Indus Motor Company Ltd.

2015
annual report
A Journey of Continuous Commitment
 Indus Motor Company Ltd.

Corporate Profile 25 Years of Value Creation

IMC was incorporated in 1989 as a joint venture Corolla is the largest selling automotive brand
company between the House of Habib of Pakistan, model in Pakistan and it also has the distinction of Direct Employment Training Man-Hours
Toyota Motor Corporation and Toyota Tsusho being # 1 in Toyota’s Asian market.
Corporation of Japan. The Company manufactures
and markets Toyota brand vehicles in Pakistan. The The Company invests heavily in training its
main product offerings include several variants 2,300 plus workforce of team members &
of the flagship ‘Corolla’ in the passenger cars management employees and creating a culture
category, ‘Hilux’ in the light commercial vehicles of high performing empowered teams working
segment and the ‘Fortuner’ Sports Utility Vehicle. seamlessly across processes in search of quality

2,322
and continuous improvement. The core values
The manufacturing facility and offices are located of the Company encourage employees to pursue

1.8 mn
at a 105 acre site in Port Qasim, Karachi, while the high standards of business ethics and safety; 2015
product is delivered to end customers nationwide communicating candidly by giving bad news first
through a strong network of 41 independent and to respect people. The bi-annual TMC morale 1993
3S Dealerships spread across the country. surveys show that employees rate IMC high on 496
work environment and level of job satisfaction.
In its 25 years history since inception, IMC has
sold more than 600,000 CBU/CKD vehicles and The Company has played a major role in the
has demonstrated impressive growth, in terms development of the entire value chain of the local Dealership Network Vendors Network
of volumetric increase from a modest beginning auto industry and is proud to have contributed

41
of 20 vehicles per day production in 1993 to 240 in poverty alleviation at the grass root level by
units daily at present through the development nurturing localization that, in turn, has directly
of human talent embracing the ‘Toyota Way’ created thousands of job opportunities and

60
of quality and lean manufacturing. Over the transferred technology to over 60 vendors
years, IMC has made large scale investments supplying parts. IMC is also a major tax payer and
in enhancing its own capacity and in meeting significant contributor to the GOP exchequer
customer requirements for new products. Today,
2015

South Region Central Region North Region 1993

12 19 10 21
Production Capacity Localization

54,800 60% 2015

2015
1993
1993

20,000
20%
* Corolla (Base Grade-Value)

2 Annual Report 2015 3

 Indus Motor Company Ltd.

Contents

6. 30. 54. 74.

Company Review Chairman’s Review Sustainability Review Compliance and Financials

Vision Mission and Core Values 06 Industry Review 32 CEO’s Message 54 Statement of Compliance with the
Toyota Guiding Principles 07 Company Review 34 TMC CSR Policy 56 Code of Corporate Governance 74
Strategic Objectives 10 Marketing 38 Global Vision for those we serve 57 Review Report to the Members 78
Board of Directors 12 Customer Relations 42 Relations with Cusomers 58 Auditor’s Report to the Members 79
Corporate Governance 14 Customer First 43 Relations with Employees 60 Financial Statements 80
Company Information 16 Safety, Health and Environment 44 Global Society/Local Communities 62 Pattern of Shareholding 122
Organization Chart 17 Human Resources 46 Relations with Shareholders 69 Ten Year Performance Indicators 124
Shareholder Information 18 Operations 48 Relations with Business Partners 71 Notice of Annual General Meeting 126
Operating Highlights 20 Corporate Social Responsibility 51
Financial Summary 21 Strategy Moving Forward 52
Vertical and Horizontal Analysis 22
Statement of Value Addition 24
Directors’ Report 26

4 Annual Report 2015 5

 Indus Motor Company Ltd.

Vision, Mission & Core Values Toyota

Guiding Principles

“To be the most respected and successful

Akio Toyoda
Vision enterprise, delighting customers with a wide range
of products and solutions in the automobile industry
with the best people and the best technology.”
President & CEO, Toyota Corporation

The Toyota business is guided by seven principles:

IMC’s Mission is reflected in the Company’s slogan

1
Mission Action, Commitment and Teamwork to
become # 1 in Pakistan
Honor the language and spirit of the Foster a corporate culture that enhances
law of every nation and undertake open individual creativity and teamwork value,
and fair corporate activities to be a good while honoring mutual trust and respect
corporate citizen of the world. between labor and management.
Respect & Corporate Image
Respect the culture and customs of every Pursue growth in harmony with
Customer Satisfaction nation and contribute to economic and the global community through

Act #
social development through corporate innovative management.
activities in the communities.
Production & Sales Work with business partners in research
Dedicate ourselves to providing clean and and creation to achieve stable long-
Quality & Safety Action, safe products and to enhancing the term growth and mutual benefits, while
Commitment, quality of life everywhere through all our
activities.
keeping ourselves open
to new partnerships.
Best Employer
Teamwork
Create and develop advanced
Profitability technologies and provide outstanding
products and services that fulfill the
needs of customers worldwide.

• World class production quality

Core •
•
Achieving the ultimate goal of complete customer satisfaction
Being seen as the best employer
Values •
•
Fostering the spirit of teamwork
Inculcating ethical and honest practices

6 Annual Report 2015 7

 The First Corolla Line off in 1993 marked the beginning of IMC’s journey based on a
March vision to promote industrial development of Pakistan. Comprising of mere 30 local parts,
1993 the model became a resounding success, reinforcing belief that Pakistan’s industry is
indeed capable of manufacturing high quality automobiles.
 Indus Motor Company Ltd.

Strategic Objectives

Achieving Market Leadership by Delivering

Respecting our people
Value to Customers

• Following our “Customer First” philosophy • Treating employees as the most important
in manufacturing and providing high quality sustainable competitive resource.
vehicles and services that meet the needs of
Pakistani customers. • Providing a continuous learning environment
that promotes individual creativity and
• Enhancing the quality and reach of our 3S teamwork.
Dealership Network.
• Supporting equal employment opportunities,
• Employing customer insight and feedback diversity and inclusion without discrimination.
for continuous corporate renewal, including
product development, improving service and • Building competitive value through mutual
customer care. trust and mutual responsibility between the
Indus Team and the Company.

Bringing Toyota Quality to Pakistan

Become a Good Corporate Citizen
• Maximizing QRD (Quality, Reliability and
Durability) by built-in engineering. • Following ethical business practices and the
laws of the land.
• Transferring technology and promoting
indigenization at IMC and its Vendors. • Engaging in philanthropic and social activities
that contribute to the enrichment of the
• Raising the bar in all support functions to Pakistani society, especially in areas that
meet Toyota Global Standards. are strategic to both societal and business
needs e.g. road safety, technical education,
environment protection, etc.

• Enhancing corporate value and respect while

achieving a stable and long term growth for
the benefit of our shareholders.

Optimizing Cost by Kaizen

• 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.

10 Annual Report 2015 11

 Indus Motor Company Ltd.

Board of Directors

Ali S. Habib | Chairman Mohamedali R. Habib | Director

Ali S. Habib is the Chairman of Indus Motor Company Limited and is also the Founding Mohamedali R. Habib is the Founding Director of Indus Motor Company Limited. He has
Director of the Company. He also serves as a Member on the board of directors of Thal been an Executive Director of Habib Metropolitan Bank Limited since 2004 and also serves
Limited, Shabbir Tiles & Ceramics Limited, Habib Metropolitan Bank Limited, Metro Habib as a member on the Board of Thal Limited and Habib Insurance Company Limited. He was
Cash and Carry Pakistan (Pvt.) Limited. appointed as Joint-President & Division Head (Asia) & Member of General Management of
Habib Bank AG Zurich in 2011.
He is a graduate in Mechanical Engineering from the University of Minnesota, USA. He has
attended the PMD Program at Harvard University. He is a graduate in Business Management – Finance from Clark University, USA.

Keiichi Murakami | Vice Chairman Kyoichi Tanada | Director

Keiichi Murakami was appointed as a Director on the Board and Vice Chairman of Indus Kyoichi Tanada was appointed as a Director of Indus Motor Company Limited in May 2013.
Motor Company Limited with effect from January 2013. He has been serving at Toyota Currently he is serving as the President of Toyota Motor Thailand, Toyota Motor Asia Pacific,
Motor Corporation for over 30 years now and has worked in different capacities primarily Toyota Motor Asia Pacific Engineering and Manufacturing & Managing Officer of Toyota
in the areas of Product Planning and Marketing Research. He has looked after Toyota’s Motor Corporation.
business in Asia, Oceania and Middle East with various Toyota distributors.
He is a graduate in Foreign Studies from Tokyo University, Japan.
He had served as an Executive Director at UMWT which is the Toyota distributor in Malaysia.

Parvez Ghias | Chief Executive Officer Masato Yamanami | Director

Parvez Ghias is Chief Executive of Indus Motor Company Limited since 2005. Prior to joining Masato Yamanami was appointed as Director of Indus Motor Company Limited in June
the Company, he was the Vice President and CFO at Engro Chemical Pakistan Limited and 2015. He has been associated with Toyota Motor Corporation from 1981 to 2013, during
served as a Member of the Board of Directors. He also serves as an independent director on which time he has held various senior positions. He joined Toyota Tsusho Corporation in
the boards of Standard Chartered Bank (Pakistan) Limited, Dawood Hercules Corporation January 2014 as a member of management team. He is presently director on the boards of
Limited and INJAZ Pakistan. various Toyota Group companies in countries around the globe.

He is a fellow of the Institute of Chartered Accountants from England & Wales and holds a He is a graduate from Faculty of Political Science and Economics from Waseda University,
Bachelors Degree in Economics and Statistics. Japan

Azam Faruque | Independent Director Yoshiyuki Matsuo | Director

Azam Faruque was elected as a Director of the Company in October 2014. He is the CEO of Cherat Yoshiyuki Matsuo was appointed as Director of Indus Motor Company Limited in January
Cement Co Ltd, a Ghulam Faruque Group (GFG) Company. Apart from the 23 years he has spent 2014 and also serves as Senior Director Manufacturing. He has been with Toyota Group
in the cement industry and other GFG businesses, he has served as member on the boards of since 1986 during which time he held various senior executive positions. He has vast
various public and private sector institutions. Currently he is a director of International Industries experience in the areas of Production, Logistics, Plant Engineering and Quality Control at
Limited, Atlas Asset Management Limited, Ghulam Faruque (Pvt) Limited, Madian Hydro Power
various Toyota plants in the world.
Limited, and Greaves Pakistan (Pvt) Limited.

He is an Electrical Engineering and Computer Science graduate from Princeton University, USA, He is a graduate from the Nanzan University, Japan.
and also holds an MBA degree (High Honors) from the University of Chicago.

Farhad Zulficar | Director Raza Ansari | Director

Farhad Zulficar is the Founding Director of Indus Motor Company Limited. He was the first Raza Ansari was elected in October 2011 as a Director of the Company. He joined Indus
Managing Director of the Company from 1989 to 2001 and has also served as Director on Motor Company Limited in 1989 when the company was formed and served in various
various listed and private companies. positions. Raza Ansari is currently the Chief Executive of Shabbir Tiles, a leading ceramic and
porcelain tile manufacturer in the country.

He is a commerce graduate from the University of Karachi.

He holds a degree of Bachelor of Science and a post graduate diploma in Business
Administration. Prior to joining the Company, he had worked with Pakistan Papersack
Limited in 1986.

12 Annual Report 2015 13

Corporate Governance

IMC’s Basic Approach to Corporate Governance investment in assets of the company. It evaluates
the capital expenditures required to be made and
IMC has a range of long-standing in-house recommends the same to the Board for approval.
committees responsible for monitoring and The Committee is also responsible for formulating
discussing management and corporate activities the overall policies for investment in fixed assets,
from viewpoints of various stakeholders to make subject to approval by the Board, and establishing
prompt decisions for developing strategies, investment guidelines in furtherance of those
speed up operation while ensuring heightened policies. The Committee consists of the CEO, two
transparency and the fulfillment of social Directors, the CFO and Secretary.
obligations. IMC has a unique corporate culture
that places emphasis on problem solving and Marketing Technical Co-ordination Committee
preventative measures in line with Toyota Global
Standards. Marketing Technical Co-ordination Committee
is a management committee responsible for
Basic Concept of Compliance synchronization between the marketing and
technical departments. The committee also
IMC follows the guiding principles of Toyota and controls new products or minor model specification
not only complies with local laws and regulations, changes and schedules. The Committee is chaired
but also meets social norms, corporate ethics by the CEO every month and representation is from
and expectations of various stakeholders. IMC marketing and technical departments.
undertakes open and fair corporate activities
to meet local standards a well as Toyota Global ACT #1 Management Committee
Standards. The committee consists of five non-
Executive Directors and one independant Director. The ACT #1 Management Committee is responsible
for the monitoring of organizational KPIs and
Board Human Resource and Remuneration stewardship of financial performance every
Committee month. It also reviews departmental targets and
accomplishments achieved during the month. In
The Remuneration Committee is a sub-committee addition ACT #1 reviews government regulatory
of the Board. It recommends human resource affairs including macro-economic situations which
management policies to the Board. It also results in formation of the Company’s strategy and
recommends selection, evaluation, compensation risk management policies. The meeting is headed
and succession plan of the CEO and Senior by the Chairman with representation from all
Management who directly report to the CEO. departments.
The Committee consists of three Non-Executive
Directors, one Executive Director, the CEO and Safety, Health and Environment Committee
Secretary.
The Committee meets on a monthly basis and
Board Ethics Committee keeps a close eye on company wide Safety, Health
and Environment (S.H.E) statistics, KPI trends,
The Committee has the responsibility of overseeing relevant local laws compliance, promulgating drive
ethical policies and compliance by the Company. and focus on S.H.E. right from the top; enabling
It provides expeditious actions on disclosures of Management to have a first hand feel of S.H.E issues
wrongdoing. The Ethics Committee also reviews prevailing on the shop floor and ways to resolve
and investigates incidents of whistle-blowing. them via efficient and swift decision-making. The
The Committee consists of the CEO the two Non- S.H.E Committee, chaired by the CEO, formulates Mr. Eiji Toyoda (1913 – 2013), known as the legendary
Executive Directors. the overall policies and S.H.E framework for May “Father” of Modern Toyota and acknowledged as the
Investment Committee
the company.
1993 architect of the world famous Toyota Production System is
seen at IMC production facilities.
The Investment Committee assists the Board
in fulfilling its oversight responsibility for the

14
 Indus Motor Company Ltd.

Company Information Organization Chart

Bankers Factory / Registered Office

Bank Alfalah Limited Plot No. N.W.Z/1/P-1, Port Qasim Authority,
Bank Al-Habib Limited Bin Qasim, Karachi.
Citibank N.A. Phone: (PABX) (92-21) 34720041-48
Habib Bank Limited (UAN) (92-21) 111-TOYOTA (869-682)
Habib Metro Bank Limited Fax: (92-21) 34720056 BOARD OF
DIRECTORS
MCB Bank Limited Website: www.toyota-indus.com
Meezan Bank Limited Audit Committee
National Bank of Pakistan Chief Financial Officer
Standard Chartered Bank (Pakistan) Limited Mr. Rayomand Ghadiali
The Bank of Tokyo-Mitsubishi UFJ Limited Human Resource Ethics
Committee Committee
United Bank Limited Company Secretary
Ms. Anam Fatima Khan
Auditors
A.F. Ferguson & Co. Audit Committee Members
Safety Health and
Chartered Accountants, Mr. Mohamedali R. Habib (Chairman) Environment
State Life Building No. 1-C, Mr. Farhad Zulficar CEO Committee
I.I. Chundrigar Road, Karachi. Mr. Azam Faruque
Mr. Kyoichi Tanada
Legal Advisors Mr. Masato Yamanami
A.K. Brohi & Company Mr. Raza Ansari Finance &
Internal Audit
Mansoor Ahmed Khan & Co. Mr. Ahmed Waseem Khan (Secretary) Commercial
Mahmud & Co.
Sayeed & Sayeed Board Human Resource and Remuneration
Committee Members COO
Share Registrar Mr. Ali S. Habib (Chairman)
Noble Computer Services (Private) Limited Mr. Farhad Zulficar
First Floor, House of Habib Building Mr. Keiichi Murakami
(Siddiqsons Tower), 3-Jinnah C.H. Society, Mr. Parvez Ghias
Main Shahrah-e-Faisal, Karachi-75350. Mr. Raza Ansari
Phone: (PABX) (92-21) 34325482-84 Mr. Faisal Muneeb Khan (Secretary) Human Resource Marketing Information Technical Customer
Fax: (92-21) 34325442 & Administration Division Technology Division & Corporate
Engagement
Email: ncsl@hoh.net Board Ethics Committee Members
Mr. Farhad Zulficar (Chairman)
Mr. Parvez Ghias
Mr. Raza Ansari

16 Annual Report 2015 17

 Indus Motor Company Ltd.

Shareholder Information
INDU Vs KSE 100 (1992 - 2015)
As at June 30th
Factory / Registered Office INDU
4,500 Share Prices and Volumes 2014-15

Plot No. N.W.Z/1/P-1, Port Qasim Authority, 4,000

Karachi Stock
Price in Rupees
Daily
Exchange Average
Bin Qasim , Karachi.
High Low Volume
PABX: (92-21) 34720041-48 3,500
First Quarter 742.93 520.00 31,883
Fax: (92-21) 34720056 Second Quarter 950.00 700.00 59,208
3,000 1139.00 865.00 67,685
Third Quarter
KSE 100
Share Registrar

Relative Index
Fourth Quarter 1320.00 1001.00 27,544
2,500
INDU
Noble Computer Services (Private) Limited
2,000 KSE 100 index
First Floor, House of Habib Building
(Siddiqsons Tower), 3-Jinnah C.H. Society, 1,500
Main Shahrah-e-Faisal, Karachi-75350.
PABX: (92-21) 34325482-84 1,000
Fax: (92-21) 34325442
Email: ncsl@hoh.net 500

0
Annual General Meeting 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015

The Annual General Meeting will be held at 9:00 a.m. on October 6, 2015 at the Institute of Chartered
Accountants of Pakistan (ICAP), Karachi.

Shareholders as of September 22, 2015 are encouraged to participate and vote.

Any shareholder may appoint a proxy to vote on his or her behalf. Proxies should be filed with the Company’s
Share Registrar by close of business at 5 pm on Friday, October 2, 2015.

Ownership

On June 30, 2015 there were 3,393 shareholders on record of the Company’s ordinary shares.

Dividend Payment

The proposal of the Board of Directors for dividend payment will be considered at the Annual General
Meeting. The dividend warrants will be sent to persons listed in the register of members on September 22,
2015. Income Tax and Zakat will be deducted in accordance with the prevailing regulations.

Shareholders who wish to have the dividends deposited directly in their bank accounts must submit their
application to the Company’s Share Registrar by September 22, 2015.

Listing on Stock Exchanges

Indus Motor Company Limited equity shares are listed on Karachi, Lahore and Islamabad Stock Exchanges.

Stock Code
From left : Mr. Mohamedali R. Habib, Mr. Parvez Ghias, Mr. Ali S. Habib,
Mr. K.Murakami, Mr. Y. Matsuo, Mr. M. Aoi, Mr. R. Hatakeyama and Mr. Raza Ansari
The stock code for dealer in equity shares of Indus Motor Company Limited at KSE, LSE, and ISE is INDU.

18 Annual Report 2015 19

 Indus Motor Company Ltd.

Operating Highlights Financial Summary

Year ended June 30 % Change Year ended June 30

2015
2015 2014 For The Year: Vs 2014 2015 2014 2013 2012 2011 2010

Units sold 66% 57,387 34,470 38,517 55,060 50,943 52,063

Profit after Tax Rs in billion 9.1 3.9
Net revenues Rs in billion 69% 96.5 57.1 63.8 77.0 61.7 60.1
Profit before tax Rs in billion 182% 14.1 5.0 4.9 6.3 4.0 5.2
Vehicle Sales Units 57,387 34,470
Profit after tax Rs in billion 133% 9.1 3.9 3.4 4.3 2.7 3.4
Return on equity Percentage 95% 37.9 19.4 19.0 25.3 19.4 27.4
Vehicle Production Units 56,888 33,012

Per Share Data:

Net Revenues Rs in billion 96.5 57.1
Earnings (EPS) Rs 135% 115.9 49.3 42.7 54.7 34.9 43.8

Earnings Per Share Rs 115.9 49.3 Cash dividends Rs 171% 80 29.5 25.0 32.0 15.0 15.0
Shareholders’ equity Rs 21% 305.8 253.4 225.1 216.5 179.6 160.1

Annual Cash Dividend Per Share Rs 80.0 29.5

At Year-End:

Shareholders’ Equity Rs in billion 24.0 19.9 Total assets Rs in billion 93% 50.4 26.1 25.1 27.6 26.8 27.1
Shareholders’ equity Rs in billion 21% 24.04 19.92 17.69 17.01 14.12 12.59
Contribution to National Exchequer Rs in billion 32.1 19.3
Share Performance (June 30):

Manpower No. of employees 2,322 2,091

Price per share Rs 132% 1,249.0 537.9 311.0 245.1 220.0 262.4
Market capitalization Rs in billion 132% 98.2 42.3 24.4 19.3 17.3 20.6

Net Revenues Net Income / ROE EPS / Dividend per share

Net Income EPS

ROE (Right scale) Cash Dividend Per Share (Right scale)

(Rs in billion) (Rs in billion) (%) (Rs) (Rs)

100 96.5 9.1 140 115.9 85
40
90 9.0
35 120 75
80 77.0 8.0
30 65
70 63.8
7.0 100
60.1 61.7
57.1 6.0 25 55
60 80
50 5.0 4.3 20 45
4.0 3.9 60 54.7 49.3
40 3.4 3.4 15 43.8 42.7 35
3.0 2.7
30 40 34.9
10 25
20 2.0
5 20 15
10 1.0

- 0.0 - 0 5
2010 2011 2012 2013 2014 2015 2010 2011 2012 2013 2014 2015 2010 2011 2012 2013 2014 2015

20 Annual Report 2015 21

 Indus Motor Company Ltd.

