Final Project

“Read the name of Lord, Who created man from a clot of blood. Read! The Lord is most Bounteous who taught by pen.”(96:1-4)

Indus Motor Company Limited

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Final Project

Final Project
On INDUS MOTOR COMPANY LIMITED

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Submitted By
M. HASEEB 1662-111001

M.Com (FINANCE)
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Submitted To:
Registrar

PIMSAT Institute of Higher Education
Indus Motor Company Limited
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Final Project

INDUS MOTOR COMPANY
THIS PROJECT IS SUBMITTED TO PIMSAT Institute of Higher Education FOR THE PARTIAL FULFILMENT OF THE REQUIREMENTS FOR AWARDING THE DEGREE OF M.Com (Finance)

Assigned by: _____________________________ Faculty Member’s Signature Internal Examiner Sign: ____________________ Name: ___________________ External Examiner Sign: _____________________ Name: ____________________

Indus Motor Company Limited

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7. 5. 10. 7. 3.1 5.2 6. 9.Final Project Table of Contents Serial No.1 4. 3. 2.1 8. Dedication 1. 6 7 8 9 9 10 11 11 12 13 18 19 20 21 23 Indus Motor Company Limited Page 4 . Acknowledgment Disclaimer Reason for Choosing the Organization Aims and Objectives of the Project Executive Summary Vision Mission Core Values Corporate Information Automobile Industry in Pakistan Current Situation of Car Industry History Product Line Strategic Objectives Particular Page No. 5.

2 19.Final Project 10. 11.2 18.1 18.1 16. 15. 16.1 11.1 17. 13.2 17. 15. Manufacturing Facilities Dealership of the Company Major Departments Awards Achievement SWOT Analysis PEST Analysis Boston Consulting Group Matrix Toyota Corolla BCG Matrix Financial Analysis of Indus Motor Company Balance Sheet Profit &Loss Account Vertical Analysis of Balance Sheet Vertical Analysis of Profit and Loss Account Horizontal Analysis of Balance Sheet Horizontal Analysis of Profit &Loss Account Ratio Analysis 24 25 25 26 27 30 32 34 35 36 38 39 41 42 44 45 Indus Motor Company Limited Page 5 .1 12.1 16. 14.

Their love inspired us to the higher idea of life.Final Project Dedicated To Dedicated To er idea of life. . Whose efforts and prayers are great source of strength to us in every noble venture.May God Bless Them (Aamin). Indus Motor Company Limited Page 6 . Our Dearest and most respected Parents. .May God Bless Them (Aamin).

He is the one who gave me courage to do this. I owe my bottomless thanks to our esteemed resource person Mr. Next. At this occasion. Syed Asad who directed me well and was always available to clear my doubts and misunderstandings throughout this project.Final Project 1. It is also a matter of immense pleasure for me to express my gratitude to the Faculty of Preston Institute of Management Science and Technology for giving us their precious time and tried their best as helpful as possible. Indus Motor Company Limited Page 7 . I can’t forget my parents for their guidance at the crucial moments of my life.Acknowledgement I find no words at my command to express my deepest sense of gratitude to the Almighty ALLAH. I wish to thanks all my Friends and Classmates who really helped me by giving suggestions and critical review of the manuscript. the most Gracious. Obviously this achievement was not possible without all of you. the most Merciful and the most Beneficent. who gives me the talent to complete this task successful. I am much obliged to my loving Parents whose prayers have enabled me to reach this stage.

diligence and reasonable efforts has been taken to compile this project. Therefore the content of this document should not be relied upon for making any decision. All the material included in this document is based on data/information gathered from various sources and is based on certain assumptions. errors. Although. The content of the information does not bind “PROJECT MAKER” in any legal or other form.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. due care. investment or otherwise.Final Project 2. Project does not assume any liability for any financial or other loss resulting from this document in consequence of undertaking this activity. Project does not also assume any rectifications. Indus Motor Company Limited Page 8 .. omission and misprinting between the electronic and printed version of document. 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. Financial Analysis of IMC does not accept any responsibility for the validity and correctness of the information published on its project.

I choose best companies in their respective class. I ended with three business sectors. shareholders. performance and adaptability of the organization. Indus Motor Company Limited Page 9 .. Finally.Reason for Choosing the Organization When I was informed that I would have to do the financial analysis of last three years of any listed company than the primary challenge for me was to choose the organization on which I can start my working. these analyses portray a very clear and informative picture to the investors. the project draws conclusions based on my analysis about the current situation and the prospects of the Indus Motor Company Limited. It was bit difficult and confusing for me to select the organization. but after applying hindsight. Automobile industry. regulators and other players in the stock market. Textile industry and Tobacco industry.1 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. I started brainstorming and came up with many well-known organizations having large operations. Under the constantly increasing competition in the business market. cash flow situation and produce informative report usable by the users of the statements assessing the financial position. I decided to go with Automobile industry and the organization I selected was “Indus Motor Company Limited” 3. After gathering data and relevant information. both in Pakistan and worldwide. The performance evaluation is based on historic and current available data about the operations of the company.Final Project 3.

In my opinion. Prado. Indus Motor Company Limited Page 10 . RAV. having an assembling capacity of 55. 2.5% in company's sales. Toyota Tsusho Corporation. which formed with the help of house of Habib. The company also offers six different imported vehicles namely Toyota Camry. the company also sells auto parts and accessories. 3.Final Project 4. Suzuki and Mitsubishi. Its product line includes 9 variants of Toyota Corolla. Toyota Motor Corporation Japan (TMC). it is the best move made by IMC to survive the financial holocaust.000 units per annum. 8 variants of Daihatsu Cuore and 2 variants of Toyota Hilux. It is competing with the Honda. after the Pak Suzuki Motors. consolidation of resources and maintaining SCA. Toyota Motor Corporation. located near Bin Qasim Karachi. Indus Motors is the country's second largest auto manufacturer. Industry Type: Automobile Industry (Cyclical) Major Investors: 1. House of Habib. In addition. which is its production strength. But recently company is in stabilization mode trying to improve its functional area. It manufactures and imports cars and enjoys a healthy share in the market.. Its core business is to manufacture and market cars. Major contributor to the revenue is Corolla. Land Cruiser. Nissan. Company Profile: Name of the Company: Indus Motor Company Limited.Executive Summary Indus Motor Company is one of the Automobile Companies. having a contribution of 66. ability to produce quality cars with respect to low cost and research and development in hybrid and bio fuel cars. Toyota Tsusho Corporation Japan. Hilux and Hiace. To sustain its lead IMC must maintain strategic competitive advantage.

