Final

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Indus Motor Company (IMC) is a joint venture between the House of Habib, Toyota Motor
Corporation Japan (TMC) , and Toyota Tsusho Corporation Japan (TTC) for assembling,
progressive manufacturing and marketing of Toyota vehicles in Pakistan since July 01, 1990.
IMC is engaged in sole distributorship of Toyota and Daihatsu Motor Company Ltd. vehicles
in Pakistan through its dealership network.
The company was incorporated in Pakistan as a public limited company in December 1989
and started commercial production in May 1993. The shares of company are quoted on the
stock exchanges of Pakistan. Toyota Motor Corporation and Toyota Tsusho Corporation have
25 % stake in the company equity. The majority shareholder is the House of Habib.
IMC's production facilities are located at Port Bin Qasim Industrial Zone near Karachi in an
area measuring over 105 acres.
Indus Motor Company¶s plant is the only manufacturing site in the world where both Toyota
and Daihatsu brands are being manufactured.
Heavy investment was made to build its production facilities based on state of art
technologies. To ensure highest level of productivity world-renowned Toyota Production
Systems are implemented.
IMC's Product line includes 6 variants of the newly introduced Toyota Corolla, Toyota Hilux
Single Cabin 4x2 and 4 versions of Daihatsu Cuore. We also have a wide range of imported
vehicles.
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Net Operati Profit After Tax (NOPAT)
(Rupees i µ000)
NOPAT 2008= EB T (1-TaxRate)

3,541,711.00 (1-35.318%)
3,541,711.00 0.647
Rs. 2,290,849.51
NOPAT 2007= EB T (1-TaxRate)

4,229,481.00 (1-35.018%)
4,229,481.00 0.650
Rs. 2,748,401.34
Rs2,800,000.00
Rs2,700,000.00
Rs2,600,000.00
Rs2,500,000.00
2008
Rs2,400,000.00
2009
Rs2,300,000.00
Rs2,200,000.00
Rs2,100,000.00
Rs2,000,000.00
NOPAT
NOPAT is net operating profit after taxes. It is t e after-tax profit a company woul have if it
had no debt and no investment in non operating assets. The company position is strong in
2008 because its NOPAT decreases in 2008 from Rs. 2,748,401.34 to Rs. 2,290,849.51. This
is around 17% decrease in 2008. However the income statement shows that Indus Motor
Company earnings per share declined in 2008.
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Current Ratio
(Rupees in µ000)
Current Ratio 2008 = Total Current Assets

Total Current Liabilities
= 9,664,784.00
3,779,631.00
Current Ratio 2008 = 2.56 x

Total Current Liabilities
= 15,665,050.00
7,410,926.00
3.00 x
2.50 x
2.00 x
1.50 x 2008
1.00 x
2007
0.50 x
0.00 x
Current Ratio
The current ratio for the year 2008 is 2.56 x and for the year 2007, it is 2.11 x. For the year
2008, a current ratio of 2.56x means that for every Rs.1 of current liability, the company has
Rs. 2.56 in Current assets with which to pay them .This means the company is in strong
position and it is also indicator that company has the ability to meets its creditors demand.
The increase in current ratio in 2008 is because the current assets have reduced 38.30% its
current liability decreases to 49% as compared to 2007.
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Net Worth
(Rupees in µ000)
Net Worth 2008 = Total Assets - Total Liabilities

13,748,109.00 4,311,769.00
Net Worth 2008 = Rs. 9,436,340.00
15,665,050.00 7,621,075.00
Net Worth 2007 = Rs. 8,043,975.00
Rs9,500,000.00
Rs9,000,000.00
Rs8,500,000.00
2008
Rs8,000,000.00
2007
Rs7,500,000.00
Rs7,000,000.00
Net Worth
The net worth of the company increases 14.7% in 2008 as compared to 2007. The Total net
worth in year 2007 is Rs.8,043,975,000 and in year 2008 the total net worth is Rs.
9,436,340,000
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Leverage Ratio (Debt/Worth) Ratio 2008
(Rupees in µ000)
Leverage Ratio(Debt/Worth) Ratio 2008 = Total Liability

Net Worth
= 4,311,769.00
9,436,340.00
Leverage Ratio(Debt/Worth) Ratio 2008 = 0.46 x

Net Worth
= 7,621,075.00
8,043,975.00
1.00 x
0.90 x
0.80 x
0.70 x
0.60 x
0.50 x 2008
0.40 x
2007
0.30 x
0.20 x
0.10 x
0.00 x
Leverage(Debt/Worth) Ratio
The company position is strong in 2008 because for every Re. 1 of Net worth the company
invested, the company owes 50 paisa of Debt to its creditors as compare to 2007 where the
company owes 95 paisa of Debt to its creditors in year 2007. This showthe decreases is
52.77% means the company owes 52.77% less Debt in 2008.
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Gross Profit
(Rupees in µ000)
Gross Profit 2008 = Net Sales - Cost Of Goods Sold

