152.99% 7,621,075 8,040,407 94.78% 4,311,769 9,433,545 45.71%

)100
10,388,550 10,293,001 100.93%

UNIVERSITY OF EDUCATION OKARA CAMPUS

113

INDUS MOTOR COMPANY LIMITED PROFESSIONAL PROJECT
Annexure V

2005

2006

2007

2008

2009

1. Day's Sales in A/R
989,570 75,619.27 13.09

Gross A/R Net Sales / 365 days
2,402,836 96,538.45 24.89 1,697,537 107,017.06 15.86 2,144,564 113,489.98 18.90 2,698,992 103,738.64 26.02

2. Accounts Receivable Turnover
27,601,034 989,570 27.89

Net Sales Gross A/R
35,236,535 2,402,836 14.66 39,061,226 1,697,537 23.01 41,423,843 2,144,564 19.32 37,864,604 2,698,992 14.03

3. Day's Sales in Inventory
805,061 68,205 11.80

Ending Inventory Cost of Goods Sold / 365 days
1,324,142 85,175 15.55 528,333 94,851 5.57 1,123,784 102,946 10.92 1,382,259 97,371 14.20

4. Inventory Turnover
24,894,856 589,933.50 42.20

Cost of Goods Sold Average Inventory
31,088,906 1,064,601.50 29.20 34,620,632 926,237.50 37.38 37,575,356 826,058.50 45.49 35,540,418 1,253,021.50 28.36

UNIVERSITY OF EDUCATION OKARA CAMPUS

115

INDUS MOTOR COMPANY LIMITED PROFESSIONAL PROJECT
Annexure VI

2005

2006

2007

2008

2009

1. Net Profit Margin
1,484,646 27,601,034 5.38%

(
2,648,464 35,236,535 7.52%

Net Income Net Sales
2,745,701 39,061,226 7.03% 2,290,845 41,423,843 5.53%

)100
1,385,102 37,864,604 3.66%

2. Total Asset Turnover
27,601,034 12,194,517 2.26 35,236,535 15,822,468 2.23

Net Sales Total Assets
39,061,226 15,665,050 2.49 41,423,843 13,748,109 3.01 37,864,604 20,685,523 1.83

3. Return on Assets
1,484,646 12,194,517 12.17%

(
2,648,464 15,822,468 16.74%

Net Income Total Assets
2,745,701 15,665,050 17.53% 2,290,845 13,748,109 16.66%

)100
1,385,102 20,685,523 6.70%

4. Operating Income Margin
2,134,221 27,601,034 7.73%

(
3,500,256 35,236,535 9.93%

Operating Income Net Sales
3,665,306 39,061,226 9.38% 3,063,830 41,423,843 7.40%

)100
1,501,952 37,864,604 3.97%

5. Operating Assets Turnover
27,601,034 901,035 30.63 35,236,535 1,408,314 25.02

Net Sales Operating Assets
39,061,226 1,902,912 20.53 41,423,843 3,592,271 11.53 37,864,604 3,900,977 9.71

UNIVERSITY OF EDUCATION OKARA CAMPUS

117

INDUS MOTOR COMPANY LIMITED PROFESSIONAL PROJECT 6. Return on Operating Assets
1,484,646 901,035 164.77%

(
2,648,464 1,408,314 188.06%

Net Income Operating Assets
2,745,701 1,902,912 144.29% 2,290,845 3,592,271 63.77%

)100
1,385,102 3,900,977 35.51%

7. Sales to Fixed Assets
27,601,034 998,887 27.63 35,236,535 1,716,590 20.53

Net Sales Fixed Assets
39,061,226 2,093,852 18.66 41,423,843 4,033,762 10.27 37,864,604 3,934,473 9.62

8. Return on Equity
1,484,646 4,475,805 33.17%

(
2,648,464 6,257,879 42.32%

Net Income Total Equity
2,745,701 8,043,975 34.13% 2,290,845 9,436,340 24.28%

)100
1,385,102 10,296,973 13.45%

9. Gross Profit Margin
2,706,178 27,601,034 9.80%

(
4,147,629 35,236,535 11.77%

Gross Profit Net Sales
4,440,594 39,061,226 11.37% 3,848,487 41,423,843 9.29%

)100
2,324,186 37,864,604 6.14%

UNIVERSITY OF EDUCATION OKARA CAMPUS

118

INDUS MOTOR COMPANY LIMITED PROFESSIONAL PROJECT
Annexure VII

2005

2006

2007

2008

2009

1. Earning Per Share
1,484,646 78,600 18.89 2,648,464 78,600 33.70

Net Income No. of Equity Shares
2,745,701 78,600 34.93 2,290,845 78,600 29.15 1,385,102 78,600 17.62

2. Price Earning Ratio
90.00 18.89 4.76

Market Price Per Share Earning Per Share
191.00 33.70 5.67 305.50 34.93 8.75 200.05 29.15 6.86 107.72 17.62 6.11

3. Dividend Payout Ratio
10.00 18.89 52.94%

(
12.00 33.70 35.61%

Dividend Per Share Earning Per Share
13.00 34.93 37.22% 10.50 29.15 36.02%

)100
10.00 17.62 56.75%

4. Dividend Yield Ratio

(
10.00 90.00 11.11%

Dividend Per Common Share Market Price Per Share
12.00 191.00 6.28% 13.00 305.50 4.26% 10.50 200.05 5.25%

)100
10.00 107.72 9.28%

UNIVERSITY OF EDUCATION OKARA CAMPUS

120

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