.       The most respected. The best people. The most successful. Wide range of products. Toyota is developing various new technologies from the perspective of energy saving and diversifying energy sources. Delighting customers. Environment has been first and most important issue in priorities of Toyota and working toward creating a prosperous society and clean world.Vision "IMC’s Vision is to be the most respected and successful enterprise. “ Ac t i o n Co mmi t me n t T e a mw o r k f o r b e c o mi n g # 1 i n P a ki s t a n ” Means a committed team to make Indus # 1 in:       Respect and Corporate Image Customer Satisfaction Quantity in Production & Sales Quality Profitability Best Employer Page 11 Indus Motor Company Limited .1 Mi s s i o n Mission of Toyota is to provide safe & sound journey. 5 . delighting customers with a wide range of products and solutions in the automobile industry with the best people and the best technology".Final Project 5. The best technology.

Removing waste in all areas and operating in the lowest cost quartile of the industry. Bringing Toyota quality to Pakistan 1. its Dealers and Vendors. Achieving market Leadership by Delivering Value to Customers by: 1. Ethics and Practices. Transferring Technology and promoting Indigenization at IMC and Vendor. 3. 3. Fostering a Kaizen culture and mindset at IMC. Implementing Toyota Production System. Following our “Customer first” philosophy in manufacturing and providing high quality vehicles and services that meet the needs of Pakistani customers.2 Co r e Va l u e s Customer Satisfaction Team Work. improving service and customer care. Optimizing Cost by Kaizen 1. 2. Reliability and Durability) by built-in-engineering. Raising the bar I all corporate functions to meet Toyota Global Standards. 2. Enhancing the quality and reach of our 3S Dealership Network Employing customer insight and feedback for continuous corporate renewal. 2. 3. Indus Motor Company Limited Page 12 .Final Project 5 . Maximizing QRD (Quality. including producer development.

Ltd. Habib Mr. Habib Mr. National Bank of Pakistan Indus Motor Company Limited Page 13 .Corporate Information Board of Directors Mr. Masaru Kato Mr.. Mohamed Ali R. Farhad Zulficar Mr. Shahid Mahmood Khan Bankers ABN Amro Bank American Express ANZ Grindlays Bank plc Askari Commercial Bank Bank of Tokyo-Mitsubishi. Faysal Bank Ltd. Tokuichi Uranishi Mr. Kersi Kapadia Chairman Vice Chairman Chief Executive Officer Director Director Director Director Company Secretary Mr.Final Project 6. Credit Agricole Indosuez Emirates Bank International Ltd. Yutaka Arae Mr. Habib Bank AG Zurich Habib Bank Limited Hong Kong & Shanghai Banking Corporation Metropolitan Bank Limited Muslim Commercial Bank Ltd. Ali S.

Bangalore Town Housing Society. A. NWZ/1/P-1. Indus Motor Company Limited Page 14 . Registrar M/s. Ford. M/s. Karachi. Finlay House. Port Qasim Industrial Estate. M/s. Main Shahrah-e-Faisal. 14. Auditors M/s. Morrow Chartered Accountants 1st Floor. I. Factory Plot No. Mansoor Ahmed Khan & Co.Final Project Societe Generale Standard Chartered Bank Union Bank Ltd. Karachi. Bangalore Town Housing Society. Registered Office 14. I. Karachi Legal Advisors M/s. K. Noble Computer Services (Pvt) Ltd. Mahmud & Co. Robson. Karachi. Rhodes. Main Shahrah-e-Faisal. Brohi& Co. Chundrigar Road. Bin Qasim.

spare parts and accessories in Pakistan. Bankers Askari Bank Limited Bank Alfalah Limited Barclays Bank PLC Pakistan Bank Al-Habib Limited Citibank N. assemblers. 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 Indus Motor Company Limited Page 15 .Final Project Company Registration Number 0020742 National Tax Number (NTN) 0676546-7 Status of the Company Listed on Karachi Stock Exchange (Guarantee) Ltd Lahore Stock Exchange (Guarantee) Ltd Islamabad Stock Exchange (Guarantee) Ltd Symbol INDU Details of Permissible Business Activities Manufacturers. distributors and importers of Toyota and Daihatsu vehicles.A.

Japan Thal Limited Habib Insurance Co. Karachi. Port Qasim Authority.com Address of Head Office / Registered Office / Factory Plot No.W. N.) Ltd. 3 Jinnah Cooperative Housing Society Main Shahrah-e-Faisal Karachi-75350. PABX: (92-21) 34325482-87. Fax (92-21) 34325442 Email: ncsl@noble-computers. First Floor.Final Project The Bank of Tokyo-Mitsubishi UFJ. Japan Toyota Tsusho Corporation. Bin Qasim.Z/1/P-1. Limited United Bank Limited Share Registration Noble Computer Services (Pvt. Limited Indus Motor Company Limited Page 16 . House of Habib Building (Siddiqsons Tower).relations@toyota-indus. Phone: (PABX) (92-21) 34720041-48 (UAN) (92-21) 111-TOYOTA (869-682) Fax: (92-21) 34720056 Email: customer.com Memberships Pakistan Automotive Manufacturers Association (PAMA) The Overseas Investors Chamber of Commerce & Industry (OICCI) Karachi Chamber of Commerce & Industry (KCCI) Pakistan Business Council (PBC) Associated Companies Toyota Motor Corporation.

Makro-Habib Pakistan Ltd. Parts & Logistics Support Technology KD Parts Hilux Frame & Deck Indus Motor Company Limited Page 17 . Habib Metropolitan Bank Limited Collaboration EQUITY Toyota Motor Corporation Toyota Tsusho Corporation House of Habib BUSINESS TOYOTA GROUP Technology & KD Parts Materials.Final Project Shabbir Tiles & Ceramics Ltd.

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. After struggling through nineties. The indigenized parts in these vehicles did not exceed 20% with only exception of Bed Ford trucks with a deletion level of 80%.s. and Chevrolet.Automobile Industry in Pakistan Auto market is one of the largest segments in world trade. practically all-automobile assembling in Pakistan ceased. 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. The industry operates under franchise and technical cooperation agreements with Japanese. Vauxhall. European and Korean manufacturers. cutting costs and enhancing user comfort without compromising quality are the most important challenges of the auto industry in a fast globalizing world. established by General Motors of USA..Final Project 7. Dewan Farooque Motors set up a plant to manufacture Hyundai and Kia vehicles in Pakistan. when Suzuki commenced production eyeing the small and LCV car segment of 800cc-1000cc range. The automotive assembling in Pakistan started in 1950 when National Motors Limited. National Motors assembled passenger cars as well as commercial vehicles. a public limited company and the pioneer in the industry. came into existence. Dewan Mushtaq Motors with imported Mitsubishi range of vehicles. Changing models. By the end of 70s. Nexus Automotive with Chevrolet imported vehicles and others imported Chinese Indus Motor Company Limited Page 18 . A regular car industry started in the country in 1983. improving fuel efficiency. Lately Few new market players entered the market such as Gandhara Nissan again with now the imported Nissan range of vehicles. Since then the market has changed all together. which carried “General Motors” brands such as Bedford. and introduced Suzuki car which targeted the middle-income group (constituting the larger segment of the market) by providing an affordable car.

