Final Project

Read the name of Lord, Who created man from a clot of blood. Read! The Lord is most Bounteous who taught by pen.(96:1-4)

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Final Project
On INDUS MOTOR COMPANY LIMITED

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Submitted By
M. HASEEB 1662-111001

M.Com (FINANCE)
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Submitted To:
Registrar

PIMSAT Institute of Higher Education

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INDUS MOTOR COMPANY

THIS PROJECT IS SUBMITTED TO PIMSAT Institute of Higher Education FOR THE PARTIAL FULFILMENT OF THE REQUIREMENTS FOR AWARDING THE DEGREE OF M.Com (Finance)

Assigned by: _____________________________ Faculty Members Signature Internal Examiner Sign: ____________________ Name: ___________________ External Examiner Sign: _____________________ Name: ____________________

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Table of Contents
Serial No.
Dedication 1. 2. 3. 3.1 4. 5. 5.1 5.2 6. 7. 7.1 8. 9. 10. Acknowledgment Disclaimer Reason for Choosing the Organization Aims and Objectives of the Project Executive Summary Vision Mission Core Values Corporate Information Automobile Industry in Pakistan Current Situation of Car Industry History Product Line Strategic Objectives

Particular

Page No.
6 7 8 9 9 10 11 11 12 13 18 19 20 21 23

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10.1 11. 11.1 12. 13. 14. 15. 15.1 16. 16.1 16.2 17.1 17.2 18.1 18.2 19.

Manufacturing Facilities Dealership of the Company Major Departments Awards Achievement SWOT Analysis PEST Analysis Boston Consulting Group Matrix Toyota Corolla BCG Matrix Financial Analysis of Indus Motor Company Balance Sheet Profit &Loss Account Vertical Analysis of Balance Sheet Vertical Analysis of Profit and Loss Account Horizontal Analysis of Balance Sheet Horizontal Analysis of Profit &Loss Account Ratio Analysis

24 25 25 26 27 30 32 34 35 36 38 39 41 42 44 45

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Dedicated To Dedicated To
er idea of life. Our Dearest and most respected Parents.
.May God Bless Them (Aamin).

Whose efforts and prayers are great source of strength to us in every noble venture. Their love inspired us to the higher idea of life.

.May God Bless Them (Aamin).

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1.Acknowledgement
I find no words at my command to express my deepest sense of gratitude to the Almighty ALLAH, the most Gracious, the most Merciful and the most Beneficent, who gives me the talent to complete this task successful, He is the one who gave me courage to do this. I am much obliged to my loving Parents whose prayers have enabled me to reach this stage. At this occasion, I cant forget my parents for their guidance at the crucial moments of my life. Next, I owe my bottomless thanks to our esteemed resource person Mr. Syed Asad who directed me well and was always available to clear my doubts and misunderstandings throughout this project. It is also a matter of immense pleasure for me to express my gratitude to the Faculty of Preston Institute of Management Science and Technology for giving us their precious time and tried their best as helpful as possible. I wish to thanks all my Friends and Classmates who really helped me by giving suggestions and critical review of the manuscript. Obviously this achievement was not possible without all of you.

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2..Disclaimer
The purpose of the project is to introduce the subject matters and provide a general idea and financial information about the Indus Motors Company Limited. All the material included in this document is based on data/information gathered from various sources and is based on certain assumptions. Although, due care, diligence and reasonable efforts has been taken to compile this project, the contained information may vary due to any change in any of concerned factors and the actual results may differ substantially from the presented information. Project does not assume any liability for any financial or other loss resulting from this document in consequence of undertaking this activity. Therefore the content of this document should not be relied upon for making any decision, investment or otherwise. The content of the information does not bind PROJECT MAKER in any legal or other form. Project does not also assume any rectifications, errors, omission and misprinting between the electronic and printed version of document. Financial Analysis of IMC does not accept any responsibility for the validity and correctness of the information published on its project.

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3..Reason for Choosing the Organization

When I was informed that I would have to do the financial analysis of last three years of any listed company than the primary challenge for me was to choose the organization on which I can start my working. It was bit difficult and confusing for me to select the organization. I started brainstorming and came up with many well-known organizations having large operations, both in Pakistan and worldwide. After gathering data and relevant information, I ended with three business sectors, Automobile industry, Textile industry and Tobacco industry. I choose best companies in their respective class, but after applying hindsight, I decided to go with Automobile industry and the organization I selected was Indus Motor Company Limited

3.1 Aims and Objectives of the Project

The main objectives and aims of this project are to analyze and evaluate the overall performance of the company by applying different conceptual models and discuss the liquidity, cash flow situation and produce informative report usable by the users of the statements assessing the financial position, performance and adaptability of the organization. The performance evaluation is based on historic and current available data about the operations of the company. Under the constantly increasing competition in the business market, these analyses portray a very clear and informative picture to the investors, shareholders, regulators and other players in the stock market. Finally, the project draws conclusions based on my analysis about the current situation and the prospects of the Indus Motor Company Limited.

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4..Executive Summary
Indus Motor Company is one of the Automobile Companies, which formed with the help of house of Habib, Toyota Motor Corporation, Toyota Tsusho Corporation. It manufactures and imports cars and enjoys a healthy share in the market. It is competing with the Honda, Nissan, Suzuki and Mitsubishi. To sustain its lead IMC must maintain strategic competitive advantage, which is its production strength, ability to produce quality cars with respect to low cost and research and development in hybrid and bio fuel cars. But recently company is in stabilization mode trying to improve its functional area, consolidation of resources and maintaining SCA. In my opinion, it is the best move made by IMC to survive the financial holocaust. Indus Motors is the country's second largest auto manufacturer, after the Pak Suzuki Motors, located near Bin Qasim Karachi, having an assembling capacity of 55,000 units per annum. Its core business is to manufacture and market cars. In addition, the company also sells auto parts and accessories. Its product line includes 9 variants of Toyota Corolla, 8 variants of Daihatsu Cuore and 2 variants of Toyota Hilux. The company also offers six different imported vehicles namely Toyota Camry, Prado, Land Cruiser, RAV, Hilux and Hiace. Major contributor to the revenue is Corolla, having a contribution of 66.5% in company's sales.

Company Profile:
Name of the Company: Indus Motor Company Limited.

Industry Type: Automobile Industry (Cyclical)

Major Investors:

1. House of Habib. 2. Toyota Motor Corporation Japan (TMC). 3. Toyota Tsusho Corporation Japan.

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5..Vision
"IMCs Vision is to be the most respected and successful enterprise, delighting customers with a wide range of products and solutions in the automobile industry with the best people and the best technology".

The most respected. The most successful. Delighting customers. Wide range of products. The best people. The best technology.