Vertical Analysis Horizontal Analysis

2015 2014 2013 2012 2011

2015 2014 2013 2012 2011 2010 2015 2014 2013 2012 2011 2010 2015 2014 2013 2012 2011 2010 vs vs vs vs vs
2014 2013 2012 2011 2010
BALANCE SHEET (Rs in million) (Percentage %)
BALANCE SHEET (Rs in million) (Percentage %)
Fixed assets 5,193 6,033 2,742 3,473 4,226 3,324 10.30 23.11 10.92 12.59 15.75 12.25 Fixed assets 5,193 6,033 2,742 3,473 4,226 3,324 (13.92) 120.02 (21.04) (17.82) 27.14
Long-term loans and advances 11 29 131 6 12 16 0.02 0.11 0.52 0.02 0.04 0.06 Long-term loans and advances 11 29 131 6 12 16 (62.25) (77.62) 2,088.95 (50.00) (25.00)
Long-term investments 4,955 - - - - - 9.83 - - - - - Long-term investments 4,955 - - - - - - - - - -
Long-term deposits 10 10 10 8 9 7 0.02 0.04 0.04 0.03 0.03 0.03 Long-term deposits 10 10 10 8 9 7 - - 20.84 (11.11) 28.57
Deferred taxation 5 - 34 - - - 0.01 - 0.14 - - - Deferred taxation 5 - 34 - - - 102.42 (737.48) 120.69 - -
Stores and spares 179 142 154 178 190 112 0.35 0.54 0.61 0.65 0.71 0.41 Stores and spares 179 142 154 178 190 112 26.08 (7.82) (13.67) (6.32) 69.64
Stock-in-trade 6,150 4,469 7,883 7,530 5,690 5,198 12.20 17.12 31.40 27.31 21.20 19.15 Stock-in-trade 6,150 4,469 7,883 7,530 5,690 5,198 37.61 (43.30) 4.69 32.34 9.47
Trade debts 448 1,737 1,383 1,460 1,356 1,613 0.89 6.65 5.51 5.29 5.05 5.94 Trade debts 448 1,737 1,383 1,460 1,356 1,613 (74.23) 25.64 (5.29) 7.67 (15.93)
Loans and advances 1,221 1,006 1,558 945 926 840 2.42 3.85 6.21 3.43 3.45 3.10 Loans and advances 1,221 1,006 1,558 945 926 840 21.33 (35.43) 64.86 2.05 10.24
Short-term prepayments 19 15 11 21 19 19 0.04 0.06 0.04 0.08 0.07 0.07 Short-term prepayments 19 15 11 21 19 19 26.62 38.36 (48.58) 10.53 -
Accrued return 419 87 12 45 53 57 0.83 0.33 0.05 0.16 0.20 0.21 Accrued return 419 87 12 45 53 57 379.46 618.67 (72.99) (15.09) (7.02)
Other receivables 168 176 163 448 150 196 0.33 0.67 0.65 1.62 0.56 0.72 Other receivables 168 176 163 448 150 196 (4.51) 7.71 (63.59) 198.67 (23.47)
Investments 6,757 4,332 6,698 2,691 4,993 - 13.41 16.59 26.68 9.76 18.61 - Investments 6,757 4,332 6,698 2,691 4,993 - 55.96 (35.32) 148.91 (46.10) -
Taxation - payment less provision - 1,216 131 - 399 - - 4.66 0.52 - 1.49 - Taxation - payment less provision - 1,216 131 - 399 - (181.41) 825.96 318.94 (115.04) 264.20
Cash and bank balances 24,865 6,857 4,195 10,771 8,812 15,756 49.34 26.26 16.71 39.06 32.84 58.06 Cash and bank balances 24,865 6,857 4,195 10,771 8,812 15,756 262.62 63.45 (61.05) 22.23 (44.07)
Total Assets 50,399 26,111 25,106 27,576 26,835 27,138 100.00 100.00 100.00 100.00 100.00 100.00 Total Assets 50,399 26,111 25,106 27,576 26,835 27,138 93.02 4.00 (8.96) 2.76 (1.12)

Issued, subscribed and paid-up capital 786 786 786 786 786 786 1.56 3.01 3.13 2.85 2.93 2.90 Issued, subscribed and paid-up capital 786 786 786 786 786 786 - - - - -
Reserves 23,250 19,130 16,907 16,228 13,334 11,802 46.13 73.26 67.34 58.85 49.69 43.49 Reserves 23,250 19,130 16,907 16,228 13,334 11,802 21.54 13.14 4.19 21.70 12.98
Shareholders' Equity 24,036 19,916 17,693 17,014 14,120 12,588 47.69 76.27 70.47 61.70 52.62 46.39 Shareholders' Equity 24,036 19,916 17,693 17,014 14,120 12,588 20.69 12.56 3.99 20.50 12.17
Deferred taxation - 219 - 166 454 326 - 0.84 - 0.60 1.69 1.20 Deferred taxation - 219 - 166 454 326 (102.42) 737.48 (120.69) (63.44) 39.26
Trade, other payables and provisions 9,181 4,430 6,014 6,512 5,741 5,905 18.22 16.97 23.95 23.61 21.39 21.76 Trade, other payables and provisions 9,181 4,430 6,014 6,512 5,741 5,905 107.22 (26.33) (7.65) 13.43 (2.78)
Advances from customers and dealers 16,193 1,546 1,399 3,824 6,520 8,075 32.13 5.92 5.57 13.87 24.30 29.76 Advances from customers and dealers 16,193 1,546 1,399 3,824 6,520 8,075 947.60 10.51 (63.42) (41.35) (19.26)
Accrued mark-up - - - - - 1 - - - - - 0.00 Accrued mark-up - - - - - 1 - - - - (100.00)
Taxation - provision less payment 990 - - 60 - 243 1.96 - - 0.22 - 0.90 Taxation - provision less payment 990 - - 60 - 243 181.41 - (318.94) 115.04 (264.20)
Total Equity and Liabilities 50,399 26,111 25,106 27,576 26,835 27,138 100.00 100.00 100.00 100.00 100.00 100.00 Total Equity and Liabilities 50,399 26,111 25,106 27,576 26,835 27,138 93.02 4.00 (8.96) 2.76 (1.12)

PROFIT AND LOSS ACCOUNT PROFIT AND LOSS ACCOUNT

Net Sales 96,516 57,064 63,829 76,963 61,703 60,093 100.00 100.00 100.00 100.00 100.00 100.00 Net Sales 96,516 57,064 63,829 76,963 61,703 60,093 69.14 (10.60) (17.07) 24.73 2.68
Cost of sales 82,272 51,270 57,972 70,401 57,614 55,237 85.24 89.85 90.82 91.47 93.37 91.92 Cost of sales 82,272 51,270 57,972 70,401 57,614 55,237 60.47 (11.56) (17.65) 22.19 4.30
Gross profit 14,244 5,794 5,857 6,562 4,089 4,856 14.76 10.15 9.18 8.53 6.63 8.08 Gross profit 14,244 5,794 5,857 6,562 4,089 4,856 145.86 (1.08) (10.74) 60.48 (15.79)
Distribution costs 996 794 814 820 690 468 1.03 1.39 1.28 1.07 1.12 0.78 Distribution costs 996 794 814 820 690 468 25.52 (2.54) (0.70) 18.84 47.44
Administrative expenses 799 635 644 628 463 382 0.83 1.11 1.01 0.82 0.75 0.64 Administrative expenses 799 635 644 628 463 382 25.85 (1.45) 2.54 35.64 21.20
Other operating expenses 1,172 424 436 516 356 416 1.21 0.74 0.68 0.67 0.58 0.69 Other operating expenses 1,172 424 436 516 356 416 176.38 (2.79) (15.47) 44.94 (14.42)
Other income 2,907 1,113 1,038 1,776 1,508 1,796 3.01 1.95 1.63 2.31 2.44 2.99 Other income 2,907 1,113 1,038 1,776 1,508 1,796 161.09 7.27 (41.56) 17.77 (16.04)
Operating profit before finance costs 14,184 5,055 5,000 6,374 4,088 5,386 14.70 8.86 7.83 8.28 6.63 8.96 Operating profit before finance costs 14,184 5,055 5,000 6,374 4,088 5,386 180.62 1.09 (21.55) 55.92 (24.10)
Finance costs 52 38 31 61 77 144 0.05 0.07 0.05 0.08 0.12 0.24 Finance costs 52 38 31 61 77 144 35.63 24.59 (49.67) (20.78) (46.53)
Profit before taxation 14,133 5,016 4,970 6,313 4,011 5,242 14.64 8.79 7.79 8.20 6.50 8.72 Profit before taxation 14,133 5,016 4,970 6,313 4,011 5,242 181.72 0.94 (21.28) 57.39 (23.48)
Taxation 5,022 1,143 1,612 2,010 1,268 1,799 5.20 2.00 2.53 2.61 2.06 2.99 Taxation 5,022 1,143 1,612 2,010 1,268 1,799 339.38 (29.10) (19.79) 58.52 (29.52)
Profit after taxation 9,110 3,873 3,358 4,303 2,743 3,443 9.44 6.79 5.26 5.59 4.45 5.73 Profit after taxation 9,110 3,873 3,358 4,303 2,743 3,443 135.20 15.37 (21.97) 56.87 (20.33)

22 Annual Report 2015 23

Statement of Value Addition
For The Year Ended June 30, 2015
2015 2014
Rupees in ‘000 % Rupees in ‘000 %

Wealth Generated
Gross revenue 116,339,212 97.6% 68,529,700 98.4%
Other income 2,906,797 2.4% 1,113,316 1.6%
119,246,009 100.0% 69,643,016 100.0%

Bought in material and services and other expenses 74,992,374 62.9% 45,692,426 65.6%
44,253,635 37.1% 23,950,590 34.4%

Wealth Distributed
Employees
Salaries, wages and other benefits 1,365,035 3.1% 997,973 4.2%

Society
Donations towards education, health and environment 116,726 0.3% 49,655 0.2%

Providers of Finance
Finance cost 51,883 0.1% 38,254 0.2%

Government
Income tax, sales tax, excise duty, customs duty, WWF 32,065,654 72.4% 18,095,801 75.5%
and WPPF

Shareholders
Dividend 6,288,000 14.2% 2,318,700 9.7%

Retained Within The Business For Future Growth

Retained earnings, depreciation and amortisation 4,366,337 9.9% 2,450,207 10.2%

44,253,635 100.0% 23,950,590 100.0%

Distribution Of Wealth

72.4% 75.5%

2015 2014

14.2% 9.7% To cater to the demand for a Small Hatchback vehicle,

March IMC entered into a technical assistance agreement with
Daihatsu Motor Company and introduced Cuore, an
0.1% 3.1%
9.9%
0.2% 4.2%
10.2%
2000 800 cc hatchback that quickly gained prominence and
0.3% 0.2%
acceptance as a car of choice.

Employees Society Providers of finance Government Shareholders

Retained within the business for future growth

24
 Indus Motor Company Ltd.

Directors’ Report
Key Operating and Financial Data
The Key Operating and Financial Data is mentioned on pages 124 to 125 of the Annual Report.
The Directors of Indus Motor Company Limited takes pleasure in presenting Directors’ Report, together
with the Accounts of the Company for the year ended June 30, 2015 and recommends the following Appointment of Auditors
appropriations: The existing auditors, M/s A.F. Ferguson & Co., Chartered Accountants retire and being eligible, offer
themselves for re-appointment. The Directors endorse the recommendation of the Audit Committee for
2015 2014 re-appointment of A.F. Ferguson & Co, as the auditors for the financial year ending 2016.
(Rupees in ‘000)
Chairman’s Review
Profit After Taxation 9,110,251 3,873,452 The Directors of the Company endorse the contents of the Chairman’s Review dealing with the Company’s
Other Comprehensive Income / (Loss) for the year 717 (491) performance, major activities carried out during the year and the future outlook of the Company.
Un-appropriated Profit brought forward 235,002 680,741
9,345,970 4,553,702
Investments of Retirement Benefit Funds
The value of Investments held in the retirement benefit funds at the year ended 30 June, 2015, is as follows:
Appropriations
First Interim Dividend @ 200% i.e. Rs. 20 per share (2014: 60% i.e. Rs. 6 per share) 1,572,000 471,600 2015 2014
Second Interim Dividend @ 200% i.e. Rs. 20 per share (2014: Nil) 1,572,000 - (Unaudited) (Audited)
3,144,000 471,600 (Rupees in ‘000)
Unappropriated Profit Carried Forward 6,201,970 4,082,102
Indus Motor Company Limited Employees’ Provident Fund 541,555 465,731
Indus Motor Company Limited Employees’ Pension Fund 287,072 238,491
Subsequent Effects
Proposed Final Dividend @ 400% i.e. Rs. 40 per share 3,144,000 1,847,100
Government Levies
(2014: 235% i.e. Rs. 23.50 per share) Government levies outstanding as at June 30, 2015 have been disclosed in Note No. 19 to the Financial
Transfer to General Reserves 3,000,000 2,000,000 Statements.
6,144,000 3,847,100
Board of Directors Meetings
Basic and Diluted Earnings Per Share 115.91 49.28 A total of seven meetings of the Board of Directors were held during 12 months period from July 01, 2014
to June 30, 2015. Attendance at the Board Meetings by each Director is as follows:

Code of Corporate Governance Name of Directors Number of Meetings Attended

The Board members are pleased to state that the Management of the company is committed to good corporate Mr. Ali S. Habib 7
governance and complying with the best practices. In compliance with the Code of Corporate Governance, the
Directors are pleased to state as follows: Mr. Keiichi Murakami 6
Mr. Parvez Ghias 7
• The financial statements prepared by the management of the Company present fairly its state of affairs, Mr. Yoshiyuki Matsuo 6
the result of its operations, cash flows and changes in equity.
Mr. Azam Faruque* 5
• Proper books of accounts of the Company have been maintained. Mr. Mohamedali R. Habib 6
Mr. Kyoichi Tanada (Mr. M. Aoi [Ex-Alternate] / Mr. T. Azuma, [Alternate]) 6
• Appropriate accounting policies have been consistently applied in preparation of the financial statements
Mr. Tetsuro Hirai [Ex- Director] / Mr. Masato Yamanami **
and accounting estimates are based on reasonable and prudent judgment.
(Mr. R. Hatakeyama [Ex-Alternate]/Mr. Osamu Yoneyama, [Alternate]) 7
• During the year, one Director has obtained certificate of Directors Training Course from Pakistan Mr. Farhad Zulficar 3
Institute of Corporate Governance (PICG).
Mr. Raza Ansari 7
• International Financial Reporting Standards, as applicable in Pakistan, have been followed in
preparation of the financial statements. * Mr. Azam Faruque was elected on the Board as an Independent Director with effect from 31 October
2014.
• The system of internal control is sound in design and has been effectively implemented and monitored. ** During the year, Mr. Tetsuro Hirai retired as Director with effect from June 15, 2015 and Mr. Masato
Yamanami was appointed as Director with effect June 15, 2015.
• There are no significant doubts upon the Company’s ability to continue as a going concern.
The Board acknowledges the valuable contribution made by the outgoing Directors and welcomes the new
• There is no material departure from the best practices of Corporate Governance as detailed in the Director and the Alternate Directors to the Board.
Listing Regulations.

26 Annual Report 2015 27

Board Audit Committee
The Board Audit Committee comprises of Six Non-Executive directors, out of which one is an Independent
Director.

The Committee meets at least once every quarter and assists the Board in fulfilling its oversight
responsibilities. A total of Four (04) Board Audit Committee meetings were held during 12 months
period from July 01, 2014 to June 30, 2015. Attendance at the Board Audit committee Meetings by each
Director / Member is as follows:

Name of Directors Number of Meetings Attended

Mr. Mohamedali R. Habib 4

Mr. Farhad Zulficar 2
Mr. Azam Faruque 2
Mr. Kyoichi Tanada (Mr. M. Aoi [Ex-Alternate] / Mr. T. Azuma, [Alternate]) 4
Mr. Tetsuro Hirai [Ex- Director] / Mr. Masato Yamanami
(Mr. R. Hatakeyama [Ex-Alternate]/Mr. Osamu Yoneyama, [Alternate]) 2
Mr. Raza Ansari 4

Terms of Reference of the Audit Committee include the requirements for review of annual and quarterly
financial statements, review of internal audit reports, information before dissemination to Stock Exchanges
and Consideration and recommendation for appointment of external auditors, in addition to other matters
of a significant nature.

Trading of Shares of the Company

The Directors, the Executives, and their spouses and minor children have not carried out trading of shares of
the Company, other than that disclosed in the Pattern of Shareholding.

Pattern of Shareholding
The Pattern of Shareholding of the Company as at June 30, 2015 is given on pages 122 to 123.

Karachi
August 28, 2015

The 9th generation Corolla was introduced with 469 local

February parts. Aimed at exciting customers with a stylish design
and superior built, this Corolla was another styling success,
2002 reinforcing Toyota’s quality, durability and reliability image in
Pakistan.
Parvez Ghias Keiichi Murakami
Chief Executive Vice Chairman & Director

28
 Indus Motor Company Ltd.

Chairman’s Review

Ali S. Habib
Chairman

I welcome you to this 26th Annual General

Meeting of your company and it is my pleasure
to present to you the Company’s performance
for the year ended June 30, 2015.

• Industry Review
• Company Review
• Marketing
• Customer Relations
• Customer First (Parts and Service)
• Safety Health and Environments
• Human Resources
• Operations
• Corporate Social Responsibility
• Strategy Moving Forward

30 Annual Report 2015 31

 Indus Motor Company Ltd.

Industry Review

The fiscal year 2014–15 saw an impressive entire value chain stepped up effectively to meet Policy, one has not been finalised to date. An early of commitment displayed by the Government to
turnaround in the business environment for the challenge and cater for the increased product announcement in this regard is desirable to remove implement good governance has continued to
domestic automakers and parts suppliers who had demand by operating manufacturing facilities uncertainty and allow the industry to firm up plans plague our Parts business, where malpractices
been besieged with two consecutive years of volume optimally. for investment and the introduction of new models, of under-invoicing and incorrect declaration of
decline. The annual demand for automobiles grew thereby offering customers a wider selection of imported auto parts by unprincipled importers
31% to 179,953 units compared to 136,888 units The elimination of FED on locally manufactured vehicles to choose from . continued unabated creating further difficulties for
sold last year, primarily driven with the Government vehicles over 1800cc at start of the fiscal year, the genuine and legitimate parts manufacturers and
of Punjab’s decision to purchase 50,000 Suzuki together with minor tweaking in the valuation of In order to create a level playing field in the local distributors.
vehicles for the ‘Apna Rozgar Scheme’ and the used imported vehicles augured well for the industry industry, the prevalent concessionary structure of
impact created in the market place by the new 11th but was insufficient to discourage inflows of used duties and valuations for used vehicles needs further
generation Toyota Corolla. cars. Around 33,000 units still entered the market realignment. This would also help ensure that the
as traders targeted hybrid imports, taking full Government receives its fair share of revenue, Sales of Locally Produced Passenger Cars and LCVs
250,000
A general feel good factor was witnessed in consumer advantage of the unreasonably favourable customs instead of annually losing billions of Rupees due to
sentiment on account of improving macroeconomic valuations, together with the 50% customs duty significantly lower valuation on both used imported 200,000

indicators, falling inflation & interest rates, stability and sales tax concessions provided to this category vehicles and imported auto parts.

No. of Vehicles
150,000 61,528 78,533
in the retail prices of vehicles and relative calm of vehicles. 39,253 43,437
in the law and order situation across the country, The Pakistan market offers huge potential, and we 100,000
23,696 23,360
29,981
45,419 58,050
19,133
13,308
enabling the demand for locally manufactured A stable and consistent application of policies urge the Government to embrace good governance 65,816
16,455
53,468
50,000 61,008 61,147
vehicles to remain robust throughout the year. The is crucial to allow for unhindered growth of the as a key driver for the public policy agenda and 60,103 43,597
28,819
small-high 1300- 1800cc segment of passenger automotive sector. The old Auto Policy expired in long-term industrial growth, as this would restore 0
17,697 18,553 21,814 16,480 18,786
09-10 10-11 11-12 12-13 13-14 14-15
cars outperformed all others with an impressive June 2012, and although there has been continued market confidence without stifling the dynamism
up to 800cc 1000cc 1300cc-2000cc LCV
growth of 35%. Despite chronic power outages, the interaction with the government on a new Auto that underlies the economy. Regrettably, a lack

Team Members at the Engine shop Trainee team member experiencing on the job training Team member on the assembly line Final Inspection before line-off

32 Annual Report 2015 33

 70,000
2000 Hilux 4x4
23,622
60,000 1,500
52,761 2,724
1,000 2,315
50,000
3,500
3,000
40,000 2,724
23,674
500
Indus Motor Company Ltd.
Competition 0
2,500 2,315 2013-14 2014-15
30,000
2000 Corolla
Hilux 4x4
51,398
20,000
1,500 2,724
29,087 2,315

Company Review
1,000
10,000 3,000
500 2,518
0 0 2,476
2,500 10
2013-14
2013-14 2014-15
2014-15
680
2,000

1,500 Competition
3,000
While an improving economic environment driven and introduce more fuel-efficient vehicles such as 2,476
2,518 CBU Segment 2,508
Hilux 4x2
10 1,000
by the Government’s efforts provided a much Eco- Car Schemes seen in Thailand and Indonesia. 2,500 1,796

needed boost to the entire industry, FY2014-15 was 2,000

680
Market
500 for new CBU vehicles reflected restrained
3,500
particularly auspicious for Indus Motor Company. It CKD Passenger Cars: Small High Segment 3,000 2,724
growth
0
in view of extraordinary concessions allowed
1,500 Competition
marked the start of our silver jubilee celebrations 2,500 2,508
2,315
to Hybrid imported
2013-14
used vehicles
2014-15
that continue
Hilux 4x2
and Al-hamdu lillāh, the company delivered stellar The small high segment of the industry rebounded 2000
1,000 1,796
Hilux 4x4 to enter the country through misuse of schemes
results with an impressive all round performance with an impressive growth of 42% to 75,020 units 1,500
500
2,724
2,315
intended only for facilitation of overseas Pakistanis.
1,000
setting new records on production, sales, earnings led by the new Toyota Corolla in which the Company’s 500
The industry sales were 1,339 units, in which IMC’s
1,500
and job creation. The stock market reflected market share was further strengthened. 0
0 2013-14 2014-15
share was 812 units or 61%, mainly on account
2013-14 2014-15
confidence in the Company’s performance with an of Toyota Land Cruiser, Hiace, Toyota Avanza and
80,000
all-time high market capitalization. In recognition 75,020 CKD SUV Segment Daihatsu
1,000
Terios vehicle sales. 722

of these achievements we enhanced our social 70,000

3,000 Fortuner
23,622
contribution expenditure beyond the regular policy 60,000
52,761 Toyota
1,500 Fortuner
2,476
is the first true2,518locally produced We 500
reiterate our390 request to the722 Government to
10
to share the joy with the under privileged segments 50,000 Sports Utility Vehicle in the country that has
2,500
abolish the 50% regulatory duty on high end
390
of our society. 40,000 23,674 attracted
2,000
1,000 many680
customers for the722luxury, elegance, vehicles as it is punitive in nature, and causes volume
Competition 0
30,000
safety, price and all round comfort it offers. After to drop. Lower duties will create 2014-15
2013-14 increased demand
Corolla 1,500 Competition
CKD & CBU Business 51,398 a promising launch in early 2013, 2,508 demand soon
Fortuner
for legally imported CBUs and yield greater revenues
20,000 500 390 Hilux 4x2
29,087 crashed during
1,000 1,796FY2013-14 on account of imposition
722
for the exchequer and benefit the economy.
10,000
The Company outperformed and stayed well ahead of50010% FED and 390 the influx of used imports. The
of competition throughout the year, on account 0
2013-14 2014-15 subsequent
0 removal
2013-14
of FED in the2014-15
Finance Act 2014- 2,500
of the strong demand generated by the new 11th 15 0finally paved
2013-14 way for the company
2014-15 to sell 722
generation Toyota Corolla launched in July 2014. CKD Light Commercial | Pickup Segment units, up 85% compared to 390 units sold during the 2,000

Toyota Fortuner demand showed partial recovery same period last year. 1,518
80,000 1,500
upon withdrawal of 10% FED, though it remained Our Hilux variants continue 75,020 to gain customer 1,339
Competition
70,000
below our expectation with an influx of used appreciation and remained popular, particularly 1,500
2,500
1,000
629
527 IMC CBUs
23,622
imported SUVs. amongst
60,000
3,500 fleet users, institutional buyers, farmers,
52,761
2,000
transporters
50,000
3,000 and entrepreneurs who favour
2,724 1,000 722
500 889 812
The company sales of Toyota and Daihatsu brand its
40,000sturdy build,
2,500
23,674 versatility and2,315superb off-road 1,500
1,518
1,339
2000 Competition
Hilux 4x4 Fortuner 0
vehicles (CKD and CBU) registered a robust growth performance
30,000
on challenging terrain. During the year, 629
Competition
2013-14 2014-15
1,500 2,724 Corolla 500 390 527
722
of 66% to 57,387 units, compared to 34,470 units the Company introduced the locally
1,000 2,315 manufactured
51,398 1,000 IMC CBUs
20,000
sold during the same period last year. The sales 4X4500version 29,087
of the immensely popular Hilux single 500
390
10,000 889
volume achieved during the year is a new record and Cabin 0 pickup for the first time, while the entire range
2013-14 2014-15
0
2013-14
812
2014-15
resulted in capturing 32% market share compared comprising
0
of Double Cabin 4X4,
2013-14 Single Cabin and
2014-15 0
2013-14 2014-15
to 25% attained in 2013-14. Deck less 4X2 were spruced up with a new look
and
3,000features. The combined sales of Hilux LCV grew
2,518
In 2014, the Company was the first OEM to launch 7%, to 4,823 2,476 units as compared to 10
4,520 units sold
2,500
a hybrid vehicle – the Toyota Prius complete with during the same period last year. 2,500
680
dedicated after sales service. We were unable to 2,000
2,000
sustain this CBU sale operation due to a tax anomaly 3,500
1,500 Competition
that disadvantaged our worthy customers. While 3,000 2,724 2,508
Hilux 4x2 1,500
1,518
1,339
the 50% concessionary rate of Custom Duty is 1,000
2,500 1,796 2,315
629
Competition

2000 Hilux 4x4 527

applicable to both new and used hybrid vehicles, the 500
1,000 IMC CBUs
1,500 2,724
full rate of Sales Tax is applied on sales made by IMC 1,000 2,315
500
0 889
to its customers, whereas used Prius sold by traders 500 2013-14 2014-15
812

receive the benefit of Sales Tax concessions as well. 0

2013-14 2014-15
0
2013-14 2014-15
This anomaly continues to subsist and hurt our
business and we believe the Government would do
1,500
well to seriously reconsider its strategy to encourage 3,000
2,518
2,476
10 Ready for the road: New Corolla line-off
2,500
1,000 722
680
2,000

34 1,500
500
Fortuner
Competition
Annual Report 2015 35
390 722
2,508
Hilux 4x2
1,000 390
Business Results Dividend

Overall, the market for the auto industry started on The Company achieved a return on equity of 38% for
a high note with the launch of new 11th generation the FY 2014-15 (FY2013-14: 19%). Based on the
Toyota Corolla and a neutral to a positive outlook results, the Board of Directors is pleased to propose
for the domestic manufacturers reflected in a final dividend of Rs 40 per share, making the total
the Federal budget, and it remained favourable payment of Rs 80 per share compared to Rs 29.50 per
throughout FY2014-15. A decline in imports bill, share paid to the shareholders last year. An amount
led by the collapse in oil prices and strong growth of Rs 3.0 billion is recommended for appropriation
in remittances provided macroeconomic stability to to the general reserve to be utilized for continuing
bolster investor confidence. growth and plant capacity expansion.

