COMPARATIVE ANALYSIS OF

AUTOMOBILE SECTOR COMPANIES OF

PAKISTAN

By

Ihtisham Zahoor
F11-MBA-14
Research Project
In
Management Sciences

GOVERNMENT COLLEGE OF
MANAGEMENT SCIENCES-HARIPUR
Session 2011-2015
 UNIVERSITY OF HARIPUR

Project Title

Comparative Analysis of Automobile Sector

Companies of Pakistan
A Research Project Presented To

University of Haripur

In partial fulfillment
of the requirement for the degree of

MBA (Management Sciences)

By

Ihtisham Zahoor
F11-MBA-14

Session 2011-2015

II
 Comparative Analysis of Automobile Sector
Companies of Pakistan
A Research Project submitted to the Department of Management Sciences as
partial fulfillment of the requirement for the award of Degree of MBA
(Management Sciences).

Name Registration Number

Ihtisham Zahoor F11-MBA-14

Supervisor
Muhammad Sohail
Department of Management Sciences

Government College of Management Sciences, Haripur

May, 2015

III
 Final Approval
This Research Project Titled

Comparative Analysis of Automobile Sector

Companies of Pakistan

By

Ihtisham Zahoor
F11-MBA-14

Has been approved

For the Government College of Management Sciences, Haripur

External Examiner: __________________________________________

Supervisor: ______________________________________________
Muhammad Sohail

Department of Management Sciences

HoD: _____________________________________________
Muhammad Idrees

Department of Management Sciences

IV
 Declaration

I Ihtisham Zahoor (F11-MBA-14) hereby declare that I have produced the work
presented in this Research Project, during the scheduled period of study. I also declare
that I have not taken any material from any source except referred to wherever due
that amount of plagiarism is within acceptable range. If a violation of HEC rules on
research has occurred in this thesis, I shall be liable to punishable action under the
plagiarism rules of the HEC.

Date ____________________________

________________

Ihtisham Zahoor
F11-MBA-14

V
 Certificate

It is certified that Ihtisham Zahoor (F11-MBA-14) has carried out all the work
Related to this Research Project under my supervision at the Department of
Management Sciences, Government College of Management sciences, Haripur and
the work fulfills the requirement for award of MBA degree.

Date: _________________

Supervisor:

___________________________

Muhammad Sohail

Head of Department

_____________________________

Muhammad Idrees
Department of Management Sciences

VI
 Dedication

My LOVING PARENTS,

FRIENDS,

&

RESPECTED TEACHERS

This project work is dedicated to my parents and honorable and beloved Principle of
the college Tasdiq Hussain Shah Sahib, that all of his efforts made possible for us to
enjoy quality education near our homes.

Furthermore, this project work is dedicated to the faculty members of the college,
who manage the program and make sure that we get the ideal environment for study.

VII
 Acknowledgments

All praises to Allah Almighty, who enabled me and gave me potential and courage to
complete this Research Project. I am also grateful to Allah Almighty for giving me a
co-operative teaching staff of Government College of Management Sciences, Haripur
who encouraged me and provided me full support to complete this Work Project
within time.

I present my honest gratefulness to my supervisor Muhammad Sohail that he guided

me during every stage of this Research Project with his acquaintance and passionate
exposure. I really find him very competent and cooperative instructor. It is not easy to
complete this Project work without his support.

Finally, I would like to pay my kind regards to my parents, who supported me during
my study in the college.

________________

Ihtisham Zahoor
F11-MBA-14

VIII
 Executive Summary

This study is conducted as a prerequisite for Masters of Business Administration -

MBA (Finance) degree as per Scheme of study of University of Haripur. This study
focuses on the Pakistan automobile sector by considering top three companies, Indus
Motor Company Ltd (IMC), Atlas Honda Ltd (ATHL) and Pak Suzuki Motor
Company Ltd. (PSMCL), based on market capitalization. The Comparative Analysis
to compare their performance from 2009 to 2013. The secondary data is used in this
study which is collected from annual reports of the companies, Karachi Stock
Exchange, Business recorder, Auto manufacturer’s associations which are PAAPAM,
PAMA, and CREB.

This study not only helped myself to grasp the idea and important of financial ratios
but it has also provided useful information for the management of the companies. The
objectives to achieve from this study are to analyze the companies with respect to
their Profitability, Liquidity, Long-term Solvency, and From Investor’s View.

The results have shown that Liquidity position of PSMCL remained better as
compared to IMC and ATHL Moreover overall liquidity position of companies
remained good over the analysis period.

PSMCL performance remained good regarding its ability to meet its Long-term debt
paying obligations as compared to IMC and ATHL. The ability of IMC and ATHL
regarding its ability to meet their long-term solvency position remained weak
especially of IMC over the analysis period.

The profitability position of IMC remained very in this analysis as well as the
profitability position of ATHL. while PSMCL profitability position remained
satisfactory in this analysis.

IMC performed better than other companies regarding its ability to attract new
investors for the company, it is concluded from its EPS which remained highest
throughout the years in this analysis. ATHL performance also remained good while
PSMCL performance remained satisfactory regarding EPS but best regarding its
Dividend Payout ratio.

IX
The overall performance of the companies remained good expect in their ability to
meet their long term debt paying obligations in which these companies seem facing
difficulties in maintaining a proper balance. PSMC Inventory Turnover was not
satisfactory as a company with huge assets at its disposal. On the basis of the
Comparative Analysis this study selects IMC as the best company for the years of
study from 2009 to 2013.

X
 Table of Contents

Declaration................................................................................................................... V

Certificate .................................................................................................................. VI

Dedication ................................................................................................................. VII

Acknowledgments .................................................................................................. VIII

Executive Summary .................................................................................................. IX

Table of Contents ...................................................................................................... XI

List of Tables .......................................................................................................... XIII

List of Figures ......................................................................................................... XIV

Chapter 1 Introduction................................................................................................ 1
1.1 Background of Study ........................................................................................... 1
1.2 Objectives of the Study ........................................................................................ 1
1.3 Significant of the Study ....................................................................................... 1
1.4 Introduction to Industry ....................................................................................... 2
1.4.2 Indus Motor Company Limited ................................................................ 6
1.4.3 Atlas Honda Limited ................................................................................. 8
1.4.4 Pak Suzuki Motor Company Limited ..................................................... 10
1.5 Scheme of the Study .......................................................................................... 13

Chapter 2 Data and Methodology ............................................................................ 14

2.1 Definition of Data .............................................................................................. 14
2.1.1 Primary Data ........................................................................................... 14
2.1.2 Secondary Data ....................................................................................... 14
2.2 Type of Data used in Study................................................................................ 14
2.3 Data Collection Sources..................................................................................... 14
2.4 Data Processing & Analysis Tools .................................................................... 15
2.5 Sampling ............................................................................................................ 15

XI
Chapter 3 Comparative Analysis ............................................................................. 16
3.1 Liquidity Ratios ................................................................................................. 17
3.1.1 Current Ratio ........................................................................................... 17
3.1.2 Acid Test or Quick Ratio ........................................................................ 19
3.1.3 Inventory Turnover Ratio ....................................................................... 22
3.2 Long-Term Debt Paying ability Ratios .............................................................. 24
3.2.1 Debt to Equity Ratio ............................................................................... 24
3.2.2 Operating Cash Flow to Debt Ratio ........................................................ 26
3.3 Profitability Ratios ............................................................................................. 28
3.3.1 Return on Assets Ratio............................................................................ 28
3.3.2 Return on Equity Ratio ........................................................................... 31
3.3.3 Net Profit Margin .................................................................................... 33
3.4 Investors Analysis Ratios................................................................................... 36
3.4.1 Dividend Cover Ratio ............................................................................. 36
3.4.2 Earnings per share (EPS) ........................................................................ 38

Chapter 4 Findings, Conclusion and Recommendations ....................................... 41

4.1 Findings ............................................................................................................. 41
4.2 Conclusion ......................................................................................................... 42
4.3 Recommendations .............................................................................................. 43

References ................................................................................................................... 45

Annexure..................................................................................................................... 46
Financial Statements ................................................................................................ 46
Indus Motor Company Limited ....................................................................... 46
Atlas Honda Limited ........................................................................................ 48
Pak Suzuki Motor Company Limited .............................................................. 50

XII
 List of Tables
Table 3.1 Current Ratio................................................................................................ 17
Table 3.2 Acid Test Ratio ............................................................................................ 20
Table 3.3 Inventory Turnover Ratio ............................................................................ 22
Table 3.4 Debt to Equity Ratio .................................................................................... 24
Table 3.5 Operating Cash Flow to Debt Ratio ............................................................. 26
Table 3.6 Return on Assets Ratio ................................................................................ 29
Table 3.7 Return on Equity Ratio ................................................................................ 31
Table 3.8 Net Profit Margin ......................................................................................... 34
Table 3.9 Dividend Cover Ratio .................................................................................. 36
Table 3.10 Earnings per Share ..................................................................................... 38

XIII
 List of Figures
Figure 3.1 Current Ratio .............................................................................................. 18
Figure 3.2 Acid Test or Quick Ratio ............................................................................ 20
Figure 3.3 Inventory Turnover Ratio ........................................................................... 23
Figure 3.4 Debt to Equity Ratio ................................................................................... 25
Figure 3.5 Operating Cash Flow to Debt Ratio ........................................................... 27
Figure 3.6 Return on Assets Ratio ............................................................................... 30
Figure 3.7 Return on Equity Ratio ............................................................................... 32
Figure 3.8 Net Profit Margin ....................................................................................... 34
Figure 3.9 Dividend Cover Ratio ................................................................................. 37
Figure 3.10 Earnings per Share .................................................................................... 39

XIV
 Chapter 1 Introduction
1.1 Background of Study

This study is conducted as a prerequisite for academic degree. This study focuses on
the Pakistan automobile sector by considering top three companies namely, Indus
Motor Company Ltd, Atlas Honda Ltd and Pak Suzuki Motor Company Ltd. These
companies are selected by their market capitalization in the Comparative Analysis to
compare their performance from year 2009 to 2013 among each other. This study by
using Comparative Analysis, highlights pros and cons of the companies as well it
partly point to the overall performance of the automobile sector of Pakistan for the
given years.