= 41,423,843.00 37,575,356.00
Gross Profit 2008 = Rs. 3,848,487.00

39,061,226.00 34,620,632.00
Gross Profit 2007 = Rs. 4,440,594.00
Rs4,500,000.00
Rs4,400,000.00
Rs4,300,000.00
Rs4,200,000.00
Rs4,100,000.00
Rs4,000,000.00 2008
Rs3,900,000.00
2007
Rs3,800,000.00
Rs3,700,000.00
Rs3,600,000.00
Rs3,500,000.00
Gross Profit
The gross profit decreases from 13.33 % in 2008 from Rs. 4,440,594 to Rs. 3,484,487. This is
because increase in manufacturing cost.
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Gross Profit Margin Ratio
(Rupees in µ000)
Gross Profit Margin 2008 = Gross Profit 2008

Sales 2008
3,848,487.00
41,423,843.00
Gross Profit Margin 2008 = 0.09 x
Gross Profit Margin 2007 = Gross Profit 2007

Sales 2007
4,440,594.00
39,061,226.00
Gross Profit Margin 2008 = 0.11 x
0.12 x
0.10 x
0.08 x
0.06 x 2008
0.04 x 2007
0.02 x
0.00 x
The Gross Profit Margin Ratio decreases in the year 2008 from 11% to 9%. This is due the
economic and political conditions in the country. The company net sale had increased but its
manufacturing cost has also increased. There is a 5.70% increase in sale but the cost of goods
sold also increases to 8.53%. This means that the manufacturing cost of the company
increases in the year 2008.
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Net Profit Margin Ratio
(Rupees in µ000)
Net Profit Margin Ration 2008 = Net Profit Before Tax

Net Sales
= 3,541,711.00
41,423,843.00
Net Profit Margin Ration 2008 = 0.085 x

Net Sales
= 4,229,481.00
39,061,226.00
0.12 x
0.10 x
0.08 x
0.06 x 2008
0.04 x 2007
0.02 x
0.00 x
The decrease in net profit margin ratio is due to the increase in inflation and domestic
economic recession. There is also decrease in the purchase power of the middle class income
group. The net profit margin decreases from 10.8% to 8.5%.
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Sales-To-Assets R atio
(Rupees in µ000)
Sales-To-Assets 2008 = Sales

Total Assets
= 41,423,843.00
13,784,109.00
Sales-To-Assets 2008 = 3.01 x

Total Assets
= 39,061,226.00
15,665,050.00
3.50 x
3.00 x
2.50 x
2.00 x
2008
1.50 x
2007
1.00 x
0.50 x
0.00 x
Sales-To-Assets Ratio
This means that for every Re. 1 invested in total assets the company is generating sales of Rs.
3.01 in 2008. This is a good sign for the company as its Sales-To-Assets ratio increases to
17.27%
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Return on Assets Ratio
(Rupees in µ000)
Return On Assets (ROA) 2008 = Net Profit before Tax

Total Assets
= 3,541,711.00
13,748,109.00
Return On Assets (ROA) 2008 = 0.257 x
Return On Assets (ROA) 2007 = Net Profit before Tax

Total Assets
= 4,229,481.00
15,665,050.00
0.30 x
0.28 x
0.26 x
2008
0.24 x 2007
0.22 x
0.20 x
Return On Assets Ratio
Return on assets measures the efficiency of Total Assets in generating Net Profit. The
company is generating .26 paisa on every Re. 1 invested in total assets in 2008. This indicates
that the efficiency decreases in 2008 because the company is earning .27 paisa in 2007 for
every Re. 1 invested on total assets.
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Return On Investment Ratio
(Rupees in µ000)
Return On Investment(ROI) 2008= Net Profit Before Tax

Net Worth
= 3,541,711.00
9,436,340.00
Return On Investment(ROI) 2008= 0.38 x
Return On Investment (ROI) 2007= Net Profit Before Tax

Net Worth
4,229,481.00
8,043,975.00
Return On Investment (ROI) 2007= 0.53 x
0.60 x
0.50 x
0.40 x
0.30 x 2008
0.20 x 2007
0.10 x
0.00 x
Return On Investment
Return on assets measures the efficiency of Net worth in generating Net Profit. The company
is generating .38 paisa on every Re. 1 invested in 2008. This indicates that the efficiency
decreases in 2008 because the company is earning .53 paisa in 2007 for every Re. 1 invested.
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Inventory
(Rupees in µ000)
Inventory 2008 = Stores and Spare + Stock-in-trade

= 232,142.00 + 2,637,629.00
Inventory 2008 = Rs. 2,869,771.00
Inventory 2007 = Stores and Spare + Stock-in-trade

= 227,191.00 + 2,859,951.00
Inventory 2007 = Rs. 3,087,142.00
Rs3,100,000.00
Rs3,050,000.00
Rs3,000,000.00
Rs2,950,000.00
2008
Rs2,900,000.00
2007
Rs2,850,000.00
Rs2,800,000.00
Rs2,750,000.00
Inventory
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Inventory Turnover Ratio
(Rupees in µ000)
Inventory Turnover Ratio 2008 = Cost of Goods Sold

Inventory 2008
37,575,356.00
2,869,771.00
Inventory Turnover Ratio 2008 = 13.09 x
Inventory Turnover Ratio 2007 = Cost of Goods Sold

Inventory 2007
34,620,632.00
3,087,142.00
13.50 x
13.00 x
12.50 x
12.00 x
2008
11.50 x
2007
11.00 x
10.50 x
10.00 x
Inventory Turnover Rate
The inventory turnover ratio in the year 2007 is 11.21; this means that around 11 times in the
year the inventory of the firm is converted into cash or receivable. However the company¶s
Ratio in 2008 13.09, means the 13 times in the year the company converted its inventory into
cash or receivables.
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Inventory Turn-Days
(Rupees in µ000)
Inventory Turn-Days 2008 = 360