5 .1 Mi s s i o n
Mission of Toyota is to provide safe & sound journey. Toyota is developing various new technologies from the perspective of energy saving and diversifying energy sources. Environment has been first and most important issue in priorities of Toyota and working toward creating a prosperous society and clean world.

Ac t i o n Co mmi t me n t T e a mw o r k f o r b e c o mi n g # 1 i n P a ki s t a n
Means a committed team to make Indus # 1 in:

Respect and Corporate Image Customer Satisfaction Quantity in Production & Sales Quality Profitability Best Employer
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5 .2 Co r e Va l u e s
Customer Satisfaction Team Work. Ethics and Practices. Achieving market Leadership by Delivering Value to Customers by: 1. Following our Customer first philosophy in manufacturing and providing high quality vehicles and services that meet the needs of Pakistani customers. 2. 3. Enhancing the quality and reach of our 3S Dealership Network Employing customer insight and feedback for continuous corporate renewal, including producer development, improving service and customer care. Bringing Toyota quality to Pakistan 1. 2. 3. Maximizing QRD (Quality, Reliability and Durability) by built-in-engineering, Transferring Technology and promoting Indigenization at IMC and Vendor. Raising the bar I all corporate functions to meet Toyota Global Standards.

Optimizing Cost by Kaizen 1. 2. 3. Fostering a Kaizen culture and mindset at IMC, its Dealers and Vendors. Implementing Toyota Production System. Removing waste in all areas and operating in the lowest cost quartile of the industry.

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6..Corporate Information
Board of Directors
Mr. Ali S. Habib Mr. Yutaka Arae Mr. Farhad Zulficar Mr. Mohamed Ali R. Habib Mr. Tokuichi Uranishi Mr. Masaru Kato Mr. Kersi Kapadia Chairman Vice Chairman Chief Executive Officer Director Director Director Director

Company Secretary
Mr. Shahid Mahmood Khan Bankers ABN Amro Bank American Express ANZ Grindlays Bank plc Askari Commercial Bank Bank of Tokyo-Mitsubishi,Ltd. Credit Agricole Indosuez Emirates Bank International Ltd. Faysal Bank Ltd. Habib Bank AG Zurich Habib Bank Limited Hong Kong & Shanghai Banking Corporation Metropolitan Bank Limited Muslim Commercial Bank Ltd. National Bank of Pakistan Indus Motor Company Limited
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Final Project Societe Generale Standard Chartered Bank Union Bank Ltd.

Auditors
M/s. Ford, Rhodes, Robson, Morrow Chartered Accountants 1st Floor, Finlay House, I. I. Chundrigar Road, Karachi

Legal Advisors
M/s. A. K. Brohi& Co. M/s. Mansoor Ahmed Khan & Co. M/s. Mahmud & Co.

Registered Office
14, Bangalore Town Housing Society, Main Shahrah-e-Faisal, Karachi.

Registrar
M/s. Noble Computer Services (Pvt) Ltd. 14, Bangalore Town Housing Society, Main Shahrah-e-Faisal, Karachi.

Factory
Plot No. NWZ/1/P-1, Port Qasim Industrial Estate, Bin Qasim, Karachi.

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Company Registration Number

0020742

National Tax Number (NTN)

0676546-7

Status of the Company Listed on

Karachi Stock Exchange (Guarantee) Ltd Lahore Stock Exchange (Guarantee) Ltd Islamabad Stock Exchange (Guarantee) Ltd

Symbol
INDU

Details of Permissible Business Activities

Manufacturers, assemblers, distributors and importers of Toyota and Daihatsu vehicles, spare parts and accessories in Pakistan.

Bankers
Askari Bank Limited Bank Alfalah Limited Barclays Bank PLC Pakistan Bank Al-Habib Limited Citibank N.A. Habib Bank Limited Habib Metropolitan Bank Limited HSBC Bank Middle East Limited MCB Bank Limited National Bank of Pakistan NIB Bank Limited Soneri Bank Limited Standard Chartered Bank (Pakistan) Limited

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Final Project The Bank of Tokyo-Mitsubishi UFJ, Limited United Bank Limited

Share Registration
Noble Computer Services (Pvt.) Ltd. First Floor, House of Habib Building (Siddiqsons Tower), 3 Jinnah Cooperative Housing Society Main Shahrah-e-Faisal Karachi-75350. PABX: (92-21) 34325482-87, Fax (92-21) 34325442 Email: [email protected]

Address of Head Office / Registered Office / Factory

Plot No. N.W.Z/1/P-1, Port Qasim Authority, Bin Qasim, Karachi.

Phone: (PABX) (92-21) 34720041-48 (UAN) (92-21) 111-TOYOTA (869-682) Fax: (92-21) 34720056 Email: [email protected]

Memberships
Pakistan Automotive Manufacturers Association (PAMA) The Overseas Investors Chamber of Commerce & Industry (OICCI) Karachi Chamber of Commerce & Industry (KCCI) Pakistan Business Council (PBC)

Associated Companies
Toyota Motor Corporation, Japan Toyota Tsusho Corporation, Japan Thal Limited Habib Insurance Co. Limited Indus Motor Company Limited
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Final Project Shabbir Tiles & Ceramics Ltd. Makro-Habib Pakistan Ltd. Habib Metropolitan Bank Limited

Collaboration
EQUITY

Toyota Motor Corporation

Toyota Tsusho Corporation

House of Habib

BUSINESS TOYOTA GROUP

Technology & KD Parts

Materials, Parts & Logistics Support

Technology KD Parts

Hilux Frame & Deck

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7..Automobile Industry in Pakistan

Auto market is one of the largest segments in world trade. Changing models, improving fuel efficiency, cutting costs and enhancing user comfort without compromising quality are the most important challenges of the auto industry in a fast globalizing world. The automotive assembling in Pakistan started in 1950 when National Motors Limited, a public limited company and the pioneer in the industry, came into existence, established by General Motors of USA. National Motors assembled passenger cars as well as commercial vehicles, which carried General Motors brands such as Bedford, Vauxhall, and Chevrolet. The indigenized parts in these vehicles did not exceed 20% with only exception of Bed Ford trucks with a deletion level of 80%. By the end of 70s, practically all-automobile assembling in Pakistan ceased. A regular car industry started in the country in 1983, when Suzuki commenced production eyeing the small and LCV car segment of 800cc-1000cc range, and introduced Suzuki car which targeted the middle-income group (constituting the larger segment of the market) by providing an affordable car. Then there was a long gap until the early 90s when Indus Motor Company was established to manufacture Toyota vehicles in Pakistan. Soon after Honda Atlas came with the Civic and Gandhara Nissan entered the market with Sunny. In the late 90,s, Dewan Farooque Motors set up a plant to manufacture Hyundai and Kia vehicles in Pakistan. Since then the market has changed all together. After struggling through nineties, a decade full of uncertainties and frequent policy the Pakistani Auto Industry has been able to achieve double-digit growth consistently since the last 4 years. The industry operates under franchise and technical cooperation agreements with Japanese, European and Korean manufacturers. Lately Few new market players entered the market such as Gandhara Nissan again with now the imported Nissan range of vehicles, Dewan Mushtaq Motors with imported Mitsubishi range of vehicles, Nexus Automotive with Chevrolet imported vehicles and others imported Chinese