The combined sale of Toyota CKD and CBU vehicles Contribution to the National Exchequer
increased by 66% to set a new annual record of
57,387 units compared to 34,470 units sold last In FY 2014-15 the Company contributed a sum of Rs
year, while the market share for locally manufactured 32 billion to the national exchequer, which amounts
vehicles grew from 25% to 32% for FY 2014-15. to about 1.2% of the total revenue collection by the
Government of Pakistan during the year. In the 25
The nationwide customer response to the new years since incorporation, our contribution stands
Toyota Corolla has been overwhelming. In order to at an impressive total of nearly Rs. 250 billion.
fulfill the tremendous market demand, while trying
to reduce the delivery lead time cycle, the Company Inquiry by the Competition Commission of
operated its manufacturing facilities at full capacity Pakistan
throughout the year, undertaking daily overtime
and working off Saturdays to minimize the impact In late June 2015, the office of Cartels and Trade
of delivery time lag on customers. It enabled us to Abuse at the Competition Commission of Pakistan
achieve a new annual production record of 56,888 initiated an inquiry under Section 37(1) of the
units compared to 33,102 units produced last year. Competition Act 2010, and has requested the
Company to furnish certain information in this
A robust operating environment enabled the connection. The Company has provided all the
Company to post a record gross sales revenue of Rs. documents and details sought, and we remain
116.3 billion up 70% compared to Rs 68.5 billion for committed to co-operating with the Commission in
the same period last year, while profit after tax at Rs this regard.
9.1 billion grew 135% as against Rs 3.9 billion posted
for the FY14. The surge in the after tax profitability
is mainly attributable to increased sales volume of
additional 22,917 units, improvement in margins
after years of erosion and Kaizen initiatives aimed at
improving operational efficiencies, work processes,
strategic sourcing of supplies and cost reduction in
general. Hilux, Toyota’s sturdy workhorse, is globally
November acclaimed as one of the most durable light
2007 commercial vehicles. It has gained the same
success in Pakistan that it has globally.

36
 Indus Motor Company Ltd.

Marketing

Toyota continues to be the brand with which process speeds up the transaction, promotes While we have continuously represented and Provisional Booking Order form on the advance
customers across all generations feel a strong healthy competition, enables customers to made suggestions to improve the system without payment of Rs. 500,000 for Corolla, Rs. 1,000,000
affinity. History tells us that as things change with purchase vehicles immediately and obtain invoices compromising government revenue, we have not for Fortuner and Hilux variants, including Vigo.
time, so do people; and for this reason we strive instantly from the dealership. had success so far. In case of imported CBU vehicles, Rs. 1,000,0000 or
to continually listen to our customers, innovate 25% of the Vehicle’s Retail selling price, whichever
and grow with them, always committing to ‘Make Unfortunately, such a system is not possible in As a result of these challenges the company is forced higher, is applicable. The remaining balance has to
Better Cars’. The iconic design and features of our country due to minimum turnover tax of 1% to use its dealer network to collect orders from be settled at least 10 days prior to the 1st day of
the new Toyota Corolla are a direct outcome of applied first to your company when it sells to the customers and pass them on to the company, who the delivery month. Over the period the Company
this philosophy, where the customers’ wants are dealers, as well as on the dealer when they sell in then has to transact and sell and invoice each and has continuously advertised and created awareness
reflected in the product. We are fortunate that our the retail mode to the customer. In the current every customer individually across the country from amongst customers to stay away from premium
customers display a sense of loyalty and trust in year’s Federal Budget, an additional withholding Karachi to Khyber. payments and to promote the partial payment
the Company to supply the best in terms of service, income tax has been introduced both for filers and scheme launched for the customer’s benefit.
superior quality and great value, which fuels our for non-filers at a higher rate (which we support Such a system, unfortunately, requires customers to
passion to surpass our benchmarks to the single, for documentation of the economy), on sale of place provisional orders through the dealers with the New 11th Generation Toyota Corolla
most valuable end – earning smiles from our vehicles to our dealers under a wholesale mode company, for the company to then deliver vehicles
customers. We are truly humbled by the success of and a further withholding income tax is again after receipt of orders through the dealers to the The launch of new Toyota Corolla in our 25th year
this year, and grow more determined to continue applied to the same transaction when the dealer customer, issue invoices which need to be delivered of incorporation is a memorable milestone. The
to delight our growing customer base. retails the vehicle to the customer. In addition to the customer from a centralized source rendering dynamic shape, exhilarating performance, spacious
to these punitive measures, if the dealer were to the entire exercise both inefficient and needlessly interior and cutting-edge functionalities mark the
Distribution Model retail a vehicle to a corporate entity, the purchaser complex and customer unfriendly. beginning of another era in the automotive history
(being a withholding agent) is required to deduct of Toyota in Pakistan, and sets a new benchmark that
Our customers deserve a seamless vehicle a further 4% or 4.5% withholding income tax It is our sincere hope that we will be able to is bound to send customer spirits soaring.
purchase and ownership experience which should applied to the total price of the vehicle. successfully address this challenge with the
include financing, purchasing and invoicing Government, who we fully support in their effort The line-up of full model range includes:
through one-window provided by the authorized It is apparent from the measures described to document the economy and tax all sources of
dealerships. Internationally, OEMs sell cars in herein that the global best practices of sales and income. • Corolla 1.8L Altis: Available in four variants with
bulk to their nationwide dealership network that distribution are rendered completely unviable in Manual and Automatic Transmission. The Grande
maintain an inventory and thereafter sell vehicles an attempt to collect taxes from undocumented IMC is the only OEM to offer a Partial Payment offers top of the line specs of Continuous Variable
directly to consumers in the retail mode. This and non-tax paying persons. scheme whereby customers may execute a Transmission 7 speed sport sequential paddle

WELLWORTH
WELL WORTH THE
THE WAIT
WAIT 31,462
e are humbled, amazed and thankful for the truly overwhelming response to the New Corolla. In order to fulfil 31,462 67%More
your demand, we at IMC have been operating at full capacity which reached the highest level of production
e are humbled, amazed and thankful for the truly overwhelming response to the New Corolla. In order to fulfil
in January 2015. 18,847 67%
Corolla
Production
More
your demand, we at IMC have been operating at full capacity which reached the highest level of production
Corolla
in January 2015. 18,847 Production
We understand that waiting for the exciting new Corolla can test your patience, but rest assured, we are doing all that
is humanly and technically possible to bring you your Corolla. We urge you to book your vehicle only at our authorized
We understand that waiting for the exciting new Corolla can test your patience, but rest assured, we are doing all that
dealerships with the partial payment of Rs. 500,000 only, without any premium.
is humanly and technically possible to bring you your Corolla. We urge you to book your vehicle only at our authorized
dealerships with the partial payment of Rs. 500,000 only, without any premium.
Take it from the thousands of our satisfied customers…the wait will be well worth it. Jul '13 Jul '14
to Feb '14 to Feb '15

Take it from the thousands of our satisfied customers…the wait will be well worth it. Jul '13
to Feb '14
Jul '14
to Feb '15
@ToyotaPak ToyotaPakistanOfficial

@ToyotaPak ToyotaPakistanOfficial

One of the public service message print advertisement Batch of newly manufactured Corolla vehicles awaiting dispatch to customers

38 Annual Report 2015 39

 Indus Motor Company Ltd.

service. To date, eight Toyota Sure facilities have dealerships in peripheries of major cities and in
shift, Wi-Fi enabled multimedia touch screen, Silver Jubilee Commemorative Variants been launched nationwide and the facility continues small towns is part of our strategy to get closer to
rearview camera, leather seats, reclining rear to grow. our valued customers and provide quality service at
seats and more in many exciting colors. We owe a large part of our success to the trust and their doorstep.
confidence the people of Pakistan have placed in Toyota Sure offers the customers the opportunity
• Corolla 1.6L Altis: Designed with a view to the Toyota products. As part of the 25th anniversary to sell their used vehicles at good prices, based on Our dealership network maintains Toyota’s excellent
offer value for customers who need superior celebrations and a humble display of gratitude, IMC a rigorous 203 checkpoint criteria that ensures only standards of service and provides a pleasurable
performance with enhanced fuel economy and introduced limited edition versions of Hilux Vigo and the best vehicles are certified and offered for sale. experience to customers. Furthermore, through a
luxury. Equipped with a 7 speed Automatic Toyota Fortuner that were well appreciated and won Toyota Sure and Trade-in facility enables customers dealership uplift plan the entire network has been
Transmission, it offers the performance that the acclaim from our customers. to buy a used car with peace of mind, ensured by upgraded to enhance the customer experience and
Altis is known to promise. limited warranty, as one finds when purchasing a now offers sales, services and spare parts facilities
Toyota SURE brand Toyota Vehicle. at 41 dealerships throughout the country, and
• Corolla 1.3L GLi and Xli: Available with the same regularly host events like the dream art contest for
extraordinary styling, and for the first time In line with Toyota’s Global strategy to increase 3S Dealership Network children and loyalty program for customers.
will be available in both Manual and Automatic efficiency, reliability and deliver greater value to the
Transmission. Standard features include manually customers, the business of certified used vehicles During the year another two new dealerships were
controlled air conditioning, new comfortable seat was restructured and rebranded as Toyota SURE launched in the cities of Peshawar (Toyota Khyber
design with fabric upholstery, more leg and trunk last year. Apart from facilitating trade-in business Motors) and Karachi (Toyota Creek Motors). Opening
room, LED type stop lamps, in-dash audio system in Toyota products, Toyota SURE also provides
including MP3 and USB connectivity, etc. customers the facility of purchasing a used Toyota
vehicle backed with limited warranty and after sales

Hilux Vigo Champ Silver Jubilee Fortuner Silver Jubilee

Commemorative Variant Commemorative Variant 3S Dealership at Ring Road, Peshawar

40 Annual Report 2015 41

 Indus Motor Company Ltd.

Customer Relations Customer First

People form a lifelong affinity with their vehicles, While our customer’s first line of contact is the
and IMC’s Customer Relations (CR) plays a vital role dealership, we are just a call away and can be The Parts and Service department play a pivotal authorities enhance the existing low customs
to keep customers satisfied. We are aggressively reached at 0800 11123 during the office hours role in providing customers a complete and reliable valuation which is creating an uneven playing field
driven towards implementing Toyota’s Global where our dedicated representatives are available ownership experience throughout the life cycle against OEMs and severely hurting the legitimate,
Customer Relations standards in letter and spirit to provide swift response. We can also be reached of their vehicle by providing customers with the registered businesses of OEMs, while causing
at IMC and at all dealerships. The focal point of via email at customer.relations@toyota-indus. assurance and availability of genuine spare parts and revenue loss to the Government of Pakistan in terms
Company’s CR is the ‘Voice of Customer’ that com. Realizing the growing importance of digital quality services throughout our dealership network of custom duties and taxes. Policy makers need to
proactively records and disseminates customer and social media, the Company has integrated its and retail outlets across the country. During the year, address this issue by ensuring the parts valuation
feedback throughout the organization to add value social media Facebook page and Twitter handle the Parts and Service Departments of the company is carried out in line with the OEMs import price list.
to our products, services and overall customer with Customer Service, proving customers with were consolidated and renamed as ‘Customer First They must also bear in mind the detrimental effect
experience. another platform to seek resolution of issues. Department’. The restructuring has been carried out counterfeit products can have on the health and
with a view to further enhance customer experience safety of the public, where customers are unable
The key to satisfying customers is to remain aware Dealer Operations Guidelines and boost efficiency through synergizing the after to distinguish between genuine and deceptively
of their level of satisfaction with our products sales business. Both, the Toyota genuine parts and similar counterfeit parts. For its part, the Company
and services, which is possible through biannual The Dealer Operations Guidelines implementation Toyota Motor Oil businesses continue to register is committed to raising this awareness through
Customer Satisfaction Index research aimed to process was initiated last year as a pilot project with growth in sales and profitability. education and promotions so that customers may be
collect data that assesses our performance in the support of Toyota Motor Asia Pacific to give able to take well informed decisions to differentiate
handling and serving our valued customers and accreditation to dealerships for maintaining high The Auto Parts business is still at its infancy stage, genuine parts from fake products.
identifying the areas for improvement. During level of employee satisfaction, an aspect viewed and has huge potential for growth as a strong
the year we undertook ‘mystery-shopping survey’ as instrumental in ensuring customer satisfaction. revenue generator for the Government, provided During the year, several advertising and customer
for the first time to gain deeper insight into the Realizing the importance and the positive all- improved governance and adherence to rule of law care campaigns addressed the importance of using
customer experience while visiting a dealer. round impacts it creates, we went national with 33 is implemented. The unabated influx of illegally genuine parts for maintaining the overall health of
Additionally, the Company annually conducts a dealers achieving compliance with the initial basic sourced spare parts however continue to enter the car. A free air conditioner checkup campaign
focused ‘Toyota Customer Delight Workshop’ to requirements of the guidelines. the country through under invoicing and mis- provided value to all customers in wake of an
provide cross-functional training to IMC frontline declaration from commercial importers. The majority increasingly hot summer. These campaigns, carried
and Dealership staff enabling them to practically of such importers operate in the undocumented out through radio spots, print and social media, were
embody and promote the ‘Customer First’ Toyota sector and are able to evade the FBR’s due diligence well received.
mindset. mechanisms. It is imperative that the custom

Children participating in the Toyota Dream Car Art contest 2015 Free AC checkup campaign rolled out during summers

42 Annual Report 2015 43

 Indus Motor Company Ltd.

Safety, Health and Environment

As an organization driven towards the betterment case for any of our own employees, we recognize The environment theme of “Seven Billion Dreams; of all designated areas to prevent soil underwater
of people, we are always looking to improve that we must remain vigilant. One Planet; Consume with Care” also stirred a lot of contamination, developed sludge dewatering
our safety standards and enforcing stricter interest and disseminated information encouraging mechanism to reduce landfill impact and ensured full
environmental discipline. These efforts lead us Safety and Environment Months conservation and prudent use of resources. It too compliance against NEQS (National Environment
to ensure that we create a safe workplace with kicked off with the top management expressing its Quality Standards).
zero fatalities and no serious injuries. We train In Fy 15, January and June were dedicated as Safety commitment towards environmental care, planting
and motivate our people to take responsibility and Environment months to promote collaborative of over 200 tree saplings at the plant-site, training Environmental Assessment Audit
and ownership for risk assessment activities in efforts for safer workplace and creating collective on eco-friendly business practices as stipulated by
their sphere of operations and to desist from environmental awareness respectively. Environment Management System, an ECO award During Fy 15, a TMAP Environmental Management
unsafe practices and behaviors. This environment competition for resource conservation activities, an Team audited Non-Manufacturing functions like
encourages employees to alert management of Our theme on safety, “Let’s make IMC Zero Accident ECO photo contest and distribution of biodegradable Communication, Training, CSR activities, Sales and
every injury or hazard, however small, allowing us Workplace” commenced with the Company’s top fabric bags to promote the idea of reducing the Service, Purchasing and Logistics to check the level
to learn from every mistake and take corrective management signing off on their commitment to usage of disposable packaging and encouraging of management’s commitment to environment and
actions to create a safer workplace for everyone. safety, firefighting trainings and fire simulation reuse and recycle. were pleased with results relative to other affiliates.
All near miss cases are similarly investigated, to put evacuation drills, a 5S competition and awareness
in place appropriate preventive counter measures. sessions on defensive driving, first aid, etc were Toyota GEMS Audit Campaign against Substances Injurious to Health
held, to further strengthen the effectiveness of our
Safety Record systems and to counter and emergency situations An audit of the Toyota Global Environment As part of the workplace wellness a strong campaign
on site. A competition amongst all employees to Management Systems declared IMC as a fully was launched focusing at promoting healthy living
There was no Lost Work Day (LWD) injury for the identify and propose ways to eliminate hazards compliant entity and improved our rating of and discouraging use of chewing tobacco, beetle leaf
fourth consecutive year in 2014-15, thereby in the workplace called the “4 rounds of Keiken environmental self-reliance (Jiritsuka). With and cigarette smoking. Awareness sessions were
setting a new record. This is particularly creditable Yuichi” drew an enthusiastic response with this, IMC has joined the ranks of other regional held and a program to rehabilitate employees who
as we rebound from two prior years of downturn, winners recognized, rewarded and their proposals production centers such as Thailand and Indonesia. are regular consumers is underway to make plant
with record production and relatively higher incorporated as safety kaizen in the workplace. During the year, we took measures to reduce our completely free of these dangerous substances.
intense activity levels in the plant this year. While carbon footprint, completed anti-corrosive coating
we are pleased that there was no serious injury

Team members in standard safety attire at the weld shop A row of trees at plant site TMAP Auditors during the GEMS Audit A section of water treatment plant

44 Annual Report 2015 45

Human Resources

The Company maintained focus on recruitment for female employees. The aim of the training was
and development of human capital for capacity to provide challenging, simulating situations that
building in support of business growth. Over 500 encourage employees to step out of their comfort
new jobs were created during the year to ensure zones, and to promote collaborative teamwork.
our operations remain streamlined to deliver
products in a timely manner to meet the rising Battle of Brains
demand of customers in the market place. At the
heart of our human development initiative remains The annual ‘Battle of Brains’ competition created
Kaizen, an incessant commitment to excellence and sponsored by the Company is now a signature
and improvement that warranted every new team event attracting top tier business schools of
member joining the team is trained in the Toyota Pakistan such as IBA, KSBL and LUMS. The
Way before being assigned to their permanent job competition encourages application of creative
in the manufacturing operations. and critical thought process to develop solutions
to real life business challenges and scenarios
In House Training and Development faced by the Company. The theme for this years’
competition was regarding customer perceptions
During the year, the company conducted various about auto industry products and services. Over
training aimed at improving the skill set, behavioral 400 students participated with the KSBL team
aspects and mindset of the employees to enable winning the final challenge round. Attractive
value addition in their work and facilitate team prizes were given to participants in the final round.
work. ‘The Tick-Tick Dollar’ training conducted
by the motivational speaker and author of the 200th Apprentice Program
book was held for the middle level managers to
challenge their mindset and practices, to maximize The Silver Jubilee celebration year coincidentally
individual potential. marked placement of the 200th batch of Assistant
Team Members (ATM). IMC periodically recruits
As part of the affirmative action program these batches of Trade Apprentices under the
supporting equal opportunity employment and ATM program and transforms them into talented
to ensure our female employees are empowered technicians through intensive skill development
in the face of cultural diversity in Pakistan, the program involving both classroom training and
Company for the first time organized a specifically hands on experience.
tailored collaborative outdoor training exclusively

The 10th generation Corolla has been a resounding

August success. Apart from winning the hearts of many
customers, it also has earned distinctions for Pakistan at
2008 regional level, making it the most sold Corolla country in
the Asia Pacific Region.

Participants at an outdoor leadership training Trainee team members with mentor

46
 Indus Motor Company Ltd.

Operations

Strong demand for the new Toyota Corolla enabled a collaborative culture at IMC. By focusing on played a major role in the development and growth many of these parts play an integral role in smooth
the company to achieve all time record production developing quality mindset, corresponding of the local parts supplier industry. functioning of the vehicle and frequent interface
of 56,888 units for all Toyota products. The initial behaviors are developed to enable skilled people with the users, a significant role was played by
launch period was challenging on account of to deliver better quality output at any and all levels There are many accomplishments that make the Toyota Motor Corporation to provide guidance and
gradual ramp-up in production as downstream of the organization. order of merit for new technology introduction in ensure quality.
suppliers adjusted to new peak levels of parts Pakistan. One highlight of the new Corolla is its
supplies required, following two successive Skill Contest bucket seat design with dual density and spring Another cutting-edge technology adopted by
years of volume decline that served to severely suspension to give added comfort to the driver a supplier was to develop facility for metalizing
dent the industry financially and in terms of loss More than 150 participants representing nine and passengers. It’s the first time for domestic interior parts of lamp assemblies locally. This is a
of experienced talent due to attrition. To meet countries from the Asia Pacific Region participated customers to relish such an experience in vehicles notable achievement which required highly strict
soaring demand and delivery time expectations in the TMAP Skill contest, an event aimed at manufactured locally. A few models of Corolla also process and quality control parameters to meet
on delivery orders, we added new jobs for over assessing and recognizing superior skills of the come with the added feature to recline the rear the promised Toyota Standard. The facility was
500 team members and resorted to daily overtime people who make some of the best known cars of sets for relaxation in posture. It’s worth noting the established and process tuned to perfection within
working throughout the year. the world. The competing IMC team members and seat reclining and track assembly was developed a very short timeframe.
team leaders won four medals, three in silver and by Thal Boshoku, a new joint venture between Thal
Total Quality Jiritsuka (Self Reliance) one bronze at this annual contest. Engineering and Toyota Boshoku that also helped us In order to achieve higher safety standards for the
localize the air cleaner assembly. vehicle and passenger protection, we pursued the
Quality Assurance is the single biggest hurdle in Localization localization of sheet metal and body parts, including
an era of globalization of production that every A few of our suppliers leveraged their strong high tensile steel components, which resulted in a
Toyota manufacturing plant must overcome. No We are proud of the indigenization achieved in the relationship with us and prospect of future growth Technical Assistance Agreement with the Ogihara
matter where Toyota vehicles are made, they must 25 years since formation. Throughout this period to establish new facilities comprising assembly and Stamping Company and creation of a new local
comply with the same level of quality standards the company has strived to realize higher and manufacturing lines dedicated to Toyota products company. It is the first time that IMC undertook this
and that is why Toyota opts to put one label for all, technically advanced level of localization to benefit and high-tech parts such as alternator, starter, fuel initiative involving stronger steel strength that also
i.e. ‘Made by Toyota’ instead of naming the country the society. Our new Toyota Corolla comprises of tank, energy absorber parts in EPP material and required development of special tooling to match
of manufacture. It means there is a need to spread 760 parts and components manufactured locally, window regulators, thus benefiting the country the sophisticated metallurgy.
Toyota’s manufacturing philosophy – the ‘Toyota a far cry from just 33 parts used in the first locally in establishing transfer of new technology. Since
Way’ to all the overseas bases such that same produced vehicle in 1993. Most of the high-
quality assurance cuts across all frontiers. tech localization involved transfer of technology
under technical assistance or spot assistance
In order to continuously emphasize the importance agreements with overseas companies while others
of Quality and to encourage quality controls at all were achieved through entering joint ventures
levels, a Quality month is celebrated to promote with foreign vendor principals, all of which has

TMAP skill contest winners with the Chairman Localized reclining seats of the new Corolla Corolla body shell with high tensile steel parts

48 Annual Report 2015 49

 Indus Motor Company Ltd.