1.2 Objectives of the Study

The objectives of the study include;

i. To check the liquidity of the companies that is their ability to meet their short-
term debt obligations.

ii. To check the solvency of the companies that is their ability to meet their long-
term debt obligations.

iii. To check the profitability of the companies that concerns their shareholders,
by analyzing their assets utilization and their business operations.

iv. To check from the investors’ prospective whether activities of the companies
able to attain their attention or not.

v. To find out the best performing company based on the Comparative Analysis.

1.3 Significant of the Study

The primary significance being a student is to learn practical application of the field
of finance. This study has helped me to understand the importance of financial
statements analysis of the companies that how useful can it be, to obtain meaningful
information about the different aspects of the companies.

1
Furthermore, this study is useful for the stockholders and investors of the company as
the analysis shows the profitability level of the companies which can help them make
better decision regarding their future investment. This study is also useful for the
management of the companies in a manner that they can compare the performance of
their respected company with their competitors.

1.4 Introduction to Industry

1.4.1.1 History

Since the advent of the Wheel, mankind has achieved many milestones from road and
railway transportation, to sea routes and air travel, looking to make the travel more
comfortable and accessible. After the Industrial revolution, transportation especially
the road transportation have become an important factor in the Economic and Social
development of any economy.

The Automobile Industry Sector is one of the important sector in large-scale

manufacturing sectors in Pakistan. The automobile industry in Pakistan started its
journey with the Government backed public limited company known as National
Motors Limited (NML) in 1950. Assembly of Bed ford trucks were the first output of
this sector and with the passage of time buses, light trucks and cars were added to the
portfolio. The automobile sector can be categorized into 6 major segments which are
cars & light commercial vehicles (LVC’s), two and three wheelers, tractors, trucks
and buses, Accessories and part manufacturers and Vendor Industry.

1.4.1.2 Overview

Presently, the Automobile Industry Sector of Pakistan, includes total of 2,870 Auto
part makers units. When the Government of Pakistan deregulated the industry sector,
many important automobile manufacturers from foreign countries like Japan and USA
started its business in the local market, eventually introducing competition for the
already-established companies in this sector. Currently, three major multinational car
manufacturers/assemblers are operating in Pakistan. Suzuki entered in 1984, Toyota
in 1993 and Honda in 1994 (Zareen, et al.). To fulfill the need of the investment and
technical skills required to ensure the quality product and to keep up with the demand,
the agreement of joint venture among local companies with their Multinational

2
Automobile Company counterparts was initiated that not only secured the interest of
both the parties but also helped Pakistan automobile sector to grow rapidly.

At present the auto sector of Pakistan is manufacturing/assembling all kinds of

vehicles from trucks, buses and tractors, to passenger cars and two wheelers. A
sizeable portion of the auto industry consists of the vendors and OEM's, the allied
industry developed in line with the main auto industry.

Pakistan is part of the group of 40 Automobile Producing Countries in the world

(Hashmi, 2014) but Automobile sector of Pakistan is still considered to be in
developing phase. As a matter of fact, after all these years since the inception of
operations of the automobile companies in Pakistan, this sector still has not achieved
the proficiency, and technical skills required to transform its operations from
assembling vehicles to manufacturing the vehicle in Pakistan. The Automobile
industry in Pakistan has seen many ups & downs in the periods under study as a result
of many obstacles this sector confronts.

The Automobile sector imprints a positive impression on many factors of the

economy. Presently, Automobile sector has gathered 280 billion rupees in investment
which contributed to the national treasury of 124 billion rupees in form of taxes. Until
June, 2013 the Automobile sector has provided 400,000 in direct jobs and 2 million in
indirect job opportunities in which 90% of jobs are provided by Part Makers while
remaining 10% jobs are provided by Original Equipment Manufacturers (OEMs). The
Automobile sector not only fulfills the needs of local demand but also exports the
Auto parts and the vehicles which have generated more than 700 million dollars in
return over the years so far. The Automobile industry also directly benefited other
industries like CNG Stations, Maintenance Workshops, and Automobile parts &
dealers shops. One of the most visible effects the automobile has had on Pakistan and
the world is the huge increase in the amount of surfaced and structured roads and
infrastructure.

By standardizing and maintaining the quality of products, Pakistan graduated to

EURO-II compliance in July 2013 which is the part of European emission standards.
These standards illustrate the adequate limits for the gas emissions of newly

3
manufactured vehicles mostly sold in the countries of European Union. (Hashmi,
2014).

1.4.1.3 Problems faced by the Automobile Sector

The biggest engineering sector of Pakistan however has to face a lot of problems. The
debilitating power crisis is the biggest concern of manufacturing sector. In addition,
rising fuel price has pushed up the cost of production. The devaluation of rupee
against Yen, which has spiked up the input costs and foreign exchange risk, is also of
the utmost concern for the sector, because of its dependency on the import of critical
parts from Thailand, Japan, and Korea etc.

In addition to the unfavorable import policies and almost no efforts by the

government to stop the influx of smuggled auto parts, which were already putting the
sector under immense pressure, now the industry, especially the allied sector can face
stiff competition from the India due to the MFN status. Secondly the favorable new
entrant policy is threatening the sector, as the existing players fear that Chinese
manufacturers would come in and take a sizable portion of the market.

The other challenges being faced by the sector like other sectors of the country
includes political instability, situation of Law & Order, Terrorism. Apart from these
costs auto-sector also has to face the inconsistent and irrational government policies.
Furthermore, overnight changes, lack of long term vision and thorough research
before policy division and improvisation is also impeding growth of the sector.

According to the Pakistan Association of Automotive Parts & Accessories

Manufacturers (PAAPAM) one of prominent challenge Pakistan’s Automobile
industry faced until recently is the Government policy to sanction the import of 5-
years old used vehicles into the country (Allawala, 2014).

Although, with persistent lobbying from associations of this sector, Government

responded with an amendment in its SRO 577(I)/2005 to restrict the import to 3-years
old vehicles in SRO 144(I)/2012 but still this decision is not helping much the already
in-trouble sector, as it effects the sales of the local manufactured vehicles & parts.

4
1.4.1.4 Some Key Statistics of the Automobile Sector

The Key statistics of the Automobile sector of Pakistan since started its operation
back in 1995 to current year of 2013 are as follows;

Total production of Cars was at 1,701,164 units produced while their total combined
sales were at 1,585,998 units sold.

Total combined production of Trucks & Buses were at 63,482 units produced while
their total combined sales were at 54,426 units sold.

Total combined production of Jeeps, LCV & Pick-up were at 233,585 units produced
while their total combined sales were at 217,180 units sold.

Total production of Farm Tractors was at 710,068 units produced while their total
combined sales were at 669,508 units sold. The Motorcycle & Tri-Wheeler
production & sale, despite seeing inconsistency in the production of other vehicular
products of this sector maintained a consistent growth since the inception of local
production of Motorcycles back in 1996-97.

Total production of Motorcycles was at 6,879,152 units produced while their total
combined sales were at 6,673,388 units sold (PAMA, 2014).

5
1.4.2 Indus Motor Company Limited

1.4.2.1 History

Indus Motor Company Limited or (IMC) was incorporated in the year 1989. It was
incorporated as a joint venture between three companions namely, The House of
Habib (HOH), at that time it was a local conglomerate and the two companies of
Japanese origin namely, Toyota Motor Corporation (TMC) & Toyota Tsusho
Corporation (TTC). The Company head office and its manufacturing plants are
spanned at 105 acres in the area of Port Qasim, Karachi; the vehicles are delivered to
the customers in local market via a robust network of 39 private Sale, Service & Spare
dealerships operating throughout the country.

1.4.2.2 Overview

The manufacturing facility and offices are located at a 105 acre site in Port Qasim,
Karachi, while the product is delivered to end customers nationwide through a strong
network of 37 independent 3S Dealerships spread across the country. In its 24 years
history since inception, IMC has sold more than 500,000 CBU/CKD vehicles and has
demonstrated an impressive growth, in terms of volumetric increase from a modest
beginning of 20 vehicles per day production in 1993 to 210 units daily at present
through the development of human talent embracing the ‘Toyota Way’ of quality and
lean manufacturing. Over the years, IMC has made large scale investments in
enhancing its own capacity and in meeting customer requirements for new products.
Today, Corolla is the largest selling automotive brand model in Pakistan and it also
has the distinction of being #1 in Toyota’s Asian market. The Company invests
heavily in training its 2,000 plus workforce of team members and management
employees and creating a culture of high performing empowered teams working
seamlessly across processes in search of quality and continuous improvement.

IMC is known for its passenger cars Like Corolla XLI brand which is very popular
sedan car in Pakistani Market. The other luxurious cars are targeted towards higher
income customers. Presently, the company not only markets the Toyota Motor
Corporation brand vehicles in Pakistan but also is manufacturing in its local plants.
The major product offerings of the company are categorized under several variants of
the “Hilux” in the light commercial vehicles category, the “Fortuner” in Sport Utility

6
Vehicle category and “Corolla” in the passenger cars segment. In the past the
company also sold some limited units of its vehicles under the name of Daihatsu.

The main product offerings include several variants of the flagship ‘Corolla’ in the
passenger cars category, ‘Hilux’ in the light commercial vehicles segment and
‘Fortuner’ in Sport Utility Vehicle Segment.

The core values of the Company encourage employees to pursue high standards of
business ethics and safety; communicate candidly by giving bad news first and respect
for people. The bi-annual TMC morale surveys show employees giving a high
positive score to the IMC work environment and level of job satisfaction.

The Company has played a major role in the development of the entire value chain of
the local auto industry and is proud to have contributed in poverty alleviation at the
grass root level by nurturing localization that in turn has directly created thousands of
job opportunities and transferred technology to 60 vendors supplying parts. IMC is
also a major tax payer and significant contributor toward GOP exchequer.

1.4.2.3 Vision Statement

“To be the most respected and successful enterprise, delighting customers with a wide
range of products and solutions in the automobile industry with the best people and
the best technology.”

1.4.2.4 Mission Statement

IMC’s Mission is reflected in our Company’s Slogan

ACT #1

Action, Commitment and Teamwork to become # 1 in Pakistan.

a. Respect & Corporate Image

b. Quality & Safety

c. Customer Satisfaction

d. Production & Sales

7
 e. Profitability

f. Best Employer

1.4.2.5 Some Key Statistics of the Company

Total combined production of the Passenger Cars since the company started its
operations until year 2013-14 were at 422,277 units produced while the sales were at
406,715 units sold.

Total combined production of the Jeep (4x4), LCV & Pick-up, since the company
started its operations until year 2013-14 were at 1,267 & 44,418 units produced,
respectively while the sales were at 1,202 & 39,034 units sold, respectively (PAMA,
2014).

