HONDA ATLAS CARS (PAKISTAN) LTD
S.M. ABBAS ZAIDI,
Research Analyst, PAGE
Oct 20 - 26, 2008
Honda Atlas Cars Pakistan Limited is a joint venture between Honda Motor Company Limited Japan, and the Atlas Group of Companies, Pakistan. The company was incorporated on November, 1992 and joint venture agreement was signed on August, 1993. The company is listed on Karachi, Lahore and Islamabad Stock Exchanges. On July 14, 1994, car bookings started at six dealerships in Karachi, Lahore, and Islamabad. Since then the Dealerships Network has expanded and now the company has sixteen 3S (Sales, Service and Spare Parts) and thirty 2S (Service and Spare Parts) Pit stops network in all major cities of Pakistan. Currently Honda is offering 8 different models of Honda CIVIC and CITY cars in wide range of colors with unique technological and other features.
Since the commencement of production in 1994 till March31, 2005, the company has produced and sold over 77,500 cars. All dealerships are constructed in accordance with the standards defined by Honda World over.
The Company Earned Profit before tax of Rs.55.2 million as against Rs.30.9 million in the same period last year. This was possible due to control on overheads, among others. The administrative and selling expenses remained constant at 1.9% of total sales. The other income increased from Rs. 36.6 million to Rs. 55.2 million including from higher return on the bank deposits. Since the last year, the company focused to improve liquidity through reduced short term and long term loans which resulted in Rs. 0.5 billion at the end of the quarter as against Rs. 2 billion in June, last year. This positive result was inspite of the reduced sales at Rs. 3,706.6 million during the quarter ended June 2008 against Rs. 4,535.6 million in the same quarter last year, and the reduced gross profit to Rs. 94.5 million from last year's Rs. 156.7 million due to increase in material cost and depreciation of currency.
April to June (Rs in 000)
Cost of sales
Profit before tax
Profit after tax
Earning per share (Rs)
Source Honda Atlas Cars
PRICES OF HONDA CARS
CITY Manual Transmissions 1.3 L
CITY VARIO 1.3 L
CIVIC i-VTEC Manual Transmission
CIVIC i-VTEC Prosmatec Transmission
CIVIC VTi Oriel - Manual Transmission
CIVIC VTi Oriel - Prosmatec Transmission
CR-V 2.4 Litre
Accord 2.4 i-VTEC
The Automobile Industry is the 5th largest revenue earner for the country. In the past few years it had phenomenal growth. The country is now aiming production of 500,000 units as planned by the year 2011 with proper incentivization. This target is not impossible to achieve despite the lower growth with a decreased 3.5% in automobile production in the last quarter under review. It should be possible as influx of the Completely Built Up (CBU) and used vehicles import has been discouraged through increase of 3 years old import of used cars and increase of duty on import of CBU cars from 90% to 100%. The government's approach in the changed circumstances is also seen through its due emphasis on growth of agriculture, investment and production and export and restriction on import of luxury goods. Accordingly, the government has come out with more incentives for local production than encouraging CBU import as in the past. The duty for the local production, Completely Knocked down (CKD) has been reduced from 35% to 32.5%. All other things remaining equal, this will encourage investment, GDP growth and employment highly desirable more than ever before and also because of 5% FED and 1% additional sales tax on all cars with higher effect on higher CCs more so on CBU.
Given the current economic fundamentals of the economy marked by high domestic inflation, weakening of local currency along with higher interest rates and uncertain economic and political environment, Honda along with other automobile companies, is expected to face tough challenges in the coming days. However, Honda Atlas Cars which had set up its manufacturing facilities during 1993 with installed capacity of 5,000 units has now increased over 30,000 units a year before last. The installed capacity now is 50,000 units. Honda has established manufacturing facilities all over the world and exporting to their member countries to countries and even back to Japan. The company has the capacity to improve results, quarter after quarter, due to its traditional approach of Quality, Cost, Delivery and Management. Honda Motors is constantly in process of re-evaluating its products and processes. Relying on its international resource of R&D and global experience, the Honda product line up is in a constant process of evolution thus producing pioneering products in Pakistan. However, the company's profitability remains intact with the economic situation of both the automotive industry as well as the country.