Inventory Turnover
2008
= 360.00
13.09
Inventory Turn-Days 2008 = 27.50 x

Inventory Turnover
2007
360.00
11.21
33.00 x
32.00 x
31.00 x
30.00 x
29.00 x 2008
28.00 x 2007
27.00 x
26.00 x
25.00 x
Inventory Turn-Days
The company is keeping its inventory for around 28 days in 2008 as compared to 32 days in
2007 on hand throughout the year
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Daily Credit Sales
(Rupees in µ000)
Daily Credit Sales 2008= Net Credit Sales

365.00
= 41,423,483.00
365.00
Daily Credit Sales 2008= s. 113,488.99

365.00
= 39,061,226.00
365.00
Daily Credit Sales 2008= s. 107,017.06
s114,000.00
s113,000.00
s112,000.00
s111,000.00
s110,000.00
s109,000.00 2008
s108,000.00 2009
s107,000.00
s106,000.00
s105,000.00
s104,000.00
s103,000.00
Daily Credit Sales
The daily credit sales increase in 2008 from 107,017.06 to 112,488.99. This is a around 5 %
increase in 2008.
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Ghandhara Nissan Limited (GNL) is a group Company of Bibojee Services (Pvt.) Limited.
The Company was incorporated in 1981 as a Private Limited Company having the sale
licensee for the distribution of Nissan vehicles in CBU condition in Pakistan; later in 1992 it
was converted in to a Public Company listed in Karachi Stock Exchange.
GNL has Technical Assistance Agreement with Nissan Motor Co. Japan and joint Venture
Agreement with Nissan Diesel Co. Japan for the progressive Assembly of Passenger Cars,
Light Commercial Vehicles and Heavy Duty Vehicles. GNL¶s Car and Truck Plants are
located at Port Qasim adjacent to each other.
It is the only Automobile Company in the country assembling complete range of product i.e.
passengers cars, light commercial vehicles and heavy-duty trucks and buses.
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Net Operating Profit After Tax
(Rupees in µ000)
NOPAT 2008= EBIT(1-TaxRate)

279,892(1-36.347%)
Rs. 178,159.02
NOPAT 2007= EBIT(1-TaxRate)

285,918(1-34.515%)
Rs. 187,233.40
Rs188,000.00
Rs186,000.00
Rs184,000.00
Rs182,000.00
2008
Rs180,000.00
2007
Rs178,000.00
Rs176,000.00
Rs174,000.00
Rs172,000.00
NOPAT
NOPAT is net operating profit after taxes. It is the after-tax profit a company would have if it
had no debt and no investment in non operating assets. The company position is strong in
2008 because its NOPAT decreases in 2008 from Rs. 178,159.02 to Rs. 187,233.40. This is
around 5% decrease in 2008. However the income statement shows that Indus Motor
Company earnings per share declined in 2008.
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Current Ratio
(Rupees in µ000)

Total Current
Liabilities
= 1,869,547.00
1,408,245.00

Total Current
Liabilities
= 1,418,077.00
1,039,023.00
1.40 x
1.35 x
1.30 x 2008
2007
1.25 x
1.20 x
Current Ratio
The current ratio for the year 2008 is 1.33 x and for the year 2007, it is 1.36 x. For the year
2008, a current ratio of 1.33x means that for every Rs.1 of current liability, the company has
Rs. 1.33 in Current assets with which to pay them .This means the company is not in strong
position and it is also indicator that company has the ability to meets its creditors demand
decrease. The decrease in current ratio in 2008 is because the current assets have increases to
24.14 % and its current liability increases to 26.14% as compared to 2007.
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Net Worth
(Rupees in µ000)

3,101,317.00 - 1,635,241.00
Net Worth 2008 = 1,466,076.00

2,398,619.00 1,378,303.00
Net Worth 2007 = 1,020,316.00
Rs1,600,000.00
Rs1,400,000.00
Rs1,200,000.00
Rs1,000,000.00
Rs800,000.00 2008
Rs600,000.00 2007
Rs400,000.00
Rs200,000.00
Rs0.00
Net Worth
The net worth of the company increases 30% in 2008 as compared to 2007. The Total net
worth in year 2007 is Rs.1,020,316 and in year 2008 the total net worth is Rs. 1,466,076.
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Leverage Ratio (Debt/Worth) Ratio 2008
(Rupees in µ000)

Net Worth
1,635,241.00
1,466,076.00

Net Worth
1,378,303.00
1,020,316.00
1.40 x
1.20 x
1.00 x
0.80 x
2008
0.60 x
2007
0.40 x
0.20 x
0.00 x
Leverage(Debt/Worth) Ratio
The company position is strong in 2008 because for every Re. 1 of Net worth the company
invested, the company owes 1.12 rupees of Debt to its creditors as compare to 2007 where the
company owes 1.35 rupees of Debt to its creditors in year 2007. This show the decreases is
53% means the company owes 53% less Debt in 2008.
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Gross Profit
(Rupees in µ000)