1.4.3 Atlas Honda Limited

1.4.3.1 History

Atlas Honda Limited or (ATHL) is also a joint venture between two companies
namely, the local Atlas Group and a multinational company of Japanese origin, Honda
Motor Co. Ltd. The company was formed as a result of the merger in 1988 of Atlas
Autos Ltd. & Panjdarya Limited which was also established by the Atlas Group. After
the fall of Dhaka in 1971a third manufacturer, Atlas Epak Ltd. was taken over by the
Bangladeshi Government. The ground breaking ceremony was held on April 17, 1993
and within a record time of 11 months, construction and erection of machinery was
completed. The first car rolled off the assembly line on May 26, 1994. Official
inauguration was done by President of Pakistan, Sardar Farooq Ahmad Khan
Leghari., Mr. Kawamoto, President of HondaMotor Company Limited Japan was also
present to grace the occasion. The company office is located at 1-McLeod Road,
Lahore-54000 while its two factories are in Karachi and Sheikhupura.

1.4.3.2 Overview

ATHL is known for its product of long-trusted motorcycles which are considered to
be the most economical ride in the country and that is true as they are produced
specifically by considering the needs of the customers in Pakistan Market. The

8
passenger cars of the company are somewhat considered an iconic standard and
luxury in the country.

The company manufactures as well as markets the Honda motorcycles brand of

Honda Motor Company in Pakistan. The other products of company are to
manufacture many hi-tech parts locally in collaboration with Showa Atsumitech,
Toyo Denso & Nippon Denso which are leading parts manufacturers. The
motorcycles manufactured by the company are most selling motorcycles in the market
of Pakistan.

AHL is playing a pioneering role in creating conditions for easy and confident use of
motorcycles all over the country. A vast and growing network of over 1600 sales
service and spare parts dealers has been established. In order to back up this system,
Atlas has set up Warranty & Training Centers (WTC) in Karachi and Lahore which
provide several courses of varying duration and complexity for motorcycle mechanics
and users each year. Mobile training facilities take the latest know-how, technology
and maintenance of motorcycles to major rural and urban centers around the country.

1.4.3.1 Vision Statement

“Market leader in the motorcycle industry as a global competitive center of

production and exports.”

1.4.3.2 Mission Statement

A dynamic growth oriented company through market leadership, excellent in quality

and service and maximizing export, ensuring attractive returns to equity holders,
rewarding associates according to their ability and performance, fostering a network
of engineers and researchers ensuing unique contribution to the development of the
industry, customer satisfaction and protection of the environment by producing
emission friendly green products as a good corporate citizen fulfilling its social
responsibilities in all aspects.

9
1.4.3.3 Some Key Statistics of the Company

Total combined production of the Passenger Cars since the company started its
operations until year 2013-14 were at 239,359 units produced while the sales were at
225,839 units sold.

Total production of the Motorcycles since the company started its operations until
year 2013-14 were at 5,425,373 units produced while the sales were at 5,294,404
units sold. (PAMA, 2014).

1.4.4 Pak Suzuki Motor Company Limited

1.4.4.1 History

Pak Suzuki Motor Company Limited or (PSMCL) is publicly traded corporation with
its shares traded at KSE in Pakistan. The Company is formed under an agreement of a
joint venture in August 1983 between two companies, of which one company was
represented by the Government of Pakistan namely, Pakistan Automobile Corporation
Limited and a multinational company of Japanese origin namely, Suzuki Motor
Corporation (SMC). The company’s production operations started in 1984. The
company has a clear set of objectives to follow which are to be progressive
manufacturer, assembler and marketer of Cars, Vans, 4x4s and Pickups automobiles
in Pakistan.

The foundation stone laying ceremony of the Company’s existing plant located at Bin
Qasim was performed in early 1989 by the Prime Minister then in office. By early
1990, on completion of first phase of this plant, in-house assembly of all the Suzuki
engines started. In 1992, the plant was completed and production of the Margalla Car
commenced. The Company head office and its manufacturing plants are spanned at 64
acres in the area of DSU-13, Pakistan Steel Industrial Estate, Bin Qasim, Karachi.

1.4.4.2 Overview

PSMCL is known for its transportation vehicles like Suzuki Pick-up which are famous
all over Pakistan. PSMCL brand models are proven to be successful in every aspect

10
such as cost, durability and accessibility which is the reason all of these qualities are
considered to be the company’s valuable assets.

Under the Government’s privatization policy, the Company was privatized and placed
under the Japanese management in September 1992. At the time of privatization,
SMC increased its equity from 25% to 40%. Subsequently, SMC progressively
increased its equity to 73.09% by purchasing remaining shares from PACO.

The Suzuki Management immediately after privatization started expansion of the

existing plant to increase its installed capacity to 50,000 per annum. The expansion
was completed in July 1994.

However the capacity remained substantially under-utilized until 2002 because of

economic recession. Thereafter realizing growth in demand, the Company increased
capacity in phases. The first phase was completed in January 2005 when capacity was
enhanced to 80,000 vehicles .The second phase was completed in January 2006 and
capacity was raised to 120,000. The third phase was completed when on 6th February
2007, Prime Minister of Pakistan, Mr. Shaukat Aziz inaugurated 150,000 vehicles
capacity expansion facilities.

On 25th April 2007, the Board of Directors of Pak Suzuki Motor Company Limited
(PSMCL) and Suzuki Motorcycles Pakistan Limited (SMPL) approved Scheme of
Arrangement (The Scheme) to amalgamate SMPL into PSMCL with effect from 1st
January 2007. The scheme was approved by the shareholders of the respective
Companies at the Extra - Ordinary General Meeting held on 30th June 2007. The
scheme was sanctioned by the Honourable High Court of Sindh (the court) on 17th
September 2007. The certified copy of the Order of the Court sanctioning the scheme
was filed with the Registrar Companies Karachi on 1st October 2007, from which
date the scheme became operative.

PSMCL and Suzuki Motor Corporation (SMC) Japan held 41% and 43% shares in
SMPL respectively. Pak Suzuki issued and allotted 1,233,300 ordinary shares of
Rs.10/- each to the qualifying shareholders of SMPL @ one ordinary share in Pak
Suzuki for every twenty one shares held by SMPL shareholders as on the date of final
book closure i.e. 29th October 2007. The trading in shares of SMPL on Karachi and
Lahore Stock Exchanges ceased from the same date.

11
The Company setup a new plant for motorcycles at Bin Qasim. All the operations of
motorcycles have been shifted to the new plant effective from July 2011.

The Company continues to be in the fore-front of automobile industry of Pakistan.

Over a period of time, the Company has developed an effective and comprehensive
network of sales, service and spare parts dealers who cater to the needs of customers
and render effective after-sale service country wide.

1.4.4.3 Vision Statement

“To be recognized as a leading organization that values customers’ needs and

provides motoring solutions with strong customer care.”

1.4.4.4 Mission Statement

i. Strive to market value packed vehicles that meet customers’ expectations.

ii. Provide a platform where our stakeholders passionately contribute, invest and
excel.

iii. Make valuable contribution to social development of Pakistan.

1.4.4.5 Some Key Statistics of the Company

Total combined production of the Passenger Cars since the company started its
operations until year 2013-14 were at 1,028,962 units produced while the sales were
at 946,278 units sold.

Total combined production of the Jeep (4x4), LCV & Pick-up, since the company
started its operations until year 2013-14 were at 11,230 & 126,712 units produced,
respectively while the sales were at 7,592 & 119,733 units sold, respectively.

Total production of the Motorcycles since the company started its operations until
year 2013-14 were at 293,804 units produced while the sales were at 288,768 units
produced (PAMA, 2014).

12
1.5 Scheme of the Study

The Scheme of the study as follow;

Chapter 1 includes background, objectives, significant of study as well as introduction

to individual companies in automobile sector which are selected for study.

Chapter 2 includes Type of data selected for study, its sources of the study, tools used
for analyzing data and data sample.

Chapter 3 includes Comparative Analysis of the companies with interpretations.

Chapter 4 includes Findings as a result of analysis, Conclusion & Recommendations

which are based on findings of the companies.

The work of other authors cited in this study is provided under References header at
the end of the report.

13
 Chapter 2 Data and Methodology
2.1 Definition of Data

Data can be defined as “The raw facts or figures which doesn’t convey complete
meanings” There are two types of data which are;

2.1.1 Primary Data

Primary Data is collected directly by the person by observation or research

2.1.2 Secondary Data

Secondary Data is collected from already published data sources like reports and
articles which is the work of other persons.

2.2 Type of Data used in Study

The data collected for this study is obtained from the secondary sources mostly
available on internet.

2.3 Data Collection Sources

The secondary data collection sources include, Financial Statements companies from
the websites of respected companies, these companies are;

i. Indus Motor Company Limited

ii. Atlas Honda Limited

iii. Pak Suzuki Motor Company Limited

Data related with the companies’ market performance is collected from the Karachi
Stock Index (KSE).

14
Also Reports & articles were also helpful to gather information which Include the
following

i. The Centre for Research in Economics and Business (CREB)

ii. Pakistan Automotive Manufacturers Association (PAMA)

iii. Pakistan Association of Automotive Parts and Accessories Manufacturers

(PAAPAM)

2.4 Data Processing & Analysis Tools

The following computer applications used for data processing and analysis for the
companies. These applications include;

i. Microsoft 2013 Word, and Excel.

ii. Microsoft Windows 8.1 Calculator.

iii. PDF X-Change Viewer.

2.5 Sampling

Convenience sampling is used in this study project. There are thirteen Automobile
companies listed in Karachi Stock Exchange. Three companies are randomly selected
from the Automobile sector, as per their market capitalization. In this study five years
of financial data is collected from the following three companies from Year 2009 to
2013. These companies include;

i. Indus Motor Company Limited

ii. Atlas Honda Limited

iii. Pak Suzuki Motor Company Limited

15
 Chapter 3 Comparative Analysis

For this study I have selected following ratios to analyze the company’s position from
different aspects. Financial ratios can be categorized into four types while each
category addresses different aspects of its operations of the company hence making it
possible to have a full insight into the company operations, these ratios include;

i. Liquidity Ratios

a. Current Ratio

b. Acid Test or Quick Ratio

c. Inventory Turnover Ratio

ii. Long-term Debt paying ability Ratios

a. Debt to Equity Ratio

b. Operating Cash Flow to Debt Ratio

iii. Profitability Ratios

a. Return on Assets Ratio

b. Return on Equity Ratio

c. Net Profit Margin

iv. Investors Analysis Ratios

a. Dividend Cover Ratio

b. Earnings per Share

To get even better look at the company aspects each category of Ratios have included
one or more ratio(s) which analyze Income Statement (I/S) items of the company
while other cover the Balance Sheet (B/S) & Cash Flow Statement (CFS) items of the
company. The idea here is to cover wide scope of company’s activities so that when

16
analyzing and interpreting the results, the findings are more authentic than mere
probabilities.

