Indus Motors Analysis

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  • Topic: 1967, 1968, 1944
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  • Published : March 30, 2012
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INTRODUCTION
Indus Motor Company Limited is an assembler, manufacturer and marketer of Toyota vehicles in Pakistan since July 01, 1990. The company is engaged in sole distributorship of Toyota and Daihatsu vehicles in Pakistan through its dealership network. SPONSOR

IMC is a joint venture between the House of Habib, Toyota Motor Corporation Japan (TMC), and Toyota Tsusho Corporation Japan (TTC). Indus Motor Company was incorporated in 1989 and is listed on all the three stock exchanges of Pakistan.

MARKET SHARE
It has a market share of 41%, slightly behind Pak Suzuki Motors (market share: 46%). Thus Indus Motor Company is one of the two leading car manufacturers in Pakistan. The market share of Pak Suzuki declined to 46% in FY10 from 48% in FY09. Dewan Motor s market share also decreased from 0. 38% in FY09 to 0% in FY10. However, Indus Motor and Honda Atlas gained in terms of market share. Honda Atlas market share increased from 12. 22% in FY09 to 12. 49% in FY10.

Indus Motor Company performed better than the other companies in the auto sector during FY10. The market share of Indus Motors surged from 39% in FY09 to 41% in FY10. This company managed to widen its market share.

Auto industry that witnessed a 67% decrease in volume over the last couple of years, bounced back in FY10 with Indus Motors in particular, outperforming the industry average.. The automotive industry proved to be a key driver for the large scale manufacturing sector that recorded a growth of 4.7% compared to 8. 2% decline in the previous year.. In 2009-10, the industry demand for the locally manufactured passenger cars (PC) and light commercial vehicles (LCV) grew by 43% to 141,654 units as compared to 99,310 units in 2008-09. The overall production increased by 37% to 138,587 units versus 101,400 units in the corresponding period of 2008-09.

FINANCIAL ANALYSIS

The demand for the locally assembled passenger cars (PC) and light commercial vehicles (LCV) has increased over the period. An analysis over the quarterly sales activity is given below

On the financial side, the company’s sales revenue of the CKD, CBU and parts business has also grown, an analysis of the sales revenue compared to

by 20% to Rs 14.3 billion over Rs 11. 9 billion, however, the profit after tax was down by 24% to Rs 577 million from Rs 759 million for the same period last year.. The reason behind it was the escalations of the costs due to inflationary pressures along with depreciation of rupee against the yen.. The cost of goods sold increased by 22%, causing the GP margin to dip from 8. 4% to 6. 6%.. Gross profit of trading increased while that of manufacturing decreased as compared to same period last year.. Selling, distribution and administrative expenses all showed a hefty increase of 28%.. The situation was worsened by a huge increase in the financial charges, thus leading to a drop in the PAT as discussed above.

Recent results (FY10)

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. =================================================================== Income Statement...
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