= 3,708,889.00 - 3,187,051.00
Gross Profit 2008 = Rs. 521,838.00

2,894,826.00- 2,398,138.00
Gross Profit 2007 = Rs. 496,688.00
Rs525,000.00
Rs520,000.00
Rs515,000.00
Rs510,000.00
Rs505,000.00
Rs500,000.00 2008
Rs495,000.00 2007
Rs490,000.00
Rs485,000.00
Rs480,000.00
Gross Profit
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(Rupees in µ000)
Gross Margin Ratio 2008 = Gross Profit

Net Sales
521,838.00
3,708,889.00
Gross Margin Ratio 2008 = 0.14 x
Gross Margin Ratio 2007 = Gross Profit

Net Sales
= 496,688.00
2,894,826.00
Gross Margin Ratio 2007 = 0.17 x
0.18 x
0.16 x
0.14 x
0.12 x
0.10 x
2008
0.08 x
0.06 x 2007
0.04 x
0.02 x
0.00 x
Gross Margin Ratio
The Gross Profit Margin Ratio decreases in the year 2008 from 54% to 46%. This is due the
economic and political conditions in the country. The company net sale had increased but its
manufacturing cost has also increased.
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(Rupees in µ000)

Net Sales
= 279,892.00
3,708,889.00

Net Sales
= 285,918.00
2,894,826.00
0.10 x
0.09 x
0.08 x
0.07 x
0.06 x
0.05 x 2008
0.04 x 2007
0.03 x
0.02 x
0.01 x
0.00 x
Net Profir Margin Ratio
The decrease in net profit margin ratio is due to the increase in inflation and domestic
economic recession. There is also decrease in the purchase power of the middle class income
group. The net profit margin decreases from 0.098 x to 0.075x.
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Sales-To-Assets Ratio
(Rupees in µ000)

Total Assets
= 3,708,889.00
3,101,317.00

Total Assets
= 2,894,826.00
2,398,619.00
1.25 x
1.24 x
1.23 x
1.22 x
1.21 x 2008
1.20 x 2007
1.19 x
1.18 x
1.17 x
1.16 x
1.15 x
Sales-To-Assets
This means that for every Re. 1 invested in total assets the company is generating sales of Rs.
1.195 in 2008. This is a not good sign for the company as its Sales-To-Assets ratio decreases
from 1.20 to 1.95. In 2007 for every Re. 1 invested in total assets the company is generating
sales of Rs. 1.20.
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Return On Asset Ratio
(Rupees in µ000)
Return On Assets (ROA) 2008 = Net Profit Before Tax

Total Assets
= 279,892.00
3,101,317.00
Return On Assets (ROA) 2007 = Net Profit Before Tax

Total Assets
= 285,918.00
2,398,619.00
0.12 x
0.10 x
0.08 x
2008
0.06 x 2007
0.04 x
0.02 x
0.00 x
Return On Assets
Return on assets measures the efficiency of Total Assets in generating Net Profit. The
company is generating 0.09paisa on every Re. 1 invested in total assets in 2008. This
indicates that the efficiency decreases in 2008 because the company is earning 0.12paisa in
2007 for every Re. 1 invested on total assets.
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Return On Investment Ratio
(Rupees in µ000)
Return On Investment(ROI) 2008= Net Profit Before Tax

Net Worth
= 279,892.00
1,466,076.00
Return On Investment(ROI) 2008= 0.19 x
Return On Investment (ROI) 2007= Net Profit Before Tax

Net Worth
285,918.00
1,020,316.00
Return On Investment (ROI) 2007= 0.28 x
0.30 x
0.25 x
0.20 x
2008
0.15 x 2007
0.10 x
0.05 x
0.00 x
Return On Investment
Return on assets measures the efficiency of Net worth in generating Net Profit. The company
is generating 0.19 paisa on every Re. 1 invested in 2008. This indicates that the efficiency
decreases in 2008 because the company is earning 0.28 paisa in 2007 for every Re. 1
invested.
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Inventory
(Rupees in µ000)
Inventory 2008 = Stores, Spare and loose Tools + Stock-in-Trade

= 48,145.00 + 789,663.00
Inventory 2008 = Rs. 837,808.00
Inventory 2007 = Stores, Spare and loose Tools + Stock-in-Trade

= 50,598.00 + 772,798.00
Inventory 2007 = Rs. 823,396.00
Rs840,000.00
Rs835,000.00
Rs830,000.00 2008
2007
Rs825,000.00
Rs820,000.00
Rs815,000.00
Inventory
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(Rupees in µ000)
Inventory Turnover Ratio 2008 = Cost Of Goods Sold

Inventory
= 3,187,051.00
837,808.00
Inventory Turnover Ratio 2007 = Cost Of Goods Sold

Inventory
= 2,398,138.00
823,396.00
4.00 x
3.50 x
3.00 x
2.50 x 2008
2.00 x 2007
1.50 x
1.00 x
0.50 x
0.00 x
The inventory turnover ratio in the year 2007 is 3; this means that around 3 times in the year
the inventory of the firm is converted into cash or receivable. However the company¶s Ratio
in 2008 4, means the 4 times in the year the company converted its inventory into cash or
receivables.
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Inventory Turn-Days Ratio
(Rupees in µ000)

Inventory Turnover
= 360.00
3.80

Inventory Turnover
= 360.00
2.91
140.00 x
120.00 x
100.00 x
80.00 x 2008
2007
60.00 x
40.00 x
20.00 x
0.00 x
Inventory Turn-Days