Porsche. 7. 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. Levy of such tax is a deviation from the spirit of pre announced policy thus causing anxiety to the auto manufactures. Roma Automobiles and Foton by Dewan Innovations Limited along with Pak Cherry Automobiles. government announced a withholding @ 5 percent on purchase of cars.5 percent and imposed from 1st September 2007. All this obviously has also adversely affected the government revenues in substantial terms.Final Project vehicles such as Karakoram Motors. The local vendors have now to face the curtailed orders. One billion (9%) when September to December data is compared with last year. which was reduced to 2. Mercedes and Audi have also launched their brands in Pakistan catering to the very upper niche. The uplift in the car market is also suffering due to stringent regulations announced by State Bank of Pakistan recently for car financing. The government has suffered a revenue loss of Rs. in due comparison with the figures of year 2007 for September to December period. Apart from these the big brands of the auto industry also entered the Pakistani market such as BMW. According to the current figures. The current situation however. the ECC approved the five years policy (AIDP) for auto sector prior to announcement of budget. Indus Motor Company Limited Page 19 . Mini & Rolls Royce by Dewan Motors. the cost of financing has also increased interest rate. Sigma Motors made its mark with Rover recently. IN the budget 2007-08. As a result the production has also gone down culminating with its impact on supply schedule both import and local.1 Current Situation of Car Industry Locally produced cars have taken an unexpected drastic downturn to the extent of frustrating all future growth prospects and projections. The intension was obviously to enhance government revenue. Moreover. the sales of cars has gone down by 15 percent. which may most hit the smaller ones with closures. Last year. has proved a reversal in collection of the revenue.

RAV. The shares of company are quoted on the stock exchanges of Pakistan. Indus Motor is the country's second largest auto manufacturer. having an assembling capacity of 55. Nissan.Final Project 8. The company was incorporated in Pakistan as a public limited company in December 1989and started commercial production in May 1993. To ensure highest level of productivity world-renowned Toyota Production Systems are implemented. IMC is competing with the Honda. The majority shareholder is the House of Habib. the company also sells auto parts and accessories. progressive manufacturing and marketing of Toyota vehicles in Pakistan since July 01. Major contributor to the revenue is Corolla.. consolidation of resources and maintaining SCA. ability to produce quality cars with respect to low cost.5% in company's sales. Toyota Motor Corporation and Toyota Tsusho Corporation have 25% stake in the company equity.IMC is engaged in sole distributorship of Toyota and Daihatsu Motor Company Ltd. Vehicles in Pakistan through its dealership network. having a contribution of 66. It manufactures and Imports Cars and enjoys a healthy share in the market.History Indus Motor Company (IMC) is a joint venture between the House of Habib. Hilux and Hiace. Its core business is to manufacture and market cars. Prado. To sustain its lead IMC must maintain Strategic Competitive Advantage. But recently company is in stabilization mode trying to improve its functional area. Toyota Hilux and 3 variants of Daihatsu Cuore. Toyota Motor Corporation Japan (TMC) and Toyota Tsusho Corporation Japan (TTC) for assembling. IMC's production facilities are located at Port Bin Qasim Industrial Zone near Karachi in an area measuring over 105 acres. Its product line includes 6 variants of newly introduced Toyota Corolla. Research. and Development in Hybrid and Bio Fuel Cars. Land Cruiser.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. The company also offers six different imported vehicles namely Toyota Camry. 1990. which is its Production Strength. Suzuki and Mitsubishi. Heavy investment was made to build its production facilities based on state of art technologies. Indus Motor Company Limited Page 20 . In addition. after the Pak Suzuki Motors.

which are 1) Xli 2) GLi 3) Corolla Altis M/T 4) Corolla Altis A/T 5)2..0D Saloon Indus Motor Company Limited Page 21 .Product Line COROLLA: Corolla includes six variants of cars.0D 6)2.Final Project 9.

Final Project CUORE Cuore consist of 3 variants of cars that are as under: 1)CX 2)CX CNG 3)CX A/T HILUX Hilux consist of following car. 4x 2 S/Cab Indus Motor Company Limited Page 22 .

d) Building competitive value through mutual trust and mutual responsibility between the indus team and the company. Bringing Toyota Quality to Pakistan a) Maximizing QRD (Quality. c) Removing waste in all areas and operating in the lowest cost quartile of the industry. improving service and customer care. b) Enhancing the quality and reach of our 3S Dealership Network. its Dealers and Vendors. . b) Providing a continuous learning environment that promotes individual creativity and teamwork. b) Transferring technology and promoting indigenization at IMC and Vendors. Reliability and Durability) by built-in engineering. diversity and inclusion without discrimination. Stra teg ic Objectives 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.Final Project 1 0 . c) Supporting equal employment opportunities. including product development. b) Implementing Toyota Production System. c) Raising the bar in all support functions to meet Toyota Global Standards. c) Employing customer insight and feedback for continuous corporate renewal. Optimizing Cost by Kaizen) a) Fostering a Kaizen culture and mindset at IMC. Indus Motor Company Limited Page 23 . Respecting our People a) Treating employees as the most important sustainable competitive resource.

Technical Education. We have to practice this contradictory idea in our daily activities. while maintaining high standards of efficiency and cost control. in the right manner. etc. in the right amount.1 Ma nufa cturing Fa cilities Just in Time spirit implies two opposing forces of providing fast and flexible response to customers. especially in areas that are strategic to both societal and business needs e. b) Engaging in philanthropic and social activities that contribute to the enrichment of Pakistani society. Road Safety. at the right time.g. 10. The concept is to provide the right product and information. c) Enhancing corporate value and respect while achieving a stable and long-term growth for the benefit of our shareholders. Indus Motor Company Limited Page 24 . yet building efficient mechanisms and systems that are efficient and waste-free. Environment Protection.Final Project Becoming a Good Corporate Citizen a) Following ethical business practices and the laws of the land.

. Chennai – 2008 As on today.Dealerships of the Company 1st dealership in Calicut – 1986 2nd in Kochi – 1991 3rd in Trivandrum – 1994 4th in Muvattupuzha – 2005 5th in Royapettah. Indus has 6 Dealerships 40 Workshops 10 True Value Outlets 2 Maruti Driving Schools 18 E-Outlets 75 sales outlets 11.Final Project 11.1 Major Departments Sales Service True value Spares Accessories Insurance Sales support Institute Maruti Driving School Indus Motor Company Limited Page 25 . Chennai – 2006 6th in Kattupakkam.