In the following section calculated ratios of companies selected for analysis have
presented. The analysis of companies being studied is presented in tabulated as well in
graphical form provided with the interpretation of the results at the end of each ratio
accordingly.

3.1 Liquidity Ratios

These ratios are used to find out the standing of the company with respect to its short-
term obligations. In this study first two ratios cover Balance Sheet while last one
covers Balance Sheet as well Income Statement items.

3.1.1 Current Ratio

Current ratio, matches the current assets of a company in relation to the current
liabilities of that company. The basic idea is to show if the current assets of the
company are sufficient to payout the company’s short-term obligations. It can be
written as;

Current Assets
Current Ratio =
Current Liabilities

Table 3.1 Current Ratio

Indus Motor Pak Suzuki Motor

Years Atlas Honda Limited
Company Company

16715319 3927828 12427633

2009 9884850 3108529 3325134
=1.69 =1.26 =3.74
23791253 5259180 14313132
2010 14224866 3517937 4752449
=1.67 =1.49 =3.01
22587737 6321732 18608777
2011
12260958 4349462 8008085

17
 =1.84 =1.45 =2.32
24088975 6976240 17060451
2012 10395919 4810168 5547980
=2.32 =1.45 =3.08
22187601 7553157 18372365
2013 7412684 4587303 6166119
=2.99 =1.65 =2.98

Current Ratio Descriptive Statistics

Company High Low Mean STD

Indus Motor
2.99 1.67 2.10 0.56
Company

Atlas Honda
1.65 1.26 1.46 0.14
Limited

Pak Suzuki
3.74 2.32 3.03 0.50
Motor Company

Figure 3.1 Current Ratio

Current Ratio
4 3.74

3.5
2.99 3.01 3.08 2.98
3

2.5 2.32 2.32

Ratio Scale

2 1.84
1.69 1.67 1.65
1.49 1.45 1.45
1.5 1.26

0.5

0
Indus Motors Atlas Honda Pak Suzuki

Year 2009 Year 2010 Year 2011 Year 2012 Year 2013

18
The graph shows that IMC kept increasing trend for the analysis period. The company
kept steady growth from first year to third year (2009 and 2010)1 while from third
year (2011) to fifth year (2012-2013) ratio trend increased rapidly mostly because of
the reduction in the company liabilities. ATHL kept mixed trend for the analysis
years. The company kept the lowest ratio among three companies in first year (2009)
though stills not a bad sign for the company. By following years (2010-2013) its ratio
showed an increasing trend because its current assets started increasing more than its
liabilities. PSMCL kept a mixed trend for the analysis period. It maintained a highest
ratio among three companies in first year (2009) but for the next two years (2010-
2011) it started decreasing mostly because of the rate of increase in its liabilities was
more than its assets. PSMCL ratio increased in fourth year (2012) because its
liabilities decreased while in fifth year (2013) its ratio again declined because the rate
of increase in its liabilities was more than the rate of increase in its assets.

3.1.2 Acid Test or Quick Ratio

The Acid Test ratio also known as Quick ratio shows the ability of company to pay its
short-term obligations. This ratio is distant from Current ratio in an important aspect
that it shows the relation of the most liquid assets like cash and marketable securities,
from the current assets portion of the company with its short-term obligations. It can
be written as;

Cash + Marketable Securities + Accounts Receivables

Acid Test Ratio =
Current Liabilities

1
Starting from this point onward, I would refer Year 2009 as “First Year”, Year 2010 as “Second
Year”, Year 2011 as “Third Year”, Year 2012 as “Fourth Year”, and Year 2013 as “Fifth Year” for
convenience.

19
 Table 3.2 Acid Test Ratio

Pak Suzuki Motor

Years Indus Motor Company Atlas Honda Limited
Company

(9731166+1736631+0) (636426+320180+455816) (3545621+376508+0)

2009 9884850 3108529 3325134
=1.16 =0.45 =1.18
(15755980+1613171+0) (1641963+445689+1088996) (2917186+240719+0)
2010 14224866 3517937 4752449
=1.22 =0.90 =0.66
(8812199+1356068+0) (2090800+401435+1338474) (1139480+322677+0)
2011 12260958 4349462 8008085
=0.83 =0.88 =0.18
(10771300+1459976+0) (2149154+598265+1460580) (1417430+588042+0)
2012 10395919 4810168 5547980
=1.18 =0.87 =0.36
(4195302+1382761+0) (2739988+514742+1635183) (1964359+983273+0)
2013 7412684 4587303 6166119
=0.75 =1.07 =0.48

Acid Test or Quick Ratio Descriptive Statistics

Company High Low Mean STD

Indus Motor 1.22 0.75 1.03 0.22

Company

Atlas Honda 1.07 0.45 0.84 0.23

Limited

Pak Suzuki 1.18 0.18 0.57 0.38

Motor Company

20
Figure 3.2 Acid Test or Quick Ratio

Acid Test/Quick Ratio

1.4
1.22 1.18 1.18
1.16
1.2
1.07
1 0.9 0.88 0.87
0.83
Ratio Scale

0.8 0.75
0.66
0.6 0.48
0.45
0.36
0.4
0.18
0.2

0
Indus Motors Atlas Honda Pak Suzuki

Year 2009 Year 2010 Year 2011 Year 2012 Year 2013

The graph shows that IMC ratio kept a mix trend for the analysis period. The ratio
increased in second year as the company’s cash reserves increased maybe because it
sold some of its marketable securities. In third year company ratio plunged down
because it decreased its cash reserves mostly by half as well a decline in its
marketable securities is the another cause. In fourth year company managed to
increase its cash reserves as well its marketable securities while also decreasing its
liabilities which resulted in an increased Acid Test ratio for the year. In fifth year
company’s cash reserves depleted with high margin that measures for compensation
the company took to decrease its liabilities couldn’t maintained the ratio to its
previous level. ATHL ratio kept a mixed trend for the analysis period. The ratio
increased in second year rapidly as its most liquid assets increased rapidly ratio
maintained the growth for next two the periods. Company’s liabilities increased
during the period but it was countered by cash reserves & account receivables. In fifth
year company’s liabilities decreased while all of its most liquid assets increased which
caused an increase in the ratio. PSMCL ratio kept a mixed trend during the analysis
years. The ratio decreased for next two years after first year because its cash reserved
decreased as well its marketable securities while its liabilities increased more rapidly.
For last two years ratio kept an increasing trend which is mostly because of small
decrease in liabilities as well the company replenished its cash reserves and
marketable securities.

21
3.1.3 Inventory Turnover Ratio

Inventory turnover ratio (ITR), is an efficiency ratio which shows how much times the
company sells and replaces its inventory for a period. The higher ratio means that the
company is efficient to convert its existing inventory into cash via sales in a given
period. It can be written as;

C.G.S
Inventory Turnover Ratio =
Inventory

Table 3.3 Inventory Turnover Ratio

Indus Motor Pak Suzuki Motor

Years Atlas Honda Limited
Company Company

35540418 12782165 25679728

2009 4088858 1792036 6879729
=8.69 =7.13 =3.73
55236625 23555842 41,638,975
2010 5198367 1664297 8748031
=10.63 =14.15 =4.76
57613542 30080978 50,849,153
2011 5690052 2003029 12922396
=10.13 =15.02 =3.93
70400788 35235893 56,185,397
2012 7529571 2161328 10562194
=9.35 =16.60 =5.32

57972038 38646049 47,818,820

2013 7883309 2171536 10726457
=7.35 =17.80 =4.46

22
 Inventory Turnover Ratio Descriptive Statistics

Company High Low Mean STD

Indus Motor 11.56 8.10 10.00 1.36

Company

Atlas Honda 19.49 7.67 15.27 4.52

Limited

Pak Suzuki 5.54 3.81 4.61 0.68

Motor Company

Figure 3.3 Inventory Turnover Ratio

Inventory Turnover Ratio

20.00
17.80
18.00 16.30
16.00 15.02
14.15
14.00
Ratio Scale

12.00 10.6310.13
10.00 9.35
8.69
8.00 7.35 7.13

6.00 4.76 5.32

3.93 4.46
3.73
4.00
2.00
0.00
Indus Motors Atlas Honda Pak Suzuki

Year 2009 Year 2010 Year 2011 Year 2012 Year 2013

The graph shows that IMC ratio kept a mix trend for the analysis years. Its ratio
increased in second year because its cost of goods almost doubled for the year. The
company was able to maintain the ratio with a minor decrease for next two years. In
fifth year the decrease in the ratio has caused by the increase in its inventory with a
minor decline in its cost of goods. ATHL ratio kept increasing trend throughout the
years. Its ratio doubled in second year because of increase in its cost of goods. Its cost
of goods has increased even more in the last year which has positively affected the
ratio. PSMCL ratio kept a mix trend for the analysis period. The ratio increased in
second year as rate of its cost of goods increased more than the rate of its inventory
but the ratio declined in the very next year because the company increased its

23
inventory. Ratio increased in fourth year because the cost of goods of the company
increased while the inventory decreased. The last year decreased mostly caused by the
decrease in its cost of goods.

3.2 Long-Term Debt Paying ability Ratios

These ratios are used to find out the standing of the company with respect to its long-
term obligations. In this study first ratio covers Balance Sheet items while second
covers all three financial statements.