The company is keeping its inventory for around 95 days in 2008 as compared to 124 days in
2007 on hand throughout the year
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Daily Credit Sales
(Rupees in µ000)

365.00
= 3,708,889.00
365.00
Daily Credit Sales 2008= Rs. 10,161.34

365.00
= 2,894,826.00
365.00
Daily Credit Sales 2007= Rs. 7,931.03
Rs12,000.00
Rs10,000.00
Rs8,000.00
2008
Rs6,000.00 2007
Rs4,000.00
Rs2,000.00
Rs0.00
Daily Credit Sales

The Daily Credit Sales increases in 2008 with Rs. 10,161.34. This is a 21% increase in 2008.
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£ Op P
I
M c p (IMc Gh
h £ L
2008 2007 2008 2007

Rs. 2,290,849.51 Rs. 2,748,401.34 Rs. 178,159.02 Rs. 187,233.40
Rs3,000,000.00
Rs2,500,000.00
Rs2,000,000.00
2008
Rs1,500,000.00
2007
Rs1,000,000.00
Rs500,000.00
Rs0.00
IMC GNL

46

c RPOR

c R
I
M c p(IMc Gh
h £ L
(G£L
2008 2007 2008 2007
2.56 x 2.11 x 1.33 x 1.36 x
2.75 x
2.50 x
2.25 x
2.00 x
1.75 x
1.50 x 2008
1.25 x 2007
1.00 x
0.75 x
0.50 x
0.25 x
0.00 x
IMC GNL

The current ratio of Indus Motor for the year 2008 is 2.56 x and Ghandhara Nissan is 1.33 x.
For the year 2008, a current ratio of 2.56x means that for every Rs.1 of current liability, the
company has Rs. 2.56 in Current assets with which to pay them .This means the company is
in strong position and it is also indicator that company has the ability to meets its creditors
demand. Whereas the for Ghandhara Nissan, for every one rupee liability the company has
Rs. 1.33 in current assets to pay them.
47

c RPOR

£ Wh
I
M c p(IMc Gh
h £ L
(G£L
2008 2007 2008 2007
Rs. 9,436,340.00 Rs. 8,043,975.00 Rs. 1,466,076.00 Rs. 1,020,316.00
Rs10,000,000.00
Rs9,000,000.00
Rs8,000,000.00
Rs7,000,000.00
Rs6,000,000.00
2008
Rs5,000,000.00
2007
Rs4,000,000.00
Rs3,000,000.00
Rs2,000,000.00
Rs1,000,000.00
Rs0.00
IMC GNL

The Net worth of Indus Motors increases 14.75 % in 2008 whereas the Ghandhara Nissan Net
worth increase 30.40 %. The Indus Motors had more liabilities than Ghandhara Motors as
compare to its assets.
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L R(D Wh R

I
M c p(IMc Gh
h £ L
(G£L
2008 2007 2008 2007
0.46 x 0.95 x 1.12 x 1.35 x

1.40 x
1.20 x
1.00 x
0.80 x 2008
0.60 x 2007
0.40 x
0.20 x
0.00 x
IMC GNL

The Indus Motor owes 0.46 paisa of Debt to its creditors for every Re. 1 of net worth the
company invested where as the Ghandhara Nissan owes 1.12 rupees for every Re. 1 invested
in 2008. Both companies had good position in 2008 as both the companieshave decrease its
Debt ratio.
49

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G P
I
M c p(IMc Gh
h £ L
(G£L
2008 2007 2008 2007
3,848,487.00 4,440,594.00 521,838.00 496,688.00
Rs4,500,000.00
Rs4,000,000.00
Rs3,500,000.00
Rs3,000,000.00
Rs2,500,000.00 2008
Rs2,000,000.00 2007
Rs1,500,000.00
Rs1,000,000.00
Rs500,000.00
Rs0.00
IMC GNL

The gross Profit of Indus Motors decreases 13.33 % whereas the gross profit of Ghandhara
Nissan Increases 4.81 % in 2008.
50

c RPOR

G P M R

I
M c p(IMc Gh
h £ L
(G£L
2008 2007 2008 2007
0.09 x 0.11 x 0.14 x 0.17 x
0.18 x
0.16 x
0.14 x
0.12 x
0.10 x 2008
0.08 x 2007
0.06 x
0.04 x
0.02 x
0.00 x
IMC GNL

The Gross Profit Margin Ratio of both of the company decreases in 2008. The decreasing rate
of both of the company is same at almost 18 % in 2008. The sales of both of the company
increases but its manufacturing costs are also increased.
51

c RPOR

£ P M R

I
M c p(IMc Gh
h £ L
(G£L
2008 2007 2008 2007
0.09x 0.11x 0.08 x 0.10 x
0.12 x
0.10 x
0.08 x
2008
0.06 x
2007
0.04 x
0.02 x
0.00 x
IMC GNL

The Net profit margin ratio also decreases due to less sale and increase manufacturing cost.
52

c RPOR

R

I
M c p(IMc Gh
h £ L
(G£L
2008 2007 2008 2007
3.01 x 2.49 x 1.195 x 1.20 x
3.50 x
3.00 x
2.50 x
2.00 x 2008
1.50 x 2007
1.00 x
0.50 x
0.00 x
IMC GNL