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Final Project vehicles such as Karakoram Motors, Roma Automobiles and Foton by Dewan Innovations Limited along with Pak Cherry Automobiles. Sigma Motors made its mark with Rover recently. Apart from these the big brands of the auto industry also entered the Pakistani market such as BMW, Mini & Rolls Royce by Dewan Motors, Porsche, Mercedes and Audi have also launched their brands in Pakistan catering to the very upper niche.

7.1 Current Situation of Car Industry

Locally produced cars have taken an unexpected drastic downturn to the extent of frustrating all future growth prospects and projections. According to the current figures, in due comparison with the figures of year 2007 for September to December period, the sales of cars has gone down by 15 percent. As a result the production has also gone down culminating with its impact on supply schedule both import and local. This downturn has come at a crucial time as most of the manufacturing had just increased their investment in the expansion projects and vending industry had made equally huge investment to complement the capacity expansion exercise. The local vendors have now to face the curtailed orders, which may most hit the smaller ones with closures. All this obviously has also adversely affected the government revenues in substantial terms. The government has suffered a revenue loss of Rs. One billion (9%) when September to December data is compared with last year. IN the budget 2007-08, government announced a withholding @ 5 percent on purchase of cars, which was reduced to 2.5 percent and imposed from 1st September 2007. The intension was obviously to enhance government revenue. The current situation however, has proved a reversal in collection of the revenue. Last year, the ECC approved the five years policy (AIDP) for auto sector prior to announcement of budget. Levy of such tax is a deviation from the spirit of pre announced policy thus causing anxiety to the auto manufactures. The uplift in the car market is also suffering due to stringent regulations announced by State Bank of Pakistan recently for car financing. Moreover, the cost of financing has also increased interest rate.

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8..History
Indus Motor Company (IMC) is a joint venture between the House of Habib, Toyota Motor Corporation Japan (TMC) and Toyota Tsusho Corporation Japan (TTC) for assembling, progressive manufacturing and marketing of Toyota vehicles in Pakistan since July 01, 1990.IMC is engaged in sole distributorship of Toyota and Daihatsu Motor Company Ltd. Vehicles in Pakistan through its dealership network. It manufactures and Imports Cars and enjoys a healthy share in the market. The company was incorporated in Pakistan as a public limited company in December 1989and started commercial production in May 1993. The shares of company are quoted on the stock exchanges of Pakistan. Toyota Motor Corporation and Toyota Tsusho Corporation have 25% stake in the company equity. The majority shareholder is the House of Habib. IMC is competing with the Honda, Nissan, Suzuki and Mitsubishi. To sustain its lead IMC must maintain Strategic Competitive Advantage, which is its Production Strength, ability to produce quality cars with respect to low cost, Research, and Development in Hybrid and Bio Fuel Cars. But recently company is in stabilization mode trying to improve its functional area, consolidation of resources and maintaining SCA. Indus Motor is the country's second largest auto manufacturer, after the Pak Suzuki Motors. IMC's production facilities are located at Port Bin Qasim Industrial Zone near Karachi in an area measuring over 105 acres, having an assembling capacity of 55,000 units per annum. Indus Motor Companys plant is the only manufacturing site in the world where both Toyota and Daihatsu brands are being manufactured. Its core business is to manufacture and market cars. In addition, the company also sells auto parts and accessories. Heavy investment was made to build its production facilities based on state of art technologies. To ensure highest level of productivity world-renowned Toyota Production Systems are implemented. Its product line includes 6 variants of newly introduced Toyota Corolla, Toyota Hilux and 3 variants of Daihatsu Cuore. The company also offers six different imported vehicles namely Toyota Camry, Prado, Land Cruiser, RAV, Hilux and Hiace. Major contributor to the revenue is Corolla, having a contribution of 66.5% in company's sales.

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9..Product Line
COROLLA:

Corolla includes six variants of cars, which are 1) Xli 2) GLi 3) Corolla Altis M/T 4) Corolla Altis A/T 5)2.0D 6)2.0D Saloon

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CUORE

Cuore consist of 3 variants of cars that are as under: 1)CX 2)CX CNG 3)CX A/T HILUX

Hilux consist of following car. 4x 2 S/Cab

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1 0 . . Stra teg ic Objectives

Achieving Market Leadership by Delivering Value to Customers: a) Following our Customer First philosophy in manufacturing and providing high quality vehicles and services that meet the needs of Pakistani customers. b) Enhancing the quality and reach of our 3S Dealership Network. c) Employing customer insight and feedback for continuous corporate renewal, including product development, improving service and customer care. Bringing Toyota Quality to Pakistan a) Maximizing QRD (Quality, Reliability and Durability) by built-in engineering. b) Transferring technology and promoting indigenization at IMC and Vendors. c) Raising the bar in all support functions to meet Toyota Global Standards. Optimizing Cost by Kaizen) a) Fostering a Kaizen culture and mindset at IMC, its Dealers and Vendors. b) Implementing Toyota Production System. c) Removing waste in all areas and operating in the lowest cost quartile of the industry. Respecting our People a) Treating employees as the most important sustainable competitive resource. b) Providing a continuous learning environment that promotes individual creativity and teamwork. c) Supporting equal employment opportunities, diversity and inclusion without discrimination. d) Building competitive value through mutual trust and mutual responsibility between the indus team and the company.

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Becoming a Good Corporate Citizen a) Following ethical business practices and the laws of the land. b) Engaging in philanthropic and social activities that contribute to the enrichment of Pakistani society, especially in areas that are strategic to both societal and business needs e.g. Road Safety, Technical Education, Environment Protection, etc. c) Enhancing corporate value and respect while achieving a stable and long-term growth for the benefit of our shareholders.

10.1 Ma nufa cturing Fa cilities

Just in Time spirit implies two opposing forces of providing fast and flexible response to customers, yet building efficient mechanisms and systems that are efficient and waste-free.

The concept is to provide the right product and information, at the right time, in the right amount, in the right manner, while maintaining high standards of efficiency and cost control. We have to practice this contradictory idea in our daily activities.