3.2.1 Debt to Equity Ratio

In a levered company which uses debt financing, the Debt-to-Equity Ratio, is used to
show how much proportion of debt of a company relates to its stockholder’s equity. In
another words, its shows in case of financial distress how well the lenders are secured
through the stockholder’s equity. It can be written as;

Current Liabilities + Non-Current Liabilities

Debt to Equity Ratio =
Shareholder’s Equity

Table 3.4 Debt to Equity Ratio

Indus Motor Pak Suzuki Motor

Years Atlas Honda Limited
Company Company

(9884850+503700) (3108529+950862) (3325134+5000)

2009 10296973 3321262 14325600
=1.01 =1.22 =0.23
(14224866+325797) (3517937+1112515) (4752499+0)
2010 12587615 3891824 14497915
=1.16 =1.19 =0.33
(12260958+454012) (4349462+649354) (8008085+0)
2011 14119648 4622414 15316815
=0.90 =1.08 =0.52

(10395919+165941) (4810168+730315) (5547980+0)

2012 17013858 5419934 15800884
=0.62 =1.02 =0.35

24
 (7412684+(-34647)) (4587303+866975) (6166119+0)
2013 17692708 6560160 17645158
=0.42 =0.83 =0.35

Debt to Equity Ratio Descriptive Statistics

Company High Low Mean STD

Indus Motor 1.16 0.42 0.82 0.30

Company

Atlas Honda 1.22 0.83 1.07 0.16

Limited

Pak Suzuki 0.52 0.23 0.36 0.10

Motor Company

Figure 3.4 Debt to Equity Ratio

Debt to Equity Ratio

1.4
1.22 1.19
1.16
1.2 1.08
1.01 1.02
1 0.9
0.83
Ratio Scale

0.8
0.62
0.6 0.52
0.42
0.4 0.33 0.35 0.35
0.23
0.2

0
Indus Motors Atlas Honda Pak Suzuki

Year 2009 Year 2010 Year 2011 Year 2012 Year 2013

The graph shows that IMC kept decreasing trend after second period. The rate of
company debt increased more than the rate of its equity in second year which caused
an increase in this ratio but the company managed to decrease it gradually for next
three years mostly by decreasing its current liabilities while raising its equity. ATHL
also kept decreasing trend regarding its debt as it raised its equity more than it owe

25
debt. PSMCL throughout the years kept better ratio among all three companies with a
mix trend. Its ratio trend remained incremental for first three years mostly because of
increase in its current liabilities. In next two years its debt declined and it raised its
equity which caused a small decline in the ratio in fourth year. In the fifth year the
ratio maintained at the same level as both of its Debt and Equity increased with the
same rate.

3.2.2 Operating Cash Flow to Debt Ratio

Operating Cash flow to Debt Ratio involves a company’s Cash Flows which shows
the capability of a company to cover its total debt obligations from its yearly cash
flow from operations. By considering cash flows figures instead of accounting
figures, it results in more realistic picture about the ability of company to pay its
obligations. It can be written as;

Cash flows from Operations

OCF to Debt Ratio =
Current Liabilities + Non-Current Liabilities

Table 3.5 Operating Cash Flow to Debt Ratio

Indus Motor Pak Suzuki Motor

Years Atlas Honda Limited
Company Company

6536529 807624 1969420

2009 (9884850+503700) (3108529+950862) (3325134+5000)
=0.63 =0.20 =0.59
7424279 1768263 -165729
2010 (14224866+325797) (3517937+1112515) (4752449+0)
=0.51 =0.38 =-0.03

701831 2147882 -1296887

2011 (12260958+454012) (4349462+649354) (8008085+0)
=0.06 =0.43 =-0.16
927978 1720597 701849
2012 (10395919+165941) (4810168+730315) (5547980+0)
=0.09 =0.31 =0.13

2013 148658 2208740 2063857

26
 (7412684+0) (4587303+866975) (6166119+0)
=0.02 =0.40 =0.33

Operating Cash flow to Debt Ratio Descriptive Statistics

Company High Low Mean STD

Indus Motor 0.63 0.02 0.26 0.29

Company

Atlas Honda 0.43 0.20 0.35 0.09

Limited

Pak Suzuki 0.59 -0.16 0.17 0.30

Motor Company

Figure 3.5 Operating Cash Flow to Debt Ratio

Operating Cash Flow to Debt Ratio

0.7 0.63
0.59
0.6
0.51
0.5 0.43
0.38 0.4
0.4 0.33
0.31
Ratio Scale

0.3
0.2
0.2 0.13
0.09
0.1 0.06
0.02
0
Indus Motors Atlas Honda Pak Suzuki
-0.03
-0.1

-0.2 -0.16
Year 2009 Year 2010 Year 2011 Year 2012 Year 2013

The graph shows that IMC ratio kept a mix trend for 5 years of study period. IMC
kept its ratio higher than 50 percent in first two years but in next two years its current
liabilities increased more than its cash flows from operations which caused a decrease
in this ratio. The ratio dropped in last year as its cash flows from operations decreased
although its current liability reduced as well but it didn’t made any positive effect on
the ratio. For ATHL its ratio kept a mix trend. The ratio increased in second and third

27
years because of a rapid increase in its cash flows which also covered the effect of the
moderate increase in its current liabilities. In fourth year the ratio decreased because
of the increase in current liabilities and decrease in its cash flows from operations. In
last year the ratio increased because of the moderate growth in cash flows generation
and a decline in current liabilities. PSMCL ratio kept a mix trend for the analysis
period. It kept a promising ratio in the first year but its cash flows from operations
decreased substantially for next two years resulted in a negative ratio. This negative
cash flow implies that if it wasn’t for the equity cushion of the company, the debtor of
the company could face 16% and 3% loss in these years respectively. The ratio
increased in fourth year by generating positive cash flows from operations while its
liabilities decreased in the same period.

3.3 Profitability Ratios

These ratios are used to find out the profitability of the company with respect to
different entities/items of business stated in the financial statements. In this study first
and second ratios cover both Balance Sheet and Income Statement while third ratio
covers Income Statement.

3.3.1 Return on Assets Ratio

Return on Assets Ratio (ROA) shows the company’s efficiency in utilizing its assets
to generate profits, it does so by comparing the net profits of the company with the
assets of the company that are used in operations to generate those profits. It can be
written as;

Net Profit Before Tax

Return on Assets Ratio = [ ] ×100
Average Total Assets

28
Table 3.6 Return on Assets Ratio

Indus Motor Pak Suzuki Motor

Years Atlas Honda Limited
Company Company

2046013 352779 412877

(4083325+9664784) + (3418964+5001658) + (5148531+11807612)+
(3970204+16715319) (3452825+3927828) (5228101+12427633)
2009
2 2 2
=0.1188 x 100 =0.0470 x 100 =0.0239 x 100
=11.88 =4.47 =2.39
5242539 1077231 668015
(3970204+16715319) + (3452825+3927828) + (5228101+12427633)+
(3347025+23791253) (3263096+5259180) (4937232+14313132)
2010
2 2 2
=0.2192 x 100 =0.1355 x 100 =0.0362 x 100
=21.92 =13.55 =3.62
4011455 1410481 1365297
(3347025+23791253) + (3263096+5259180) + (4937232+14313132)+
(4246881+22587737) (3299498+6321732) (4716123+18608777)
2011
2 2 2
=0.1486 x 100 =0.1555 x 100 =0.0641 x 100
=14.86 =15.55 =6.41
6312267 1620001 1499760
(4246881+22587737) + (3299498+6321732) + (4716123+18608777)+
(3486743+24088975) (3984177+6976240) (4288413+17060451)
2012
2 2 2
=0.2320 x 100 =0.1574 x 100 =0672 x 100
=23.20 =15.74 =6.72
4969775 2207557 2353439
(3486743+24088975) + (3984177+6976240) + (4288413+17060451)+
(2917791+22187601) (4421744+7553157) (5438912+18372365)
2013
2 2 2
=0.1887 x 100 =0.1925 x 100 =0.1042 x 100
=18.87 =19.25 =10.42

29
 Return on Assets Ratio Descriptive Statistics

Company High Low Mean STD

Indus Motor 23.20 11.88 18.15 4.75

Company

Atlas Honda 19.25 4.47 13.71 5.56

Limited

Pak Suzuki 10.42 2.39 5.91 3.12

Motor Company

Figure 3.6 Return on Assets Ratio

Retun on Assets Ratio

25 23.2
21.92

18.87 19.25
20

14.86 15.55 15.74

13.55
Ratio Scale

15
11.88
10.42
10
6.41 6.72
4.47
5 3.62
2.39

0
Indus Motors Atlas Honda Pak Suzuki

Year 2009 Year 2010 Year 2011 Year 2012 Year 2013

The graph shows that IMC ratio kept a mix trend during the analysis period. The ratio
increased in second year because of an increase in the Net Profits before Tax while a
minor increase in its assets. In third year the ratio decreased because of a decrease in
its profits and increase in the current assets. In fourth year ratio increased because of
the increase in profits as well decrease in the current assets. In fifth year ratio
decreased because of the substantial decline in the profits but it was somewhat
consolidated by the decrease in total assets. For ATHL the ratio kept an increasing
trend for the analysis period. In second year the ratio increased as the profit increased
rapidly but effect mitigated by the increase in its non-current assets which could make
the ratio even higher. For last three years the ratio increased as the rate of profit

30
increased higher than the rate of increase in total assets. PSMCL kept an increasing
trend for the analysis period. The company couldn’t utilize its assets more efficiently
throughout the years as compared with other two companies although it kept minor
but gradual growing trend. The company achieved this growth level by gradually
increasing its profit while it maintained its total assets in some years while in other
years reduced its total assets. In fifth year company profit increased rapidly while its
current assets increased gradually and the non-current assets declined.

