Research Analyst
Feb 7 - 13, 2011

Honda Atlas Cars Pakistan Limited is a joint venture between Honda Motor Company Limited Japan, and the Atlas Group of Companies, Pakistan.


MARCH 31, 2010
Non Current Liabilities 625,000 1,333,333
Current Liabilities 7,698,288 5,652,289
Current Assets 4,971,466 3,526,804
Non Current Assets 5,171,026 5,434,463

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 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) Pitstops network in all major cities of Pakistan. Since the commencement of production in 1994, the company has produced and sold more than 150,000 cars till Oct, 2008. Percentage of local parts conforms to the government's policy. Local vendors are continuously patronized to develop parts locally. The quality of local parts is thoroughly checked to meet stringent international standards.

The company always strives to give outstanding service to their valued customers. In addition to providing regular service to customers, the company also regularly conducts service campaigns, to facilitate customer's need for service. This has given their customers absolute confidence in their cars, clearly evident from the ever increasing sale volumes.

Currently, the company is offering eight different models of Honda civic and city cars in wide range of colors with unique technological and other features.

Moreover, the financial performance for the six months period ended September 30, 2010 showed significant improvement in unit sales, financial & manufacturing cost controls and above all, decline in loss before tax. In first six months of the year 2010-11, the company had reduced loss before tax to Rs128.5 million against Rs585.6 million in the same six months period last year.

During the period under review, the Net sales were Rs10,660.2 million against Rs7,326.1 million last year. The gross profit was Rs142.2 million against gross loss of Rs163.8 million. In terms of sales, the expenses were reduced from 1.78 per cent to 1.48 per cent in the period under review. The financial charges were reduced to Rs76.4 million from Rs277.4 million mainly due to reduction in long term loans and better cash flow management.

Other income was up to Rs50.6 million due to return on deposit and other charges were increased to Rs87.5 million against Rs30.5 million, mainly due to loss from exchange rate fluctuations.

The automobile industry's recovery started a year ago and is continuing to experience positive trends. The banks have also restarted auto financing to a considerable extent to facilitate the car buyers. The total production of auto industry for the period of April 2010 to September 2010 grew by 42.8 per cent. A total of 66,747 units were produced against 46,757 units in the same period last year. The sales also improved by 39 per cent.

All three segments showed positive trends with 41 per cent sales growth in 800 cc category cars, 41.5 per cent improvement for the 800 to 1300 cc and 37.3 per cent raises in 1300 cc and above segment of locally assembled vehicles. The growth was significant comparing with the last fiscal period. During the period, inflation was low as compared to the last year, however, unprecedented fluctuation in exchange rate always kept the industry on the toes. The Yen: US$ parity has experienced all time low.

. OCT'09 NOV'09 DEC'09 JULY'10 AUG'10 SEPT'10 OCT'10 NOV'10 DEC'10
1300 and Above cc
Honda Civic Prod. 429 435 456 710 418 546 659 449 568
Sale 417 363 224 518 492 548 573 446 341
Honda City Prod. 591 542 532 850 604 839 855 696 574
Sale 670 391 343 754 688 832 767 629 287

The impact of the fluctuations was partially passed on to the customers with price revision of all models in September 2010.

While, Pakistan's economy is still facing challenges on the political, social as well as economics fronts provisional estimates suggest that economics growth for the year 2010-11 could come down to 2.5 per cent from an earlier target of 4.5 per cent. Inflation has raised to 14.5 per cent as the government strives to eliminate electricity subsidies and introduce broad based value added tax. Escalating government borrowings, which touched more than Rs220 billion during first quarter of FY 2010-11, needs to be curbed to fight inflation and meet IMF targets.


The increase in discount rate by 100 points basis will also increase the cost of doing business of Honda atlas car. Despite the challenging environment, the most important strategic goal of the company is to strengthen the business over the long term and midterm period. The company will also continue to focus on sales volumes, quality, cost competitiveness and after sales services for complete customers satisfaction. Honda Atlas Cars is committed to meet customer expectations, and to provide good value for money to them.