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11..Dealerships of the Company

1st dealership in Calicut 1986 2nd in Kochi 1991 3rd in Trivandrum 1994 4th in Muvattupuzha 2005 5th in Royapettah, Chennai 2006 6th in Kattupakkam, Chennai 2008

As on today, Indus has 6 Dealerships 40 Workshops 10 True Value Outlets 2 Maruti Driving Schools 18 E-Outlets 75 sales outlets

11.1 Major Departments

Sales Service True value Spares Accessories Insurance Sales support Institute Maruti Driving School

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12..Awards Achievements

Indus Motors Team receiving the Best Dealer Award from Maruti Suzuki Dealers Conference held at Thailand 2012

Indus Motors Team receiving the Best Dealer Award from Maruti Suzuki Dealers Conference held at Singapore 2011

Indus Motors Team receiving the Best Dealer Award from Maruti Suzuki Dealers Conference held at Hongkong - 2010

Indus Motors Team receiving the Best Dealer Award from Maruti Suzuki Dealers Conference held at Thailand 2009

Indus Motors Team receiving the Best Dealer Award from Maruti Suzuki Dealers Conference held at Isthanbul 2008

Indus Motors Team receiving the Best Dealer Award from Maruti Suzuki Dealers Conference held at Greece 2007

Awards received by INDUS MOTORS in the MSDC held at Thailand 2012

3 Most Prestigious Awards

All India Best Dealer (Overall Excellence) - Indus Group All India Highest Car Sales - Indus Group BSC- Platinum dealer- Indus Group

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13..SWOT Analysis
In formulating sound strategic plans, an organization must assess its internal strengths and weaknesses in relation to the external opportunities and threats it faces. An effective strategy will take advantage of an organizations strengths and opportunities at the same time it minimizes or overcomes weaknesses and threats. Regular assessment and SWOT analysis is thus given importance.

Strengths
Strengths are the core competencies of any organization & as far as Indus Motor Company Limited is concerned, the core competencies of this organization are: Toyota has become the generic name in the Pakistan market. Whenever the company launches the new car in the market it has always the great support of the already market orientation so the car introduced by it easily covers the introduction stage. People have a lot of trust for their name and this is why Toyota is the leader in automobile industry. Toyota has a great strength for its 2.OD car, Toyota is the hot selling diesel engine car in Pakistan and is the only company offering the diesel engine in this category of cars. The important edge over the company editors are the ample availability of the spare parts in the markets. The price of spare parts is comparatively low and availability all over the country has proved to be beneficial for the company. Toyota is a financially strong company. This can be seen by analysis of the financial reports of the previous years. Toyota vehicles have got a much stronger resale value than other car in Pakistan. This is why people prefer to buy a Toyota. Toyota vehicles are made according to the Pakistani environment. No doubt the other cars are available but Toyota has an edge because it has learnt various conditions of the Pakistan environment and people. So new additions and changes are proving to be successful.

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Final Project Toyota is proud to have a successful team of competent managers and skilled workers. Extensive training has enabled the employees to perform outstandingly. Toyota is the only company having the most sophisticated network of dealerships where professional dealers treat customers. There are twenty-five dealers in Pakistan where sales, service and spare parts are offered, leading to convenience for the customers.

W e a kn e s s
Weaknesses are the lacking points, which every organization must avoid in order to make its operational effectiveness. There is some weakness in the case of ergonomic interior of Toyota corolla as well. The power steering is not speed sensitive and the air conditioning system in severe heat is in effective. Interior dimensions are less and heavy body and small engine sometimes create problems in hilly areas. There are some weaknesses in the dealership network. The dealers sometimes tend to deviate from the recommended course of action and principles of Toyota. This results in customers complaints sometimes. The company is besieged with internal operating problems which are not very serious. Because of dependency on Toyotas principles delivery of cars is done after 4-6 months. This is because CKD kits are ordered four months before and once they arrive from Japan, assembly and delivery takes some more time. A lot of effort is pulling into the sales forecasting because of the changing political and economic scenarios. For this reasons inventory has to be kept low. The company feels that one weakness is the changing policies of the government and the 30% cash L/C margin. This has lead to an adverse environment.

Opportunities
In fact, when we study all our weaknesses critically & deeply than we come to know that we can convert our weaknesses into strengths. Therefore, these are our opportunities. The opportunities for IMC are: Indus Motor Company Limited
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Final Project Export is a major opportunity for Toyota Indus Motors. Vehicles were exported to Bangladesh just once in order to prove the plant capacity and efficiency of the company. This should be started again. The contract with the government departments e.g. Motorway Police, Shaheen Force and the dignitaries where corolla has an opportunity to deal with the business markets along with dealing in consumer markets. Toyota can do better by focusing on segments much more than presently being done. Toyota should also try to lower its price of Corolla in the segment where Honda city has penetrated. It can offer discounts to Government departments and large organizations on purchase of its vehicles in more quantities. Success of the manufacturing of Daihatsu cuore is a major opportunity for Toyota to excel further careful planning and the right time to launch the new car can prove to be a success.

Threats
Though Indus Motor Company Limited has a strong footing and maintain a good number of loyal customer, still company has threats in various sectors. When we see the possible threats for IMC, the threats are prevailing such as Even though Toyota enjoys the position of being the no.1 automobile company, still it faces some threat from competitors especially Honda. Honda has adopted aggressive strategies for capturing the market. Even though Toyota keeps a careful eye on the changing trends, still the changing customer needs and trends can prove to be a threat. A major threat is the changing political and economic scenarios of Pakistan. Changing government policies affect the companys performance. Devaluation of rupee adverse shifts in foreign exchange rates, trade policies of governments is a threat. Moreover, the company is threatened by the ongoing rate of 30% cash L/C margin.

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Final Project Import of re-conditioned cars is also considered as a threat for the company. The planned car manufacturing plants of Hyundai and Daewoo can prove to be tough competition for Toyota if they are successful.

14 ..PEST Ana ly sis

PEST analysis is the analysis, which we tend to perform in order to analyze the external as well as the internal environment in which organization is currently working. PEST analysis revolves around the four things.

P o l i t i c a l Fa c t o r s
Government at all levels is an important component of the general environment. No organization or industry is immune from the various decisions made by the government. The Pakistan Governments inconsistent policies, frequent change in duty tariff and smuggling are main reasons of unstable market conduction. Like other motor companies, Toyota is also affected by the current changing policies of the government. Previously the automobile industry had to cope with more than 77000 yellow cabs that were imported during the yellow cabs scheme and was later turned lose to the market after a change of government and the policy scrapped. IN 1995, all the previous taxes and duties were rolled into one import duty of 30percent on CKD kits as well as CBU vehicles. In 1996, the sales tax on CBU was increased cost to 18 percent. In 1997, the ministry of industries and production recommended that duty on CKD be reduced from 40 percent to 35 percent while the car sales should be exempted from CVT and the deletion program should be accelerated. Just a half-year back the general sales tax has been increased to 16 percent promoting more prices like. Therefore, there is going to be a Rs. 80,000 to Rs. 1, 00,000increases in vehicles.