The Indus Motors generates sales of Rs. 3.01 for every Re. 1 invested in total assets whereas
the Ghandhara Nissan generates Rs. 1.20 for every Re. 1 invested in total assets. The Indus
Motors position gets strong in 2008 with 17% increase in generating sales from total assets
where the position of Ghandhara Nissan weaken slightly by 0.41% decreases in generating
sales from total assets.
53

c RPOR

R O R
I
M c p(IMc Gh
h £ L
(G£L
2008 2007 2008 2007
0.26 x 0.27 x 0.09 x 0.12 x
0.30 x
0.25 x
0.20 x
2008
0.15 x
2007
0.10 x
0.05 x
0.00 x
IMC GNL

Return on assets measures the efficiency of Total Assets in generating Net Profit. The Indus
Motors is generating 0.26 paisa for every one rupee invested in total assets, where as the
Ghandhara Nissan is generating 0.09 paisa for every one rupee invested.
54

c RPOR

R O I R
I
M c p(IMc Gh
h £ L
(G£L
2008 2007 2008 2007
0.38 x 0.53 x 0.19 x 0.28 x
0.60 x
0.50 x
0.40 x
2008
0.30 x
2007
0.20 x
0.10 x
0.00 x
IMC GNL

Return on assets measures the efficiency of Net worth in generating Net Profit. The Indus
Motors is generating .38 paisa for every one rupee invested where as the GhandharaNissan is
generating only .19 paisa. The return on investment decreases for both companies but the
Indus Motor position decreases 28 % in 2008 where as the Ghandhara decreases to 32 % in
2008.
55

c RPOR

I
I
M c p(IMc Gh
h £ L
(G£L
2008 2007 2008 2007
2,869,771.00 3,087,142.00 837,808.00 823,396.00
Rs3,500,000.00
Rs3,000,000.00
Rs2,500,000.00
Rs2,000,000.00 2008
Rs1,500,000.00 2007
Rs1,000,000.00
Rs500,000.00
Rs0.00
IMC GNL
The Indus Motors inventory decreases 7% in the year 2008 whereas the Ghandhara Nissan
Inventory increases by 1.7 %.
56

c RPOR

I R

I
M c p(IMc Gh
h £ L
(G£L
2008 2007 2008 2007
13.09 x 11.21 x 3.80 x 2.91 x
14.00 x
12.00 x
10.00 x
8.00 x 2008
6.00 x 2007
4.00 x
2.00 x
0.00 x
IMC GNL

The Indus Motors is converting its inventory into cash or receivable 13 times in a years where
as the Ghandhara Motors had only 4 times in a years. The reason for higher ratio of Indus
Motor is because of its cars quality and strong brand name.
57

c RPOR

I D

I
M c p(IMc Gh
h £ L
(G£L
2008 2007 2008 2007
27.50 x 32.11x 94.64 123.61
140.00 x
120.00 x
100.00 x
80.00 x 2008
60.00 x 2007
40.00 x
20.00 x
0.00 x
IMC GNL

The Indus Motors is keeping its inventory for only 28 days in 2008 whereas the Ghandhara
Nissan is keeping its inventory for 94 days on hand through out of the year. This is because
strong demand of Indus Motors Cars in the market.
58

c RPOR

D c

I
M c p (IMc Gh
h £ L
(G£L
2008 2007 2008 2007
Rs. 113,488.99 Rs. 107,017.06 Rs. 10,161.34 Rs. 7,931.03
120000
100000
80000
2008
60000
2007
40000
20000
0
IMC GNL

The Daily Credit Sales of Indus Motor was Rs. 113,488.99 in 2008 because of it high
demands of car in the market whereas the position of Ghandhara Nissan is not strong because
of its low demand. The Daily Sales Credit of Ghandhara Nissan in 2008 is Rs. 10,161.34.
Both Companies¶ Daily Sales increases in 2008.
59

c

60

c

History of Automobile Industry of Pakistan
Nine plants were in operation when the industry was nationalized in 1972 and Pakistan
Automobile Corporation (PACO) set up. It was only after 1979 that PACO was finally able to
implement its programs to develop the automobile industry. To meet local requirements,
PACO launched the Suzuki Project, which started production in 1984. In 1991, Suzuki was
manufacturing 40,846 cars per annum and the deletion rate achieved was above 50 per cent.
For transportation of smaller loads, PACO units started the assembly of Suzuki, Isuzu and
Mazda pickups, coasters, jeeps and vans. To meet the demand for heavier trucks and buses,
Isuzu and Hino production was undertaken at National Motors and Republic Motors. Later
Hinopak Motors was incorporated in the private sector.
In 1987, Ghandhara Nissan Diesel Ltd., a joint venture company of Ghandhara Nissan (Pvt)
Limited, Nissan of Japan and Toyo Menka Kaisha of Japan started commercial production.
The company manufactures Nissan trucks and buses in Pakistan and is about to introduce
passenger cars soon. In 1990, Indus Motor Company (IMC) began operations with a 20,000
unit capacity plant to manufacture Toyota cars in Pakistan. In 1992, under the privatization
program, many PACO units were privatized. Since then, the government policies in respect to
the automobile manufacturing industry remain inconsistent; its efforts to control the budget
deficit have also slowed down development activities resulting in a reduction of economic
activities. The economic slump still prevails; sales tax and other budgetary measures over the
last years have proved to be unfavourable for the local auto industry.
Notwithstanding various attempts by the Automobile industry to recommend a long term