Indus Group Indus Motor Company Limited Page 26 .Platinum dealer.Indus Group BSC.Awards Achievements Indus Motors Team receiving the Best Dealer Award from Maruti Suzuki Dealers Conference held at Thailand 2012 Indus Motors Team receiving the Best Dealer Award from Maruti Suzuki Dealers Conference held at Singapore – 2011 Indus Motors Team receiving the Best Dealer Award from Maruti Suzuki Dealers Conference held at Hongkong .Indus Group All India Highest Car Sales .Final Project 12..2010 Indus Motors Team receiving the Best Dealer Award from Maruti Suzuki Dealers Conference held at Thailand 2009 Indus Motors Team receiving the Best Dealer Award from Maruti Suzuki Dealers Conference held at Isthanbul – 2008 Indus Motors Team receiving the Best Dealer Award from Maruti Suzuki Dealers Conference held at Greece 2007 Awards received by INDUS MOTORS in the MSDC held at Thailand – 2012 3 Most Prestigious Awards All India Best Dealer (Overall Excellence) .

People have a lot of trust for their name and this is why Toyota is the leader in automobile industry. Toyota vehicles are made according to the Pakistani environment.Final Project 13. Indus Motor Company Limited Page 27 . Toyota is the hot selling diesel engine car in Pakistan and is the only company offering the diesel engine in this category of cars. No doubt the other cars are available but Toyota has an edge because it has learnt various conditions of the Pakistan environment and people. An effective strategy will take advantage of an organizations strengths and opportunities at the same time it minimizes or overcomes weaknesses and threats. 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.OD car. This can be seen by analysis of the financial reports of the previous years. Toyota has a great strength for its 2.. an organization must assess its internal strengths and weaknesses in relation to the external opportunities and threats it faces.SWOT Analysis In formulating sound strategic plans. The price of spare parts is comparatively low and availability all over the country has proved to be beneficial for the company. This is why people prefer to buy a Toyota. Regular assessment and SWOT analysis is thus given importance. Toyota is a financially strong company. the core competencies of this organization are: Toyota has become the generic name in the Pakistan market. So new additions and changes are proving to be successful. Toyota vehicles have got a much stronger resale value than other car in Pakistan. The important edge over the company editors are the ample availability of the spare parts in the markets. Strengths Strengths are the core competencies of any organization & as far as Indus Motor Company Limited is concerned.

The power steering is not speed sensitive and the air conditioning system in severe heat is in effective. when we study all our weaknesses critically & deeply than we come to know that we can convert our weaknesses into strengths. W e a kn e s s Weaknesses are the lacking points. Interior dimensions are less and heavy body and small engine sometimes create problems in hilly areas. assembly and delivery takes some more time. This results in customers complaints sometimes. Toyota is the only company having the most sophisticated network of dealerships where professional dealers treat customers.Final Project Toyota is proud to have a successful team of competent managers and skilled workers. There are twenty-five dealers in Pakistan where sales. A lot of effort is pulling into the sales forecasting because of the changing political and economic scenarios. There is some weakness in the case of ergonomic interior of Toyota corolla as well. The company is besieged with internal operating problems which are not very serious. leading to convenience for the customers. service and spare parts are offered. This is because CKD kits are ordered four months before and once they arrive from Japan. This has lead to an adverse environment. Therefore. The opportunities for IMC are: Indus Motor Company Limited Page 28 . For this reasons inventory has to be kept low. which every organization must avoid in order to make its operational effectiveness. The dealers sometimes tend to deviate from the recommended course of action and principles of Toyota. Extensive training has enabled the employees to perform outstandingly. There are some weaknesses in the dealership network. The company feels that one weakness is the changing policies of the government and the 30% cash L/C margin. Because of dependency on Toyota’s principles delivery of cars is done after 4-6 months. Opportunities In fact. these are our opportunities.

trade policies of government’s is a threat. This should be started again. Honda has adopted aggressive strategies for capturing the market. 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.Final Project Export is a major opportunity for Toyota Indus Motors. Changing government policies affect the company’s performance.1 automobile company. Shaheen Force and the dignitaries where corolla has an opportunity to deal with the business markets along with dealing in consumer markets. Motorway Police. Vehicles were exported to Bangladesh just once in order to prove the plant capacity and efficiency of the company. still company has threats in various sectors. Threats Though Indus Motor Company Limited has a strong footing and maintain a good number of loyal customer. A major threat is the changing political and economic scenarios of Pakistan. When we see the possible threats for IMC. the threats are prevailing such as Even though Toyota enjoys the position of being the no. Toyota can do better by focusing on segments much more than presently being done.g. still it faces some threat from competitors especially Honda. The contract with the government departments e. still the changing customer needs and trends can prove to be a threat. Toyota should also try to lower its price of Corolla in the segment where Honda city has penetrated. Devaluation of rupee adverse shifts in foreign exchange rates. It can offer discounts to Government departments and large organizations on purchase of its vehicles in more quantities. the company is threatened by the ongoing rate of 30% cash L/C margin. Indus Motor Company Limited Page 29 . Moreover. Even though Toyota keeps a careful eye on the changing trends.

1. there is going to be a Rs.000increases in vehicles. In 1996. The Pakistan Government’s inconsistent policies. P o l i t i c a l Fa c t o r s Government at all levels is an important component of the general environment.PEST Ana ly sis PEST analysis is the analysis. The current inflation 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. Like other motor companies. In 1997. The planned car manufacturing plants of Hyundai and Daewoo can prove to be tough competition for Toyota if they are successful.. frequent change in duty tariff and smuggling are main reasons of unstable market conduction. No organization or industry is immune from the various decisions made by the government. which we tend to perform in order to analyze the external as well as the internal environment in which organization is currently working. 80.Final Project Import of re-conditioned cars is also considered as a threat for the company. After three years of “Still Market” the Indus Motor Company Limited Page 30 . E c o n o mi c a l Fa c t o r s Government economic policies at the federal level clearly influence the ability of the industries to survive and progress. PEST analysis revolves around the four things. Inflation is a major economic factor which has affected the Pakistan’s automobile industry including Toyota. all the previous taxes and duties were rolled into one import duty of 30percent on CKD kits as well as CBU vehicles. 14 . 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. the ministry of industries and production recommended that duty on CKD be reduced from 40 percent to 35 percent while the car sales should be exempted from CVT and the deletion program should be accelerated. 00. the sales tax on CBU was increased cost to 18 percent. IN 1995. Therefore. Toyota is also affected by the current changing policies of the government. Just a half-year back the general sales tax has been increased to 16 percent promoting more prices like.000 to Rs.