3.3.2 Return on Equity Ratio

Return on Equity Ratio (ROE) shows the company’s efficiency in utilizing its raised
equity to generate profits. The generated profits later can be used in way of buying
back some of its own stock from the stockholders, or use it to raise more debt hence
reducing the amount of funds in form of the equity. It can be written as;

Net Profit Before Tax

Return on Equity Ratio = [ ] ×100
Average Total Assets

Table 3.7 Return on Equity Ratio

Indus Motor Pak Suzuki Motor

Years Atlas Honda Limited
Company Company

2046013 352779 412877

(10296973+9436340) (3321262+3404169) (14325600+14152681)
2009 2 2 2
=0.2074 x 100 =0.1049 x 100 =0.0290 x 100
=20.74 =10.49 =2.90

5242539 1077231 668015

(12587615+10296973) (3891824+3321262) (14497915+14325600)
2010 2 2 2
=0.4582 x 100 =0.2987 x 100 =0.0464 x 100
=45.82 =29.87 =4.64

4011455 1410481 1365297

2011 (14119648+12587615) (4622414+3891824) (15316815+14497915)
2 2 2

31
 =0.3004 x 100 =0.3313 x 100 =0.0916 x 100
=30.04 =33.13 =9.16
6312267 1620001 1499760
(17013858+14119648) (5419934+4622414) (15800884+15316815)
2012 2 2 2
=0.4055 x 100 =0.3226 x 100 =0.0964 x 100
=40.55 =32.26 =9.64
4969775 2207557 2353439
(17692708+17013858) (6560160+5419934) (17645158+15800884)
2013 2 2 2
=0.2864 x 100 =0.3685 x 100 =0.1407 x 100
=28.64 =36.85 =14.07

Return on Equity Ratio Descriptive Statistics

Company High Low Mean STD

Indus Motor 45.82 20.74 33.16 9.99

Company

Atlas Honda 36.85 10.49 28.52 10.39

Limited

Pak Suzuki 14.07 2.90 8.08 4.42

Motor Company

32
Figure 3.7 Return on Equity Ratio

Return on Equity Ratio

50 45.82
45 40.55
40 36.85
35 33.13 32.26
30.04 28.64 29.87
Ratio Scale

30
25 20.74
20
14.07
15
10.49 9.16 9.64
10
4.64
5 2.9

0
Indus Motors Atlas Honda Pak Suzuki

Year 2009 Year 2010 Year 2011 Year 2012 Year 2013

The graph shows that IMC kept a mix trend for the analysis period. The ratio in
second year more than 25% as compared with the first year while followed a decline
in third year because of the decrease in the profits as well by the result in increase in
equity of the company during the year. In fourth year the ratio increased by 10%
which is resulted by the rapid increase in profits while the minor increment noted in
total equity. In fifth year ratio decreased which is caused by the decrease in the profits
and raise in the equity. ATHL kept a growing trend most of the analysis period. The
ratio increased in second year which is resulted from the massive increase in its
returns. It went through up and downs during the five years period but it managed to
maintain the ratio level mostly with a four points increase in last year. PSMCL kept a
gradual increasing trend throughout the years. This growth is caused by an increase in
profits which is partially countered by an increase in equity. The rapid increase in last
year has caused by the rapid increase in profits while the equity level also gradually
increased.

3.3.3 Net Profit Margin

Net Profit Margin matches the proportion of company profit in relation to its sales. In
other words it also shows that how much efficiently the company manages its
expenses in relation to its sales. It can be written as;

33
 Net Profit after Taxes
Net Profit Margin = [ ] x 100
Net Sales

Table 3.8 Net Profit Margin

Indus Motor Pak Suzuki Motor

Years Atlas Honda Limited
Company Company

(2040013 x 100) (352779 x 100) (412877 x 100)

2009 37864604 13747820 26234061
=5.40 =2.57 =1.57
(5242539 x 100) (1077231 x 100) (668015 x 100)
2010 60093139 25554772 42642762
=8.72 =4.22 =1.57

(4011455 x 100) (1410481 x 100) (1365297 x 100)

2011 61702677 32521399 52718563
=6.50 =4.34 =2.59
(6312267 x 100) (1620001 x 100) (149976 x 100)
2012 76962642 38011857 58531137
=8.20 =4.26 =2.56
(4969775 x 100) (2207557 x 100) (2353439 x 100)
2013 63829075 42325242 51061333
=7.79 =5.22 =4.61

Net Profit Margin Descriptive Statistics

Company High Low Mean STD

Indus Motor 8.72 5.40 7.32 1.35

Company

Atlas Honda 5.22 2.57 4.12 0.96

Limited

Pak Suzuki 4.61 1.57 2.58 1.24

Motor Company

34
Figure 3.8 Net Profit Margin

Net Profit Margin Ratio

10
8.72
9 8.2
7.79
8
7 6.5
Ratio Scale

6 5.4 5.22
5 4.61
4.22 4.34 4.26
4
3 2.57 2.59 2.56

2 1.57 1.57

1
0
Indus Motors Atlas Honda Pak Suzuki

Year 2009 Year 2010 Year 2011 Year 2012 Year 2013

The graph shows that for IMC the ratio kept a mix trend for the analysis period. The
ratio increased in second year because the rate of increase in profits for the year
remained more than the rate of increase in the sales revenue which is an indication
that the company has more control over its costs. In third year the ratio declined
because of the decrease in the net profit and increase in net sales. The increase in the
fourth year has caused by the increase in the net profit while the fifth year decline in
ratio has caused by the decrease in net profits although decrease in net sales
consolidated the ratio partially. ATHL ratio increased gradually almost throughout the
years with an exception of fourth year when it declined slightly as compared with the
previous year while this behavior is the result of the gradual increase in net profit
while rapid increase in net sales. The gradual rate of growth in rest of the years
resulted because of an immediate increase in net profits as well gradual increase in net
sales. PSMCL ratio showed a steady increasing trend which is caused by the
immediate increase in its net profit as well in its net sales which also countered the
effect of net profit.

35
3.4 Investors Analysis Ratios

These ratios are used by investors of the company to decide if the company has
potential growth & expected returns in the future. In this study both of the ratios cover
Income Statement items because the investor’s primarily concern is with the
profitability of the company. These ratios include the following.

3.4.1 Dividend Cover Ratio

Dividend Coverage Ratio of a company shows how many times it is able to pay the
dividend to its shareholders out of the profits it earned from its operations over a
period.

Dividend amount due on preference share is subtracted from Net Profit after Tax, but
as neither of the selected companies in this study have any preference shares
outstanding so it’s better to exclude this adjustment in the formula. It can be written
as;

Net Profit before Tax – Tax Expense

Dividend Cover Ratio =
Total Dividend Amount

Table 3.9 Dividend Cover Ratio

Indus Motor Pak Suzuki Motor

Years Atlas Honda Limited
Company Company

(2046013-660911) (352779-128246) (412877-172624)

2009 786000 141896 41150
=1.76 =1.58 =5.84

(5242539-1799136) (1077231-373580) (668015-452000)

2010 1179000 271966 41150
=2.92 =2.59 =5.25
(4011455-1169858) (1410481-406478) (1365297-586000)
2011 1179000 406589 164600
=2.41 =2.47 =4.74
(6312267-2370844) (1620001-388532) (1499760-514000)
2012
251500 467578 205750

36
 =1.57 =2.63 =4.79
(4969775-1865952) (2207557-501853) (2353439-504082)
2013 1965000 620440 329199
=1.58 =2.75 =5.62

Dividend Coverage Ratio Descriptive Statistics

Company High Low Mean STD

Indus Motor 2.92 1.57 2.05 0.60

Company

Atlas Honda 2.75 1.58 2.40 0.47

Limited

Pak Suzuki 5.84 4.74 5.25 0.49

Motor Company

Figure 3.9 Dividend Cover Ratio

Dividend Cover Ratio

7
5.84
6 5.62
5.25
5 4.74 4.79
Ratio Scale

4
2.92
3 2.41 2.59 2.47 2.63 2.75

2 1.76 1.57 1.58 1.58

0
Indus Motors Atlas Honda Pak Suzuki

Year 2009 Year 2010 Year 2011 Year 2012 Year 2013

The graph shows that IMC ratio kept a mix trend for the analysis period. The ratio
increased in second year rapidly as its net profit increased more than its dividend
amount but in next year the ratio declined because of the decrease in its net profit. In
fourth year the ratio declined as the tax effect countered the increase in net profit. The

37
company almost maintained its ratio in last the year without any huge variation.
ATHL ratio kept a mix trend. The ratio increased in second year because of an
immediate increase in its net profit. The company maintained the ratio without huge
variation although it faced minor ups and downs during the last three years because of
the fluctuation in both net profit and dividend amount. PSMCL ratio kept a mix trend
for the analysis period. The ratio decreased in second year because of higher tax
amount paid during the year. PSMCL for the next three years kept the increasing
trend as its net profit increased more than its dividend amount.

3.4.2 Earnings per share (EPS)

Earnings per share shows the amount of profit on a share of a common stock from the
company’s net income earned over a fiscal year. The higher per share value shows the
company has the option either to pay high amount in dividends to its shareholders or
the company saves up the income as reserves and use it in the future for any potential
future investments. It can be written as;

Net Profit before Tax – Tax Expense

Earnings per share = [ ] ×Face Value
Total Ordinary Shares Outstanding

Table 3.10 Earnings per Share

Indus Motor Pak Suzuki Motor

Years Atlas Honda Limited
Company Company

(2046013-660911) (352779-128246) (412877-172624)

786000 472985 822999
2009
=1.7622 x 10 =0.4747 x 10 =0.2919 x 10
=17.62 =4.75 =2.92
(5242539-1799136) (1077231-373580) (668015-452000)
786000 543932 822999
2010
=4.3809 x 10 =1.2936 x 10 =0.2624 x 10
=43.81 =12.94 =2.62

(4011455-1169858) (1410481-406478) (1365297-586000)

2011 786000 625522 822999
=3.6152 x 10 =1.6066 x 10 =0.9481 x 10

38
 =36.15 =16.07 =9.48
(6312267-2370844) (1620001-388532) (1499760-514000)
786000 719350 822999
2012
=5.0145 x 10 =1.7119 x 10 =1.1977 x 10
=50.15 =17.12 =11.98
(4969775-1865952) (2207557-501853) (2353439-504082)
786000 827253 822999
2013
=3.9488 x 10 =2.0618 x 10 =2.2470 x 10
=39.49 =20.62 =22.47

Earnings per share Descriptive Statistics

Company High Low Mean STD

Indus Motor 50.15 17.62 37.44 12.25

Company

Atlas Honda 20.62 4.75 14.30 6.00

Limited

Pak Suzuki 22.47 2.62 9.89 8.13

Motor Company

39
Figure 3.10 Earnings per Share

Earnings per Share

60
50.15
50
43.81
39.49
40 36.15
Ratio Scale

30
22.47
20.62
20 17.62 16.07 17.12
12.94 11.98
9.48
10 4.75
2.92 2.62
0
Indus Motors Atlas Honda Pak Suzuki

Year 2009 Year 2010 Year 2011 Year 2012 Year 2013

The graph shows that IMC ratio kept a mix trend for the analysis period. The ratio
showed variability during the years of analysis which is the company generated
earnings of as low as 17 rupees per share in the first year to the highest earnings of 50
rupees per share in fourth year. For IMC the ratio increased in second year because of
an increase in its net profit. In third year the ratio decreased as the net profit
decreased. In fourth year ratio surged rapidly because of a rapid increase in its net
profit, followed by decrease in the ratio because of the decline in its net profit. ATHL
maintained growing trend throughout the years as its rate of net profit increased more
than the rate of its total shares outstanding increased. PSMCL kept a mix trend in the
analysis period. The ratio decreased in second year as it paid more in taxes than
previous years. The increase in last three years especially in fifth year was due to the
rapid increase in its net profit.