Corporate Social Responsibility

Yet another success story for 2014-15 was the Despite several challenges of low volume and Acutely mindful of the social responsibility, we Our company management is frequently engaging
localization of the thermostatically controlled air absence of policy framework, we are forging remain committed to actively outreach and support with the faculty and students of the HU to share
conditioner for the upmarket SUV category, which ahead to also extend our localization efforts on the under privileged segments of the society. Our knowledge and experience and furthermore, we
brought the latest technology of AC Systems to the commercial vehicles we manufacture so as to canvas includes health and wellness, education, hope to partner them in adopting best practices of
Pakistan through technical assistance with the increase the number of parts being made in Pakistan environmental conservation, road safety and Toyota for professionals in higher education and
Denso Corporation, Japan. for this product slate of vehicles. humanitarian response to natural disasters. drawing insight of well-established institutions.

While additional information about our efforts on Patient Aid Foundation

The company remains committed to uphold the Meeting the stringent Toyota quality is always a huge
sustainable development and social contributions
spirit of continuous localization as cornerstone challenge; however, this is what the customers want
is contained in the Sustainability Review portion of Patients Aid Foundation another not-for-profit
of its strategy. We are actively pursuing the future and what gives us the edge. Each part localized is a the annual report, it’s worth highlighting couple of organization that collaborates extensively with the
localizations of the power window regulator, step forward for us and our suppliers as we enhance projects whose contribution we wish to dedicate Jinnah Post Graduate Medical Centre Karachi to
catalytic convertor, and sub-components for the fuel our abilities and experience to take the whole nation as part of the silver jubilee celebrations. These are supplement healthcare for the underprivileged has
tank, thus making valuable additions to the portfolio forward in bringing engineering excellence to world class initiatives in their own right and we embarked on an ambitious project to set up a 580
of local parts in the vehicles we assemble. Pakistan and we are indeed proud of these efforts. expect both to have a major impact on the quality of bed hospital and surgical complex, the largest in the
education and health care for the deserving in the country.
A noteworthy achievement for the new Corolla is the country.
successful localization of the integrated-type Audio Upon completion, this medical complex together
System and matching the contours with design of Habib University with its facilities will give a totally new dimension to
the vehicle. The Audio System incorporates the the quality of health care available to the poor and
latest technology features and we made certain Habib University Foundation a not-for-profit the needy.
organization that supports educational development,
that it went through stringent evaluation criteria to
research and innovation has set up Habib University In order to lend support to the above initiatives, the
ensure that it gives our valued customers delightful
(HU), a world-class undergraduate liberal arts and company has pledged Rs 100 million each to these
listening pleasure and interactive experience.
sciences university offering innovative degree projects as our 25th anniversary gift to the city of
programs taught by an outstanding global faculty in Karachi for posterity.
Equally remarkable is the story of our weather the state-of-the-art facilities in Karachi.
strip supplier who not only developed the product
without any technical assistance or joint venture
and yet the product capability was good enough to
pass the rigorous Toyota quality and durability test Corolla fuel tank (left) and exhaust assembly in
in first go where other overseas suppliers failed. advanced stage of localization

Recently localized, thermostatically controlled air conditioner Integrated audio system for the new corolla, localized recently A view of the Habib University Artist’s impression of the JPMC Surgical Ward

50 Annual Report 2015 51

 Indus Motor Company Ltd.

Strategy Moving Forward

After years of sluggish economic activity, macroeconomic fundamentals appear to be gaining traction appropriate training and skills; thirdly, our efforts will be geared towards enhancing the Company’s image
and stabilizing. A decline in imports, led by the reduction in oil prices and strong growth in remittances, and ensuring customer satisfaction and finally we will attempt to sustain and augment the Company’s
has reduced the current account deficit considerably. GDP growth appears to be on an upward trajectory, growth through cost reduction and increased sales during the year.
investor confidence has been bolstered by improved law and order situation and ratings of international
agencies. Inflationary pressures are also continuing to decelerate and remain significantly below the target Our customer centric approach demands high-level of contribution, dedication and efficiency from every
and all of it augers well for the country and for the auto industry. level in the company, while also necessitating the development of the capabilities of our vendors through
technology transfer. We will ensure the professional development of our team through training and skill
In the last years Annual Report, commenting on the outlook for 2014-15 we expected the industry to deliver development as well as providing appropriate incentives through our reward system. The cohesive,
robust performance and our optimism was based on couple of factors namely, (a) launch of the new 11th motivated work force at IMC is ready to face the challenges ahead.
Generation Toyota Corolla and (b) Suzuki’s agreement for sale of 50,000 vehicles under the ‘Apna Rozgar
Scheme’ of the Punjab Government. Both these events continue to remain relevant for 2015-16 as the Finally, I wish to thank the Board of Directors, Management team and all employees who have responded
momentum of the new Toyota Corolla continues for the second year running and as balance orders of ‘Apna well to the challenges faces and provided constant guidance to the company, helping us deliver impressive
Rozgar Scheme’ get fulfilled. results despite the host of operational difficulties. Our customers have demonstrated unremitting confidence
in our vehicles and after sales service, for which we are immensely grateful. I also wish to express gratitude
We are pleased that the government has appointed new leadership at the Engineering Development Board to the Indus team of our shareholders, dealers, vendors and other business partners for their contribution
after a gap of nearly two years. Hopefully, it will serve as a catalyst to create an enabling environment that to the strength of the Company.
will strengthen the auto value chain on a long term basis for sustainable growth in the country.
We bow to Allah and pray for His blessings and guidance.
Whereas developments on the economic and social development front bodes well for restoring lost
confidence, it is imperative that the Government quickly finalizes the new Auto Policy paving way for new
entrants and the existing manufacturers to plan and invest in new models and technologies for future growth
of the industry and also to resolve the menace of power shortages, poor governance and law and order that
is adding significantly to the cost of doing business and eroding the country’s competitive advantage.

The Government’s decision to provide extraordinary tax concession to the Hybrid Electric Vehicles (HEV) as Ali S. Habib
a means of promoting fuel-efficient technology has not only failed to demonstrate any significant merit but Chairman
it has hurt the local industry with commercial importers taking full advantage of substantially lower prices
of used hybrid vehicles and benefiting from the anomaly in sales tax, much to the disadvantage of the local
OEMs who introduced new hybrid vehicles with complete after sales infrastructure support and yet failed to
make any substantial inroads into this HEV market segment.

The prospect of trade with India under the Non Discriminatory Market Access which received a set back
during the year, presents a host of opportunities and challenges for the industry. We look forward to an
effective and balanced trade regime and hope that the Government will safeguard the industry interests
by strengthening trade defense laws, the enforcing bodies and continuously engaging the industry whilst
firming future trade agreements.

The whole IMC team has worked dedicatedly to bring the most advanced Toyota Corolla to Pakistan. Moving
forward, we aim is to work closely with Toyota to secure a few new exciting products that further strengthen
our existing product slate to provide a wider choice to customers and ensure sustainable growth and value
creation. We are equally determined to achieve the targeted results with sharp focus on our Hoshin and its
four principal areas: firstly, we aim to ensure safe operations at the plant for our employees, contractors and
visitors with the objective of achieving zero lost work-day injury; secondly, we will work towards enriching
our Human Resource capabilities by promoting IMC as the preferred employer of choice leveraged through

52 Annual Report 2015 53

 Indus Motor Company Ltd.

Concern Beyond Cars

Our Engagement with Stakeholders

built on strong foundations of the House of Habib • Won JICA (Japan International Cooperation
Parvez Ghias and Toyota Motor Corporation, and hold ourselves to
the highest standards of integrity and transparency,
Agency) support for funding the relaying a
portion of the national highway construction
CEO all the time recognizing that how we do business is that will benefit road users on traffic safety and
as important as why we do business. congestion

Strong financial performance is a key to our long- • Enhanced customer engagement on social
term success and we achieved it in an emphatic way media for sharing information about products
for the FY15 as outlined in the Chairman’s Review and services, tracking trends and gauging
portion of the annual report. Here, I wish to share few satisfaction levels
major highlights on how we managed our resources
and relationships in ways that delivered value to all During the year, our achievements won acclaim
of our stakeholders. from some of the country’s esteemed institutions.
The Karachi Stock Exchange, the Management
• Added over 500 new jobs that supplemented Association of Pakistan and the Consumer
livelihoods of families dependent on their Association of Pakistan, once again recognized our
income performance and engagement with the society
through prestigious award presentations, which
• Pledged Rs 100 million each to Patient Aid is a matter of great pride for us and we laud the
Foundation and Habib University as 25th efforts of employees and business partners for their
Anniversary gift to Karachi towards quality contributions.
health care and education for the deserving
Finally, we wish to convey our gratitude to everyone
• Established 1st Toyota Body and Paint Training in our value chain for their continuous support.
Center at AMAN-TEC for development of The stellar results we achieved for the year would
vocational skills amongst the youth not have been possible without the guidance of
our partners, TMC, TTC and HOH. we look forward
• Reduced CO2 emissions footprint by 1,200 metric to similar support to meet the challenges that
tons annually and facilitating Pakistan Economic lie ahead.
As a key player in the automotive industry, we to our valued stakeholders and are prepared to Forum research on water situation for Karachi in
are mindful of how our decisions and actions consider changing ourselves as a result of this support of the climate change initiatives
impact the long term performance and affect the engagement.
people, places and resources associated with our
operations. We endeavor to meet this corporate By embedding sustainability considerations within
responsibility by taking a sustainable approach our strategies and the company goals, we seek
towards all aspects of our business by minimizing to enhance efficiency, improve the management
the negative and maximizing the positive social performance, ensure accountability, create an Parvez Ghias
and environmental impacts through stakeholder all-round positive impact of our operations and Chief Executive
engagement. It implies that as an organization, we reduce the risks that could derail us from achieving
are willing to listen and discuss issues of interest the goals. Here, we are guided by our core values

54 Annual Report 2015 55

 Indus Motor Company Ltd.

Toyota Motor Corporation CSR Policy Global Vision for Those We Serve
Contribution Towards Sustainable Development

Defining the ideal form of the company for each stakeholder and the outline
Preamble Business Partners
for the future it should take in order to realize the Global Vision
We, Toyota Motor Corporation and our subsidiaries, take • We respect our business partners such as suppliers
initiative to contribute to harmonious and sustainable and dealers and work with them through long-term
development of society and the earth through all relationships to realize mutual growth based on We aim to exceed expectations and be rewarded with a smile. We will meet challenging goals by engaging the
business activities that we carry out in each country mutual trust. (Guiding Principles 7) talent and passion of people, who believe there is always a better way” as we set out in the Global Vision. That
and region, based on our Principles. We comply with • Whenever we seek a new business partner, we means, we will sincerely listen to the voices of every stakeholder - customers, employees, business partners,
local, national and international laws and regulations as are open to any and all candidates, regardless of shareholders, and global society/local communities, and respond to those expectations. The expression
well as the spirit thereof and we conduct our business nationality or size, and evaluate them based on their “Global Vision for Those We Serve” is our way of organizing and explaining the thoughts constituting the
operations with honesty and integrity. In order to overall strengths. (Guiding Principles 7)
contribute to sustainable development, we believe • We maintain fair and free competition in accordance Global Vision in relation to stakeholders. It is Toyota’s resolve to meet challenging goals step by step to see
that management interacting with its stakeholders with the letter and spirit of each country’s the smiles and happiness of everyone including customers and beyond.
as described below is of considerable importance, competition laws. (Guiding Principles 1 and 7)
and we will endeavor to build and maintain sound
relationships with our stakeholders through open and Shareholders
fair communication. We expect our business partners to
support this initiative and act in accordance with it. • We strive to enhance corporate value while
achieving a stable and long-term growth for the
Customers benefit of our shareholders. (Guiding Principles 6)
• We provide our shareholders and investors with
• Based on our philosophy of “Customer First,” timely and fair disclosure on our operating results
we develop and provide innovative, safe and and financial condition. (Guiding Principles 1 and 6)
outstanding high quality products and services Customers Shareholders
that meet a wide variety of customers’ demands Global Society/Local Communities Provide safe and reliable vehicles that inspire Ensure sustainable growth by fostering the
to enrich the lives of people around the world. enthusiasm at affordable prices. Listen sincerely virtuous circle;
(Guiding Principles 3 and 4) Environment to customer voices and continue to reinvent o Always better cars
• We will endeavor to protect the personal
information of customers and everyone else we We aim for growth that is in harmony with the ourselves through sufficient information o Enriching lives of communities
are engaged in business with, in accordance with environment by seeking to minimize the environmental disclosure and dialogue. o Stable base of business.
the letter and spirit of each country’s privacy laws. impact of our business operations, such as by working to
(Guiding Principles 1) reduce the effect of our vehicles and operations on climate
change and biodiversity. We strive to develop, establish
Employees and promote technologies enabling the environment
and economy to coexist harmoniously, and to
• We respect our employees and believe that the build close and cooperative relationships with
success of our business is led by each individual’s a wide spectrum of individuals and organizations
creativity and good teamwork. We stimulate involved in environmental preservation. (Guiding Employees Business Partners
personal growth for our employees. (Guiding Principles 3) Create working environments for various Contribute for economic development of local
Principles 5)
• We support equal employment opportunities, Community employees to work proudly and with loyalty and communities with open stance to new suppliers
diversity and inclusion for our employees and do confidence in fulfilling their potential, which and dealers and through sustainable growth based
not discriminate against them. (Guiding Principles • We implement our philosophy of “respect for realize their self-growth. on mutually beneficial business relationshipswith
5) people” by honoring the culture, customs, history dealers/distributors and suppliers.
• We strive to provide fair working conditions and to and laws of each country. (Guiding Principles 2)
maintain a safe and healthy working environment • We constantly search for safer, cleaner and superior
for all our employee. (Guiding Principles 5) technology that satisfies the evolving needs of
• We respect and honor the human rights of people society for sustainable mobility. (Guiding Principles
involved in our business and, in particular, do not 3 and 4)
use or tolerate any form of forced or child labor. • We do not tolerate bribery of or by any business
(Guiding Principles 5) partner, government agency or public authority Global Society/Local Communities
• Through communication and dialogue with our and maintain honest and fair relationships with
employees, we build and share the value “Mutual government agencies and public authorities. Reduce environmental burdens through lifecycle
Trust and Mutual Responsibility” and work together (Guiding Principles 1) by developing various eco-friendly vehicles and
for the success of our employees and the company. technologies and making them prevail. As a
• We recognize our employees’ right to freely Social contribution good corporate citizen, respect the culture and
associate, or not to associate, complying with the customs of every nation and contribute to social
laws of the countries in which we operate. (Guiding • Wherever we do business, we actively promote
Principles 5) and engage, both individually and with partners, in development. Be aware of responsibilities of
• Management of each company takes leadership in social contribution activities that help strengthen developing and producing vehicles and contribute
fostering a corporate culture, and implementing communities and contribute to the enrichment of for realization of new mobility society free from
policies, that promote ethical behavior. (Guiding society. (Guiding Principles 2) traffic accidents and congestion.
Principles 1 and 5)

56 Annual Report 2015 57

 Indus Motor Company Ltd.

Relations with Customers

Provide Customers with high-quality, reliable products, as driving performance, at an affordable price. Based cross-functional co-ordination across the four
on a “Customer First” philosophy, we strive to create a departments. 3S + CR department presence also
we sincerely listen to Customer voices and continue
sale and after-sale structure that promptly responds fosters the concept of being ONE TEAM focusing
to reinvent ourselves through sufficient information to the various needs of customers nationwide. collectively on achieving ONE DREAM, Delighting
disclosure and dialogue Customers!
Consumer Choice Award 2014
Customer Satisfaction Survey
The Consumer Association of Pakistan’s “Consumer
Development Procurement Choice Award” is one of the most prestigious awards Our valued customers have shown trust and
Measurably enhance customer
perspective toward making
Promote built-in quality
in an integrated approach with presented annually to organizations recognized satisfaction on services provided by Toyota 3S
outstanding vehicles in which suppliers from the customers’ viewpoint
they have confidence solely on the basis of consumers’ choice and dealerships in the country. Improvements in results
preference. Indus Motor won the Consumer Choice from surveys of wave 11 prove that the efforts of
Award in the category of Best Car for the year 2014 the entire IMC team at delivering superior value to
for the Corolla GLi, which is IMC’s flagship product. customers in delighting and motivating them is
It is a testament of the faith, trust and confidence strengthening the relationship.
of our valued customers in IMC’s ability to deliver
quality products to customers and ensure the best Customer Assistance Centre
possible after-sales services.
After-Sales Service Production Our customer assistance centre is the busiest
Promote a more customer centric Strengthen a monozukuri system that Customer Delight Workshop communication channel between customers and
approach from the viewpoints of meets or exceeds the expectation
dealers and markets of customers dealers. IMC Customer Assistance Center (CAC)
By always keeping the ‘customer first’ principle as facilitates more than 36,000 customers’ calls
top priority, IMC ensures the development of such a seeking different product inquiries and complaints
mind-set among its employees who continue to every year. CAC was initiated at IMC in 2008 and
understand the customers more so that their since then has been trying to upgrade operations
expectations are not just met, but exceeded. In continuously to provide assistance to our valued
The smiles that we earn from our customers are our improvement and the enhancement of customer its effort to instill the “Customer First” principle, customers. Members work diligently so that each
greatest reward. Is there a gap between the “great confidence and trust by cooperating closely with Toyota Customer Delight Workshop (TCDW) is held opinion voiced by our customers is processed and
cars” Toyota thinks of and the expectations of our one another. every year. The workshop involves participants addressed promptly with input of all cross functional
customers? Are they satisfied with our current across Sales, Service, Parts and Customer Relations departments.
services? To be able to respond to the constantly- Quality Award function. Workshop helps in building strong
changing expectations of customers and society,
we listen to customers’ voices with sincerity and IMC received Toyota Motor Asia Pacific’s Quality
continually work on improvement. We never forget Achievement Award 2013-14 for Warranty
that the support of various stakeholders has made Reduction, an accolade conferred to only 4
Toyota what it is today; we value the relationships of manufacturers out of 10 in the Asia Pacific region
trust we have built; and we work toward continuing for reduction in number of customer complains
to provide accurate and appropriate communication under warranty. IMC’s consistent year of success
and respond transparently and promptly to be a in winning this award will help further improve Development Purchasing
company that is continually trusted. customer satisfaction.
This great achievement could not be realized without Refinement of
drawing requirement

Basic Concepts of Quality the combined efforts of Service, Production, Product

Development and Quality Assurance & Quality
Purchasing of
excellent parts
Fix in right and materials
the first time
Ji Kotei-
Quality is achieved through the integration of Control departments. Kanketsu*
Development, Design, Purchasing, Production and EDER
(Early Detection,
Requirement for
parts to produce
good products

After-sales Service. Each is indispensable in the Applying Customer Feedback

Early Resolution)

delivery of satisfactory quality to customers. We

Maintain and control
the standardized work
(manufacturing)

continue to aim to put the concepts of “Customer Toyota’s principle of “Customer First exists” for the Sales and
after-sales Production

First” and “Quality First” into practice and to respond purpose of providing customers with products and service

to the expectations of customers and society. services that earns their smiles. On this basis, we *Ji Kotei-Kanketsu
Built-in quality with ownership
That is why every member across our operations hope to offer cars with superior features in terms COO Mr. Ali Asghar Jamali receiving the Structure of Continuous Quality Improvement Activities
maintains high consciousness, and takes ownership of environmental, safety and quality performance, Consumer Choice Award in Customer First Program
and the responsibility of striving for continuous while also offering the intrinsic appeal of cars, such

58 Annual Report 2015 59

 Indus Motor Company Ltd.

Relations with Employees

Create working environments for various of any kind. We respect their individuality and human Pacific Human Resource Management meeting held
rights and provide them with workplaces where they for Toyota group companies in which all HR heads
employees to work proudly and with loyalty and can work with a high level of motivation. participate. At this meeting, an overseas human
confidence in fulfilling their potential, which resource network was built and participants share
realize their self-growth As an equal-opportunity employer, we encourage their company’s policies on regional HR development.
gender diversity in workplace and ensure the well- Subsequently, we also create company’s HR Hoshin
being of all the workforce members through an Kanri to set common indicators across the Toyota
environment conducive to conflict-free functioning. group to develop global human resources.
In order to strengthen IMC’s human resource base, from others. Indus Motor strives to provide our
which supports its growth, the company is striving employees with inspiring training and education
During the fiscal year 2013-14, a number of Pride and Loyalty
to create a positive working environment in which experiences that broaden and enhance skills
managers, including GMs received diversity training
all employees can work with confidence, vigor and and uncover new concepts and ideas. Talent
to develop a common understanding of diversity Creating an inspiring and rewarding workplace
enthusiasm. We endeavor to foster employees’ development takes many forms at Indus, including
management. We will continue to provide managers is fundamental to IMC’s talent recruitment and
pride and loyalty to the company, workplace and training sessions for key functional areas. To ensure
with this training to create a workplace culture that retention strategy. We provide an exceptional and
colleagues by encouraging a culture of teamwork a world-class workforce, IMC trains, educates and
takes full advantage of diversity. inspiring workplace involves recognizing people for
through communication and friendly competition. recognizes employees so that they are successful
a job well done. Every year, competition of Quality
contributors to the business. IMC’s performance
Safety and Health Control Circle held across its network that gives an
Based on the Toyota Way, a set of principles and management and career development philosophy
opportunity to employees to compete and present
behaviors that underlined by Toyota’s managerial is that employees should be engaged, aligned and
Ensuring employee safety and health is one of their kaizen initiatives reflecting their identification
approach and Toyota Production System, and as excited about their careers and make meaningful
Toyota’s most important business activities and of work site issues and their resolution through
well as Functional and Advanced Management contributions to the company’s success.
is a universal value, unaffected by times. At IMC, rigorous analysis to improve productivity, safety,
Programs from leading institutions in Pakistan and
we strongly believe that safety culture can only quality, cost and overall the work place. This concept
abroad, we conduct step by step training program Respect for Diversity
be built by creating a safety mind set through of being in charge of and responsible for your own
for our future leaders. This along with on-the-
constant reminders, systems and initiatives aimed area is a testament to IMC’s culture of empowerment
job learning has resulted in an environment that Innovation comes from the diverse perspectives
at reinforcing the Safety and Health message, be it of its people and generates a sense of pride and
supports human empowerment, both in terms that an inclusive, inspiring culture helps to foster.
in the form of posters identifying health hazards ownership of their work and work environment.
of contributing to our business objectives and As a joint venture company, we embrace and
prevalent in society like tobacco chewing, to
achieving personal career goals. respect the diverse cultures of our employees and
ensuring no-smoking offices, to adopting basic rules Strong Relations between Labor and Management
believe it is these distinct attributes that make
(stop, point, call) for crossing internal roads, to more
Employee Training, Education and Recognition our organization an innovative and rewarding
precise and data based systems and competitions The approach of mutual trust and respect between
place to work. We treat all employees on an equal
requiring each section to identify potential hazards labor and management at IMC is symbolized by the
Moments of inspiration often occur when we have basis, regardless of physical, financial or social
and taking corrective actions. (Haro Hatti), as well healthy industrial relations climate that has jointly
an opportunity to listen to, share with and learn characteristics, and we do not tolerate harassment
as having zero accidents and lost workday as a led the company and its workforce see through
company-wide goal. These measures are beginning different phases, industry and macro environment
Management Development Program to take effect and last year we again closed with zero challenges with a positive, mature and result
lost work day injuries for our employees. oriented mind set ensuring stable employment and
Management AM / DM / Senior a healthy, fair and conducive work environment. At
Training Trainee Engineer Manager Manager GM / SGM Director
Global Human Resource Management IMC, we truly believe in the Toyota Way and its two
Orientation pillars - Continuous Improvement and Respect for
The globalization of human resources is one of the People because we realize that in the end, it is our
Fundamental Skill Training IMC’s most urgent deliveries. Every year, the Asia people who make the difference.
Toyota Way
PDCA – Plan Do Check Act
A3 Report
Toyota Business Practice
Managerial Skills
Marketing Strategy
Leadership Grid
Advance Management Program
Management Development Program

Respecting Diversity and Human Rights to provide all employees with Workplaces where they can fulfil Team members cherishing work culture Signing ceremony of the labor agreement
their potential

60 Annual Report 2015 61

 Indus Motor Company Ltd.

Global Society/ Local Communities were awarded to participants providing innovative

Social Development Initiatives solutions for solving the country development
challenges in two critical domains, i.e., (a) enhancing
productivity, and (b) developing innovation
products.