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. comfort. Toyota takes pride in being the most trusted name all over Pakistan. The locally produced Toyota Corolla introduced in May 1993 is now in its 17th year. 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. The recent increase of 16 percent sale tax is however. Its vehicles are regarded as a status symbol. Indus Motor Company Limited Page 31 . for the first time in Pakistan SRS “Secondary Restrain System” Airbags have been introduced in the GLI Automatic and GLI manual models. luxury and a have to be trusted. Product diversification and a wide range of colors have allowed customers to exercise greater options and have sustained this threat. low maintenance cost and high resale value has won it the support and loyalty of its customers.Final Project market picked up. side impact bars which protect vehicles for side collisions have however been routinely fitted in all Corolla variants since inception. Its excellent quality. going to result in a price increase. The total company’s product range comprises of 8 variants of Corolla and5 variants of Hilux. ensuring that “New Car” look “New” for years to come. the resulting increase has been negligible when compared to that of created by technology. S o c i a l Fa c t o r s Society holds a global or summary belief that an organization is proper and worthy of support. 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. This is the reason that Toyota is proud of the fact that Pakistani society considers Toyota vehicles to be a symbol of reliability. As a result of the “Safety First” commitment. T e c h n o l o g i c a l Fa c t o r s Technology is of particular importance because it has been and continues to be the main source of increases in productivity. It is the guiding principles of Toyota which has strongly developed trust in the people. Despite changes in the means used to motivate people and the variety of incentives that have been offered to stimulated production.

Final Project 15 .. BCG matrix consists of four factors which are: Stars Question mark Cash cows Dogs Stars Toyota Corolla of IMC falls into the category of Stars.Bosto n Consulting Gro up Ma trix The BCG matrix measures market attractiveness by market growth rate and it assesses the firm’s ability to compete by its relative market share. Indus Motor Company Limited Page 32 . therefore the cash in each direction approximately nets out. 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. 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. However. The BCG matrix assumes the causal relationship between market share and profitability.

Santro and some imported vehicles like Vitz are already present in the market. 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. It generates large amounts of cash for the organization and usually segments in which management can make additional investments and earn attractive returns. 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. As the Suzuki Aulto. The unit can be very successful in the market or it can be simply being ruined of. The portfolio of a diversified company always should have stars that will become the next cash cows and ensure future cash generation. Indus Motor Company Limited Page 33 . a question mark is such a business unit about which you are not about the success or failure. The company wants to dissolve that product. it will become a Cash Cow when the market growth rate would decline.Final Project Cash Cows If IMC’s Toyota Corolla could maintain its large market share. In case of IMC. Question Mark According to Boston consulting group matrix. Typically needs this cash to support its rapid and significant growth. the question mark is actually the Cuore. It is due to the large competition of in this category of cars. In case of Indus Motor Company Limited. Mehran.

Final Project 15.1 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 Indus Motor Company Limited Page 34 .

.Financial Analysis of Indus Motor Company Indus Motor Company Limited Page 35 .Final Project 16.

2010 and 2011 NOTE ASSETS NON-CURRENT ASSETS FIXED ASSETS LOGN TERM LOANS ANS ADVANCES LONG TERM DEPOSITS CURRENT ASSETS STORES AND SPARES STOCK IN TRADE TRADE DEBTS LOANS AND ADVANCES SHORT TERM PREPAYMENTS ACCRUED RETURN ON BANK DEPOSITS OTHER RECEIVEABLES INVESTMENT TAXATION.1 Balance Sheet For the Financial Year 2009.PAYMENT LESS PROVISION CASH AND BANK BALANCES TOTAL ASSETS EQUITY SHARE CAPITAL AUTHORISED CAPITAL 100000000(2009:100000000)ORDINARY SHARES OF RS 10 EACH ISSUED.Final Project Table 16.SUBSCRIBED AND PAID-UP CAPITAL RESERVES 1000000 1000000 1000000 11 12 13 14 6 7 8 9 10 189755 5690052 1356068 926174 18900 52586 149533 4993464 399006 8812199 22587737 26834618 111567 5198367 1613171 839819 18778 57254 196317 ----15755980 23791253 27138278 128483 4088358 1736631 894459 16876 50944 67902 ----9731166 16715319 20685523 3 4 5 4225710 11949 9222 4246881 3324333 15570 7122 3347025 3934473 28509 7222 3970204 2011 (RUPEES IN *000) 2010 (RUPEES IN *000) 2009 (RUPEES IN *000) 15 16 786000 13333648 786000 11801615 786000 9510973 Indus Motor Company Limited Page 36 .

Final Project 14119648 LIABILITIES NON-CURRENT LIABILITIES DEFFERED TAXATION CURRENT LIABILITIES TRADE.OTHER PAYABLES AND PROVISIONS ADVANCES FROM CUSTOMERS AND DEALERS ACCRUED MARK-UP SHORT-TERM RUNNING FINANCE TAXATION-NET CONTINGENCIES AND COMMITMENTS TOTAL EQUITY AND LIABILITIES 18 19 5740869 6519669 420 20 21 22 26834618 12260958 17 454012 454012 12587615 10296973 325797 325797 5905062 8076281 944 242579 14224866 27138278 503700 503700 3942988 5926529 673 14660 9884850 20685523 Indus Motor Company Limited Page 37 .

2010 and 2011 NOTE 2011 (RUPEES IN *000) 61702677 57613542 4089135 23 24 690130 462517 1152647 2936488 Other operating expenses Other operating income Finance costs Profit before taxation Taxation Profit after taxation Earning per share 29 28 25 26 27 355796 2580692 1507878 4088570 77115 4011455 1268071 2743384 34.Final Project Table 16.90 2010 (RUPEES IN *000) 60093139 55382306 4710833 468496 381575 850071 3860762 416106 3444656 1801459 5246115 3576 5242539 1799136 3443403 43.62 Net sales Cost of sales Gross profit Distribution expenses Administrative expenses 21 22 Indus Motor Company Limited Page 38 .81 2009 (RUPEES IN *000) 37864604 35540418 2324186 469985 352249 822234 1501952 156479 1345473 727080 2072553 26540 2046013 660911 1385102 17.2 Profit and Loss Account For the Financial Year 2009.

