Oxford Brookes University

Research and Analysis

Project

Indus Motor Company

Limited (IMCL)
Title of Project and Company
chosen

An Analysis of Business and Financial

Performance of Indus Motor Company
Limited over a three year period
Reasons for the selection
of topic and company

► An option to analyze a range of areas of an

organisation
► Enhancement in my learning process
► Linked to my studies
► Automobile sector
► Availability of information about company
being a second largest player in the industry.
 Project objectives
► Briefly analyze the company and sector
► Profitability analysis
► Liquidity analysis
► Debt ratios
► Investor’s analysis
► SWOT analysis
► Porter’s five forces model
► Conclusion
 Research Questions
► What is my research question/title of my project?
► What is the current literature on the subject and the
underlying theory?
► What methods will be used to gather information about
the topic?
► How will the analysis be carried out?
► What conclusions can be drawn from the analysis?
► What are the key elements that I should present to my
mentor?
► What have I learned from the process?
 Research approach
► The research approach I had to follow was supposed to be very
carefully planned.
► The first thing I had to decide through research was to decide the
topic and company for the analysis. I did research regarding the
different companies in an automobile sector of Pakistan and the
information available regarding these.
► The next step was to decide the sources of information and the tools
for the analysis.
► I had to research their individual uses and limitations and the
analysis skills that I needed to be able to complete an up to he mark
project. The last area of research was the skills that were required
for my project.
► The research work was supposed to be quite detailed and
comprehensive. So once I decided the sources of information I had
to gather information from all the reliable sources and then make
use of the information which was particularly important. I referenced
all portions of information to avoid any repetition.
 Information gathering
Primary data
► A formal meeting with the company staff and
questionnaire sent to them
Secondary data
► Annual Audited Reports of IMCL and HACP
► Books and reference material
► Trade magazines and newspapers
► Search engines
► Analyst’s Reports
 Accounting and business techniques
used and its limitations

► Ratio analysis
► SWOT analysis
► Porter’s five forces model
 Analysis
► The Company
IMCL is the Pakistan’s second largest car manufacturer
Incorporated in Pakistan as a public limited company in December
1989 and started commercial production in May 1993. The shares of
the company are quoted at all the stock exchanges of Pakistan.

► Sector Profile
In addition to the economic downturn the auto industry also had to
deal with the challenges posed by the imposition of additional levies
and taxes in the Federal Budget 2008-09 which included the 5%
Federal Excise Duty (FED) on cars with engine capacity in excess
of 850cc and application of fixed slabs of withholding tax at the
registration stage. This compounded the situation resulting in a
sharp increase in automobile prices and dampening of demand.
 Analysis
Ratio analysis
► Profitability: Decrease in profitability because of decline in
number of units sold due to higher selling prices ultimately
squeezed the margins of the company
► Liquidity: Current and quick ratios are reasonable enough to pay
the current liabilities
► Capital Structure: The capital structure is very well risk free and
company can easily pay its finance cost
► Efficiency Ratio: The company is efficiently managing its
working capital
► Investors ratio: the investment ratios deteriorated due to low
EPS though the dividend policy also remained constant over the
year, market value decreased, hence P/E ratio is also showing a
declining trend.
 Analysis
SWOT analysis:
► Strengths: Market safe, innovative, reliable, durable and
outstanding quality products, IMCL’s good corporate image,
Brand equity, IMC is the only company who supplies its
vehicles to army and police departments in the country
► Weaknesses: low deletion
► Opportunities: high demand is expected
► Threats: higher inflation, steel prices, low buying power,
imported cars
Porter’s five forces Model
► High Rivalry between existing competitor
► Very low threat of new entrants
► Low bargaining power of suppliers
► Low bargaining power of customers
► No substitutes exist.
 Conclusion
► IMCL is involved in assembling of cars
► High price of cars
► The deteriorating financial performance of IMCL over the
years.
► The strengths, weaknesses, opportunities and threats
facing the company.
► High competition in the auto industry with low bargaining
power of customer and suppliers and high entry barriers.

Recommendations
IMCL should more focus towards the deletion level in
order to reduce the higher costs as the local currency is
continuously depreciation in comparison with other major
currencies.
 Graphs
Units sold

60000
50557 50802
50000
42406
40000 35874 35276
Units 30000
20000
10000
0
2005 2006 2007 2008 2009
Year
 Graphs
Gross and net profit

4440
4500 4147
4072 4229
4000 3848
3541
3500
3000 2706
2500 2302 2324
Million 2046
2000
1500
1000
500
0
2005 2006 2007 2008 2009
Year
 Graphs
EPS

2009 17.62

2008 29.15

Year 2007 34.93

2006 33.7

2005 18.89

0 10 20 30 40
Rs.