industry friendly policy to encourage local production and indigenization, the government
continues to burden this industry by increasing tariffs, sales tax from 15 to 18 per cent and
additional Commercial Vehicle Tax (CVT).
Pakistan, a Potential Market
Pakistan, with a total population of approximately 130 million, with 35 per cent living in
urban areas is a market with tremendous potential. However, the level of economic
development is still low at six per cent and GDP per capita is about the same level as India
and China. The people of Pakistan are without any good urban transportation facilities. The
increasing population of Pakistan has expanded the cities and increased distances. Travelling
and transportation poses a major problem, to the extent that survival without a car is very
difficult. There are about four million vehicles on the road as of today with an annual market
growth rate of eight per cent. Unfortunately, this annual growth rate does not benefit the local
industry but remains stagnant as a result of the Afghan Transit Trade and smuggling.
61

c

Year 2007 ± 2008 for Automobile Industry
The large scale manufacturing sector had a lackluster growth of 5.4% during 2007-08
compared to 8.4% the year before. In the automotive sector, sales of locally assembled
passenger cars and light commercial vehicles (LCV) that had a previously recorded sustained
growth over last five year declined by 8% to 187,412 units from 204,212 units sold in 2006-
07.
Impact of political uncertainty compounded with general slowdown in the economic

environment resulting from rising interest rate, limited credit availability for auto financing,
depreciation of the Pak Rupee against all major currencies unprecedented rise in prices of oil,
steel and other inputs caused severe volatility in the market place, leading to high inflation
and loss of consumer confidence.
Notwithstanding the concerns, the Federal Budget 2008-09 imposed additional levies and
taxes which have resulted in further increase of automobile prices to customers and
dampened the demand, these include the imposition of 5% Federal Excise Duty on cars with
engine capacity in excess of 850cc and application of the 2.5% Withholding Tax at the
registration stage.
62

c

Company Performance
Indus Motors Limited
Although the total market decline, the company sold over 50,000 units of during the year, the
target that the company had crossed for the second consecutive year. Since the company
inception, they have produced nearly 300,000 units with continuous improvement in product
quality, after sales service and customer care. The company¶s combined sales of locally
manufactured vehicles and CBU¶s for the year at 50,802 units were a new record compared to
50,557 units sold last year.
Although the company¶s CKD sales volume declined marginally, strong demand of certain
CBU units and Toyota genuine spare parts business enabled the company to achieve record
sales revenue of Rs. 41 billion, upto 6% compared to Rs. 39 billion during 2006-07. The
company enjoyed an impressive start to the year and posted record first quarter results.
However, starting October 2007 the margins continued to remain under severe pressure
account of rising cost of all manufacturing inputs globally.
While the company management pursued an aggressive strategy to enhance efficiencies,
contain costs and pass through some of it by way of increase in retail selling price of the
products, the overall falls in demand for automobile due to deteriorating political and
economic environment forced the company to absorb significant costs. As a result, the profit
before tax for the full year at Rs 3.5 billion, declined 16% compared to Rs. 4.2 billion
achieved in 2006-07, while the profit after tax is Rs. 2.3 billion versus Rs. 2.7 billion
recorded last year.
63

c

Ghandhara Nissan Limited
Nissan Diesel PKD series have been the Company¶s main strength. A new model of PKD-
411E Euro1 Turbo Charged, 220 HP 4x2 Truck Tractor has been well received in the market.
The overall sales volumes of trucks and buses have increased from 856 to 918 units which is
higher than the preceding year.
Trucks Buses
?
£issan ompetitor £issan ompetitor
3353
2832
931
824
871 828
47 28
2006-07 2007-08 2006-07 2007-08
During the year the company sold 451 units as against 393 units last year of passenger cars
and SUV¶s in CBU condition. The company imported Nissan Passenger cars and SUVs on a
limited scale. Models which did not fall under the CKD assembly plan will continue to be
imported.
The Net Profit after tax has been Rs. 178 million as against Rs. 187 million last year. The
decline in profit is mainly due to unfavourable exchange rate, despite the fact that sales were
higher.
460
440
420
2006-07
400
2007-08
380
360
ars
64