1 Vertical Analysis of Assets and Liabilities as Follows Description Years ASSETS NON-CURRENT ASSETS FIXED ASSETS LOGN TERM LOANS ANS ADVANCES LONG TERM DEPOSITS CURRENT ASSETS STORES AND SPARES STOCK IN TRADE TRADE DEBTS LOANS AND ADVANCES SHORT TERM PREPAYMENTS ACCRUED RETURN ON BANK DEPOSITS OTHER RECEIVEABLES INVESTMENT TAXATION.Final Project Financial Analysis Table 17.17 100 12.082 0.095 0.75 0.451 0.94 3.621 19.20 5.057 0.71 21.723 0 0 58.76 8.211 0.05 87.138 0.246 0.034 15.81 100 2011 Figures in % 2010 2009 Indus Motor Company Limited Page 39 .02 0.04 80.PAYMENT LESS PROVISION CASH AND BANK BALANCES TOTAL ASSETS EQUITY 15.053 3.16 5.324 0.069 0.61 1.33 0 0.411 19.045 0.196 0.25 0.328 0 0 47.026 12.84 84.83 0 0.487 32.035 19.67 100 19.557 18.395 4.19 0 0.07 0.

394 24.834 2.SUBSCRIBED AND PAID-UP CAPITAL RESERVES LIABILITIES NON-CURRENT LIABILITIES DEFFERED TAXATION CURRENT LIABILITIES TRADE.727 3.76 0.98 49.692 1.76 29.799 45.786 0 100 Indus Motor Company Limited Page 40 .38 3.Final Project SHARE CAPITAL AUTHORISED CAPITAL 100000000(2009:100000000)ORDINARY SHARES OF RS 10 EACH ISSUED.896 43.691 0 100 21.062 28.071 47.416 0 100 19.685 4.OTHER PAYABLES AND PROVISIONS ADVANCES FROM CUSTOMERS AND DEALERS ACCRUED MARK-UP SHORT-TERM RUNNING FINANCE TAXATION-NET CONTINGENCIES AND COMMITMENTS TOTAL EQUITY AND LIABILITIES 3.2005 2.894 52.00157 0 0 45.65 0.487 46.78 1.435 21.688 52.0032 0 0.929 49.0035 0 0.296 0.617 2.

967 0.125 6.Final Project Table 17.403 1.729 0.241 0.16 7.724 2.635 1.65 Indus Motor Company Limited Page 41 .994 5.86 6.29 2009 100 93.138 1.930 2.577 4.553 1.692 5.626 0.182 2.66 Figures in % 2010 100 92.730 0 7.444 6.172 3.732 2.2 Vertical Analysis of Profit and Loss Accounts are as Follows Description 2011 Net sales Cost of sales Gross profit Distribution expenses Administrative expenses 100 93.749 1.446 0 5.779 0.839 0.997 8.0059 8.37 6.658 0 4.759 Other operating expenses Other operating income Finance costs Profit before taxation Taxation Profit after taxation Earning per share 0.118 0.474 0.868 4.627 1.745 3.920 5.413 3.425 0.070 5.501 2.415 6.055 4.

61 100 100 100 2011 Figures in (%) 2010 2009 100 Indus Motor Company Limited Page 42 .38 289.27 112.22 86.15 92.PAYMENT LESS PROVISION CASH AND BANK BALANCES TOTAL ASSETS EQUITY SHARE CAPITAL AUTHORISED CAPITAL 100000000(2009:100000000)ORDINARY SHARES OF RS 10 EACH 100 100 90.69 84.69 139.49 54.56 135.99 103.61 98.19 100 100 100 147.12 100 100 100 100 100 100 100 107.91 142.89 111.18 78.13 129.91 127.Final Project Table 18.55 111.40 41.33 131.89 93.83 127.1 Horizontal Analysis of Balance Sheet is as Follows Description Years ASSETS NON-CURRENT ASSETS FIXED ASSETS LOGN TERM LOANS ANS ADVANCES LONG TERM DEPOSITS CURRENT ASSETS STORES AND SPARES STOCK IN TRADE TRADE DEBTS LOANS AND ADVANCES SHORT TERM PREPAYMENTS ACCRUED RETURN ON BANK DEPOSITS OTHER RECEIVEABLES INVESTMENT TAXATION.086 103.22 220.73 161.

27 0 1654.76 136.12 100 124.7 143.91 131.73 149.25 100 100 100 90.19 100 100 100 0 100 100 100 Indus Motor Company Limited Page 43 .008 62.27 140.OTHER PAYABLES AND PROVISIONS ADVANCES FROM CUSTOMERS AND DEALERS ACCRUED MARK-UP SHORT-TERM RUNNING FINANCE TAXATION-NET CONTINGENCIES AND COMMITMENTS TOTAL EQUITY AND LIABILITIES 100 140.14 64.68 100 145.59 110.19 137.04 129.SUBSCRIBED AND PAID-UP CAPITAL RESERVES LIABILITIES NON-CURRENT LIABILITIES DEFFERED TAXATION CURRENT LIABILITIES TRADE.Final Project ISSUED.41 0 0 124.08 122.

11 175.2 Horizontal Analysis of Profit and Loss Account is as Follows Description 2011 Net sales Cost of sales Gross profit Distribution expenses Administrative expenses 162.12 13.27 290.83 202.18 195.22 248.96 162.77 253.94 146.Final Project Table 18.02 247.062 191.07 Figures in (%) 2010 158.64 2009 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 Indus Motor Company Limited Page 44 .84 131.80 207.23 272.60 248.38 191.33 103.51 Other operating expenses Other operating income Finance costs Profit before taxation Taxation Profit after taxation Earning per share 227.39 197.064 198.87 198.47 256.71 155.30 140.56 196.39 257.68 108.05 265.92 256.69 99.

75 1.Ratio Analysis Current Ratio Ratios Current ratio 2009 2010 2011 Formulas Current Asset/Current liabilities 16715319/9884850 23791253/14224866 22587737/12260958 Results 1. There is a significant decrease of current ratio from 2009 to 2010 but in 2011.7 1. company has maintained good current ratio which is very useful for the analyst aspect of creditors.9 1.67 1.8 1.Final Project 19.84 Current Ratio 1.. Indus Motor Company Limited Page 45 .85 1. It shows that this year’s liabilities could be recovered with its assets. limited 2011s current ratio is stronger than other years.65 1.69 1.55 2009 2010 2011 Comments. In Indus Motor Company.6 1.

Prepaid expenses are considered as current assets so they are included in current ratio calculation. Indus Motor Company Limited Page 46 .3 1.2 2009 2010 2011 Comments. This ratio tells us to how much liquids assets in the company to meet an unconditional situation here in 2011quick ratio is better than other years it show that company can easily recover its liabilities on short notice.34 1.28 1.26 1.32 1.Final Project Quick Ratio Ratios Quick ratio 2009 2010 2011 Formulas Quick assets/Current liabilities 12626461/9884850 18592886/14224866 16897685/12260958 Results 1.27 1.36 1.24 1.38 Quick Ratio 1. Prepaid expenses are less liquid.4 1.38 1.30 1.22 1. Normally it is not easily converted into cash on short notice.

