Research Analyst
Nov 15 - 21, 2010

Indus Motor Company (IMC) is engaged in sole distributorship of Toyota and Daihatsu Motor Company Ltd. vehicles in Pakistan through its dealership network. Indus Motor Company's plant is the only manufacturing site in the world where both Toyota and Daihatsu brands are being manufactured. Heavy investment was made to build its production facilities based on state of the art technologies.

IMC's product line includes six variants of the newly introduced Toyota Corolla, Toyota Hilux Single Cabin 4x2, and 4 versions of Daihatsu Cuore.


2010 2009
Sales 14,343,588 11,936,124
Cost of sales 13,388,929 10,922,558
Gross profit 954,659 1,013,566
Adm Expenses 97,197 78,665
Profit before tax 948,877 1,167,101
Profit after taxation 577,409 759,165
EPS (Rs) 7.35 9.66

Toyota Motor Corporation and Toyota Tsusho Corporation (TTC) have 25 per cent stakes in the company's equity. The majority shareholder is the House of Habib. IMC is a joint venture between the House of Habib, Toyota Motor Corporation Japan (TMC), and TTC for assembling, progressive manufacturing, and marketing of Toyota vehicles in Pakistan since July 01, 1990.

Presently, the company's shares are quoted on the stock exchanges of Pakistan. During the quarter ended 2010, the combined sales of Toyota and Daihatsu brands recorded an increase of 14 per cent to 12,114 units compared to 10,631 units sold for the same period last year representing an increase in market share from 32 per cent to 34 per cent. Correspondingly, the production of PC and LCV for the quarter ended September 2010 also increased by 15 per cent to 12,186 units as against 10,576 units produced in the same period in 2009. The company's sales revenue of the CKD, CBU and parts business also grew by 20 per cent to Rs14.3 billion over Rs11.9 billion. However, the profit after tax was down by 24 per cent to Rs577 million from Rs759 million for the same period last year. Cost escalations in the CKD components and local vendor parts mainly on account of depreciating Rupee eroded the margin as the company partially absorbed these impacts to limit the increase in selling price of vehicles to the customers.

During year ended June 2010, inflation was almost half at 11.7 per cent. The LSM sector showed improvement of 4.4 per cent mainly due to increase in production of cement, fertilisers, and auto sectors. The agriculture growth remained less than targeted at around two per cent. The service sector followed the growth of the manufacturing sector and registered a growth of 4.6 per cent.

The automobile industry gained the growth momentum in the fiscal year ended June 2009-10 and registered a healthy growth of 49.6 per cent over the same fiscal year of 2008-09. The increase was made possible due to better economic conditions and re-entry of commercial banks in consumer financing, which helped strengthen the demand for consumer goods, despite rising cost pressures.

The total industry production for the year July 2009 to June 2010 was 121,647 units as against 84,308 units in 2008-09, up 44.3 per cent. The sales were also increased to 123,957 units against 82,844 units, up 49.6 per cent. In the fiscal budget of 2010-11, the government raised the sales tax from 16 per cent to 17 per cent, amid the controversy of VAT. The import of the additional sales tax was passed on to the consumers and prices of all models were adjusted upward from July 2010.

BALANCE SHEET AS ON SEP 30, 2010) (RS IN '000)

JUNE 30, 2010
Non-Current Assets 3,201,250 3,347,025
Current Assets 23,864,659 23,791,253
Non-Current Liabilities 281,984 325,797
Current Liabilities 14,437,252 14,224,866

However, the major players like Indus Motors and Pak Suzuki also showed impressive growth in sales by 49 per cent and 41 per cent respectively. The market share of Honda Atlas however has shrunk to 10 per cent as compared to 11 per cent in 2009. Indus Motors market share increased from 35 per cent to 37 per cent from 2009-10 on the back of strong Toyota Corolla demand and sales, Pak Suzuki is steadfast at 52 per cent while Dewan Motors dropped from two per cent to one per cent due to weak sales of their popular pick-up Shehzore.

The performance of the car assemblers remained lackluster during FY09 owing to the economic meltdown in the country. Although all the same factors which were present in FY09 are still prominent in FY10, the sales of the car segment overall took a considerable leap from a total of 82,844 cars during Jul 08-Jun 09 to 123,957 cars during Jul 09-Jun 10, a whopping 50 per cent increase.

Much of the factors which are continuously pounding the sustainability and improvement in automotive sector are the severe depreciation of PKR against the yen and US dollar.


Despite the recent devastating floods in the country that caused severe business disruption and depressed the overall economic environment, the auto industry performance for the first quarter exceeded market expectations. During the quarter, the automobile industry faced acute inflationary pressures due to rise in input costs and continuous depreciation of the Rupee against Yen and US Dollar. However, Indus motor company remains focused on improving its operational efficiencies, maintaining high quality standards, effectively managing cost increases, and delivering maximum value to its customers.