c

As an investor in which company I will invest?
As an investor I will invest in Indus Motors Corporation because despite the economic
slowdown in the year 2007-08 the company performed well. The sales Indus Motors and
Ghandhara Nissan increases in the year 2007-2008. The Indus Motors Corporation is the
biggest name in the automobile sector and its growth is continuously increasing. The IMC
has for the second time had crossed the target of selling 50,000 units of cars. On the other
hand the GNL sales of cars, trucks and buses decrease in the year 2008. Due to the economic
and political condition of the country in the year 2007-08, the IMC had managed to increase
the sales of its cars. The manufacturing cost of the IMC is increased by 6% whereas the GNL
manufacturing cost increase by 18%. This means that IMC bear the rising price of raw
material effectively.
Analysis through Ratios:
The most important ratio to measure any company performance is its Liquidity Ratios and
most important is its current ratio. The current ratio of IMC for 2008 is 2.56x where as the
GNL has 1.33x. The position of IMC gets stronger in 2008 where its current ratio increase
from 2.11x to 2.56 x while on the other hand GNL ratio decrease from 1.36x to 1.33x. This
means the assets of IMC increase in the years and had in strong position to meet its
obligations. The GNL ratio decrease shows that the company had not bear the economic
slowdown. This means that if the company cannot handle the situation, it might possible that
the companies have problem getting loans from the market.
The Leverage Ratio (Debt/Worth Ratio) measure the amount of debt the company owes to its
creditors for every Re. 1 of the net worth the company invested. The IMC ratio is 0.46x as
compared to 1.12x of GNL in the year 2008. The IMC has strong position because if it¶s net
worth is Rs. 9,436,340.00 in the year 2008 it means that the company will owe Rs.
4,340,716.4 t its creditors. On the other hand the GNL has owes Rs. 1,642,005.1 to its
creditors against its net worth of Rs. 1,466,076.
Both of the company gross profit ratios and net profit ratio decreases but the IMC losses
more. This is because of the high number of staff and expenses.
The IMC was generating sales of Rs. 3.01 for every Re. 1 invested in total assets while the
GNL is generating Rs. 1.195x for every one rupees invested in total assets. The return on
Assets ratios shows efficiency of total assets in generating net profit. The Indus Motor is
generating .26 paisa for every Re. 1 invested in total assets whereas the GNL is generating
.09 paisa for every Re. 1 invested in total assets.
The inventory Turnover ratio of IMC is 13 days as compare to 4 days of GNL. This means
the sales of IMC is high and it is converting its inventory into cash or receivable 13 times in a
year. The company keeping inventory for only 28 days while GNL is keeping it for 95 days
throughout the year.
65

c

66

c

http://findarticles.com/p/articles/mi_hb092/is_n9_v28/ai_n28693653/
http://www.toyota-indus.com/
http://www.ghandharanissan.com.pk/
http://en.wikipedia.org
67

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NOPAT 2008= EB T (1-TaxRate)

NOPAT 2007= EB T (1-TaxRate)

Current Ratio 2008 = Total Current Assets

Current Ratio 2007 = Total Current Assets

Net Worth 2008 = Total Assets - Total Liabilities

Leverage Ratio(Debt/Worth) Ratio 2008 = Total Liability

Leverage Ratio(Debt/Worth) Ratio 2007 = Total Liability

Gross Profit 2008 = Net Sales - Cost Of Goods Sold

Gross Profit 2007 = Net Sales - Cost Of Goods Sold

Gross Profit Margin 2008 = Gross Profit 2008

Gross Profit Margin 2007 = Gross Profit 2007

Gross Profit Margin Ratio

Net Profit Margin Ration 2008 = Net Profit Before Tax

Net Profit Margin Ration 2007 = Net Profit Before Tax

Net Profit Margin Ratio

Sales-To-Assets 2008 = Sales

Sales-To-Assets 2007 = Sales

Return On Assets (ROA) 2008 = Net Profit before Tax

Return On Assets (ROA) 2007 = Net Profit before Tax

Return On Assets Ratio

Return On Investment(ROI) 2008= Net Profit Before Tax

Return On Investment (ROI) 2007= Net Profit Before Tax

Inventory 2008 = Stores and Spare + Stock-in-trade

Inventory 2007 = Stores and Spare + Stock-in-trade

Inventory Turnover Ratio 2008 = Cost of Goods Sold

Inventory Turnover Ratio 2007 = Cost of Goods Sold

Inventory Turnover Rate

Inventory Turn-Days 2008 = 360

Inventory Turn-Days 2007 = 360

Daily Credit Sales 2008= Net Credit Sales

Daily Credit Sales 2008= Net Credit Sales

NOPAT 2008= EBIT(1-TaxRate)

NOPAT 2007= EBIT(1-TaxRate)

Current Ratio 2008 = Total Current Assets

Current Ratio 2007 = Total Current Assets

Net Worth 2008 = Total Assets - Total Liabilities

Net Worth 2007 = Total Assets - Total Liabilities

Leverage Ratio(Debt/Worth) Ratio 2008 = Total Liability

Leverage Ratio(Debt/Worth) Ratio 2007 = Total Liability

Gross Profit 2008 = Net Sales - Cost Of Goods Sold

Gross Profit 2007 = Net Sales - Cost Of Goods Sold

Gross Margin Ratio 2008 = Gross Profit

Gross Margin Ratio 2007 = Gross Profit

Gross Margin Ratio

Net Profit Margin Ration 2008 = Net Profit Before Tax

Net Profit Margin Ration 2007 = Net Profit Before Tax

Net Profir Margin Ratio

Sales-To-Assets 2008 = Sales

Sales-To-Assets 2007 = Sales

Return On Assets (ROA) 2008 = Net Profit Before Tax

Return On Assets (ROA) 2007 = Net Profit Before Tax

Return On Investment(ROI) 2008= Net Profit Before Tax

Return On Investment (ROI) 2007= Net Profit Before Tax

Return On Investment (ROI) 2007= 0.28 x

Inventory 2008 = Stores, Spare and loose Tools + Stock-in-Trade

Inventory 2007 = Stores, Spare and loose Tools + Stock-in-Trade

Inventory Turnover Ratio 2008 = Cost Of Goods Sold

Inventory Turnover Ratio 2007 = Cost Of Goods Sold

Inventory Turn-Days 2008 = 360

Inventory Turn-Days 2008 = 360

Daily Credit Sales 2008= Net Credit Sales

Daily Credit Sales 2007= Net Credit Sales

c

L R(D Wh R

G P M R

£ P M R

R

I R

I D