PAK SUZUKI MOTOR COMPANY LIMITED (PSMCL)

S.KAMAL HAYDER KAZMI,
Research Analyst
, PAGE
Aug 25 - 31, 2008

Pak Suzuki Motor Company Ltd is a Pakistan based automobile manufacturing company. It is a joint venture between Suzuki Motor Corporation of Japan and Pakistan Automobile Corporation. The Company's products include Mehran, Alto, Cultus, Liana, Bolan Van, Ravi Pickup, JIMNY MT, APV and Potohar. There are about 154 active vendors of Pak Suzuki, which are spread from Karachi to Lahore and Rawalpindi. The dealers of Pak Suzuki encompass all the areas of automobile marketing, which include sales, service and Suzuki spare parts. The manufacturing plant located in Bin Qasim has a production capacity of 150,000 vehicles per year. The Company also provides other facilities like press shop, welding shop, paint shop, engine and transmission assembly shop, final assembly and hi-tech inspection shop. On 1st Jan 2007, Suzuki Motorcycles Pakistan Ltd has been merged with Pak Suzuki motors.

FINANCIAL PERFORMANCE

PERFORMANCE (Rupees '000')

INDICATORS

2007

2006

Production Volume

114,214

86,421

Sales Volume

112,173

86,602

Net Sales

47,187,945

35,374,556

Gross Profit

5,560,733

3,572,956

Profit After Taxation

3,350,437

2,236,880

Source: PSMCL

The Industry for cars and light commercial vehicles witnessed a growth of 17% during the calendar year 2006. The industry produced 198,504 units during the year against 170,131 units last year. The production at company's plant has increased by 32%. During the year 114,214 units were produced against 86,421 units last year. Sales volume increased by 30%. During the year 112,173 units were sold against 86,602 units last year. Company's market share increased from 51% to 57%. With the inauguration of new plant, the production capacity has increased to 150,000 vehicles p.a. Since 2003 capacity has increased by 200%. Currently, during 1Q08 the profitability shows the good performance of the company, return on assets (ROA) 3.37% & return on equity (ROE) 6.07% increased during 1Q08 respectively, this is the good sign for company performance. Net profit margin 1.74% and operating margin 3.34% both are also increased during 1Q08.

NEW PRICES OF PAKSUZUKI VEHICLES

PRICE INCLUDING ST & FED W.E.F 01/07/08

SUZUKI SB308R VX

352,000

SUZUKI SB308R VX M

357,000

SUZUKI SB308R VX CNG

398,000

SUZUKI SB308R VX M CNG

403,000

SUZUKI SB308R VXR

398,000

SUZUKI SB308R VXR M

403,000

SUZUKI SB308R VXR CNG

444,000

SUZUKI SB308R VXR M CNG

449,000

SUZUKI ALTO RA410 VX

486,000

SUZUKI ALTO RA410 VX M

491,000

SUZUKI ALTO RA410 VX CNG

537,000

SUZUKI ALTO RA410 VX M CNG

542,000

SUZUKI ALTO RA410 VXR

533,000

SUZUKI ALTO RA410 VXR M

538,000

SUZUKI ALTO RA410 VXR CNG

585,000

SUZUKI ALTO RA410 VXR M CNG

590,000

Cultus VXR Petrol

657,000

Cultus VXR Petrol (M)

662,000

Cultus VXR CNG

699,000

Cultus VXR CNG (M)

704,000

Cultus VXL Petrol

720,000

Cultus VXL Petrol (M)

725,000

Cultus VXL CNG

774,000

Cultus VXL CNG (M)

779,000

SUZUKI PICKUP ST308R

353,000

SUZUKI PICKUP ST308R CNG

401,000

SUZUKI VAN ST308 VTR

406,000

SUZUKI VAN ST308 VTR CNG

458,000

SUZUKI VAN ST308 VTR GL

466,000

SUZUKI VAN ST308 VTR GL M

471,000

SUZUKI VAN ST308 VTR GL CNG

515,000

SUZUKI VAN ST308 VTR GL CNG M

520,000

SUZUKI LIANA 1.3L RXI MT

881,000

SUZUKI LIANA 1.3L RXI MT CNG

955,000

SUZUKI LIANA 1.3L LXI MT

945,000

SUZUKI LIANA 1.3L LXI CNG

1,015,000

SUZUKI LIANA 1.6L Eminent AT

1,015,000

APV 1.5LGLXMT

1,270,000

APV 1.5LGLX CNG

1,325,000

JIMNY MT

1,360,000

JIMNY JLSX MT

1,155,000

JIMNY JLDX MT

1,250,000

Source: (PSMCL)

PAK SUZUKI VENDORS VISIT MARUTI INDIA

PSMCL members from OEP, QAD and development department along with Pak Suzuki vendors visited Maruti Udyog Ltd. and its vendors in Delhi and Gurgaon, India in 2007. The main objective of the visit was to familiarize Pak Suzuki vendors with the working related to research and development, VAVE, cost down activities and participation in continuous improvement by Maruti Suzuki and its vendors.

CONCLUSION

Pak Suzuki's market shares had increased by 6% in FY07. However, the political uncertainties, the high auto finance default ratio, the sky rocketing oil and CNG prices, the enhanced duty and tax rates for auto buyers, the influx of used imported cars and the fast shrinking disposable incomes have brought about the threatening slowdown in the local car business. The FY08 has recorded an 11% drop in car sales, whereas the month of July alone has recorded a drop of 55% vis--vis the month of June-08. The company must rethink and rationalize its auto policy. Having great potential auto industry needs to be developed in line with economic priorities. The company requires at least 4 to 5 million tons of steel to meet the target set for coming years. The prices of imported steel have gone high and are still going up. So far the present capacity of Pak Suzuki is only 1 million ton. The company needs to use raw material options very judiciously by producing an optimal mix of auto units. On technology front too, the company needs improvement. It also needs to attract local and foreign investment towards capital formation. A broadened industrial base capable of delivering goods of industrial value is the only answer to all economic dilemmas, auto industry being no exception.