E c o n o mi c a l Fa c t o r s
Government economic policies at the federal level clearly influence the ability of the industries to survive and progress. Inflation is a major economic factor which has affected the Pakistans automobile industry including Toyota. The current inflation rate is 21% to 23% annually prices in the auto market were deregulated in 2000 and grew almost 20 percent to 30 percent per annum to allow Toyota to bring their prices to profitable levels. After three years of Still Market the

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Final Project market picked up. The recent increase of 16 percent sale tax is however, going to result in a price increase.

S o c i a l Fa c t o r s
Society holds a global or summary belief that an organization is proper and worthy of support. Toyota takes pride in being the most trusted name all over Pakistan. Its vehicles are regarded as a status symbol. It is the guiding principles of Toyota which has strongly developed trust in the people. Toyota respects the culture and customs of every nation and community and contributes to the economic and social development through corporate activities in the communities. Toyota believes in honoring the language and spirit of the law of every nation and undertakes open and fair corporate activities to be a good corporate citizen of the world. This is the reason that Toyota is proud of the fact that Pakistani society considers Toyota vehicles to be a symbol of reliability, comfort, luxury and a have to be trusted.

T e c h n o l o g i c a l Fa c t o r s
Technology is of particular importance because it has been and continues to be the main source of increases in productivity. Despite changes in the means used to motivate people and the variety of incentives that have been offered to stimulated production, the resulting increase has been negligible when compared to that of created by technology. The locally produced Toyota Corolla introduced in May 1993 is now in its 17th year. Its excellent quality, low maintenance cost and high resale value has won it the support and loyalty of its customers. Product diversification and a wide range of colors have allowed customers to exercise greater options and have sustained this threat. The total companys product range comprises of 8 variants of Corolla and5 variants of Hilux. As a result of the Safety First commitment; for the first time in Pakistan SRS Secondary Restrain System Airbags have been introduced in the GLI Automatic and GLI manual models, side impact bars which protect vehicles for side collisions have however been routinely fitted in all Corolla variants since inception. The process of making a car more durable includes Pitospaate Primer total immersion in a catholic Electro-deposit primer, which assures long term anti corrosion and an extra thick color coat that is better than all others, ensuring that New Car look New for years to come.

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15 ..Bosto n Consulting Gro up Ma trix

The BCG matrix measures market attractiveness by market growth rate and it assesses the firms ability to compete by its relative market share. The BCG matrix assumes the causal relationship between market share and profitability. BCG matrix consists of four factors which are: Stars Question mark Cash cows Dogs

Stars
Toyota Corolla of IMC falls into the category of Stars. It generates large amount of cash because of its strong relative market share, but also consume large amounts of cash because of its high growth rate, therefore the cash in each direction approximately nets out. However, companies usually invest in star units as they are feeling that the future of their company depends on the success or failure of that particular unit or product.

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Cash Cows
If IMCs Toyota Corolla could maintain its large market share, it will become a Cash Cow when the market growth rate would decline. The portfolio of a diversified company always should have stars that will become the next cash cows and ensure future cash generation. Typically needs this cash to support its rapid and significant growth. It generates large amounts of cash for the organization and usually segments in which management can make additional investments and earn attractive returns. In case of Indus Motor Company Limited, the Hilux is a cash cow for the company which earns a lot of cash for the company and company utilize this cash to run its future units like Toyota Corolla.

Question Mark
According to Boston consulting group matrix, a question mark is such a business unit about which you are not about the success or failure. The unit can be very successful in the market or it can be simply being ruined of. In case of IMC, the question mark is actually the Cuore. It is due to the large competition of in this category of cars. As the Suzuki Aulto, Mehran, Santro and some imported vehicles like Vitz are already present in the market.

Dogs
This category of BCG matrix includes the product that has no market share as well as consuming the large amount of cash instead of generating the cash. The company wants to dissolve that product.

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15.1 Toyota Corolla BCG Matrix

If we analyze the position of Toyota Corolla by using the Boston consulting group matrix in a market than it will show the following result

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16..Financial Analysis of Indus Motor Company

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Table 16.1 Balance Sheet For the Financial Year 2009, 2010 and 2011
NOTE ASSETS NON-CURRENT ASSETS FIXED ASSETS LOGN TERM LOANS ANS ADVANCES LONG TERM DEPOSITS CURRENT ASSETS STORES AND SPARES STOCK IN TRADE TRADE DEBTS LOANS AND ADVANCES SHORT TERM PREPAYMENTS ACCRUED RETURN ON BANK DEPOSITS OTHER RECEIVEABLES INVESTMENT TAXATION- PAYMENT LESS PROVISION CASH AND BANK BALANCES TOTAL ASSETS EQUITY SHARE CAPITAL AUTHORISED CAPITAL 100000000(2009:100000000)ORDINARY SHARES OF RS 10 EACH ISSUED,SUBSCRIBED AND PAID-UP CAPITAL RESERVES 1000000 1000000 1000000 11 12 13 14 6 7 8 9 10 189755 5690052 1356068 926174 18900 52586 149533 4993464 399006 8812199 22587737 26834618 111567 5198367 1613171 839819 18778 57254 196317 ----15755980 23791253 27138278 128483 4088358 1736631 894459 16876 50944 67902 ----9731166 16715319 20685523 3 4 5 4225710 11949 9222 4246881 3324333 15570 7122 3347025 3934473 28509 7222 3970204 2011 (RUPEES IN *000) 2010 (RUPEES IN *000) 2009 (RUPEES IN *000)

15 16

786000 13333648

786000 11801615

786000 9510973

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14119648 LIABILITIES NON-CURRENT LIABILITIES DEFFERED TAXATION CURRENT LIABILITIES TRADE,OTHER PAYABLES AND PROVISIONS ADVANCES FROM CUSTOMERS AND DEALERS ACCRUED MARK-UP SHORT-TERM RUNNING FINANCE TAXATION-NET CONTINGENCIES AND COMMITMENTS TOTAL EQUITY AND LIABILITIES 18 19 5740869 6519669 420 20 21 22 26834618 12260958 17 454012 454012

