Pakistan poised to enter Toyota's global master plan 2011-15

Oct 01 - 07, 2007

Parvez Ghias is the Chief Executive Officer at Indus Motor Company Limited, one of the most prestigious automobile manufacturers in the country known for their Toyota and Daihatsu brands. Prior to joining Indus Motor, Parvez Ghias was Vice President and CFO at Engro Chemical Pakistan Limited where he served as a member of the Board of Directors.

Parvez Ghias is a fellow of the Institute of Chartered Accountants from England & Wales and member of several faculties of the Institute and holds a Bachelors Degree in Economics and Statistics.

Having an optimistic approach about future of auto industry in Pakistan, Parvez Ghias in an interview with Pakistan & Gulf Economist said that actually we are trying to enter Toyota's Master Plan 2011-15 and we are sure to get that global status which would open new doors for growth of Indus Motors besides offering a great opportunity for our vendor industry to enter into global market.

Entering the global master plan also means access to resources and funds for setting up another new plant with a capacity of producing 100,000 units per annum taking the total production to 175,000 in Pakistan. When the first plant with a capacity of producing 35,000 cars was set up in Pakistan the cost was Rs1 billion, now setting of another plant of 100, 000 would cost Rs4-5 billion. Is it difficult to get into scheme of things with Toyota's Master Plan? The answer was yes however the way Pakistan auto industry is growing has attracted world players and Toyota too has acknowledged the market expansion in Pakistan. Actually before taking a decision regarding a country for inclusion in the global scheme, the proposed country is looked at in all respects especially the availability of supporting infrastructure like vendor industry and of course the quality of their output whether matching to the international standards or not.

Parvez Ghias said that we are trying to get involved at least two vendors in this master plan if succeeded there could be a boom in the downstream of the auto industry he expressed the hope.

When asked to comment on the import policy of the government, the Chief of Indus Motors was in agreement with the import policy, which is actually being used as leverage for the goading the automobile manufacturers. He however said that when the government had allowed import of used cars we had an influx of 46800 cars in 2005-06, however with the gradual age restriction on the used cars it started tapering off and in 2006-07 the number of imported cars reduced to 28000 and now with further reduction in age the number may go further down at the end of the current year, he said.

As far as the import of new cars was concerned, there is no option because we are only importing luxury new cars only which cannot be produced within the country.

He said that besides increasing production of much sought after Cuore, Indus is currently in the process of resumption of production of Hi-Lux, which was suspended in the past due to certain reasons

Meanwhile the industry is growing in Pakistan and the pace of growth is reflected in the expansion of production capacity of most of the manufacturers and due to increasing demand growth obviously due liberalized financial policies of the government and positive macro economic conditions, the industry has attained the capacity to produces around 200,000 units annually.

Parvez Ghias, said that as a responsible corporate citizen, Indus Motor Company participates in various social causes under its slogan 'Concern Beyond Cars'. These include initiatives in health, education, environment, community development and road safety projects. The company allocates 1% of its profit before tax for CSR. Through this program, the company is trying to not only make a contribution for the present, but also striving to make continuous sustainable investment for the future of Pakistan. In recognition of this effort, the Company was presented the Pakistan Corporate Philanthropy Award.

Indus Motor has achieved impressive results with record production, sales and profit after tax for the six months ending 31st December 2006. The company's combined production of Toyota and Daihatsu brands for the six months was 22,489 units, an increase of 19% over 18,900 units while sales revenue increased to Rs 18.4 billion, up 12% over Rs. 16.4 billion for the same period last year. The after tax profit increased to Rs 1.3 billion, compared to Rs 1.1 billion for the half year 2005, primarily due to increase in sales volume. The Board of Directors declared an interim dividend @ 50% or Rs 5 per share for the half year ended December 2006.

The company acknowledges the government's consultative process with stakeholders to finalize the long-term auto policy, approved by the ECC. The new policy is expected to reduce uncertainty and enable future investment and expansion plans to be firmed up thus paving way for continued transfer of technology, development of human resources, increased employment opportunities and provide for greater competitiveness and contribution to the nation's economic growth on sustainable basis.

Indus Motors strongly believes that due to increase in production capacity by the local auto manufacturers, the gap between demand and production has been eliminated to a large extent. It is imperative that the used cars import policy should be changed to ensure self-reliance and indigenization, facilitating and auto industry's integration into the global supply chain. It is in the interest of the nation, industry and the consumers that the demand should be met through domestic production.

The Annual Vendor Convention was held on December 14 in Karachi under the theme "Go See the World". Yasui, Chief Engineer, Toyota Motor Corporation, Japan was the chief guest at the occasion accompanied by Ali S. Habib, Chairman, Indus Motor Company. Automobile vendors from all over the country, representatives of Toyota, Daihatsu from Japan, and the Indus Motor team were also attended at the convention.

Addressing the gathering Yasui appreciated the efforts of Indus Motor in greater localization and quality improvement. He mentioned that while the Pakistani market is growing rapidly, the focus should continue to remain on quality not quantity, which is 'The Toyota Way'. Yasui urged the vendors to adopt best practices from all over the world. To stay ahead in the auto industry and in this emerging world without borders, we have to continuously raise the quality bar, he said.

Ali S. Habib, Chairman, Indus Motor Company in his presentation highlighted the changing market scenario, and the higher expectations and demanding needs of customers. Elaborating on the growth of the auto market, he highlighted the significant role that the auto sector is playing in the country's economic growth and social contribution.

The company management appreciates the recent initiative of the government in developing a long-term auto policy by entering into a dialogue with the auto sector and seeking suggestions. It is hoped that the auto industry's recommendations will be given due consideration. The auto industry and the government could ensure continuity of technology transfer and usher the local auto industry into a new era to help Pakistan achieve a prominent place among the global auto producers.