Every Child Yearns to Learn

As a good corporate citizen, respect the culture and
customers of every nation and contribute to social We firmly believe that it is our youth who will
development steward this country towards a brighter future and it
is in them that we must invest. IMC provided support
to over 30 educational institutions including
scholarships and gold medals for meritorious
The Basic Concepts of Social Contribution Community Health Care
students. Under Toyota Goth Education Program
Students of the new body and paint shop training (TGEP), about 250 students belonging to poor
Toyota laid down policies for social contribution Recognizing the need to support underprivileged center at Aman Tech
communities are enrolled, studying in The Citizens
activities based on its Guiding Principles and those neighborhood, we regularly arrange free medical
Over 2,000 students have so far successfully Foundation (TCF) schools located in Bin Qasim area,
of House of Habib form the basis of our CSR Policy, camps and examination facilities giving the
graduated from our T-TEP institutes and nearly a near our plant site. In addition, we fund two adopted
which the company shares globally. communities access to health care services. The
third of these graduates are employed within the school of TCF where over 550 students are receiving
medical facilities set up near Razakabad, Kohi Goth
Toyota network in Pakistan. primary education.
Contribution towards sustainable development is and Sale Muhammad, operates weekly OPD clinics
at the heart of our CSR Policy, which explain how we including free distribution of medicines. During the
Pakistan Innovation Fund 25th Anniversary Gift
actively promote and engage in social contribution year, some 30,000 patients were screened at these
activities that strengthen vulnerable communities facilities.
We strongly favor promotion of innovation based Addition of the Habib University and planned
and contribute towards enrichment of the society.
entrepreneurship culture, if the country is to construction of a major hospital and surgical
Responding to Natural Calamities
keep pace with the fast progress being made in complex by the Patient Aid Foundation at JPMC in
Sharing the joy of record results, we went beyond
the developed world. To catapult, the process Karachi are notable philanthropic efforts of world
our stated policy amount and spent Rs. 69 million on IMC is at the forefront and actively engaged in
requires that the gap between our academia and class facilities that will add a totally new dimension
social contribution activities in FY15. Additionally, providing assistance whenever the country is hit
local industries to bridged, so that innovation to the quality education and healthcare available in
over 100 employees volunteered their quality time with humanitarian disaster through natural calamity
based entrepreneurship take roots and gets the country.
supporting social development activities. Since the or other emergency. We work closely with the
start-up 25 years back, our corporate giving has National Disaster Management Authority to provide commercialized.
Consistent with our belief to realize our ambitions,
exceeded Rs 500 million earning us the goodwill and relief by way of food and medicine.
In support of this concept, IMC joined hands with the whilst sharing the success with the communities, we
respect that we cherish.
Pakistan Innovation Foundation and contributed are proud to partner the above institutions and have
During the year, we were amongst the first to respond
towards initiating the first ‘Toyota Manufacturing pledged Rs 100 million each as our gift towards their
to the plight of the victims of the earthquake in the
sustainability.
Awaran district of Baluchistan with relief goods and
3% 1% 8% again later supporting large number of people Innovation Challenge’ a year-long open competition
1% displaced in North Waziristan following the Pakistan that culminated in the final event where prizes
Army’s ‘Zarb-e-Azb’ operation to clean up the area
of terrorists.

Toyota Technical Education Program (T-TEP)

33%
The Toyota Technical Education Program (T-TEP)
was initiated to train and develop human resources
on the latest automobile technology, thereby
equipping them with the skills to make them
productive members of the country’s workforce. The
54% company supports three such institutes in Islamabad,
Karachi and Lahore. During the year, a Toyota Body IMC and Pakistan innovation fund
and Paint Training Center was established at AMAN- enabled me to showcase my skills
Road Safety Community welfare Education TEC for development of vocational skills. This is a and creativity, thereby enabling me
Environment Health Calamities first of its kind facility that will impart formal training to win laurels for myself and pakistan
in auto body and paint repair technology and help fill Winner of the Toyota manufacturing Innovation
vacuum in this discipline. challenge receiving trophy from Prof. Ahsan Iqbal Dr. Khalil, Toyota Manufacturing Innovation Challenge (TMIC) Finalist

62 Annual Report 2015 63

Global Society/ Local Communities
Traffic Safety

Be aware of responsibilities of developing and producing

vehicles and contribution for realization of new mobility,
society free from traffic accidents and congestion

Basic Concepts Toyota Research on Traffic Congestion (T-RTC)

In order for automobiles to develop as a means During 2012-14 we funded a pioneering research
of transportation that continue to provide the project to evaluate the cost of traffic congestion in
convenience of mobility in the future, it is important Karachi and its socio-economic impact on the overall
to minimize the negative effects of environmental economy. We believe T-RTC provides valuable
impact, traffic accidents and traffic congestion. With planning data to development authorities and
the aim of achieving an affluent mobile society, traffic police to leverage the information for socio-
Toyota has for some time positioned the response to economic initiatives.
this social task as an extremely important issue and
has been actively involved in addressing it. The research data has played a pivotal role in
persuading JICA to convince the local government
Road accidents are a major cause of injuries and to take on the Malir flyover project which is under
fatalities the world over and Pakistan’s track record construction and for JICA itself to commit funding
to address the road safety issues is particularly poor for the relaying a portion of the national highway in
due to lack of an effective institutional framework 2016. The completion of both projects is likely to be
to address the challenge. However, IMC for its part an efficiency game changer for industries operating
is continuously engaged in road safety initiatives in Port Qasim and surrounding vicinity.
promoting road safety education and undertaking
research to find indigenous solutions to mitigate the Toyota Road Traffic Injury Research Project (TRIRP)
adverse environmental impact of traffic congestion.
In 2006-11, we focused our energy on our first
Public Awareness Campaign on Road Safety research project to evaluate the nature, location,
magnitude and major causes of traffic hazards in
Through the national print ads, we drew public Karachi. The data was of tremendous help to the
awareness on importance of clamping seat belts, Government of Sind to correct engineering faults
refrain from cell phone usage whilst driving and in road designs and thereby reduce the number
importance of wearing helmets when riding of accident casualties at these black spots and it
motorcycles. Meanwhile, our Parts business used enabled local hospitals to better equip themselves
the social media extensively to sensitize customers to quickly respond to accident emergencies. In 2011,
not fall prey to counterfeit products as these can be the RTIRP was recognized and taken over by UN-
hazardous. WHO under their “Decade of Actions for Road Safety
2011-20”.

Initiatives designed to educate people on Integrated Three Part Initiative involving People, Vehicles and Pursuing Real-world Safety by Learning from Actual Accidents
the Traffic Environment and Reflecting the Results in Products
traffic safety

People
Lectures etc.
Actual accident investigation
and analysis
In 2012, the company celebrated the 500,000th vehicle
line off from its facilities. Dr. Abdul Hafeez Sheikh, the
to raise
Investigation and

November
awareness of
traffic safety
analysis of

then Federal Minister for Finance, Mr. Yukitoshi Funo,

accidents
People

2012
Integrated Three
Part Initiative
to improve
Pursuing
“real-world
Executive Vice President, Toyota Motor Corporation,
People
Development of
traffic safety Traffic
environment
safety”
Japan and Mr. Junzo Shimizu, Chairman Toyota Tsusho
Corporation were present at the occasion.
technology for Information on
accident avoidance traffic jams, and
and driver/ maintenance and
Vehicles Traffic passenger
protection in
management Development and
environment a car collision
of traffic lights
and roads assessment Simulations

Pursuing a higher level of Participating in Evaluation of actual vehicles to

Pursue safe vehicles and
Accident simulation to develop
preventive measures
vehicle safety the creation of a safe Incorporate preventive technologies
Into actual vehicles
traffic environment

64
 Indus Motor Company Ltd.

Global Society/ Local Communities The Fifth Toyota Environment

Environment Action Plan: Main Status of Actions
Field Status of Action
Achieved CO2 Reduction goal due to increased production and
Reduce environmental burdens through life cycle Energy Global Warming
tighter controls
by developing various eco-friendly vehicles and
technologies and making them prevail Recycling of Resources Number of Parts received in returnable plastic bins increased in 2014

Environmental Philosophy, Policy and the Toyota shortages, deforestation, and rapidly increasing Consolidated Environmental Continuous compliance of NEQS for Air emission and waste water
Environmental Action Plan carbon footprints indicate an alarming need for a Management
sustainable and comprehensive management of
Our philosophy and policies on the environment the environment. IMC is committed to preserving
are based on the Guiding Principles at Toyota and the environment and the prevention of pollution Emissions in manufacturing process Water usage in vehicle production process
the Global Vision that stresses the importance of from its activities and operations, and to protect Ton/U m3/Unit
“respect for the planet.” the employees and workplaces from hazards of 0.6 CO2 Emission 4 Water Consumption
pollution. The Management strongly believes in 0.5
0.5
2.95
The Company strives to bring continuous following environmentally sustainable practices 0.4
3
0.4
improvement in its environmental management pertaining to the management of gaseous 2.40

system to enhance the health, safety, and emissions, particulate matter, noise levels, 0.3 2

environmental performance under the three effluents and solid waste. 0.2
priority themes of: 0.1
1

Safe Work Place

1. Contribution to a low-carbon society 0
2013-14 2014-15
0
2013-14 2014-15
2. Contribution to a recycling based society, and A safe work place is the prime objective of our
3. Environmental protection and contribution to organization. We strive to inculcate safety mind-
a harmony with nature society. set in our work force through comprehensive safety Volatile Organic Compound emissions in Reusable Bins usage in Packing parts
painting process
training and skill enhancement programs for own No. of Parts in Returnable Plastic Bins
By embracing these themes, we will contribute and contractor employees. During the year, we g/m2/Unit
350 340
to the sustainable development of society and engaged an external consultant to undertake Fire 64.5

the world through manufacturing, products and Risk assessment and further strengthened our fire 62.5
VOC Emissions
300
221
services that are in harmony with the global prevention and detection system. 60.5
250

environment. 200
58.5
FY15 was the fourth year in succession that we 57.4
150
Environmental Conservation and Contribution achieved the distinction of no lost workday injury. 56.5 55.7
100
to a Harmony with Nature Society 54.5 50
In this year IMC also achieved another milestone 52.5 0
The ever increasing environmental degradation, by winning the Toyota Global Safety Award for 2013-14 2014-15 2013-14 2014-15

with challenges of energy deficiency, food Karakuri Activity done in Weld Shop.
IMC remained Committed to Environmental Management by Complying to all national
Environment Quality Standards.

Enhancing recycling of resources through 3R

Significantly reduce GHG emissions Air & Waste Water Quality Data Achievements
Contribution to a Contribution to a
low-carbon society The 5th Toyota Environmental recycling- based S.No KPI Equipment Parameters NEQS Limits 2015
Action Plan Society
Sox (mg/N.m) 1700 12.3
Environmental protection and contribution 1 Air Emissions Gas Generators Nox (mg/N.nr) 400 213
to a harmony with nature society CO (mg/N.m) 800 621
Receiving and continuing the blessings of nature
pH 6-9 7.85
BOD (mgll) 80 14
2 Waste Water
COD (mgll) 150 128
Environmental Management
TDS (mgll) 3500 855

66 Annual Report 2015 67

 Indus Motor Company Ltd.

Relations with Shareholders

Ensure sustainable growth by fostering the virtuous

Safety DOJO Simulation Training • Anti-corrosive coating on floor to prevent soil
circles, always better cars, enriching lives of
underground water contamination
We use DOJO simulation training to give the real • Implementing sludge dewatering mechanism to communities, stable base of business
time feeling of the potential hazards that employees reduce landfill impact
face in the plant environment and offices. This • SOPs to counter accidental chemical spillage
training has been imparted all employees and new
hires. With such implementations, IMC has joined the
ranks of certain major regional production hubs
Safety Plant Management Requirement such as Thailand and Indonesia in terms of standing
on environmental issues.
During the year, our press shop achieved the
IMC basic management principle is to benefit long term sustainable growth. On efficiency, IMC
distinction of 100% implementation of step 3E of The company also achieved all environmental
the society through its business activities while constantly maintains focus on cost reduction efforts
Safety Jiritsuka (Self Reliance) that assures safety control parameters under the NEQS (National
realizing common growth founded on long-term and increasing level of localization. And in view of
in handling and operating machines. This is another Environmental Quality Standards).
perspective. The three key components of Toyota’s anticipated medium to long term growth in the
step towards achieving self reliance in safety.
financial strategy are ‘growth, efficiency and automotive sector, we believe maintaining adequate
Toyota’s team also conducted audit of non-
sustainability’. From the viewpoint of growth, IMC liquidity is essential in terms of stability, retaining
Toyota GEMS Audit – going one notch above manufacturing areas and appreciated the level of
plans to implement forward looking investments funds for future capital expenditure for long term
management commitment on environmental issues
to respond to structural shifts in demand ensure growth and maintaining improved cash flows.
Toyota conducts a stringent environmental audit and its communication, training and CSR activities.
of IMC annually to ensure compliance with the Sales and service purchasing and logistics were also
Toyota Global Environmental Management System covered.
covering areas relating to environment, operational Sustainable Growth
controls, chemical and waste management systems EMS ISO 14001:2004 Audit Results
and emergency preparedness. Stable Base of Business
We continue to maintain an impressive record of
It is heartening that in the recent Toyota GEMS audit, zero non-compliance in the EMS ISO 14001 audit Regional Product Business
Strategy Strategy Localization Strategy
Strategy
IMC was declared a fully compliant and its rating ensuring strict adherence to the requirements. It’s
upgraded one notch up on self-reliance or Jiritsuka. a laudable achievement that we strive to sustain in • Provide products and services matched to customer
the future. needs
During the year, several additional measures were
taken to reduce impact on environment: Quality Cost Improve Products Strategy
competitiveness
in product • Product appeal
and cost
HR
Develop- • New Variants to be introduced to meet customer
ment requirement

• Additional Services or promotion to be offered align with

products

Business Strategy
Improve Profitability
• Achieving targeted profitability and returns • Develop close relations with customers through a strong
• Enhance Volumes against last year dealership network, customer surveys and customer
• Reduce cost thorough additional localization and other relationship activities.
initiatives.

Key Components of Financial Strategy Dividends

Safety Dojo provides real life safety Enhancing corporate value through Long Term Benefitting Shareholders is one of our
Plant design ensures safe and sustainable operations Stable growth top management priorities
experiences to employees
Growth : Sustainable growth through continuous forward IMC strives to continue paying dividends while giving due
looking investments consideration to factors such as the business results in each
Efficiency : Improving profitability and enhance cost reduction term, investment plans and cash reserves.
efforts
68 Stability : Maintaining a solid financial base Annual Report 2015 69
 Develop-
ment requirement

• Additional Services or promotion to be offered align with

products
Indus Motor Company Ltd.
Business Strategy
Improve Profitability
• Achieving targeted profitability and returns • Develop close relations with customers through a strong

Relations with Business Partners

• Enhance Volumes against last year dealership network, customer surveys and customer
• Reduce cost thorough additional localization and other relationship activities.
initiatives.

Contribute for economic development of local

Key Components of Financial Strategy Dividends
communities with open stance to new suppliers
and dealers and through sustainable growth based
Enhancing corporate value through Long Term
Stable growth
Benefitting Shareholders is one of our
top management priorities
on mutually beneficial business relationships with
Growth : Sustainable growth through continuous forward IMC strives to continue paying dividends while giving due
dealers/distributors and suppliers
looking investments consideration to factors such as the business results in each
Efficiency : Improving profitability and enhance cost reduction term, investment plans and cash reserves.
efforts
Stability : Maintaining a solid financial base
Suppliers Dealers
Basic Policies Toyota Dealer CSR Guidelines
Supplier CSR Guidelines CSR Declaration
CSR Promotion Activities CSR Workshop

Independent Director Quarterly Analyst Briefings

At the annual shareholder meeting, the company Regular sessions were held with the security analysts
elected 10 directors for a term of 3 years commencing to update on quarter end performance and market
October 31, 2014 including Mr. Azam Faruque as an environment.
Independent Director in compliance with the Code
of Corporate Governance 2012.

Tr
us th
t row
Mu g
tua m
ter
l gr
owt long-
h ba le
sed on Stab
mutual trust Bond

Openness | Contribution to Local Communities to working to achieve better quality in terms of

safety and confidence to secure higher customer
Toyota takes an integrated approach to “making satisfaction, in further united cooperation with its
better cars” and providing “better services” with business partners including suppliers and dealers.
many business partners including suppliers and
dealers. Though business activities are ever more Toyota’s Basic Purchasing Policies
globalized, but we continue to share the Toyota
principles and vision and “work with business We endeavor to ensure stable, long-term
partners in research and creation to achieve stable, purchasing of the best products in the world at the
long-term growth and mutual benefits, while lowest prices and in the most speedy and timely
keeping ourselves open to new partnerships.” We manner. In order to achieve this, we believe that the
build mutual trust with business partners in each most important task in purchasing is the creation
region and contribute to the happiness of people of relationships in which suppliers do business
working there as well as regional economic growth. on an equal footing based on mutual respect,
thus building firm bonds of trust and promoting
Basic Concept of Business Partners mutual growth and development. Toyota’s global
purchasing activities based on close cooperation
Chairman Mr. Ali S. Habib receiving KSE top 25 Award from the Prime Minister H.E. Mian Muhammad Nawaz Sharif
In order to contribute to society through revolve around the following three policies making
automobile manufacturing and put into practice up the Basic Purchasing Policies.
the principle of “Customer First,” it is necessary
to implement various activities in a spirit of 1. Fair competition based on an open-door policy
cooperation and share principles with our 2. Mutual benefit based on mutual trust
business partners. In addition to steadily pursuing 3. Contribution to local economic vitality through
open and fair business activities and conventional localization: good corporate citizenship
ones including CSR activities, Toyota is committed

70 Annual Report 2015 71

Collaboration with Suppliers to enhance customer satisfaction based on a strong
relationship of trust, close two-way communication,
We recognize that our future growth and the superiority of Toyota products and services, and
sustainability is reliant on having capable and shared value.
dependable local parts manufacturers. Sourcing
the components from domestic market reduces A fundamental principle of Toyota is ‘Customer First,
the exposure to exchange rate fluctuations and Dealer Second, Manufacturer Third.’ Based on its
strengthens Pakistan’s economy. Consequently, policy of ‘Customer First,’ we believe that dealer
Rs 30 billion worth of parts were sourced from Tier success, which ultimately leads to the growth of
1 local suppliers in FY15 and this amount is set Toyota, is achieved by boosting support for dealer
to increase as we pursue greater localization. In initiatives to improve customer satisfaction through
addition, IMC supported some 500 tier 2 and tier 3 the implementation of PDCA (Plan, Do, Check, and
suppliers indirectly and continues to work closely Act), as well as by being committed to meeting the
with the Engineering Development Board and the customer and dealer expectations.
local industry to implement supplier improvement
initiatives aimed to achieve quality alignment with 2014 Suppliers Convention | Dealer Conference
the outside world so that Pakistan’s automotive
industry becomes globally competitive. We held our annual signature events to recognize
our nationwide suppliers and dealers for their
Relations with Dealers contributions and emphasizing the need to
continuously enhance quality and delighting
Our sales dealership network is the front line where customers with experience that they cherish.
Toyota’s ‘Customer First’ principle will be directly
observed. Toyota and its dealers always work as one

Safety and
Confidence
Mutual trust
Japan Dealer

Good products at lower prices

Supplier
in a timely manner
TOYOTA
Customer
Overseas Dealer/distributor
Enriching Mutually beneficial
lives of people relationship

The 11th Generation Corolla is 60% localized, with 760 local

parts.
September
2014 While visiting Pakistan, Mr. S. Yasui, Chief Engineer Corolla,
acknowledged the efforts of IMC in making the 11th generation
Corolla a resounding success.

Toyota G.T Motor won the Nationwide Best Performance Award Shaheen Engineering won the nationwide best vendor award

72
 Indus Motor Company Ltd.

Statement of Compliance with the 10. The Board has approved the appointment of Chief Financial Officer (CFO), Company Secretary and
Head of Internal Audit earlier, including their remuneration and terms and conditions of employment.

Code of Corporate Governance However, no new appointment has been made during the year.

11. The Directors’ Report for this year has been prepared in compliance with the requirements of the Code
and fully describes the salient matters required to be disclosed.
This statement is being presented to comply with the Code of Corporate Governance (“Code”) contained
in Regulation 35 of the Listing Regulations of the Karachi Stock Exchange Limited, Lahore Stock Exchange 12. The financial statements of the Company were duly endorsed by the CEO and the CFO before approval
Limited and Islamabad Stock Exchange Limited, for the purpose of establishing a framework of good by the Board.
governance, whereby a listed company is managed in compliance with the best practices of corporate
governance. 13. The Directors, CEO and Executives do not hold any interest in the shares of the Company other than
that disclosed in the pattern of shareholding.
The Company has applied the principles contained in the Code in the following manner:
14. The Company has complied with all the corporate and financial reporting requirements of the Code.
1. At the year ended June 30, 2015, the Board consists of the following Non-Executive, Independent and
Executive Directors: 15. The Board of Directors have put in place a mechanism for undertaking annual evaluation of the
performance of the Board.
Non Executive Directors Executive Directors
Mr. Ali S. Habib Chairman Mr. Keiichi Murakami Vice Chairman 16. The Board has formed an Audit Committee. It comprises of six members, including five Non-Executive
Mr. Kyoichi Tanada Director Mr. Parvez Ghias Chief Executive Directors and one Independent Director.
Mr. Masato Yamanami Director Mr. Yoshiyuki Matsuo Senior Director Manufacturing
Mr. Farhad Zulficar Director 17. The meetings of the Audit Committee were held at least once every quarter prior to approval of interim
Mr. Mohamedali R. Habib Director and final results of the Company and as required by the Code. The terms of reference of the committee
Mr. Raza Ansari Director have been formulated and advised to the committee for compliance.

Independent Director 18. The Board has formed an HR and Remuneration Committee. It comprises of five members, of whom
Mr. Azam Faruque Independent Director three are non-executive directors, including the Chairman of the committee.

19. The Board has set-up an effective internal audit function within the Company.
2. The Directors have confirmed that none of them is serving as a director in more than seven listed
companies, including this Company. 20. The statutory auditors of the Company have confirmed that they have been given a satisfactory
rating under the quality control review programme of the Institute of Chartered Accountants of
3. During the year, one casual vacancy occurred on the Board on June 15, 2015, that was duly filled by the Pakistan (ICAP), that they or any of the partners of the firm, their spouses and minor children do not
induction of the new Director, Mr. Masato Yamanami, on the same day. hold shares of the Company and that the firm and all its partners are in compliance with International
Federation of Accountants (IFAC) guidelines on Code of Ethics as adopted by ICAP.
4. All the resident directors of the Company are registered as taxpayers and none of them has defaulted
in payment of any loan to a banking company, a DFI or an NBFI or, being a member of a stock exchange, 21. The statutory auditors or the persons associated with them have not been appointed to provide other
has been declared as a defaulter by that stock exchange. services except in accordance with the listing regulations and the auditors have confirmed that they
have observed IFAC guidelines in this regard.
5. The Company has prepared a “Code of Conduct” and has ensured that appropriate steps are taken to
disseminate it throughout the Company along with its supporting policies and procedures. 22. The ‘closed period’, prior to the announcement of interim / final results, and business decisions, which
may materially affect the market price of Company’s securities, was determined and intimated to
6. The Board has developed a Vision / Mission statement, overall corporate strategy and significant policies directors, executives and stock exchanges.
of the Company prepared by the management. A complete record of particulars of significant policies
along with the dates on which they were approved or amended has been maintained. 23. Material / price sensitive information has been disseminated among all market participants at once
through stock exchanges.
7. All the powers of the Board have been duly exercised and decisions on material transactions, including
appointment and determination of remuneration and terms and conditions of employment of the Chief 24. We confirm that all other material principles enshrined in the Code have been complied with.
Executive (CEO) and other executive directors, have been taken by the Board.

8. The meetings of the Board were presided over by the Chairman and the Board met at least once Karachi
in every quarter. Written notices of the Board meetings, along with agenda and working papers, were August 28, 2015.
circulated at least seven days before the meetings. The minutes of the meetings were appropriately
recorded and circulated.