12587615

10296973

325797 325797 5905062 8076281 944 242579 14224866 27138278

503700 503700 3942988 5926529 673 14660 9884850 20685523

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Table 16.2 Profit and Loss Account For the Financial Year 2009, 2010 and 2011
NOTE 2011 (RUPEES IN *000) 61702677 57613542 4089135 23 24 690130 462517 1152647 2936488 Other operating expenses Other operating income Finance costs Profit before taxation Taxation Profit after taxation Earning per share 29 28 25 26 27 355796 2580692 1507878 4088570 77115 4011455 1268071 2743384 34.90 2010 (RUPEES IN *000) 60093139 55382306 4710833 468496 381575 850071 3860762 416106 3444656 1801459 5246115 3576 5242539 1799136 3443403 43.81 2009 (RUPEES IN *000) 37864604 35540418 2324186 469985 352249 822234 1501952 156479 1345473 727080 2072553 26540 2046013 660911 1385102 17.62

Net sales Cost of sales Gross profit Distribution expenses Administrative expenses

21 22

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Financial Analysis
Table 17.1 Vertical Analysis of Assets and Liabilities as Follows
Description Years
ASSETS NON-CURRENT ASSETS FIXED ASSETS LOGN TERM LOANS ANS ADVANCES LONG TERM DEPOSITS CURRENT ASSETS STORES AND SPARES STOCK IN TRADE TRADE DEBTS LOANS AND ADVANCES SHORT TERM PREPAYMENTS ACCRUED RETURN ON BANK DEPOSITS OTHER RECEIVEABLES INVESTMENT TAXATION- PAYMENT LESS PROVISION CASH AND BANK BALANCES TOTAL ASSETS EQUITY 15.75 0.045 0.034 15.83 0 0.71 21.20 5.053 3.451 0.07 0.196 0.557 18.61 1.487 32.84 84.17 100 12.25 0.057 0.026 12.33 0 0.411 19.16 5.94 3.095 0.069 0.211 0.723 0 0 58.05 87.67 100 19.02 0.138 0.035 19.19 0 0.621 19.76 8.395 4.324 0.082 0.246 0.328 0 0 47.04 80.81 100 2011

Figures in %
2010 2009

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SHARE CAPITAL AUTHORISED CAPITAL 100000000(2009:100000000)ORDINARY SHARES OF RS 10 EACH ISSUED,SUBSCRIBED AND PAID-UP CAPITAL RESERVES LIABILITIES NON-CURRENT LIABILITIES DEFFERED TAXATION CURRENT LIABILITIES TRADE,OTHER PAYABLES AND PROVISIONS ADVANCES FROM CUSTOMERS AND DEALERS ACCRUED MARK-UP SHORT-TERM RUNNING FINANCE TAXATION-NET CONTINGENCIES AND COMMITMENTS TOTAL EQUITY AND LIABILITIES

3.727

3.685

4.834

2.929 49.688 52.617

2.896 43.487 46.38

3.799 45.98 49.78

1.692

1.2005

2.435

21.394 24.296 0.00157 0 0 45.691 0 100

21.76 29.76 0.0035 0 0.894 52.416 0 100

19.062 28.65 0.0032 0 0.071 47.786 0 100

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Table 17.2 Vertical Analysis of Profit and Loss Accounts are as Follows
Description
2011 Net sales Cost of sales Gross profit Distribution expenses Administrative expenses 100 93.37 6.627 1.118 0.749 1.868 4.759 Other operating expenses Other operating income Finance costs Profit before taxation Taxation Profit after taxation Earning per share 0.577 4.182 2.444 6.626 0.125 6.501 2.055 4.446 0 5.66

Figures in %
2010 100 92.16 7.839 0.779 0.635 1.415 6.425 0.692 5.732 2.997 8.729 0.0059 8.724 2.994 5.730 0 7.29 2009 100 93.86 6.138 1.241 0.930 2.172 3.967 0.413 3.553 1.920 5.474 0.070 5.403 1.745 3.658 0 4.65

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Table 18.1 Horizontal Analysis of Balance Sheet is as Follows

Description Years
ASSETS NON-CURRENT ASSETS FIXED ASSETS LOGN TERM LOANS ANS ADVANCES LONG TERM DEPOSITS CURRENT ASSETS STORES AND SPARES STOCK IN TRADE TRADE DEBTS LOANS AND ADVANCES SHORT TERM PREPAYMENTS ACCRUED RETURN ON BANK DEPOSITS OTHER RECEIVEABLES INVESTMENT TAXATION- PAYMENT LESS PROVISION CASH AND BANK BALANCES TOTAL ASSETS EQUITY SHARE CAPITAL AUTHORISED CAPITAL 100000000(2009:100000000)ORDINARY SHARES OF RS 10 EACH 100 100 90.56 135.13 129.73 161.91 142.33 131.19 100 100 100 147.69 139.18 78.086 103.55 111.99 103.22 220.22 86.83 127.15 92.89 93.89 111.27 112.38 289.12 100 100 100 100 100 100 100 107.40 41.91 127.69 84.49 54.61 98.61 100 100 100 2011

Figures in (%)
2010 2009

100

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ISSUED,SUBSCRIBED AND PAID-UP CAPITAL RESERVES LIABILITIES NON-CURRENT LIABILITIES DEFFERED TAXATION CURRENT LIABILITIES TRADE,OTHER PAYABLES AND PROVISIONS ADVANCES FROM CUSTOMERS AND DEALERS ACCRUED MARK-UP SHORT-TERM RUNNING FINANCE TAXATION-NET CONTINGENCIES AND COMMITMENTS TOTAL EQUITY AND LIABILITIES

100 140.19 137.12

100 124.08 122.25

100 100 100

90.14

64.68

100

145.59 110.008 62.41 0 0 124.04 129.73

149.76 136.27 140.27 0 1654.7 143.91 131.19

100 100 100 0 100 100 100

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Table 18.2 Horizontal Analysis of Profit and Loss Account is as Follows

Description
2011 Net sales Cost of sales Gross profit Distribution expenses Administrative expenses 162.96 162.11 175.94 146.84 131.30 140.18 195.51 Other operating expenses Other operating income Finance costs Profit before taxation Taxation Profit after taxation Earning per share 227.38 191.80 207.39 197.27 290.56 196.062 191.87 198.064 198.07

Figures in (%)
2010 158.71 155.83 202.69 99.68 108.33 103.39 257.05 265.92 256.02 247.77 253.12 13.47 256.23 272.22 248.60 248.64 2009 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100

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19..Ratio Analysis

Current Ratio
Ratios Current ratio 2009 2010 2011 Formulas Current Asset/Current liabilities 16715319/9884850 23791253/14224866 22587737/12260958 Results 1.69 1.67 1.84

Current Ratio
1.9 1.85 1.8 1.75 1.7 1.65 1.6 1.55 2009 2010 2011

Comments.
In Indus Motor Company, limited 2011s current ratio is stronger than other years. It shows that this years liabilities could be recovered with its assets. There is a significant decrease of current ratio from 2009 to 2010 but in 2011, company has maintained good current ratio which is very useful for the analyst aspect of creditors.