83% 6.00% 4.00% 1.14% 7.00% 7.00% 6. Reason is that because cost of goods sold has increased and the selling rate of the goods sold has decreased.00% 2.00% 2009 2010 2011 Comments. it means company has shown good performance in 2010 but the company has loosed his position in 2011 which is not in favor of company.Final Project Gross Profit Ratio Ratios Gross profit ratio 2009 2010 2011 Formulas Gross profit/sales*100 2324186/37864604*100 4710833/60093139*100 4089135/61702677*100 Results 6.14% while we see in 2010 it has been increased. The gross profit in 2009 is 6.00% 8. Indus Motor Company Limited Page 47 .00% 3.00% 0.00% 5.63% Gross Profit Ratio 9.

65% in 2009 but it is increase in 2010 is 5.00% 1.00% 5.00% 3.Final Project Net Profit Ratio After Tax Ratios Net profit ratio 2009 2010 2011 Formulas Net profit after tax/sales*100 1385102/37864604*100 3443403/60093139*100 2743384/61702677*100 Results 3.73% it is increase by in one year it’s better for the company to increase in net profit but in 2011 net profit of the company has decreased it is not in favor of company.65% 5.00% 0.00% 6.00% 2. Reason is that that total expenses are increases. Indus Motor Company Limited Page 48 .00% 2009 2010 2011 Comments.45% Net Profit Ratio 7.00% 4. Net profit is 3.73% 4.

00% 9.00% 1.00% 0.00% 7.Final Project Net Profit Ratio Before Tax Ratios Net profit ratio 2009 2010 2011 Formulas Net profit before tax/sales*100 2046013/37864604*100 5242539/60093139*100 4011455/61702677*100 Results 5.50% Net Profit Ratio 10.00% 5.00% 8. According to average overall performance of the company has increased but in 2011 company is bearing more expenses than the previous year.00% 2.40% 8.00% 4.00% 2009 2010 2011 Comments The ratio shows more profit in 2010 as compared to 2009 and 2011.00% 6.72% 6. Indus Motor Company Limited Page 49 .00% 3.

Final Project

Inventory Turnover Ratio
Ratios Formulas Inventory turnover ratio Cost of goods sold/ average inventory 2009 2010 2011 35540418/4088358 55382306/5198367 57613542/5690052 Results 8.69 10.65 10.13

Inventory Turn Over Ratio
12 10

8

6

4

2

0 2009 2010 2011

Comments.
Show the time, in which it will convert the current inventory in to sales, so 2010 is more beneficial for the company and favorable for the company.

Indus Motor Company Limited

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Final Project

Fixed Asset Turnover
Ratios Fixed asset turnover 2009 2010 2011 Formulas Sales/fixed assets 37864604/3934473 60093139/3324333 61702677/4225710 Results 9.62 18.07 14.60

Fixed Asset Turnover Ratio
20 18 16 14 12 10 8 6 4 2 0 2009 2010 2011

Comments.
In 2009 the fixed assets turnover is 9.62, in 2010-it is18.07 and in 2011 14.60 .In 2009 and 2011 fixed asset turnover ratio is decrease as compare to 2010 that shows Indus motors used his assets in 2010 effectively. Company used his fixed assets intensely that is why his production level increases in every year.

Indus Motor Company Limited

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Final Project

Asset Turnover
Ratios Total Asset turnover 2009 2010 2011 Formulas Sales/Total Assets 37864604/20685523 60093139/27138278 61702677/26834618 Results 1.83 2.21 2.29

Asset Turn Over
2.5

2

1.5

1

0.5

0 2009 2010 2011

Comments.
Ratio tells us how much time is requires to asset sale. In 2009 company asset turnover is 1.83, which is lower than other two years. From 2010 to 2011 it has been increasing in so it is not in favor of company.

Indus Motor Company Limited

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49 0.53 0.50 0.Final Project Debt Ratio Ratios Debt ratio 2009 2010 2011 Formulas Total debts/total assets 10388550/20685523 14550663/27138278 12714970/26834618 Results 0.51 0.47 0.5 0.48 0.46 0.52 0.47 Debt Ratio 0.45 0. In 2010 debt ratio is higher than other two years it means company is capable to meet outside obligation in full out of its own assets but in 2011 its worth is very low which is not favorable for the company.44 2009 2010 2011 Comments.54 0.53 0. Indus Motor Company Limited Page 53 .

90 Earning Per Share 50 45 40 35 30 25 20 15 10 5 0 2009 2010 2011 Comments.62 43.Final Project Earning Per Shares Ratios Earning per shares 2009 2010 2011 Formulas PAT-performance dividend/No.81 34. of ordinary share 1385102-000/78600 3443403-000/78600 2743384-000/78600 Results 17. Earning per share is increased in 2010 is due to increased in net profit of company it’s for better performance of company Indus Motor Company Limited Page 54 .

Comparatively 2010 and 2011 shows an increasing trend as compare to 2009 this means it is favorable for company because the high rate if ROCE is beneficial for company.94% 40.00% 35.00% 20.59% and in 2011 is 27.00% 5.59% 27.00% 30.52.94% in 2010 it is 40.00% 2009 2010 2011 Comments. Indus Motor Company Limited Page 55 .00% 0. The resulting ratio represents the efficiency with which capital is being utilized to generate revenue.00% 10.00% 15.00% 25. A measure of the returns that a company is realizing from its capital.00% 40. This ratio tell us the investment of company in 2009 ROCE is 18.Final Project Return on Capital Employed Ratios Return on capital employed 2009 2010 2011 Formulas Profit before interest tax/Capital employed*100 2046013/10800673*100 5242539/12913412*100 4011455/14573660*100 Results 18.52% Return on Capital Employed 45.

However.09 36. Time interest ratio is very good for company satiability. A measure of the creditworthiness of a company.09.44 52. according to average the ratio has decreased as compare to the previous years.Final Project Time Interest Earned Ratios Time interest earned 2009 2010 2011 Formulas PBIT/interest 2046013/26540 5242539/143873 4011455/77115 Results 77.44and in 2009 it is 77. equal to EBIT divided by interest Time interest earned in 2010 is 36.02 Time Interest Earned 90 80 70 60 50 40 30 20 10 0 2009 2010 2011 Comments. It indicates that company is able to meet his interest cost for long period of time. Indus Motor Company Limited Page 56 . This ratio is increase in 2011 as compare to 2010 that show company’s EBIT is increased.