40
 Chapter 4 Findings, Conclusion and Recommendations
4.1 Findings

After analysis of three companies, following findings are reported;

i. Over the five years period PSMCL performed better among all three
companies regarding current ratio while other companies kept good ratio over
the years as well. The variation in ratios of the companies over the analysis
period remained at acceptable level as shown by the Standard Deviation.

ii. IMC performed better among all three companies regarding acid test ratio over
the five years period while PSMCL kept good ratio. ATHL ratio remained
lower than other companies. The variation in ratios of the companies remained
normal during the analysis period.

iii. Inventory Turnover ratio of ATHL remained highest over the five years
analysis period which means ATHL performed better among all three
companies regarding this ratio while IMC ratio remained second best and
PSMCL ratio remained good. ATHL ratio over the analysis period has very
high variation than other companies while others ratio’s variation remained
satisfactory.

iv. Debt to Equity ratio of PSMCL remained lowest which is better among all
three companies in this analysis while IMC ratio was satisfactory as well
ATHL showed declining trend which decreased in last year below to 1 which
is a good indicator for the company. The variation in the ratios of the
companies remained normal over the analysis period.

v. ATHL performed better regarding OCF/Debt ratio over the five years analysis
period. The performance of all three companies’ ratio was not satisfactory
especially of PSMCL. The variation in the ratios of the companies remained
normal over the analysis period.

vi. Return on Assets ratio of IMC remained better over the period of five years
while other companies kept good ratio as well. The variation in the ratios of
the companies remained higher over the analysis period especially of ATHL.

41
vii. Over the five years period IMC generated highest returns on its equity while
ATHL kept good ratio as well but for PSMCL its performance remained
satisfactory. The variation in the ratios of the companies remained very high
over the analysis period especially of ATHL.

viii. IMC created better profit while controlling its cost which kept its Net Profit
Margin highest among all three companies in each year. ATHL and PSMCL
performance in this ratio remained satisfactory over the years. The variation in
the ratios of the companies remained normal over the analysis period.

ix. PSMCL kept highest Dividend Cover ratio during each year among all three
companies as it kept its dividend to lowest amount among all three companies.
IMC and ATHL also kept good ratio over the years. The variation in the ratios
of the companies remained normal over the analysis period.

x. IMC performed better regarding its Earnings per share as its value remained
highest during each year among all three companies while other companies’
value remained satisfactory over the years. The variation in the ratios of the
companies remained very high over the analysis period especially of IMC
which was more than 12 points.

4.2 Conclusion

After analysis of three companies, following is concluded from this study;

IMC is selected to be the best company among all three companies. IMC’s has highest
cash reserves and marketable securities. IMC also is best among all three companies
regarding its profitability. The management of the company made efficient use of the
company’s assets as well it utilized its equity resources efficiently to generate profit.
Another important observation about the company is its efficiency to control costs
which resulted in higher profit margins for the company. The reason this company is
more attractive for the investors is its higher earnings on per share basis which is the
result of higher profits of the company.

Inventory turnover of ATHL is best among all three companies which is an indicator
for the demand of the products of the company in the market. The company also

42
generates sufficient cash flows from its operations that the coverage of its debt ratio
from its operating cash flows becomes highest among all of three companies. ATHL
profitability performance showed an increasing trend over the years and it is the
reason, it remained second to IMC in profit creation.

PSMCL has sufficient amount of current assets among all three companies. Regarding
liquidity of the company the company has most liquid assets but this comparison is
based on current assets. PSMCL is also in a best position regarding its long-term debt-
paying ability. In case of insolvency the stockholder would only partially lose their
investment in the company because of the moderate amount of debt on company as
compared with other companies. The company also has a best Dividend Cover Ratio
among all three companies which is the result of allocating lowest dividend amount
for its shareholders; however, the highest ratio is always a sign of attraction for the
willing investors.

4.3 Recommendations

In Pakistan Automobile Industry despite a substantial increase in the automobiles

possession as an outcome of available finance opportunities as well the minimum
duties levied by the Government, the manufacturing of the automobiles is not good.
Indus Motor Company Limited performed best regarding its cash generation and
profitability but it can increase its profitability by focusing more on its long-term
assets which is to say that as the demand exists in the market the company can raise
finance and expands its current production facilities and its operations.

Debt to Equity ratio of ATHL remained highest among other companies each year
during the analysis period. The ratio kept decreasing trend during the years which the
management of the company achieved by increasing its Equity and decreasing its debt
gradually during the analysis period. Although the company maintained more equity
than it employed debt in its finance in the last year but still its debt remained 20%
more than its equity and its ratio remained highest among other companies. The
company case reduce it further by keeping the same policy or raising more equity
hence reducing its debt.

43
PSMCL sales remained slow also indicated by its inventory turnover, it’s not a good
sign for a company which has invested large capital and assets to generate profits
when its cash stuck in form of inventory, so the company needs to put extra effort to
increase its inventory turnover. This scenario holds true as it’s proven by observing
the company’s cash flows which became negative for two years which shows a sign
of trouble for the company. PSMCL can increase its operating cash flows by making
inventory turnover better, keeping accounts receivable under strict watch and also
increasing the prices for the products which use most resources of the company.

44
 References
Allawala, A. (2014). Used cars’ import hurting auto-parts’ industry. Retrieved from
Pakistan Association of Automotive Parts & Accessories Manufacturers
(PAAPAM): http://www.paapam.com/news-event/article/
Business Recorder. (2012). Automobile sector. Business Recorder.
Dr. Shahid Khalil, D. S. (2004). Automobile Industries in Pakistan will face the new
challenges in the Post WTO Scenario. Retrieved from PIQC:
http://www.piqc.edu.pk/casestudies/Dr_M_Shahid_Khalil_Automobile_Indust
ries_in_Pakistan_Automobile_Industries_WTO_Presentation_PIQC.pdf
Gibson, C. H. (2011). Analysis of Financial Statements (India Edition). New Delhi:
Cengage Learning Private Limited.
Hafiz Pasha, Z. I. (2012, January). Retrieved from International Growth Center:
http://www.theigc.org/wp-content/uploads/2015/02/Pasha-Ismail-2012-
Working-Paper.pdf
Hashmi, N. (2014, March 27th). CREB - Presentations from the Tenth Annual
Conference of the Lahore. Retrieved from The Centre for Research in
Economics and Business (CREB) Web site:
http://www.creb.org.pk/uploads/file/5fc29f0a5585da206c994d09b7c61c6eNab
eel%20Hashmi.pdf
Karachi Stock Exchange. (2014). Retrieved from Karachi Stock Exchange:
http://www.kse.com.pk/
Muhammad Aqeel, S. A. (2014, April). Protection and Indigenization Levels in
Pakistan Automobile Industry from 1995 to 2005. IJESR, pp. 143-154.
Pakistan Institute of Trade And Development. (2008). Automobile Sector of Pakistan.
Retrieved from http://www.pitad.org.pk/Publications/30-
Pakistan%20India%20Trade%20Liberalization%20Sectotal%20Study%20on
%20Automobile%20Sector%20of%20Pakistan.pdf
PAMA. (2014). Production (P) & Sale (S) of Vehicles From 1995 onwards. Pakistan
Automotive Manufacturers Association (PAMA).
Zaidi, F. (2013). A View on Pakistan’s Automotive Industry. PakWheels.com.
Zareen, D. S., Naeem, M., Abbasi, A., Nasir, G., Alam, R., Akhtar, N., . . . Zareen.
(n.d.). The Role of Automobile Industry in the Economy of Pakistan Its
Growth. Its Impacts Negative As Well As Positive. Lahore: Directorate General
of Training & Research, Federal Board of Revenue.

45
 Annexure
Financial Statements

For the Comparative Analysis, data is collected from the financial statements of the
respected companies are also included in this project report. The data is collected
from three different financial statements, namely;

a. Balance Sheet

b. Profit & Loss Accounts

Indus Motor Company Limited

Indus Motor Company Limited

Balance Sheet
Items 2013 2012 2011 2010 2009
ASSETS
NON-CURRENT ASSETS
Fixed assets 2,742,140 3,472,906 4,225,710 3,324,333 3,934,473
Long-term loans 131,337 6,015 11,949 15,570 28,509
Long-term deposits, prepayments
and receivables 9,667 7,822 9,222 7,122 7,222
Deferred taxation 34,647 - - - -
2,917,791 3,486,743 4,246,881 3,347,025 3,970,204
CURRENT ASSETS
Stores, spares and loose tools 153,669 178,188 189,755 11,567 128,483
Stock-in-trade 7,883,309 7,529,571 5,690,052 5,198,367 4,088,858
Trade debts 1,382,761 1,459,976 1,356,068 1,613,171 1,736,631
Loans, advances and others 1,557,897 945,498 926,174 839,819 894,459
Short-term prepayments 10,799 20,965 18,900 18,778 16,876
Accrued profit on bank deposits 12,155 45,355 52,586 57,254 50,944
Other receivables 162,225 447,569 149,533 196,317 67,902
Investments 6,698,121 2,690,553 4,993,464 - -
Taxation - payment less provision 131,363 - 399,006 - -
Cash and bank balances 4,195,302 10,771,300 8,812,199 15,755,980 9,731,166
22,187,601 24,088,975 8,812,199 23,791,253 16,715,319
NON-CURRENT ASSETS
CLASSIFIED AS HELD
TOTAL ASSETS 25,105,392 27,575,718 26,834,618 27,138,278 20,685,523