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Quick Ratio
Ratios Quick ratio 2009 2010 2011 Formulas Quick assets/Current liabilities 12626461/9884850 18592886/14224866 16897685/12260958 Results 1.27 1.30 1.38

Quick Ratio
1.4 1.38 1.36 1.34 1.32 1.3 1.28 1.26 1.24 1.22 1.2 2009 2010 2011

Comments.
Prepaid expenses are considered as current assets so they are included in current ratio calculation. Prepaid expenses are less liquid. Normally it is not easily converted into cash on short notice. This ratio tells us to how much liquids assets in the company to meet an unconditional situation here in 2011quick ratio is better than other years it show that company can easily recover its liabilities on short notice.

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Gross Profit Ratio

Ratios Gross profit ratio 2009 2010 2011 Formulas Gross profit/sales*100 2324186/37864604*100 4710833/60093139*100 4089135/61702677*100 Results 6.14% 7.83% 6.63%

Gross Profit Ratio

9.00% 8.00% 7.00% 6.00% 5.00% 4.00% 3.00% 2.00% 1.00% 0.00% 2009 2010 2011

Comments.
The gross profit in 2009 is 6.14% while we see in 2010 it has been increased. it means company has shown good performance in 2010 but the company has loosed his position in 2011 which is not in favor of company. Reason is that because cost of goods sold has increased and the selling rate of the goods sold has decreased.

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Net Profit Ratio After Tax

Ratios Net profit ratio 2009 2010 2011 Formulas Net profit after tax/sales*100 1385102/37864604*100 3443403/60093139*100 2743384/61702677*100 Results 3.65% 5.73% 4.45%

Net Profit Ratio

7.00% 6.00% 5.00% 4.00% 3.00% 2.00% 1.00% 0.00% 2009 2010 2011

Comments.
Net profit is 3.65% in 2009 but it is increase in 2010 is 5.73% it is increase by in one year its better for the company to increase in net profit but in 2011 net profit of the company has decreased it is not in favor of company. Reason is that that total expenses are increases.

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Net Profit Ratio Before Tax

Ratios Net profit ratio 2009 2010 2011 Formulas Net profit before tax/sales*100 2046013/37864604*100 5242539/60093139*100 4011455/61702677*100 Results 5.40% 8.72% 6.50%

Net Profit Ratio

10.00% 9.00% 8.00% 7.00% 6.00% 5.00% 4.00% 3.00% 2.00% 1.00% 0.00% 2009 2010 2011

Comments
The ratio shows more profit in 2010 as compared to 2009 and 2011. According to average overall performance of the company has increased but in 2011 company is bearing more expenses than the previous year.

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Inventory Turnover Ratio

Ratios Formulas Inventory turnover ratio Cost of goods sold/ average inventory 2009 2010 2011 35540418/4088358 55382306/5198367 57613542/5690052 Results 8.69 10.65 10.13

Inventory Turn Over Ratio

12 10

0 2009 2010 2011

Comments.
Show the time, in which it will convert the current inventory in to sales, so 2010 is more beneficial for the company and favorable for the company.

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Fixed Asset Turnover

Ratios Fixed asset turnover 2009 2010 2011 Formulas Sales/fixed assets 37864604/3934473 60093139/3324333 61702677/4225710 Results 9.62 18.07 14.60

Fixed Asset Turnover Ratio

20 18 16 14 12 10 8 6 4 2 0 2009 2010 2011

Comments.
In 2009 the fixed assets turnover is 9.62, in 2010-it is18.07 and in 2011 14.60 .In 2009 and 2011 fixed asset turnover ratio is decrease as compare to 2010 that shows Indus motors used his assets in 2010 effectively. Company used his fixed assets intensely that is why his production level increases in every year.

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Asset Turnover
Ratios Total Asset turnover 2009 2010 2011 Formulas Sales/Total Assets 37864604/20685523 60093139/27138278 61702677/26834618 Results 1.83 2.21 2.29

Asset Turn Over

2.5

1.5

0.5

0 2009 2010 2011

Comments.
Ratio tells us how much time is requires to asset sale. In 2009 company asset turnover is 1.83, which is lower than other two years. From 2010 to 2011 it has been increasing in so it is not in favor of company.

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Debt Ratio
Ratios Debt ratio 2009 2010 2011 Formulas Total debts/total assets 10388550/20685523 14550663/27138278 12714970/26834618 Results 0.50 0.53 0.47

Debt Ratio
0.54 0.53 0.52 0.51 0.5 0.49 0.48 0.47 0.46 0.45 0.44 2009 2010 2011

Comments.
In 2010 debt ratio is higher than other two years it means company is capable to meet outside obligation in full out of its own assets but in 2011 its worth is very low which is not favorable for the company.

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Earning Per Shares

Ratios Earning per shares 2009 2010 2011 Formulas PAT-performance dividend/No. of ordinary share 1385102-000/78600 3443403-000/78600 2743384-000/78600 Results 17.62 43.81 34.90

Earning Per Share

50 45 40 35 30 25 20 15 10 5 0 2009 2010 2011

Comments.
Earning per share is increased in 2010 is due to increased in net profit of company its for better performance of company

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Return on Capital Employed

Ratios Return on capital employed 2009 2010 2011 Formulas Profit before interest tax/Capital employed*100 2046013/10800673*100 5242539/12913412*100 4011455/14573660*100 Results 18.94% 40.59% 27.52%

Return on Capital Employed

45.00% 40.00% 35.00% 30.00% 25.00% 20.00% 15.00% 10.00% 5.00% 0.00% 2009 2010 2011

Comments.
A measure of the returns that a company is realizing from its capital. This ratio tell us the investment of company in 2009 ROCE is 18.94% in 2010 it is 40.59% and in 2011 is 27.52.Comparatively 2010 and 2011 shows an increasing trend as compare to 2009 this means it is favorable for company because the high rate if ROCE is beneficial for company. The resulting ratio represents the efficiency with which capital is being utilized to generate revenue.

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Time Interest Earned

Ratios Time interest earned 2009 2010 2011 Formulas PBIT/interest 2046013/26540 5242539/143873 4011455/77115 Results

77.09 36.44 52.02

Time Interest Earned

90 80 70 60 50 40 30 20 10 0 2009 2010 2011

Comments.
A measure of the creditworthiness of a company, equal to EBIT divided by interest Time interest earned in 2010 is 36.44and in 2009 it is 77.09. This ratio is increase in 2011 as compare to 2010 that show companys EBIT is increased. It indicates that company is able to meet his interest cost for long period of time. Time interest ratio is very good for company satiability. However, according to average the ratio has decreased as compare to the previous years.