00% 4.Final Project Return on Total Assets Ratios Return on Total Assets 2009 2010 2011 Formulas Net Income / Total Assets*100 1385102/20685523*100 3443403/27138278*100 2743384/26834618*100 Results 6.00% 0.68% 10.00% 8.22% Return on Total Assets 14.00% 10. It means the assets of the business are not fully utilized in more and efficient way and shows an unfavorable trend of the business.00% 2. which is higher than other two years but 2011shows a decreasing trend.68%. Indus Motor Company Limited Page 57 .69% 12.00% 6.00% 12. Return on asset in 2010 is 12.00% 2009 2010 2011 Comments. . It means that Indus motors basic earning power has decreased in 2011.

The graph shows a increasing trend as compare to 2009.00% 5.It means this is a good sign for Indus motors if its return on equity remain positive than many shareholder will invest money in the Indus motors.00% 10.8% 26.00% 2009 2010 2011 Comments.00% 15. Return on equity in 2010 is 26.Final Project Return on Equity (ROE) Ratios Return on Equity (ROE) 2009 2010 2011 Formulas Net Income / capital employed*100 1385102/10800673*100 3443403/129134128*100 2743384/14573660*100 Results 12.6% 18. Indus Motor Company Limited Page 58 .00% 0.82% Return on Equity 30.00% 25.00% 20.6%which is highest than other two years.

Working capital is better in 2011. Indus Motor Company Limited Page 59 .Current Liabilities 16715319-9884850 23791253-14224866 22587737 -12260958 Results 6830469 9566387 10326779 Working Capital Ratio 12000000 10000000 8000000 6000000 4000000 2000000 0 2009 2010 2011 Comments. which are 10326779. It means that are assets utilized more economically in 2011 as compared to previous years.Final Project Net Working Capital Ratio Ratios Net Working Capital 2009 2010 2011 Formulas Current Assets .

97 Working Capital Turn Over 6.Final Project Working Capital Turnover Ratios 2009 2010 2011 Formulas Sales/working capital 37864604/6830469 60093139/9566387 61702677/10326779 Results 5.2 5 2009 2010 2011 Comments.4 6. Indus Motor Company Limited Page 60 .2 6 5.28 5.4 5.54 6.8 5. What this ratio tries to highlight is how effectively working capital is being used in terms of the turnover in 2010 is high from 2009 to 2010 we see that in 2010 it is effective as compare to 2009 and 2011.6 5.

00% 2009 2010 2011 Comments Return on investment ratio is used by financial analysts to ascertain the best investment plans.82% Return On Investment 30.00% 25. It is also an important tool used by investors and shareholders.00% 10.82% is less favorable for the company than 2011.00% 15.82% 26.00% 20. while making investment decisions in which we see in 2011 is 18.Final Project Return on Investment Ratios Return on investment 2009 2010 2011 Formulas Net profit after tax/ capital employed*100 1385102/10800673*100 3443403/12913412*100 2743384/14573660*100 Results 12.00% 0.66% 18. Indus Motor Company Limited Page 61 .00% 5.

2 1 0.Final Project Debt to Equity Ratio Ratios Debt to asset ratio 2009 2010 2011 Formulas Total debts/ Total equity 10388550/10296973 14550663/12587615 12714970/14119648 Results 1.15 0.00 1.4 0. Indus Motor Company Limited Page 62 . Therefore.4 1. Higher debts means higher financial risk involve. Indus motor company is less risky as compared to 2009 and 2010 so it is favorable for the company.8 0.90 Debt to Equity Ratio 1.6 0.2 0 2009 2010 2011 Comments Debt to equity ratio shows how the firm’s stockholder bears the risk of the firm.

9 1.15 1.05 2 1.95 1.2 2.1 2. Indus Motor Company Limited Page 63 .15 2.Final Project Financial Leverage Ratios 2009 2010 2011 Formulas Total assets/total equity 20685523/10296973 27138278/12587615 26834618/14119648 Results 2 2.90 Financial Leverage 2. A high financial leverage ratio 2010 means that the company is using debt and other liabilities to finance its assets and.85 1.8 1. everything else being equal is more risky than a company with lower leverage.75 2009 2010 2011 Comments The financial leverage ratio is a measure of how much assets a company holds relative to its equity.

With the country’s macroeconomic indices showing some signs of modest recovery. the maker of Toyota Corolla. Financial ratios are a useful by product of financial statement and provide standardized measures of business financial position.year benchmark. Indus Motor Company Limited Page 64 . etc impacted the demand negatively. particularly for the trade creditors and banks. By calculating one or other ratio or group of ratios he can analyze the performance of a business from the different point of view. limited credit availability for auto financing. profitability and riskiness. which may drive up competition. Ratios generally do the work of diagnosing a problem only and failed to provide the solution to the problem. The result was accompanied by a dividend announcement of Rs5 for every Rs10 ordinary share. according to a communique sent to the Karachi Stock Exchange on Tuesday. However.903 units compared with 21. The profitability of the firm can be analyzed with the help of profitability ratios. the earnings will remain under pressure owing to continuous depreciation of the rupee and relaxation allowed by the government in used car imports. amongst other measures.7 per cent in the first half of 2009-10. The ratios need not be taken for granted and accepted at face values. These ratios are numerous and there are wide spread variations in the same measure. The ratio analysis can help in understanding the liquidity and short-term solvency of the business. inflation.300 units sold in the same period last year. The operational efficiency of the business in utilizing its assets to generate profits can be accessed on the basis of different turnover ratios. Indus Motor has requested the government to take note of the recommendations made by the Pakistan Automobile Manufacturers Association to accelerate growth of the local industry and withdraw the 5% Federal Excise Duty and increase of 1% Sales Tax. depreciation of the Pak Rupee against major currencies. the company expects the second half of fiscal 2011 to be better for the auto industry.Final Project Conclusion KARACHI: Indus Motor. the ratio analyses suffer from different limitations also. However. It is an important and powerful tool in the hands of financial analyst. Manufacturing operations were affected by rising input cost due to depreciation of the rupee against Japanese yen and other inflationary pressures.2 per cent in the period under review compared with 7. The government recently allowed imports of used cars up to five-year-old compared to the previous three. unprecedented rise in prices of oil. Long-term solvency position as measured by different debt ratios can help a debt investor or financial institutions to evaluate the degree of financial risk. said the company in a press release. The impact of political uncertainty compounded with a general slowdown in the economic environment resulting from rising interest rates. steel and other inputs. The combined sale of Toyota and Daihatsu brands in the first half ended December 2010 grew by eight per cent to 22. The company’s gross margins declined by 250 basis points to 5. recorded a 34 per cent decline in net profit to Rs908 million in the first half of fiscal 2010-11 primarily due to higher cost pressures and lower other income.

Final Project REFRENCES     Annual Report http://www.com/ http://en. Newspapers and Others Indus Motor Company Limited Page 65 .wikipedia.org/wiki/Indus_Motors_Company Library: Magazines.toyota-indus.

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