Indus motor's excellent performance

Over the years, Indus has made Toyota a household name in Pakistan

By Syed M. Aslam
Feb 19 - 25, 2001

Indus Motor Company, the local producer of Toyota Corolla and Daihatsu Cuore cars and Toyota Hilux Trucks, showed a strong financial performance for the half-year ended December 31, 2000.

Indus Motor's operating profit increased by 30 per cent from Rs 111 million to Rs 143 million during the first six months ended December 31, 2000 over the comparative period last year. The pre- and post-tax profit increased by 17 per cent each — from Rs 103 million to Rs 120 million and from Rs 63 million to Rs 74 million respectively.

A joint venture between local House of Habib, Toyota Motor Corporation and Toyota Tsusho Corporation, Indus Motor was incorporated in Pakistan as a public limited company in December, 1989. It commenced commercial production in May 1993 and has never looked back since.

Over the years, Indus has made Toyota a household name in Pakistan. In 1996 it sold 8,125 vehicles which touched an all-time high of 11,944 in 1999-2000. The sales doubled from Rs 4.136 billion to Rs 8.246 billion during the same period. During 1995-96 to 1999-2000 Indus contributed Rs 10 billion to national exchequer — over half or Rs 5.4 billion of which came in the last two years alone.

Indus enjoys an edge in the local automobile market. In 1999-2000 its Toyota Corolla range of passenger cars maintained a healthy market share of 53 per cent in the competitive market while Hilux 4x4 truck enjoyed 47 per cent share in the comparative commercial market with the takeover of Daihatsu by Toyota. Indus also obtained the green signal to produce and market Daihatsu Cuore car the commercial production of which commenced in March last year. Targeted at the small car segment Cuore has drawn enthusiastic response from the market because of its quality and zippy performance.

Sources in Indus Motor attributed the increase in operating profit primarily on a massive company-wide cost-cutting effort. They included increased operational efficiency, reducing the cost of inputs by renegotiating agreements and by reducing wastage and unnecessary costs. The measures also included increasing the deletion ratios and the higher volumes resulting in increasing economies of scale.

Indus produced a total of 6,587 units during the first six months ended December 31 last year and sold 6,006 units during the same period. During this period Indus' Corolla enjoyed 52 per cent share of the 1300cc-2000cc segment market while Cuore dominated 51 per cent of the small car segment market of 800cc-850cc. The Hilux enjoyed 31 per cent of the pickup market during the period under discussion.

The sources expect the financial performance of Indus to get even better during the rest of the remaining six months. Their observation is based on the following positive indicators from the market. Number one, they are optimistic that the extremely positive reputation of Cuore quality in the market will lead to increased Cuore sales. The launching of Hilux Flatbed model last month, they feel, will also result in increased sales of the pickup. In addition, the leasing has resulted in the products being affordable to a new target market which is expected to grow as trends show that January-July is traditionally a high sales period in the automobile market. As is, the local automobile industry, particularly the passenger car, has greatly benefited from the growth of the leasing companies which are collectively contributing some 30-40 per cent to the total car sales in the country.

Indus is also hopeful to better an already excellent financial performance during the remaining year: unlike the 1999-2000 the automobile market is not only not contracting but is recovering at present making it all the more pronounced during the later half of the current fiscal ending June 30 this year.

So what gives Indus an edge? The sources cited reliability, durability and quality of Indus products to ensure fullest customer satisfaction and the high resale value as its top asset. They also said that Indus 3-S dealer network remains unmatched in the country to better customer interaction. In addition, Indus has a full-fledged Customer Relations department at over two dozen dealerships nationwide which is monitored by the IMC and is geared to satisfy the clients. Most of all, Indus is using the cutting-edge Japanese technology, they added.

Financial Results For Half-Year Ended Dec. 31, 2000 & Comparative Period The Previous Year

(Rs in '000')

.

1998-99

1999-2000

Sales Net

3,442,836

4,147,467

Cost of Sales

3,228,252

3,892,912

Gross Profit

214,584

254,555

Adm. & Selling Expenses

103,742

111,392

Operating Profit

110,842

143,163

Pre-Tax Profit

102,935

120,277

Net Profit

63,410

73,906

Source: Unaudited Account