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Return on Total Assets

Ratios Return on Total Assets 2009 2010 2011 Formulas Net Income / Total Assets*100 1385102/20685523*100 3443403/27138278*100 2743384/26834618*100 Results 6.69% 12.68% 10.22%

Return on Total Assets

14.00% 12.00% 10.00% 8.00% 6.00% 4.00% 2.00% 0.00% 2009 2010 2011

Comments.
Return on asset in 2010 is 12.68%, which is higher than other two years but 2011shows a decreasing trend. . It means the assets of the business are not fully utilized in more and efficient way and shows an unfavorable trend of the business. It means that Indus motors basic earning power has decreased in 2011.

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Return on Equity (ROE)

Ratios Return on Equity (ROE) 2009 2010 2011 Formulas Net Income / capital employed*100 1385102/10800673*100 3443403/129134128*100 2743384/14573660*100 Results 12.8% 26.6% 18.82%

Return on Equity
30.00% 25.00% 20.00% 15.00% 10.00% 5.00% 0.00% 2009 2010 2011

Comments.
Return on equity in 2010 is 26.6%which is highest than other two years. The graph shows a increasing trend as compare to 2009.It means this is a good sign for Indus motors if its return on equity remain positive than many shareholder will invest money in the Indus motors.

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Net Working Capital Ratio

Ratios Net Working Capital 2009 2010 2011 Formulas Current Assets - Current Liabilities 16715319-9884850 23791253-14224866 22587737 -12260958 Results 6830469 9566387 10326779

Working Capital Ratio

12000000 10000000 8000000 6000000 4000000 2000000 0 2009 2010 2011

Comments.
Working capital is better in 2011, which are 10326779. It means that are assets utilized more economically in 2011 as compared to previous years.

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Working Capital Turnover

Ratios 2009 2010 2011 Formulas Sales/working capital 37864604/6830469 60093139/9566387 61702677/10326779 Results 5.54 6.28 5.97

Working Capital Turn Over

6.4 6.2 6 5.8 5.6 5.4 5.2 5 2009 2010 2011

Comments.
What this ratio tries to highlight is how effectively working capital is being used in terms of the turnover in 2010 is high from 2009 to 2010 we see that in 2010 it is effective as compare to 2009 and 2011.

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Return on Investment
Ratios Return on investment 2009 2010 2011 Formulas Net profit after tax/ capital employed*100 1385102/10800673*100 3443403/12913412*100 2743384/14573660*100 Results 12.82% 26.66% 18.82%

Return On Investment
30.00% 25.00% 20.00% 15.00% 10.00% 5.00% 0.00% 2009 2010 2011

Comments
Return on investment ratio is used by financial analysts to ascertain the best investment plans. It is also an important tool used by investors and shareholders, while making investment decisions in which we see in 2011 is 18.82% is less favorable for the company than 2011.

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Debt to Equity Ratio

Ratios Debt to asset ratio 2009 2010 2011 Formulas Total debts/ Total equity 10388550/10296973 14550663/12587615 12714970/14119648 Results 1.00 1.15 0.90

Debt to Equity Ratio

1.4 1.2 1 0.8 0.6 0.4 0.2 0 2009 2010 2011

Comments
Debt to equity ratio shows how the firms stockholder bears the risk of the firm. Higher debts means higher financial risk involve. Therefore, Indus motor company is less risky as compared to 2009 and 2010 so it is favorable for the company.

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Financial Leverage
Ratios 2009 2010 2011 Formulas Total assets/total equity 20685523/10296973 27138278/12587615 26834618/14119648 Results 2 2.15 1.90

Financial Leverage
2.2 2.15 2.1 2.05 2 1.95 1.9 1.85 1.8 1.75 2009 2010 2011

Comments
The financial leverage ratio is a measure of how much assets a company holds relative to its equity. A high financial leverage ratio 2010 means that the company is using debt and other liabilities to finance its assets and, everything else being equal is more risky than a company with lower leverage.

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Conclusion
KARACHI: Indus Motor, the maker of Toyota Corolla, recorded a 34 per cent decline in net profit to Rs908 million in the first half of fiscal 2010-11 primarily due to higher cost pressures and lower other income. Manufacturing operations were affected by rising input cost due to depreciation of the rupee against Japanese yen and other inflationary pressures, said the company in a press release. The result was accompanied by a dividend announcement of Rs5 for every Rs10 ordinary share, according to a communique sent to the Karachi Stock Exchange on Tuesday. The companys gross margins declined by 250 basis points to 5.2 per cent in the period under review compared with 7.7 per cent in the first half of 2009-10, The impact of political uncertainty compounded with a general slowdown in the economic environment resulting from rising interest rates, limited credit availability for auto financing, depreciation of the Pak Rupee against major currencies, unprecedented rise in prices of oil, steel and other inputs, inflation, etc impacted the demand negatively. Indus Motor has requested the government to take note of the recommendations made by the Pakistan Automobile Manufacturers Association to accelerate growth of the local industry and withdraw the 5% Federal Excise Duty and increase of 1% Sales Tax, amongst other measures. The combined sale of Toyota and Daihatsu brands in the first half ended December 2010 grew by eight per cent to 22,903 units compared with 21,300 units sold in the same period last year. With the countrys macroeconomic indices showing some signs of modest recovery, the company expects the second half of fiscal 2011 to be better for the auto industry. However, the earnings will remain under pressure owing to continuous depreciation of the rupee and relaxation allowed by the government in used car imports. The government recently allowed imports of used cars up to five-year-old compared to the previous three- year benchmark, which may drive up competition. Financial ratios are a useful by product of financial statement and provide standardized measures of business financial position, profitability and riskiness. It is an important and powerful tool in the hands of financial analyst. By calculating one or other ratio or group of ratios he can analyze the performance of a business from the different point of view. The ratio analysis can help in understanding the liquidity and short-term solvency of the business, particularly for the trade creditors and banks. Long-term solvency position as measured by different debt ratios can help a debt investor or financial institutions to evaluate the degree of financial risk. The operational efficiency of the business in utilizing its assets to generate profits can be accessed on the basis of different turnover ratios. The profitability of the firm can be analyzed with the help of profitability ratios. However, the ratio analyses suffer from different limitations also. The ratios need not be taken for granted and accepted at face values. These ratios are numerous and there are wide spread variations in the same measure. Ratios generally do the work of diagnosing a problem only and failed to provide the solution to the problem.

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REFRENCES
Annual Report http://www.toyota-indus.com/ http://en.wikipedia.org/wiki/Indus_Motors_Company Library: Magazines, Newspapers and Others

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