9. During the year, the Board has arranged orientation courses for the Directors. During the year, one
Director has obtained certificate of Directors Training Course from Pakistan Institute of Corporate Parvez Ghias Keiichi Murakami
Governance (PICG). Chief Executive Vice Chairman & Director

74 Annual Report 2015 75

 IMC’s legacy of 25 years is full of landmark achievements. This picture
The journey continues... symbolizes our employees dedication and commitment in making
Toyota the most admired car of Pakistan
Auditors’ Review Report to the Members on the Statement of Auditors’ Report to the Members
Compliance with the Code of Corporate Governance
We have audited the annexed balance sheet of Indus Motor Company Limited as at June 30, 2015 and the
We have reviewed the enclosed Statement of Compliance with the best practices contained in the Code of related profit and loss account, statement of comprehensive income, cash flow statement and statement of changes
in equity together with the notes forming part thereof, for the year then ended and we state that we have obtained
Corporate Governance (‘the Code’), prepared by the Board of Directors of Indus Motor Company Limited
all the information and explanations which, to the best of our knowledge and belief, were necessary for the
(‘the Company’) for the year ended June 30, 2015 to comply with the requirements of Regulation No. 35 of Chapter purposes of our audit.
XI contained in the Listing Regulations issued by the Karachi Stock Exchange, the Lahore Stock Exchange and
the Islamabad Stock Exchange where the Company is listed. It is the responsibility of the company’s management to establish and maintain a system of internal control, and
prepare and present the above said statements in conformity with the approved accounting standards and the
The responsibility for compliance with the Code is that of the Board of Directors of the Company. Our requirements of the Companies Ordinance, 1984. Our responsibility is to express an opinion on these statements
responsibility is to review, to the extent where such compliance can be objectively verified, whether the Statement based on our audit.
of Compliance reflects the status of the Company’s compliance with the provisions of the Code and report if it
does not and to highlight any non-compliance with the requirements of the Code. A review is limited primarily We conducted our audit in accordance with the auditing standards as applicable in Pakistan. These standards
to inquiries of the Company’s personnel and review of various documents prepared by the Company to comply require that we plan and perform the audit to obtain reasonable assurance about whether the above said statements
with the Code. are free of any material misstatement. An audit includes examining on a test basis, evidence supporting the
amounts and disclosures in the above said statements. An audit also includes assessing the accounting policies
and significant estimates made by management, as well as, evaluating the overall presentation of the above said
As part of our audit of the financial statements, we are required to obtain an understanding of the accounting and statements. We believe that our audit provides a reasonable basis for our opinion and, after due verification, we
internal control systems sufficient to plan the audit and develop an effective audit approach. We are not required to report that:
consider whether the Board of Director’s statement on internal control covers all risks and controls or to form an
opinion on the effectiveness of such internal controls, the Company’s corporate governance procedures and risks. (a) in our opinion, proper books of accounts have been kept by the company as required by the Companies
Ordinance, 1984;
The Code requires the Company to place before the Audit Committee, and upon recommendation of the Audit
Committee, place before the Board of Directors for their review and approval its related party transactions (b) in our opinion:
distinguishing between transactions carried out on terms equivalent to those that prevail in arm’s length
transactions and transactions which are not executed at arm’s length price and recording proper justification for (i) the balance sheet and profit and loss account together with the notes thereon have been drawn
using such alternate pricing mechanism. We are only required and have ensured compliance of this requirement up in conformity with the Companies Ordinance, 1984, and are in agreement with the books
of accounts and are further in accordance with accounting policies consistently applied;
to the extent of the approval of the related party transactions by the Board of Directors upon recommendation of
(ii) the expenditure incurred during the year was for the purpose of the company’s business; and
the Audit Committee. We have not carried out any procedures to determine whether the related party transactions
were undertaken at arm’s length price or not. (iii) the business conducted, investments made and the expenditure incurred during the year were in
accordance with the objects of the company;
Based on our review, nothing has come to our attention which causes us to believe that the Statement of
Compliance does not appropriately reflect the Company’s compliance, in all material respects, with the best (c) in our opinion and to the best of our information and according to the explanations given to us, the
practices contained in the Code as applicable to the Company for the year ended June 30, 2015. balance sheet, profit and loss account, statement of comprehensive income, cash flow statement and
statement of changes in equity together with the notes forming part thereof conform with approved
accounting standards as applicable in Pakistan, and, give the information required by the Companies
Ordinance, 1984, in the manner so required and respectively give a true and fair view of the state of the
company’s affairs as at June 30, 2015 and of the profit, comprehensive income, its cash flows and
changes in equity for the year then ended; and

(d) in our opinion, Zakat deductible at source under the Zakat and Ushr Ordinance, 1980 (XVIII of 1980),
Chartered Accountants was deducted by the company and deposited in the Central Zakat Fund established under Section 7 of
Dated: September 1, 2015 that Ordinance.
Karachi

Chartered Accountants
Engagement Partner: Rashid A. Jafer
Dated: September 1, 2015
Karachi
 Indus Motor Company Ltd.

Balance Sheet Profit and Loss Account

As at June 30, 2015 For the year ended June 30, 2015

Note 2015 2014 Note 2015 2014

----- (Rupees in ‘000) ----- ----- (Rupees in ‘000) -----
ASSETS
Net sales 24 96,516,322 57,063,622
Non-current assets
Fixed assets 3 5,193,477 6,033,264 Cost of sales 25 82,272,092 51,270,040
Long-term loans and advances 4 11,096 29,392
Long-term investments 5 4,954,764 - Gross profit 14,244,230 5,793,582
Long-term deposits 6 9,667 9,667
Deferred taxation 18 5,295 -
10,174,299 6,072,323 Distribution expenses 26 996,017 793,509
Current assets
Stores and spares 7 178,599 141,659 Administrative expenses 27 798,696 634,628
Stock-in-trade 8 6,150,448 4,469,460
Other operating expenses 29 1,171,862 424,010
Trade debts 9 447,750 1,737,358
Loans and advances 10 1,220,574 1,006,010 2,966,575 1,852,147
Short-term prepayments 11 18,919 14,942
Accrued Return 12 418,829 87,354 11,277,655 3,941,435
Other receivables 13 167,757 175,689
Investments 14 6,756,886 4,332,387 Other income 30 2,906,797 1,113,316
Taxation - payment less provision 22 - 1,216,369
14,184,452 5,054,751
Cash and bank balances 15 24,865,388 6,857,084
40,225,150 20,038,312 Finance cost 31 51,883 38,254

TOTAL ASSETS 50,399,449 26,110,635 Profit before taxation 14,132,569 5,016,497

Taxation 32 5,022,318 1,143,045
EQUITY
Profit after taxation 9,110,251 3,873,452
Share capital
Authorised capital
100,000,000 (2014: 100,000,000) Ordinary shares of Rs 10 each 1,000,000 1,000,000

Issued, subscribed and paid-up capital 16 786,000 786,000

Reserves 17 23,249,520 19,129,652
(Rupees)
24,035,520 19,915,652
LIABILITIES Earnings per share 33 115.91 49.28

Non-current liabilities
Deferred taxation 18 - 218,949
The annexed notes 1 to 47 form an integral part of these financial statements.
Current liabilities
Trade, other payables and provisions 19 9,180,705 4,430,322
Advances from customers and dealers 20 16,192,918 1,545,712
Taxation - provision less payment 22 990,306 -
Short-term running finances 21 - -
26,363,929 5,976,034

CONTINGENCIES AND COMMITMENTS 23

TOTAL EQUITY AND LIABILITIES 50,399,449 26,110,635

The annexed notes 1 to 47 form an integral part of these financial statements.

Parvez Ghias Keiichi Murakami Parvez Ghias Keiichi Murakami

Chief Executive Vice Chairman & Director Chief Executive Vice Chairman & Director

80 Annual Report 2015 81

 Indus Motor Company Ltd.

Statement of Comprehensive Income Cash Flow Statement

For the year ended June 30, 2015 For the year ended June 30, 2015

Note 2015 2014 Note 2015 2014

----- (Rupees in ‘000) ----- ----- (Rupees in ‘000) -----
CASH FLOWS FROM OPERATING ACTIVITIES
Profit after taxation 9,110,251 3,873,452
Cash generated from operations 34 32,633,544 7,593,767
Other comprehensive income
Interest paid (36) (162)
Workers’ Profit Participation Fund paid (761,000) (270,000)
Items that will not be reclassified subsequently to profit and loss
Workers’ Welfare Fund paid (100,330) (103,941)
Interest received on bank deposits 1,469,670 243,356
- Remeasurement gain / (loss) of post employment
Interest received on Pakistan Investment Bonds 198,755 -
benefit obligation 28.4 1,055 (733) Income tax paid (3,040,225) (1,974,514)
- Related deferred tax (charge) / income thereon (338) 242 Movement in long-term loans and advances 18,296 101,945
717 (491) Net cash generated from operating activities 30,418,674 5,590,451

Total comprehensive income for the year 9,110,968 3,872,961

CASH FLOWS FROM INVESTING ACTIVITIES
The annexed notes 1 to 47 form an integral part of these financial statements.
Fixed capital expenditure (721,621) (4,210,915)
Proceeds from disposal of fixed assets 33,578 52,429
Investment in Pakistan Investment Bonds (4,912,071) -
Investment in listed mutual fund units (10,500,000) (4,569,000)
Proceeds from redemption of listed mutual fund units 6,899,138 8,929,456
Investment in Market Treasury Bills (14,382,763) (10,509,912)
Proceeds from redemption of Market Treasury Bills 16,062,499 9,039,811
Net cash used in investing activities (7,521,240) (1,268,131)

CASH FLOWS FROM FINANCING ACTIVITIES

Dividend paid (4,889,130) (1,660,538)

Net cash used in financing activities (4,889,130) (1,660,538)

Net increase in cash and cash equivalents 18,008,304 2,661,782

Cash and cash equivalents at the beginning of the year 6,857,084 4,195,302
Cash and cash equivalents at the end of the year 35 24,865,388 6,857,084

The annexed notes 1 to 47 form an integral part of these financial statements.

Parvez Ghias Keiichi Murakami Parvez Ghias Keiichi Murakami

Chief Executive Vice Chairman & Director Chief Executive Vice Chairman & Director

82 Annual Report 2015 83

 Indus Motor Company Ltd.

Statement Of Changes In Equity Notes to and Forming Part of the Financial Statements
For the year ended June 30, 2015 For the year ended June 30, 2015

Share Capital Reserves 1 THE COMPANY AND ITS OPERATIONS

Capital Revenue The Company was incorporated in Pakistan as a public limited Company in December 1989 and
Issued, Premium Total started commercial production in May 1993. The shares of the Company are quoted on all the stock
subscribed Unappro- Sub-Total exchanges in Pakistan.
on issue of General
and paid-up priated
ordinary reserve The Company was formed in accordance with the terms of a Joint Venture agreement concluded
profit
shares amongst the House of Habib, Toyota Motor Corporation and Toyota Tsusho Corporation for the
----------------------------------- (Rupees in ‘000) ----------------------------------- purposes of assembling, progressive manufacturing and marketing of Toyota vehicles. The Company
also acts as the sole distributor of Toyota and Daihatsu vehicles in Pakistan and has a license for
Balance at July 1, 2013 786,000 196,500 13,351,050 3,359,741 16,907,291 17,693,291 assembling, progressive manufacturing and marketing of these vehicles in Pakistan.
Final dividend @ 150% for the year ended The registered office and factory of the Company is situated at Plot No. NWZ/1/P-1, Port Qasim
June 30, 2013 declared subsequent to year end - - - (1,179,000) (1,179,000) (1,179,000) Industrial Estate, Bin Qasim, Karachi.
Transfer to general reserve for the year ended 2 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
June 30, 2013 appropriated subsequent to year end - - 1,500,000 (1,500,000) - -
The significant accounting policies applied in the preparation of these financial statements are
Total comprehensive income for the year set out below. These policies have been consistently applied to all the years presented, unless
ended June 30, 2014 - - - 3,872,961 3,872,961 3,872,961 otherwise stated.

Interim dividend @ 60% - - - (471,600) (471,600) (471,600) 2.1 Basis of preparation

Balance at June 30, 2014 786,000 196,500 14,851,050 4,082,102 19,129,652 19,915,652 2.1.1 Statement of compliance

Final dividend @ 235% for the year ended - - - (1,847,100) (1,847,100) (1,847,100) These financial statements have been prepared in accordance with the approved accounting
June 30, 2014 declared subsequent to year end standards as applicable in Pakistan. Approved accounting standards comprise of such International
Financial Reporting Standards (IFRSs) issued by the International Accounting Standards Board as
Transfer to general reserve for the year ended are notified under the provisions of the Companies Ordinance, 1984, and the requirements of the
June 30, 2014 appropriated subsequent to year end - - 2,000,000 (2,000,000) - - Companies Ordinance, 1984 and the directives issued by the Securities and Exchange Commission
of Pakistan (SECP). Where the requirements of the Companies Ordinance, 1984 or the directives
Total comprehensive income for the year issued by the SECP differ with the requirements of IFRS, the requirements of the Companies
ended June 30, 2015 - - - 9,110,968 9,110,968 9,110,968 Ordinance, 1984 or the directives issued by the SECP prevail.

1st Interim dividend @ 200% - - - (1,572,000) (1,572,000) (1,572,000) 2.1.2 Other standards, interpretations and amendments to published approved accounting standards
that are effective in the current year
2nd Interim dividend @ 200% - - - (1,572,000) (1,572,000) (1,572,000)
The following amendments and improvements to approved accounting standards have been
Balance at June 30, 2015 786,000 196,500 16,851,050 6,201,970 23,249,520 24,035,520 published and are mandatory for the Company’s current accounting period:

- Amendment to IAS 32, “Financial Instruments: Presentation” on offsetting financial assets and
Proposed final dividend and transfer between reserves made subsequent to the year ended June 30, 2015 are disclosed in note 44 to these financial liabilities. This amendment clarifies that the right of set-off must not be contingent
financial statements. on a future event. It must also be legally enforceable for all counterparties in the normal course
of business, as well as in the event of default, insolvency or bankruptcy. The amendment also
The annexed notes 1 to 47 form an integral part of these financial statements. considers settlement mechanisms.

- IFRIC 21, “Levies”, sets out the accounting for an obligation to pay a levy if that liability is within
the scope of IAS 37 “Provisions.” The interpretation addresses the obligating event that give
rise to pay a levy and when a liability should be recognised.

The Company has incorporated the effects of the above amendments and improvements to the
accounting standards and interpretations in these financial statements, where applicable.

Further, there are certain other new and amended standards and interpretations that are mandatory
for the Company’s accounting periods beginning on or after July 1, 2014 but are considered not
to be relevant or do not have any material effect on the Company’s financial statements and are
therefore not detailed in these financial statements.
Parvez Ghias Keiichi Murakami
Chief Executive Vice Chairman & Director

84 Annual Report 2015 85

 Indus Motor Company Ltd.

Notes to and Forming Part of the Financial Statements Notes to and Forming Part of the Financial Statements
For the year ended June 30, 2015 For the year ended June 30, 2015

2.1.3 New and amended standards and interpretations to published approved accounting standards Capital work-in-progress
that are not yet effective in the current year All expenditures connected to the specific assets incurred during installation and construction
period are carried under capital work-in-progress. These are transferred to specific assets as and
There are certain new and amended standards and interpretations to published approved
when assets are available for use.
accounting standards that are mandatory for the Company’s accounting periods beginning on or
after July 1, 2015 but are considered not to be relevant or do not have any material effect on the 2.4.2 Intangible - computer software
Company’s financial statements and are therefore not detailed in these financial statements.
Computer software are stated at cost less accumulated amortisation. Software costs are only
2.2 Accounting estimates and judgments capitalised when it is probable that future economic benefits attributable to the software will flow
to the Company and the same is amortised applying the straight line method at the rates stated in
The preparation of financial statements in conformity with approved accounting standards requires note 3.2 to these financial statements.
management to make estimates and assumptions that affect the reported amounts of assets and
liabilities, income and expenses. It also requires management to exercise judgment in application 2.4.3 Impairment
of the Company’s accounting policies. The estimates and associated assumptions are based on
historical experience and various other factors that are believed to be reasonable under the The Company assesses at each balance sheet date whether there is any indication that property,
circumstances. These estimates and assumptions are reviewed on an ongoing basis. Revisions to plant and equipment and intangible assets may be impaired. If any such indication exists and where
accounting estimates are recognised in the period in which the estimate is revised if the revision the carrying values exceed the estimated recoverable amount, the assets or cash-generating units
affects only that period, or in the period of revision and future periods if the revision affects both are written down to their recoverable amount and the differences are recognised in the profit and
the current and future periods. loss account.

Significant accounting estimates and areas where judgments were exercised by management in the 2.5 Stores and spares
application of accounting policies are disclosed in note 2.22 to these financial statements.
Stores and spares, except in transit are valued at cost, determined on a moving average basis.
2.3 Basis for measurement Provision is made for any slow moving and obsolete items. Items in transit are valued at cost
comprising invoice values plus other charges incurred thereon.
These financial statements have been prepared under the historical cost convention except that
investments classified as financial assets ‘at fair value through profit or loss’ or ‘available for sale’ 2.6 Stock-in-trade
and ‘derivative financial instruments’ have been marked to market and certain staff retirement
benefits are carried at present value of defined benefit obligation less fair value of plan assets. Stock-in-trade, except in transit, are valued at the lower of cost and net realisable value. Stock in
transit is stated at invoice price plus other charges incurred thereon.
2.4 Fixed assets
Cost of raw materials, own manufactured vehicles and trading stock is determined on a moving
2.4.1 Property, plant and equipment average basis. Cost of work-in-process is valued at material cost.

Owned Provision for obsolete and slow moving stock-in-trade is determined based on the management’s
assessment regarding their future usability.
Property, plant and equipment are stated at cost less accumulated depreciation and accumulated
impairment losses, if any, except capital work-in-progress which is stated at cost less accumulated
Net realisable value signifies the estimated selling price in the ordinary course of business less
impairment losses, if any.
estimated cost of completion and the estimated costs necessarily to be incurred to make the sale.
Depreciation is charged to income applying the straight line method, whereby the depreciable
amount of an asset is written off over its estimated useful life. The cost of leasehold land is amortised 2.7 Financial instruments
equally over the lease period. Depreciation is charged on additions from the month the asset is
available for use and on disposals up to the month preceding the month of disposal. The rates of 2.7.1 Financial assets
depreciation are stated in note 3.2 to these financial statements.
2.7.1.1 Classification
The assets’ residual values and useful lives are reviewed, and adjusted, if appropriate, at each
balance sheet date. The management determines the appropriate classification of its financial assets in accordance
with the requirements of International Accounting Standard 39 (IAS 39) “Financial Instruments:
Subsequent costs are included in the asset’s carrying amounts or recognised as a separate asset, as Recognition and Measurement” at the time of purchase of financial assets and re-evaluates this
appropriate, only when it is probable that future economic benefits associated with the item will flow classification on a regular basis. The financial assets of the Company are categorised as follows:
to the Company and the cost of the item can be measured reliably. Normal repairs and maintenance
are charged to income as and when incurred. a) Financial assets ‘at fair value through profit or loss’
Gains and losses on sale or retirement of property, plant and equipment are included in the profit Financial assets that are acquired principally for the purpose of generating profit from short-term
and loss account. fluctuations in prices are classified as financial assets ‘at fair value through profit or loss’ category.

86 Annual Report 2015 87

 Indus Motor Company Ltd.

Notes to and Forming Part of the Financial Statements Notes to and Forming Part of the Financial Statements
For the year ended June 30, 2015 For the year ended June 30, 2015

b) Loans and receivables Evidence of impairment may include indications that the debtors or a group of debtors is experiencing
significant financial difficulty or default in payments, the probability that they will enter bankruptcy,
These are non-derivative financial assets with fixed or determinable payments that are not quoted
and where observable data indicate that there is a measurable decrease in the estimated future
in an active market. The Company’s loans and receivables comprise of trade debts, loans and
cash flows, such as changes in arrears or economic conditions that correlate with defaults.
advances, deposits, cash and bank balances and other receivables in the balance sheet.
For loans and receivables category, the amount of the loss is measured as the difference between
c) Held to maturity the asset’s carrying amount and the present value of estimated future cash flows (excluding future
These are financial assets with fixed or determinable payments and fixed maturity with the Company credit losses that have not been incurred) discounted at the financial asset’s original effective
having positive intent and ability to hold to maturity. interest rate. The carrying amount of the asset is reduced and the amount of the loss is recognised in
the profit and loss account. If a loan or held-to-maturity investment has a variable interest rate, the
d) Available for sale financial assets discount rate for measuring any impairment loss is the current effective interest rate determined
Financial assets intended to be held for an indefinite period of time, which may be sold in response under the contract. As a practical expedient, the Company also evaluates impairment on the basis
to needs for liquidity or changes in equity prices, are classified as ‘available for sale’. Available for of an instrument’s fair value using an observable market price.
sale financial instruments are those non-derivative financial assets that are designated as available If, in a subsequent period, the amount of the impairment loss decreases and the decrease can
for sale or are not classified as (a) loans and receivables, (b) held to maturity and (c) financial assets be related objectively to an event occurring after the impairment was recognised (such as an
‘at fair value through profit or loss’. improvement in the debtor’s credit rating), the reversal of the previously recognised impairment
2.7.1.2 Initial recognition and measurement loss is recognised in the profit and loss account.

All financial assets are recognised at the time the Company becomes a party to the contractual b) Assets classified as ‘available for sale’
provisions of the instrument. Regular purchases and sales of financial assets are recognised on the In the case of equity investments classified as available for sale, a significant or prolonged decline in
trade date - the date on which the Company commits to purchase or sell the assets. Financial assets the fair value of the security below its cost is also evidence that the assets are impaired.
are initially recognised at fair value plus transaction costs except for financial assets carried at fair
value through profit or loss. Financial assets carried at fair value through profit or loss are initially If any evidence for impairment exist, the cumulative loss is removed from equity and recognised
recognised at fair value while the transaction costs associated with these financial assets are taken in the profit and loss account. For investments, other than equity instruments, the increase in
directly to the profit and loss account. fair value in a subsequent period thereby resulting in reversal of impairment is reversed through
the profit and loss account. Impairment losses recognised in the profit and loss account on equity
2.7.1.3 Subsequent measurement instruments are not reversed through the profit and loss account.

Subsequent to initial recognition, financial assets are valued as follows: 2.7.1.5 Offsetting of financial assets and liabilities

a) Financial asset ‘at fair value through profit or loss’ and ‘available for sale’ Financial assets and financial liabilities are offset and the net amount is reported in the balance
sheet when there is a legally enforceable right to set off the recognised amounts and there is a
Financial assets ‘at fair value through profit or loss’ are marked to market using the closing market
intention to settle on a net basis, or to realise the assets and settle the liabilities simultaneously.
rates and are carried on the balance sheet at fair value. Net gains and losses arising on changes in
fair values of these financial assets are taken to the profit and loss account in the period in which 2.7.2 Financial liabilities
these arise.

‘Available for sale’ financial assets are marked to market using the closing market rates and are All financial liabilities are recognised at the time when the Company becomes a party to the
carried on the balance sheet at fair value. Net gains and losses arising on changes in fair values of contractual provisions of the instrument.
these financial assets are recognised in other comprehensive income.
2.7.3 Derecognition
b) Financial assets classified as ‘Loans and receivables’ and ‘held to maturity’ Financial assets are derecognised at the time when the Company loses control of the contractual
Loans and receivables and held to maturity financial assets are carried at amortised cost. rights that comprise the financial assets. Financial liabilities are derecognised at the time when
they are extinguished i.e. when the obligation specified in the contract is discharged, cancelled, or
2.7.1.4 Impairment expires. Any gain or loss on derecognition of financial assets and financial liabilities is taken to the
profit and loss account.
The Company assesses at each balance sheet date whether there is objective evidence that a
financial asset is impaired. 2.8 Loans, advances and deposits

These are stated at cost less estimates made for any doubtful receivables based on a review of all
a) Assets carried at amortised cost
outstanding amounts at the balance sheet date. Balances considered bad and irrecoverable are
A financial asset or a group of financial assets is impaired and impairment losses are incurred only if
written off when identified.
there is objective evidence of impairment as a result of one or more events that occurred after the
initial recognition of the asset (a ‘loss event’) and that loss event (or events) has an impact on the 2.9 Trade debts and other receivables
estimated future cash flows of the financial asset or group of financial assets that can be reliably
estimated. Trade debts are recognised and carried at original invoice amount less an allowance for any
uncollectible amounts. Other receivables are carried at cost less estimates made for doubtful
receivables, if any.