46
 Indus Motor Company Limited
Balance Sheet
Items 2013 2012 2011 2010 2009
EQUITY AND LIABILITIES
SHARE CAPITAL AND RESERVES
Authorized share capital 150,000,000
(2012: 150,000,000) ordinary shares of
Rs.10/- each 1,000,000 1,000,000 1,000,000 1,000,000 1,000,000
Issued, subscribed and paid-up share
capital 786,000 786,000 786,000 786,000 786,000
Reserves 16,906,708 16,227,858 13,333,648 11,801,615 9,510,973
17,692,708 17,013,858 14,119,648 12,587,615 10,296,973
NON-CURRENT LIABILITIES
Deferred tax liability - 165,941 454,012 325,797 503,700
CURRENT LIABILITIES
Trade and other payables 6,013,852 6,512,461 5,740,869 5,905,062 3,942,988
Advances 1,398,698 3,823,641 6,519,669 8,076,281 5,926,529
Accrued mark-up 134 188 420 944 673
Short-term borrowing - - - - -
Taxation - provisions less payments - 59,629 - 242,579 14,660
7,412,684 10,395,919 12,260,958 14,224,866 9,884,850
CONTINGENCIES AND
COMMITMENTS
TOTAL EQUITY AND LIABILITIES 25,105,392 27,575,718 26,834,618 27,138,278 20,685,523

Indus Motor Company Limited

Profit & Loss Account
Items 2013 2012 2011 2010 2009
Net Sales 63,829,075 76,962,642 61,702,677 60,093,139 37,864,604
Cost of sales (57,972,038) (70,400,788) (57,613,542) (55,236,625) (35,540,418)
Gross profit 5,857,037 6,561,854 4,089,135 4,856,514 2,324,186
Distribution costs (814,228) (820,339) (690,130) (468,496) (469,985)
Admin expenses (643,978) (627,673) (462,517) (381,575) (352,249)
Other income 1,037,840 1,775,748 1,507,878 1,796,075 727,080
Finance costs (30,704) (60,981) (77,115) (143,873) (26,540)
Other operating expenses (436,192) (516,342) (355,796) (416,106) (156,479)

Profit before taxation 4,969,775 6,312,267 4,011,455 5,242,539 2,046,013

Taxation (1,612,230) (2,009,552) (1,268,071) (1,799,136) 660,911
Profit after taxation 3,357,545 4,302,715 2,743,384 3,443,403 1,385,102
EPS - basic & diluted 42.72 54.74 34.90 43.81 17.62

47
Atlas Honda Limited

Atlas Honda Motor Company Limited

Balance Sheet
Items 2013 2012 2011 2010 2009
ASSETS
NON-CURRENT ASSETS
Property, plant and equipment 4,421,744 3,941,610 3,259,193 3,224,897 3,412,901
Intangible assets 5,555 6,419 7,137 8,053 16,601
Long-term investments - - - - -
Long-term loans 25,583 20,420 22,403 18,810 14,359
Long-term deposits, prepayments and
receivables 8,399 1,528 10,765 11,336 8,964
4,461,281 3,984,177 3,299,498 3,263,096 3,452,825

CURRENT ASSETS
Stores, spares and loose tools 390,250 348,639 325,891 322,592 428,188
Stock-in-trade 2,171,536 2,161,328 2,003,029 1,664,297 1,792,036
Trade debts 514,742 598,265 401,435 445,689 320,180
Loans, advances and others 33,253 33,152 33,525 40,485 37,646
Short term investments 47,722 44,832 36,936 39,079
Trade deposits and short-term
prepayments 1,635,183 1,460,580 1,338,474 1,088,996 64,637
Accrued mark-up/interest 11,603 4,348 8,517 4,513 520
Other receivables 6,302 15,338 15,075 11,566 296,790
Taxation – net 2,578 160,604 68,050 - -
Cash and bank balances 2,739,988 2,149,154 2,090,800 1,641,963 636,426
7,553,157 6,976,240 6,321,732 5,259,180 4,032,239
NON-CURRENT ASSETS
CLASSIFIED AS HELD
TOTAL ASSETS 12,014,438 10,960,417 9,621,230 8,522,276 7,485,064

Atlas Honda Motor Company Limited

Balance Sheet
Items 2013 2012 2011 2010 2009
EQUITY AND LIABILITIES
SHARE CAPITAL AND RESERVES
Issued, subscribed and paid-up share capital 827,253 719,350 625,522 543,932 472,985
Reserves 5,732,907 4,700,584 3,996,892 3,347,892 2,622,118
5,419,934 4,622,414 3,891,824 226,159
NON-CURRENT LIABILITIES
Long-term borrowings - - - 512,500 375,000
Compensated absences 170,248 15,878 - - -
Deferred tax liability 696,727 576,437 649,354 600,015 575,862
CURRENT LIABILITIES
Trade and other payables 4,587,303 4,810,168 4,255,584 3,109,999 2,646,221
Accrued mark-up/interest - 6,378 37,384 72,328
Current portion of long-term borrowings - 87,500 362,500 389,980
Provisions for taxation - - 8,054 104,411
5,454,278 5,540,483 4,349,462 3,517,937 3,212,940
CONTINGENCIES AND COMMITMENTS
TOTAL EQUITY AND LIABILITIES 12,014,438 10,960,417 9,621,230 8,522,276 7,485,064

48
 Atlas Honda Motor Company Limited
Profit & Loss Account
Items 2013 2012 2011 2010 2009
Net Sales 42,325,242 38,011,857 32,521,399 25,554,772 13,474,820
Cost of sales (38,646,049) (35,235,893) (30,080,978) (23,555,842) (12,782,165)
Gross profit 3,679,193 2,775,964 2,440,421 1,998,930 965,655
Distribution costs (1,206,648) (965,883) (815,463) (690,794) (271,346)
Admin expenses (387,477) (335,654) (310,742) (264,739) (165,648)
Other income 322,668 274,453 299,337 239,047 89,744
Finance costs (9,726) (11,717) (93,475) (112,613) (251,777)
Other operating expenses (190,453) (117,162) (109,597) (92,600) (13,849)

Profit before taxation 2,207,557 1,620,001 1,410,481 1,077,231 352,779

Taxation (599,753) (415,892) (407,925) (364,773) (128,246)
Profit after taxation 1,607,804 1,204,109 (1,002,556) (712,458) 224,533
EPS - basic & diluted 19.44 14.56 16.03 11.39 4.75

49
Pak Suzuki Motor Company Limited
Pak Suzuki Motor Company Limited
Balance Sheet
Items 2013 2012 2011 2010 2009
ASSETS
NON-CURRENT ASSETS
Fixed assets
Property, plant and equipment 4,892,675 3,738,867 4,200,317 4,226,582 4,684,671
Intangible assets 182,638 312,028 303,777 505,760 347,732
5,075,313 4,050,895 4,504,094 4,732,342 5,032,403
Long-term investments 2,194 4,545 4,190 5,413 4,449
Long-term loans 6,264 1,409 1,523 1,114 3,162
Long-term deposits, prepayments and
receivables 36,977 63,451 20,487 28,499 34,609
Long-term installment sales
receivables 170,252 162,650 185,829 169,864 153,478
Deferred taxation 147,912 - - - -
363,599 232,055 - - -
5,438,912 4,282,950 4,716,123 4,937,232 5,228,101
CURRENT ASSETS
Stores, spares and loose tools 66,279 83,095 64,467 63,916 41,749
Stock-in-trade 10,726,457 10,562,194 12,922,396 8,748,031 6,879,729
Trade debts 983,273 627,054 322,677 240,719 376,508
Current portion of long-term
installment sales receivables 330,504 314,065 303,951 251,254 205,680
Loans, advances and others 411,629 194,622 216,586 134,963 226,388
Trade deposits and short-term
prepayments 62,935 38,918 83,271 43,466 31,738
Accrued profit on bank deposits 13,016 5,664 6,145 8,652 7,837
Other receivables 114,138 186,973 139,948 107,779 76,685
Sales tax adjustable 802,777 970,176 1,023,399 389,453 255,609
Income tax refundable – net 2,896,998 2,676,742 2,362,674 1,407,713 780,089
Cash and bank balances 1,964,359 1,471,430 1,139,480 2,917,186 3,545,621
18,372,365 17,076,933 18,584,994 14,313,132 12,427,633
NON-CURRENT ASSETS
CLASSIFIED AS HELD - 5,463 - - -
TOTAL ASSETS 23,811,277 21,365,346 23,301,117 19,250,364 17,655,734

50
 Pak Suzuki Motor Company Limited
Balance Sheet
Items 2013 2012 2011 2010 2009
EQUITY AND LIABILITIES
SHARE CAPITAL AND
RESERVES
Authorized share capital
150,000,000 (2012: 150,000,000)
ordinary shares of Rs.10/- each 1,500,000 1,500,000 1,500,000 1,500,000 1,500,000
Issued, subscribed and paid-up share
capital 82,299 82,299 822,999 822,999 823,000
Reserves 16,822,159 14,994,367 14,470,033 13,674,916 13,502,600
17,645,158 15,817,366 15,293,032 14,497,915 14,325,600
NON-CURRENT LIABILITIES
Deferred tax liability - - - - 5,000
CURRENT LIABILITIES
Trade and other payables 3,695,675 2,694,625 3,211,174 3,080,351 1,853,034
Advances 629,275 1,143,746 3,065,406 327,031 441,781
Short-term borrowing - - 75,000 50,000 80,000
Deposits against display of vehicles 1,615,747 1,486,406 1,436,833 1,067,839 723,554
Security deposits 86,947 84,728 81,197 88,753 86,778
Provision for custom duties and
sales tax 138,475 138,475 138,475 138,475 138,475
6,166,119 5,547,980 8,008,085 4,752,449 3,325,134
CONTINGENCIES AND
COMMITMENTS
TOTAL EQUITY AND
LIABILITIES 23,811,277 213,654,346 23,301,117 19,250,364 17,655,734

Pak Suzuki Motor Company Limited

Profit & Loss Account
Items 2013 2012 2011 2010 2009
Turnover - net 51,061,333 58,531,137 52,718,563 42,642,762 26,234,061
Cost of sales (47,818,820) (56,186,266) (50,849,153) (41,638,975) (25,664,762)
Gross profit 3,242,513 2,344,871 1,869,410 1,003,787 569,299
Distribution costs (560,239) (358,403) (263,651) (197,361) (214,550)
Admin expenses (959,363) (859,310) (735,935) (636,332) (495,200)
Other income 863,241 493,985 620,390 575,078 619,572
Finance costs (57,576) (11,100) (17,845) (21,349) (12,564)
Other operating expenses (175,137) (111,152) (107,072) (55,808) (38,714)
(889,074) (845,980) (504,113) (335,772) (141,456)
Profit before taxation 2,353,439 1,498,891 1,365,297 668,015 427,843
Taxation (504,082) (521,738) 570,876 456,872 172,624
Profit after taxation 1,849,357 977,153 794,421 211,143 255,219
EPS - basic & diluted 22.47 11.87 9.65 2.57 3.10

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