Indus Motor Ratio Analysis

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IBF REPORT
INDUS MOTOR COMPANY

11/19/2011

Analysis of Common size Income Statement
Net sales
In the years 2007 and 2008 there has been a slight increase in net sales which depicts that the demand of the vehicles has not surged in a significant manner. In contrast to this, the year 2009 has suffered a decrease in the total net sales . As compared to FY09, the net sales for FY10 rose by 37%. This was due to both, increase in manufacturing and increase in trading of the company.. The increase in demand is mainly attributable to the combined effects of a healthy agricultural income for the farming community and a small increase in auto financing. This has occurred on a low volume base for the previous year, which had suffered from the dampened demand due to the extraordinarily difficult economic conditions in the country and also from the absence of the newly launched Corolla for part of the year on account of the run out of the old model.. The Federal Budget 2009-10 brought good news for the auto industry in terms of the abolishment of the 5% excise duty on cars with an engine capacity in excess of 850cc, which was immediately passed to the customers through a price. The demand for the locally assembled passenger cars (PC) and light commercial vehicles (LCV) increased by 9% to 33,687 units for the first quarter of the year 2010 as compared to 30,787 units sold for the corresponding period in 2009.. The combined sales of Toyota and Daihatsu brands for the quarter recorded an increase of 14% to 12,114 units compared to 10,631 units sold for the same period last year representing an increase in market share from 32% to 34%.. Correspondingly, the production of PC and LCV for the quarter ended September 2010 also increased by 15% to 12,186 units as against 10,576 units produced in the same period in 2009. On the financial side, the company s sales revenue of the CKD, CBU and parts business grew by 20% to Rs 14. 3 billion over Rs 11.9 billion.

Cost of sales
The trend of cost of sales has fluctuated between the two financial years that is; 2007 and 2008.Later it has been consistent because of increase in the trading of the company. The inflationary measures has also contributed the cost of sales to be on a higher end for the year 2009 but depreciation of Yen was a significant factor for the surge in cost of sales for the year 2010-2011. For the fiscal year of 2010 the cost of goods sold increased by 22%, causing the GP margin to dip from 7.84% to 6. 6%

Gross Profit
Gross Profit has significantly declined in the period between 2007-2009. This is primarily because of increase in cost of sales resulting by a surge in trading of the company as well as inflationary measures too. In 2010, Gross profit of trading increased as the company adopted a new strategy for their production department, known as Toyota Maintenance, while for the year 2011 gross profit declined due to the depreciation of Yen currency.

Distribution cost and Administrative expenses
Selling, distribution and administrative expenses all showed an increase in the overall trend of the costs. The situation was worsened by a huge increase in the financial charges, thus leading to a drop in the PAT. With respect to the distribution costs, between the period of 2009-2010, there was only a slight decline whereas the administrative expenses increased by around 8%. This was mainly due to the rise in salaries, allowances and other benefits as well as staff training costs.

Other operating expenses
In the year 2009-2010, other operating expenses rose by 62% mainly because of increase in workers welfare fund which increased from 41 million to 112 million.. Workers profit participation fund rose from 108 to 281 million in FY10.

Operating income
In the year 2009-2010 operating income rose by 60% because of a rise in return on bank deposits from 628 million to 1611 million.. Also, the liabilities no longer payable were written back which increased from...
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