88 Annual Report 2015 89

 Indus Motor Company Ltd.

Notes to and Forming Part of the Financial Statements Notes to and Forming Part of the Financial Statements
For the year ended June 30, 2015 For the year ended June 30, 2015

An estimate for doubtful trade debts and other receivables is made when collection of the full 2.15 Warranty obligations
amount is no longer probable. Bad debts are written off when identified.
The Company recognises the estimated liability, on an accrual basis, to repair or replace products
2.10 Derivative financial instruments and hedge accounting under warranty at the balance sheet date, and recognises the estimated product warranty costs in
The Company designates derivate financial instruments as either fair value hedge or cash flow the profit and loss account when the sale is recognised.
hedge. 2.16 Staff retirement benefits
Fair value hedge
Fair value hedge represents hedges of the fair value of recognised assets or liabilities or a firm Defined contribution plan - Employees Provident Fund
commitment. Changes in the fair value of derivatives that are designated and qualify as fair value The Company operates a recognised provident fund for its permanent employees. Equal monthly
hedges are recorded in the profit and loss account, together with any changes in the fair value of the contributions are made to the Fund by the Company and the employees in accordance with the rules
hedged asset or liability that are attributable to the hedged risk. The carrying value of the hedged of the Fund. The Company has no further payment obligation once the contributions have been
item is adjusted accordingly. paid. The contributions made by the Company are recognised as an employee benefit expense when
they are due.
Cash flow hedge
Cash flow hedge represents hedges of a highly probable forecast transaction. The effective portion Defined benefit / contribution plan - Employees Pension Fund
of changes in the fair value of derivatives that are designated and qualify as cash flow hedges are The Company also operates an approved funded pension scheme for its permanent employees.
recognised in other comprehensive income. The gain or loss relating to the ineffective portion is
recognised immediately in the profit and loss account. The employee pension is governed by two sets of Rules, ‘New Rules’ - Defined contribution plan
and ‘Old Rules’ - Defined benefit plan. The New Rules are applicable to all members of the Fund with
Amounts accumulated in equity are reclassified to the profit and loss account in the periods in which effect from July 1, 2008. However, the Old Rules continue to apply to all persons whose employment
the hedged item will affect the profit or loss account. with the Company ceased before July 1, 2008 and who are entitled to pension from the Fund. In
2.11 Taxation addition, the Old Rules also apply to existing employees who have not opted to be governed by the
New Rules.
Current In accordance with the New Rules an actuarial balance was determined by the actuary as at June 30,
Provision for current taxation is based on taxable income at the current rates of taxation, after 2008 in respect of all members of the Fund who were in the service of the Company as of that date
considering rebates and tax credits available, if any, and taxes paid under the Final Tax Regime. The and opted to be governed by the New Rules which was credited to the members’ individual accounts.
charge for current tax also includes adjustments where necessary, relating to prior years which arise With effect from July 2008 the Company is required to make a fixed monthly contribution to the
from assessments framed / finalised during the year. Fund based on the basic salary of the employees which is credited into the individual account of each
member. The Company has no further payment obligation once these monthly contributions have
Deferred been paid to the Fund. Profit earned on the investments maintained by the Fund is also allocated
Deferred tax is recognised using the balance sheet liability method, on all temporary differences into the individual account of each member.
arising between the tax bases of assets and liabilities and their carrying amounts appearing in
the financial statements. Deferred tax liability is recognised for all taxable temporary differences. The pension liability recognised in the balance sheet in respect of members governed by the Old Rules
Deferred tax asset is recognised for all deductible temporary differences to the extent that it is the present value of the defined benefit obligation at the balance sheet date less the fair value of
is probable that the temporary differences will reverse in the future and taxable income will be plan assets attributed to these members. Contributions are made to cover the pension obligations
available against which the temporary differences can be utilised. in respect of the members governed by the Old Rules on the basis of actuarial recommendations.
Deferred tax asset and liability is measured at the tax rate that is expected to apply to the period The amount arising as a result of remeasurement is recognised in the Balance Sheet immediately,
when the asset is realised or the liability is settled, based on tax rates that have been enacted or with a charge or credit to Other Comprehensive Income in the period in which they occur.
substantively enacted by the balance sheet date.
The Projected Unit Credit Method, using the following significant assumptions, is used for the
2.12 Cash and cash equivalents valuation of the pension liability at June 30, 2015 in respect of members governed by the Old Rules:
For the purpose of the cash flow statement, cash and cash equivalents comprise of cash in hand,
- Expected rate of increase in salaries at 10.00% (2014: 12.50%) per annum.
bank balances and bank deposits net of running finances. The cash and cash equivalents are readily
convertible to known amounts of cash and are therefore subject to insignificant risk of changes in value. - Expected rate of return on plan assets at 11.00% (2014: 13.50%) per annum.
- Expected rate of increase in long term pension at 6.00% (2014: 8.50%) per annum.
2.13 Trade and other payables
- Expected discount rate at 11.00% (2014: 13.50%) per annum.
Liabilities for trade and other amounts payable are carried at cost, which is the fair value of the
consideration to be paid in the future for goods and services, whether or not billed to the Company. 2.17 Employees’ compensated absences

2.14 Provisions The Company accounts for compensated absences on the basis of unavailed earned leave balance
of each employee at the end of the year.
Provisions are recognised when the Company has a present legal or constructive obligation as a
result of past events, it is probable that an outflow of resources embodying economic benefits will
be required to settle the obligation and a reliable estimate of the amount can be made. Provisions
are reviewed at each balance sheet date and adjusted to reflect the current best estimate.

90 Annual Report 2015 91

 Indus Motor Company Ltd.

Notes to and Forming Part of the Financial Statements Notes to and Forming Part of the Financial Statements
For the year ended June 30, 2015 For the year ended June 30, 2015

2.18 Dividend distribution and transfer between reserves iii) Provision for slow moving stock-in-trade (notes 2.6 and 8)
Dividends declared and transfers between reserves made subsequent to the balance sheet date are The Company exercises judgment and makes provision for slow moving stock-in-trade based on
considered as non-adjusting events and are recognised in the financial statements in the year in their future usability and recoverable value. Management believes that changes in outcome of
which such dividends are approved / transfers are made. estimates will not have a material effect on the financial statements.

2.19 Revenue recognition iv) Provision for doubtful debts (notes 2.9 and 9)
The Company makes provisions for doubtful debts when the collection of full amount is no longer
Sales are recognised as revenue when goods are delivered and invoiced. probable. Management believes that changes in outcome of estimates will not have a material
effect on the financial statements.
Return on bank deposits, term deposit receipts and mark-up on advances to suppliers and
contractors are accounted for on an accrual basis. v) Classification and valuation of investments (notes 2.7 and 14)

Agency commission is recognised when shipments are made by the principal. The Company takes into account its intention for classification of investment as mentioned in
note 2.7.1.1 at the time of purchase. The valuation of investments is done based on the criteria
Unrealised gains / losses arising on re-measurement of investments classified as ‘financial assets mentioned in notes 2.7.1.2, 2.7.1.3 and 2.7.1.4.
at fair value through profit or loss’ are included in the profit and loss account in the period in which
these arise. vi) Income taxes (notes 2.11 and 32)
The Company takes into account the current income tax law and the decisions taken by the appellate
Dividend income is recognised when the right to receive dividend is established. authorities. Instances where the company’s view differs from the view taken by the income tax
department at the assessment stage and where the company considers that its views on the items
Income on Market Treasury Bills and Pakistan Investment Bonds (PIBs) is accrued using the effective
of material nature is in accordance with the law, the amounts are shown as contingent liabilities.
interest rate method.

2.20 Foreign currency transactions and translation vii) Warranty obligations (notes 2.15 and 19.3); and
The Company exercises professional judgment, based on the history of warranty claims entertained,
Foreign currency transactions are recognised or accounted for into Pakistani Rupees using the number of cars eligible for warranty and its internal risk assessment while making assessment of
exchange rate prevailing on the date of the transaction. Monetary assets and liabilities in foreign obligation in respect of warranty.
currencies are translated into Pakistani Rupees at the rates of exchange prevailing on the balance
sheet date. Exchange gain / loss on foreign currency translations are included in income / equity viii) Staff retirement benefits (notes 2.16 and 28)
along with any related hedge effects. The Company has post retirement benefit obligations, which are determined through actuarial
valuations as carried out by an independent actuary using various assumptions as disclosed in note
2.21 Functional and presentation currency 28 to these financial statements.
Items included in the financial statements are measured using the currency of the primary economic 2.23 Segment Reporting
environment in which the Company operates. The financial statements are presented in Pakistani
Rupees, which is the Company’s functional and presentation currency. The Company uses ‘management approach’ for segment reporting, under which segment information
is required to be presented on the same basis as that used for internal reporting purposes. Operating
2.22 Accounting estimates and judgments segments have been determined and presented in a manner consistent with the internal reporting
provided to the chief operating decision-maker. The Company has determined operating segments
The preparation of financial statements in conformity with approved accounting standards
on the basis of business activities i.e. manufacturing and trading activities. Segment assets have
requires the use of certain critical accounting estimates. It also requires management to exercise its
not been disclosed in these financial statements as these are not reported to the chief operating
judgment in the process of applying the Company’s accounting policies. Estimates and judgments
decision-maker on a regular basis.
are continually evaluated and are based on historical experience, including expectation of future
events that are believed to be reasonable under the circumstances. The areas where various Note 2015 2014
assumptions and estimates are significant to the Company’s financial statements or where judgment ----- (Rupees in ‘000) -----
was exercised in application of accounting policies are as follows: 3 FIXED ASSETS
i) Useful lives of property, plant and equipment (notes 2.4 and 3.2)
Property, plant and equipment 3.1 5,183,750 6,032,201
The Company reviews the useful lives of fixed assets on a regular basis. Any change in estimates
Intangible assets 3.2 9,727 1,063
in future years might affect the carrying amounts of respective items of fixed assets with a
corresponding effect on the depreciation charge and impairment. 5,193,477 6,033,264

ii) Provision for slow moving stores and spares (notes 2.5 and 7) 3.1 Property, plant and equipment
The Company exercises judgment and makes provision for slow moving stores and spares based on
their future usability. Management believes that changes in outcome of estimates will not have a Operating assets 3.2 5,110,267 5,746,600
material effect on the financial statements.
Capital work-in-progress 3.5 73,483 285,601
5,183,750 6,032,201

92 Annual Report 2015 93

94
3.2 The following is a statement of tangible operating assets and intangible assets:
---------------------------------------------------------------------------------- 2015 ----------------------------------------------------------------------------------
Intangible
Tangible assets
assets
Total
Factory Other
Furniture Computer Jigs, moulds tangible
Leasehold building on building on Plant and Motor Office Tools and Computer
and and related and related assets
land leasehold leasehold machinery vehicles equipment equipment software
fixtures accessories equipments
land land
---------------------------------------------------------------------------- (Rupees in ‘000) ----------------------------------------------------------------------------
For the year ended June 30, 2015

At July 1, 2014
Cost 38,662 1,099,897 126,023 8,369,449 265,157 200,693 92,440 198,096 647,555 3,128,715 14,166,687 39,030
Accumulated depreciation /
amortisation 15,870 739,725 58,087 5,180,012 144,983 168,803 70,938 185,674 540,439 1,315,556 8,420,087 37,967
Net book value 22,792 360,172 67,936 3,189,437 120,174 31,890 21,502 12,422 107,116 1,813,159 5,746,600 1,063

Year ended June 30, 2015

Opening net book value 22,792 360,172 67,936 3,189,437 120,174 31,890 21,502 12,422 107,116 1,813,159 5,746,600 1,063
Additions 70,000 11,106 154,598 429,575 59,747 11,089 18,275 40,014 76,840 51,709 922,953 10,786

Disposals / write offs

Cost - 100 - 84,181 43,964 1,009 3,397 54,733 2,092 72,246 261,722 -
Depreciation - 38 - 82,086 30,633 924 3,148 53,346 2,092 72,133 244,400 -
- 62 - 2,095 13,331 85 249 1,387 - 113 17,322 -
Depreciation / amortisation
charge for the year 3,157 78,425 17,696 822,686 45,218 14,529 8,983 10,614 48,692 491,964 1,541,964 2,122
Closing net book value 89,635 292,791 204,838 2,794,231 121,372 28,365 30,545 40,435 135,264 1,372,791 5,110,267 9,727

At June 30, 2015

Cost 108,662 1,110,903 280,621 8,714,843 280,940 210,773 107,318 183,377 722,303 3,108,178 14,827,918 49,816
Accumulated depreciation /
amortisation 19,027 818,112 75,783 5,920,612 159,568 182,408 76,773 142,942 587,039 1,735,387 9,717,651 40,089
Net book value 89,635 292,791 204,838 2,794,231 121,372 28,365 30,545 40,435 135,264 1,372,791 5,110,267 9,727

Depreciation / amortisation
rate % per annum 2.38%-3.85% 10% 5% 10%-20% 20% 20% 20% 33.33% 20% 20%-25% 33.33%
Notes to and Forming Part of the Financial Statements

---------------------------------------------------------------------------------- 2014 ----------------------------------------------------------------------------------

Intangible
Tangible assets
assets
Total
Factory Other
Furniture Computer Jigs, moulds tangible
Leasehold building on building on Plant and Motor Office Tools and Computer
and and related and related assets
land leasehold leasehold machinery vehicles equipment equipment software
fixtures accessories equipments
land land
---------------------------------------------------------------------------- (Rupees in ‘000) ----------------------------------------------------------------------------
At July 1, 2013
Cost 38,662 997,437 124,475 6,273,622 282,619 191,837 80,136 207,622 602,535 1,363,848 10,162,793 37,552
For the year ended June 30, 2015

Accumulated depreciation /
amortisation 14,949 663,196 52,480 4,614,115 147,078 148,886 66,171 182,127 516,328 1,194,082 7,599,412 37,548
Net book value 23,713 334,241 71,995 1,659,507 135,541 42,951 13,965 25,495 86,207 169,766 2,563,381 4

Year ended June 30, 2014

Opening net book value 23,713 334,241 71,995 1,659,507 135,541 42,951 13,965 25,495 86,207 169,766 2,563,381 4
Additions - 102,460 1,548 2,096,285 55,004 8,856 14,033 5,824 53,714 1,764,867 4,102,591 1,478

Disposals / write offs

Cost - - - 458 72,466 - 1,729 15,350 8,694 - 98,697 -
Depreciation - - - 458 48,883 - 1,345 15,000 8,675 - 74,361 -
- - - - 23,583 - 384 350 19 - 24,336 -
Depreciation / amortisation
charge for the year 921 76,529 5,607 566,355 46,788 19,917 6,112 18,547 32,786 121,474 895,036 419
Closing net book value 22,792 360,172 67,936 3,189,437 120,174 31,890 21,502 12,422 107,116 1,813,159 5,746,600 1,063

At June 30, 2014

Cost 38,662 1,099,897 126,023 8,369,449 265,157 200,693 92,440 198,096 647,555 3,128,715 14,166,687 39,030
Accumulated depreciation /
amortisation 15,870 739,725 58,087 5,180,012 144,983 168,803 70,938 185,674 540,439 1,315,556 8,420,087 37,967
Net book value 22,792 360,172 67,936 3,189,437 120,174 31,890 21,502 12,422 107,116 1,813,159 5,746,600 1,063

Depreciation / amortisation
rate % per annum 2.38% 10% 5% 10%-20% 20% 20% 20% 33.33% 20% 20%-25% 33.33%
Annual Report 2015
Notes to and Forming Part of the Financial Statements

95
Indus Motor Company Ltd.
 Indus Motor Company Ltd.

Notes to and Forming Part of the Financial Statements Notes to and Forming Part of the Financial Statements
For the year ended June 30, 2015 For the year ended June 30, 2015

3.3 The depreciation charge for the year has been allocated as follows: 2015 2014
----- (Rupees in ‘000) -----
Note 2015 2014 3.5 Capital work-in-progress
----- (Rupees in ‘000) -----
Civil works 46,926 22,000
Cost of sales - own manufactured 25 1,488,113 834,739 Plant and machinery 7,458 188,495
Distribution expenses 26 29,047 33,494 Computer and related accessories 7,602 -
Administrative expenses 27 24,804 26,803 Tools and equipment - 25,000
1,541,964 895,036 Jigs, moulds and related equipment 11,497 50,106
73,483 285,601

3.4 Particulars of operating assets having a net book value exceeding Rs 50,000 disposed off during 3.6 During the year capital work-in-progress amounting to Rs 574.611 million (2014: Rs 4,003.575 million)
the year are as follows: was transferred to owned assets.
Gain / Note 2015 2014
Accumulated Net book Sale
Asset description Cost (loss) on Mode of disposal Particulars of buyer
depreciation value proceeds ----- (Rupees in ‘000) -----
disposal
4 LONG-TERM LOANS AND ADVANCES
------------------- (Rupees in ‘000) -------------------
Factory building on leasehold land* Considered good
100 38 62 17 (45) Bid M/S Salim & Company, Karachi Loans due from - secured
- Executives 4.2 & 4.3 29,282 18,729
Plant & Machinery - Employees 4,907 5,885
7,360 5,514 1,846 - (1,846) Assets written off 4.1 34,189 24,614
330 268 62 34 (28) Bid M/S Salim & Company, Karachi Advances to suppliers - unsecured 4.4 22,283 55,071
56,472 79,685
Furniture & Fixture Less: Recoverable within one year shown under
461 400 61 28 (33) Bid M/S National Trade Council, Karachi current assets
Loans due from - secured
Office Equipment
- Executives 10 18,421 12,791
355 189 166 284 118 Insurance Claim Habib Insurance Company Limited, Karachi -Related Party - Employees 10 4,672 5,629
109 43 66 19 (47) Bid M/S Nawab & Sons, Karachi Advances to suppliers - unsecured 10 22,283 31,873
45,376 50,293
Computer and related accessories
11,096 29,392
90 2 88 90 2 Insurance Claim Habib Insurance Company Limited, Karachi -Related Party

4.1 These represent house building and personal loans granted to executives and employees. These are
Jigs and related equipments
granted in accordance with the terms of their employment and are secured against their balances
1,685 1,572 113 161 48 Bid M/S National Trade Council, Karachi
with the Employees’ Provident Fund. The loans are repayable over a period of 12 to 48 (2014:12 to
Motor Vehicles
60) months. House building and personal loans to management employees carry interest at the rate
1,824 730 1,094 1,824 730 Insurance Claim Habib Insurance Company Limited, Karachi -Related Party
of 3.00% to 3.50% (2014: 3.00% to 3.50%) per annum. Non-management employees are entitled to
1,929 932 997 1,929 932 Insurance Claim Habib Insurance Company Limited, Karachi -Related Party
personal loans which carry no interest.
844 450 394 844 450 Insurance Claim Habib Insurance Company Limited, Karachi -Related Party
2015 2014
824 439 385 824 439 Insurance Claim Habib Insurance Company Limited, Karachi -Related Party
1,929 1,157 772 1,350 578 Employee Scheme Mr. Raheel Asghar (Employee)
----- (Rupees in ‘000) -----
990 330 660 825 165 Employee Scheme Mr. Ahmed Waseem Khan (Employee) 4.2 Reconciliation of carrying amount of loans to executives is as follows:
990 413 577 776 199 Employee Scheme Mr. Shuja Ahmed (Employee)
1,880 1,410 470 1,191 721 Employee Scheme Mr. Tariq Ahmed Khan (Employee) Opening balance 18,729 18,531
844 478 366 605 239 Employee Scheme Mr. Syed Asif Ahmed (Employee) Disbursements during the year 47,674 24,909
874 524 350 577 227 Employee Scheme Mr. Jamshed Ali Khan (Employee) Repayments during the year (37,121) (24,711)
1,426 1,165 261 820 559 Employee Scheme Mr. Wali Muhammad (Employee) Closing balance 29,282 18,729
779 636 143 421 278 Employee Scheme Mr. Shahwar Hassan (Employee)
4,051 878 3,173 1,049 (2,124) Tender Mr. Mushtaq Memon, Karachi 4.3 The maximum aggregate amount due from executives at the end of any month during the year was
4,132 1,171 2,961 1,061 (1,900) Tender Mr. Muhammad Jameel Ahmed, Karachi Rs 31.922 million (2014: Rs 20.835 million).
1,815 1,452 363 1,149 786 Tender M/S Amin Motors, Karachi
1,557 1,272 285 1,060 775 Tender M/S Amin Motors, Karachi 4.4 These represent advances to suppliers which are deducted from payments in respect of supplies over
a period of 1 to 2 years (2014: 1 to 2 years). These carry interest at the rate of 3 months KIBOR plus
*This represents disposal of press shop shutter capitalised as part of building cost. 1% (2014: 3 months KIBOR plus 1%) per annum.

96 Annual Report 2015 97

 Indus Motor Company Ltd.

Notes to and Forming Part of the Financial Statements Notes to and Forming Part of the Financial Statements
For the year ended June 30, 2015 For the year ended June 30, 2015

Note 2015 2014 Note 2015 2014

----- (Rupees in ‘000) ----- ----- (Rupees in ‘000) -----
5 LONG-TERM INVESTMENTS 9 TRADE DEBTS - UNSECURED

Held to Maturity Considered good

- Government securities - Pakistan Investment Bonds 5.1 4,954,764 - Government agencies 125,584 1,247,773
Others 299,032 489,585
5.1 These securities have a tenor of 3 years and are maturing on July 17, 2017. The yield on these 424,616 1,737,358
securities ranges from 10.40% - 12.56% . Considered doubtful 38,095 643
462,711 1,738,001
Note 2015 2014 Less: Provision for doubtful debts 9.1 (14,961) (643)
----- (Rupees in ‘000) ----- 447,750 1,737,358
6 LONG-TERM DEPOSITS
9.1 Provision for doubtful debts
Utilities 7,169 7,169
Others 6.1 2,498 2,498 Balance at July 1 643 330
9,667 9,667 Add: Provision made during the year 14,581 313
15,224 643
6.1 This include a deposit made against rent to a related party - Habib Metro Pakistan (Private) Limited Less: Bad debts written off during the year (263) -
amounting to Rs 2.005 million (2014: Rs 2.005 million). Balance at June 30 14,961 643

Note 2015 2014 9.2 As at June 30, 2015, Rs 56.180 million (2014: Rs 747.492 million) are overdue but not impaired
----- (Rupees in ‘000) ----- in respect of trade debts. These relate to various customers for whom there is no recent history of
7 STORES AND SPARES default. The ageing analysis of these trade debts is as follows:

Stores 180,087 156,568 Note 2015 2014

Spares 258,535 250,249 ----- (Rupees in ‘000) -----
438,622 406,817
Less: Provision for slow moving stores and spares (260,023) (265,158) Upto 1 month - 1,761
178,599 141,659 1 to 6 months 17,878 518,836
More than 6 months 38,302 226,895
8 STOCK-IN-TRADE 56,180 747,492

In hand 10 LOANS AND ADVANCES

Manufacturing stock Current portion of long-term loans and advances - considered good
Raw material and components 2,588,481 1,672,705 Loans due from - secured
Less: Provision for slow moving stock (5,162) (10,097) - Executives 4 18,421 12,791
2,583,319 1,662,608 - Employees 4 4,672 5,629
Work-in-process 261,221 214,910 Advances to suppliers - unsecured 4 22,283 31,873
Finished goods (vehicles – own manufactured) 8.1 249,628 434,134 45,376 50,293
3,094,168 2,311,652 Advances – considered good
Trading stock Suppliers and contractors 12,758 51,024
Vehicles 8.1 260,306 271,825 Employees 3,039 1,779
Less: Provision for slow moving stock (234) (5,030) Collector of Customs 10.1 825,529 860,709
260,072 266,795 Margin with Banks 333,872 42,205
1,175,198 955,717
Spare parts 480,607 436,208 1,220,574 1,006,010
Special service tools and publications 7,478 10,182
Less: Provision for slow moving stock (132,353) (95,666) 10.1 This represents amounts paid to the Collector of Customs in respect of the import of stock-in-
355,732 350,724 trade. An amount of Rs. 671.578 million (2014: Rs. 860.709 million) was cleared subsequent to the
In transit 2,440,476 1,540,289 year end.
6,150,448 4,469,460

8.1 These include vehicles amounting to Rs 301.825 million (2014: Rs 618.789 million) held with the
Company’s authorised dealers at year end.

98 Annual Report 2015 99

 Indus Motor Company Ltd.

Notes to and Forming Part of the Financial Statements Notes to and Forming Part of the Financial Statements
For the year ended June 30, 2015 For the year ended June 30, 2015

Note 2015 2014 Note 2015 2014

----- (Rupees in ‘000) ----- ----- (Rupees in ‘000) -----
11 SHORT-TERM PREPAYMENTS 14 INVESTMENTS

Rent 1,463 1,748 Financial assets ‘at fair value through profit or loss’-
Insurance 10,016 6,098 held for trading
Others 7,440 7,096 - Mutual Fund Units 14.1 & 14.2 3,754,870 -
11.1 18,919 14,942 Held to Maturity
- Government securities - Market Treasury Bills 14.3 3,002,016 4,332,387
11.1 This includes Rs 6.117 million (2014: Rs 3.053 million) paid to related parties.
6,756,886 4,332,387
Note 2015 2014
12 ACCRUED RETURN ----- (Rupees in ‘000) ----- Market value as at June 30
2015 2014
Pakistan Investment Bond 256,051 -
----- (Rupees in ‘000) -----
Term Deposit Receipt 159,991 80,301
Others 2,787 7,053 14.1 Mutual Fund Units
12.1 418,829 87,354 HBL Money Market Fund 100,092 -
MCB Cash Management Optimizer Fund 1,250,914 -
12.1 This includes an amount of Rs. 114.058 million (2014: Rs. 71.243 million) receivable from related UBL Liquidity Plus Fund 1,502,992 -
parties. ABL Cash Fund 900,872 -
3,754,870 -
Note 2015 2014
----- (Rupees in ‘000) ----- 14.2 Net unrealised appreciation on re-measurement of
13 OTHER RECEIVABLES investments classified as financial assets ‘at fair value
through profit or loss’ - ‘held for trading’
Considered good Note 2015 2014
Warranty claims and other receivables due from a related party ----- (Rupees in ‘000) -----
– Toyota Tsusho Corporation and its affiliates 3,417 8,734
Agency commission - Toyota Tsusho Asia Pacific PTE. Ltd 13.1 90,160 121,063
Market value of securities 3,754,870 -
Warranty claims due from local vendors 1,754 1,864
Less: carrying value of securities 3,750,000 -
Earnest money 26,373 7,805
Insurance claims – receivable from related party 30 4,870 -
- Habib Insurance Company Limited 22,398 9,886
Workers’ Profit Participation Fund 13.2 2,373 622
Receivable against sale of fixed assets 4,219 577 14.3 These securities have a tenor of 3 to 6 months and have varying maturities ranging from August
Receivable from Pension Fund - Defined Benefit Scheme 28.2 359 - 06, 2015 to December 10, 2015. The yield on these securities ranges from 6.5276% - 8.3345% per
Receivable from Customs - 20,861 annum (2014: 9.9383% - 9.9564% per annum).
Net unrealised gain on revaluation of foreign exchange
Note 2015 2014
contracts - fair value hedge 14,363 -
Others 2,341 4,277 ----- (Rupees in ‘000) -----
167,757 175,689 15 CASH AND BANK BALANCES
Cash in hand 1,536 2,818
13.1 The maximum aggregate amount due at the end of any month during the year was Rs 247.854 million With banks in:
(2014: Rs 144.269 million). current accounts 28,422 17,577
deposit accounts 5,335,430 2,047,962
Note 2015 2014 term deposit receipt 15.1 19,500,000 4,788,727
----- (Rupees in ‘000) ----- 15.2 24,863,852 6,854,266
13.2 Workers’ Profit Participation Fund 24,865,388 6,857,084

Opening receivable 622 37 15.1 As of June 30, 2015, the company holds term deposit receipts carrying profit rates ranging between
Add: Allocation for the year 29 (759,249) (269,415) 6.25% to 8.00% per annum (2014: 8.85% to 10.50% per annum). The term deposit receipts are due
(758,627) (269,378) to mature maximum by December 1, 2015.
Less: Amount paid during the year 761,000 270,000
Closing receivable 2,373 622 15.2 Balances with banks include an amount of Rs 12,783 million (2014: Rs 3,553 million), [including
Rs. 8,000 million fixed deposit receipts (2014: 1,600 million)] held with related parties namely Habib
Metropolitan Bank Limited amounting to Rs 11,523 million (2014: Rs 3,284 million) and Standard
Chartered Bank (Pakistan) Limited amounting to Rs 1,260 million (2014: Rs 269 million).

100 Annual Report 2015 101

 Indus Motor Company Ltd.

Notes to and Forming Part of the Financial Statements Notes to and Forming Part of the Financial Statements
For the year ended June 30, 2015 For the year ended June 30, 2015

16 ISSUED, SUBSCRIBED AND PAID-UP CAPITAL 19.1 These include an amount of Rs 52.090 million (2014: Rs 178.510 million) payable to associated
undertakings / related parties.
2015 2014 2015 2014
(Number of shares in ‘000) ----- (Rupees in ‘000) ----- 19.2 These represent interest free deposits repayable to dealers upon the termination of dealership
agreements.
Ordinary shares of Rs.10 each fully
78,600 78,600 paid in cash 786,000 786,000 2015 2014
19.3 Warranty obligations ----- (Rupees in ‘000) -----

17 RESERVES Opening balance 628,147 573,999

Add: Charge for the year 184,334 105,797
Capital reserve 812,481 679,796
Premium on issue of ordinary shares 196,500 196,500 Less: Utilisation during the year (24,107) (51,649)
788,374 628,147
Revenue reserves
General reserve 20 ADVANCES FROM CUSTOMERS AND DEALERS 16,192,918 1,545,712
Balance brought forward 14,851,050 13,351,050
Transferred from unappropriated profit 2,000,000 1,500,000 These represent advances received by the Company from customers and dealers in respect of sale of
16,851,050 14,851,050 vehicles and parts.

Unappropriated profit 6,201,970 4,082,102 21 SHORT-TERM RUNNING FINANCES

23,249,520 19,129,652
At June 30, 2015, the Company has unutilised short-term running finance facilities under mark-
18 DEFERRED TAXATION up arrangements aggregating Rs 3,550 million (2014: Rs 4,700 million) available from various
commercial banks carrying mark-up rates based on 1 month KIBOR as benchmark rate plus 25 basis
Deferred tax liability arising on taxable temporary differences: points (2014: 1 month KIBOR plus 25 basis points). The above facilities include an amount of Rs 1,500
Due to accelerated tax depreciation 194,068 392,158 million (2014: Rs 1,500 million) available from related parties.
Others 1,556 1,080
The company also has facilities for opening letters of credit and bank guarantees under mark-up
Deferred tax asset arising on deductible temporary differences: arrangements as at June 30, 2015 amounting to Rs 27,050 million (2014: Rs 17,700 million) from
In respect of certain provisions (200,727) (174,047) various commercial banks, including Rs 9,200 million (2014: Rs 7,500 million) available from related
Others (192) (242) parties. The unutilised balance at June 30, 2015 was Rs 16,420 million (2014: Rs 9,080 million).
(5,295) 218,949
Short-term running finance and bank guarantees are secured by pari passu hypothecation charge to
Note 2015 2014 the extent of Rs 8,043 million (2014: Rs 8,043 million) on movable assets and receivables.
19 TRADE, OTHER PAYABLES AND PROVISIONS ----- (Rupees in ‘000) -----
22 TAXATION
Trade creditors The income tax assessments of the company have been finalised by the Income Tax Department or
- Associated undertakings / related parties 375,268 74,958
deemed to be assessed under section 120 of the Income Tax Ordinance, 2001 up to the year ended
- Others 914,672 221,541
June 30, 2014.
Bills payable to associated undertakings / related parties 1,586,781 845,260
Accrued liabilities 19.1 2,156,711 1,680,576 23 CONTINGENCIES AND COMMITMENTS
Unclaimed dividends 160,973 59,003
Royalty payable to associated undertakings / related parties 576,014 148,001 Contingencies
Security deposits from dealers 19.2 126,300 147,300
Retention money 12,095 31,852 23.1 The Company, during the years 2005-2006 and 2006-2007, received demand notices from the
Workers’ Welfare Fund 301,358 108,526 Collector of Customs, claiming short recovery of Rs 480.311 million in aggregate on account of
Technical fee 2,302 2,470 customs duty amounting to Rs 305.426 million and sales tax amounting to Rs 174.885 million on
Warranty obligations 19.3 788,374 628,147 royalty payment to the Joint Venture Partner, Toyota Motor Corporation. The demand has been raised
Payable to dealers 663,522 136,429 based on the view that royalty value should be included as part of imported CKD kits which is opposed
Payable to customers 116,919 138,225
to the view of the Company based on factual position that the royalty pertains to locally deleted parts.
Sales tax – net 505,159 72,601
Withholding income tax payable 312,867 6,047 During year ended June 30, 2008, the Customs, Excise and Sales Tax Appellate Tribunal decided
Net unrealised loss on revaluation of foreign exchange the case in the Company’s favour and accordingly, the demand to the extent of Rs 370.373 million
contracts - fair value hedge - 2,942 (customs duty of Rs 235.775 million and sales tax of Rs 134.598 million) has been reversed. During
Payable to Pension Fund - Defined Benefit Scheme 28.2 - 732 the year ended June 30, 2010, an appeal was filed by the Custom Authorities before the Sindh High
Other government levies payable 581,390 125,712 Court against the decision of Customs, Excise and Sales Tax Appellate Tribunal, which is pending for
9,180,705 4,430,322 hearing.

102 Annual Report 2015 103

 Indus Motor Company Ltd.

Notes to and Forming Part of the Financial Statements Notes to and Forming Part of the Financial Statements
For the year ended June 30, 2015 For the year ended June 30, 2015

In respect of the balance aggregate demand, the appeals are pending before the Collector of 24 OPERATING RESULTS
Customs Appeal for Rs 54.348 million and before the Appellate Tribunal for Rs 55.590 million.
A similar favourable decision is expected out of the said pending appeals as the facts are common Manufacturing Trading Total
and involve identical question of law. Therefore, no provision has been made by the Company in the Note 2015 2014 2015 2014 2015 2014
financial statements against the above mentioned sums as the management is confident that the -------------------------------------- (Rupees in ‘000) --------------------------------------
matters will be decided in the favour of the Company.
Gross sales 24.1 111,281,648 63,654,457 5,057,564 4,875,243 116,339,212 68,529,700
23.2 As at June 30, 2015, the claims not acknowledged as debt by the company amounts to Rs 965.260 million
(2014 Rs 984.523 million). Sales tax (16,148,419) (9,203,992) (548,080) (591,934) (16,696,499) (9,795,926)
Federal excise duty - (181,128) - - - (181,128)
Note 2015 2014
----- (Rupees in ‘000) ----- 95,133,229 54,269,337 4,509,484 4,283,309 99,642,713 58,552,646
Commission (2,903,321) (1,326,223) (46,607) (32,789) (2,949,928) (1,359,012)
Cases filed by the dealers 300,000 300,000
Cases filed by government authorities 494,647 494,647 Discounts (1,827) (2,686) (174,636) (127,326) (176,463) (130,012)
Others 23.2.1 170,613 189,876 Net sales 92,228,081 52,940,428 4,288,241 4,123,194 96,516,322 57,063,622
23.2.2 965,260 984,523
Cost of sales 25 79,250,476 48,232,604 3,021,616 3,037,436 82,272,092 51,270,040
23.2.1 Others mainly represents cases filed by the customers against the company in various courts and are
pending adjudication. Gross profit 12,977,605 4,707,824 1,266,625 1,085,758 14,244,230 5,793,582

23.2.2 The management of the Company is of the view that the Company has a strong position in these Distribution expenses 26 910,848 694,537 85,169 98,972 996,017 793,509
cases and these cases will be decided in favour of the Company.
Administrative expenses 27 763,210 588,772 35,486 45,856 798,696 634,628
2015 2014 1,674,058 1,283,309 120,655 144,828 1,794,713 1,428,137
----- (Rupees in ‘000) -----
11,303,547 3,424,515 1,145,970 940,930 12,449,517 4,365,445
Other operating expenses 29 1,166,555 420,237 5,307 3,773 1,171,862 424,010
23.3 Outstanding bank guarantees 5,514,465 3,672,013
10,136,992 3,004,278 1,140,663 937,157 11,277,655 3,941,435
Outstanding bank guarantees include an amount of Rs 2,122.129 million (2014: Rs 1,795.011 million) Other income 30 2,631,327 895,942 275,470 217,374 2,906,797 1,113,316
in respect of bank guarantees from related parties. 12,768,319 3,900,220 1,416,133 1,154,531 14,184,452 5,054,751
Finance cost 31 49,926 36,382 1,957 1,872 51,883 38,254
Commitments
Profit before taxation 12,718,393 3,863,838 1,414,176 1,152,659 14,132,569 5,016,497
23.4 Commitments in respect of capital expenditure at June 30, 2015 amounted to Rs 392.911 million
(2014: Rs 179.702 million). 24.1 This includes an amount of Rs. 3.920 million (2014: Rs. 157.837 million) and Rs. 0.362 million
(2014: Rs. 4.569 million) in respect of export sales of own manufactured vehicles and spare parts
23.5 Commitments in respect of letters of credit, other than for capital expenditure, amounted to respectively.
Rs 4,919.914 million (2014: Rs 4,923.620 million). The above letters of credit include an amount of
Rs 2,228.133 million (2014: Rs 2,176.503 million) availed from related parties. 24.2 Finance costs (excluding markup on advances from customers), other operating expenses (excluding
Workers’ Profit Participation Fund and Workers’ Welfare Fund), administrative expenses and
23.6 Commitments in respect of land rent and maintenance charges against leasehold land from Port distribution expenses (excluding warranty claims and pre-delivery inspection charges, development
Qasim Authority as at June 30, 2015 amounted to Rs 222.368 million (2014: Rs 206.073 million). expenditure, transportation and running royalty), are allocated between manufacturing and trading
activities on the basis of net sales. Markup on advances from customers, warranty claims and pre-
Year 2015 2014 delivery inspection charges, development expenditure, Workers’ Profit Participation Fund and
----- (Rupees in ‘000) ----- Workers’ Welfare Fund are allocated to manufacturing activity. Running royalty and transportation
charges are allocated to trading activity.
2015-2016 - 4,632
2016-2017 5,369 4,864
2017-2018 5,637 5,107
2018-2019 5,919 5,362
2019-2020 6,215 5,630
2020 Onwards 199,228 180,478
222,368 206,073

104 Annual Report 2015 105

 Indus Motor Company Ltd.

Notes to and Forming Part of the Financial Statements Notes to and Forming Part of the Financial Statements
For the year ended June 30, 2015 For the year ended June 30, 2015

Note 2015 2014 Note 2015 2014

----- (Rupees in ‘000) ----- ----- (Rupees in ‘000) -----
25 COST OF SALES 26 DISTRIBUTION EXPENSES

Raw materials and vendor parts consumed Salaries, allowances and other benefits 26.1 174,201 140,487
Opening stock 1,672,705 2,618,469 Rent, rates and taxes 12,465 3,264
Purchases 73,210,265 42,310,001 Repairs and maintenance 6,469 5,501
Closing stock 8 (2,588,481) (1,672,705) Depreciation 3.3 29,047 33,494
25.1 72,294,489 43,255,765 Advertising and sales promotion 382,713 315,247
Travelling 27,893 25,702
Stores and spares consumed 1,245,984 774,816 Vehicle running 14,309 15,704
Salaries, wages and other benefits 25.2 873,042 621,505 Communication 4,820 4,896
Rent, rates and taxes 6,960 9,205 Printing, stationery and office supplies 5,036 3,525
Repairs and maintenance 308,092 160,937 Staff training 9,752 8,752
Depreciation 3.3 1,488,113 834,739 Staff transport and canteen 14,319 12,444
Legal and professional 2,993 1,700 Subscription 433 384
Travelling 29,544 28,602 Warranty claims 184,334 105,797
Transportation 1,115 3,321 Pre-delivery inspection and service charges 47,083 29,232
Insurance 27,398 22,996 Development expenditure 12,794 17,001
Vehicle running 13,647 15,612 Utilities 521 202
Communication 4,016 6,002 Transportation 38,888 40,333
Printing, stationery and office supplies 2,348 2,175 Running royalty 15,285 14,110
Subscription 354 1,771 Charge for doubtful debts and bad debts 14,581 313
Fuel and power 411,437 259,828 Others 1,074 17,121
Running royalty 2,127,217 694,892 996,017 793,509
Technical fee 6,912 5,218
Staff catering, transport and uniforms 262,005 185,528 26.1 Included herein is a sum of Rs 5.279 million (2014: Rs 5.041 million) in respect of charge against
Reversal of provision for stock in trade - Manufacturing Stock (4,935) (49,447) employee provident fund and Rs 3.597 million (2014: Rs 1.131 million) in respect of charge against
Reversal of provision for stores and spares (5,135) (3,750) employee pension fund.
Others 16,685 11,436
6,817,792 3,587,086 Note 2015 2014
79,112,281 46,842,851 ----- (Rupees in ‘000) -----
Add: Opening work-in-process 214,910 378,502 27 ADMINISTRATIVE EXPENSES
Less: Closing work-in-process 8 (261,221) (214,910)
Salaries, allowances and other benefits 27.1 317,792 235,981
79,065,970 47,006,443
Rent, rates and taxes 2,327 2,044
Opening finished goods stock - own manufactured 434,134 1,660,295
Insurance 28,360 26,625
Closing finished goods stock - own manufactured 8 (249,628) (434,134) Repairs and maintenance 87,888 36,831
Cost of sales - own manufactured 79,250,476 48,232,604 Depreciation 3.3 24,804 26,803
Amortisation 3.2 2,122 419
Opening finished goods stock - trading 718,215 613,148 Travelling 45,866 43,569
Finished goods purchased 3,019,901 3,185,081 Legal and professional 136,682 97,387
Closing finished goods stock - trading 8 (748,391) (718,215) Director fee 875 -
Charge / (reversal) of provision for slow moving stock 31,891 (42,578) Vehicle running 17,717 18,220
Cost of sales - trading 25.3 3,021,616 3,037,436 Communication 11,288 13,881
82,272,092 51,270,040 Printing, stationery and office supplies 3,140 2,172
Staff training 56,594 61,076
25.1 This includes and amount of Rs 14.485 million (2014: Rs 0.752 million) in respect of write off against Staff transport and canteen 21,075 27,468
stock-in-trade. Security 29,134 28,500
Subscription 3,250 3,966
25.2 Included herein is a sum of Rs 20.562 million (2014: Rs 19.049 million) in respect of charge against Utilities 925 895
employee provident fund and Rs 9.921 million (2014: Rs 10.138 million) in respect of charge against Share registrar and related expenses 7,800 7,112
employee pension fund. Others 1,057 1,679
25.3 This includes an amount of Rs 1.817 million (2014: Rs 2.138 million) in respect of write-off against 798,696 634,628
stock-in-trade.
27.1 Included herein is a sum of Rs 7.755 million (2014: Rs 6.552 million) in respect of charge against
employee provident fund and Rs 3.003 million (2014: Rs 2.213 million) in respect of charge against
employee pension fund.
106 Annual Report 2015 107
 Indus Motor Company Ltd.

Notes to and Forming Part of the Financial Statements Notes to and Forming Part of the Financial Statements
For the year ended June 30, 2015 For the year ended June 30, 2015

28.4 The movement in the defined benefit obligation over the year is as follows:
28 DEFINED BENEFIT PLAN - Approved pension fund
2015
As mentioned in note 2.16, the Company operates an approved pension fund for its permanent
employees who are governed under the old rules. The latest actuarial valuation of the Company’s Present value Fair value
Total
pension fund, based on Projected Unit Credit Actuarial Cost Method, was carried out as at June 30, of obligation of plan assets
2015 . The pension fund exposes the Company to the following risks: ---------------(Rupees in ‘000)---------------
Mortality risks At July 1 17,394 (16,662) 732
The risk that the actual mortality experience is different. The effect depends on the beneficiaries’ Current service cost 993 - 993
service/age distribution and the benefit. Interest expense / (income) 2,288 (2,282) 6
20,675 (18,944) 1,731
Investment risks Remeasurements:
The risk of the investment underperforming and being not sufficient to meet the liabilities. - Return on plan assets, excluding amounts
included in interest expense - (939) (939)
Final salary risks - Loss from change in demographic assumptions - - -
The risk that the final salary at the time of cessation of service is greater than what we assumed. Since - Gain from change in financial assumptions (116) - (116)
the benefit is calculated on the final salary, the benefit amount increases similarly. - Experience loss - - -
(116) (939) (1,055)
Withdrawal risks
20,559 (19,883) 676
The risk of higher or lower withdrawal experience than assumed. The final effect could go either way
Contribution - (1,035) (1,035)
depending on the beneficiaries’ service/age distribution and the benefit.
Benefit payments (552) 552 -
The Company has recognised the following amounts in the financial statements for its obligations At June 30 20,007 (20,366) (359)
towards members governed under the Old Rules as explained in note 2.16.
28.1 Principal actuarial assumptions Note 2015 2014 2014
(% per annum) Present value Fair value
Total
Discount factor used 11.00 13.50 of obligation of plan assets
Expected rate of salary increase 10.00 12.50 ---------------(Rupees in ‘000)---------------
Expected rate of return on plan assets 11.00 13.50
Expected rate of increase in long term pension 6.00 8.50 At July 1 14,622 (15,506) (884)
Current service cost 810 - 810
28.2 The amount recognised in the balance sheet 2015 2014 Interest expense / (income) 1,667 (1,755) (88)
are determined as follows: ----- (Rupees in ‘000) ----- 17,099 (17,261) (162)
Remeasurements:
Present value of defined benefit obligations 28.4 20,007 17,394 - Return on plan assets, excluding amounts
Fair value of plan assets 28.3 & 28.4 (20,366) (16,662) included in interest expense - (68) (68)
(359) 732 - Loss from change in demographic assumptions 450 - 450
- Gain from change in financial assumptions (1,099) - (1,099)
28.3 Plan assets consist of the following: - Experience gain 1,450 - 1,450
801 (68) 733
2015 2014
17,900 (17,329) 571
Quoted Non-Quoted Quoted Non-Quoted Contribution - 161 161
Benefit payments (506) 506 -
----------------------- (Rupees ‘000) ------------------------
At June 30 17,394 (16,662) 732
Balances with banks - 3,430 - 910
Equity instruments 3,964 - 2,731 -
Debt instruments: 2015 2014
- Government - 12,467 12,826 - ----- (Rupees in ‘000) -----
- Corporates - - 195 - 28.5 Charge for defined benefit plan

Other Receivables - 505 - - Current service cost 993 810

3,964 16,402 15,752 910 Net interest expense / (income) 6 (88)
999 722

108 Annual Report 2015 109

 Indus Motor Company Ltd.

Notes to and Forming Part of the Financial Statements Notes to and Forming Part of the Financial Statements
For the year ended June 30, 2015 For the year ended June 30, 2015

28.6 The sensitivities of the defined benefit obligation to changes in the weighted principal assumptions 2015 2014
are as under: ------ (Rupees in ‘000) ------
Impact on defined benefit
29.1 Auditors’ remuneration
obligation - Increase / (decrease)
Change in Increase in Decrease in Audit fee 1,475 1,338
assumption assumption assumption Interim review and other certifications 740 732
-------(Rupees in ‘000)------- Out-of-pocket expenses 510 492
Discount rate 1% 16,774 23,704 2,725 2,562
Long term salary increases 1% 21,485 18,353 29.2 Donations
Pension increase rate 1% 22,013 17,945 Donations include the following in which a Director or his spouse is interested:

The above sensitivities analyses are based on a change in an assumption while holding all other Name of Director(s) Interest Name and address of Donee Amount donated
assumptions constant. When calculating the sensitivity of the defined benefit obligation to significant in Donee 2015 2014
actuarial assumptions the same method (present value of the defined benefit obligation calculated ---- (Rupees in ‘000) ----
with the projected unit credit method at the end of the reporting period) has been applied as when
calculating the pension liability recognised within the balance sheet. 1. Mr. Ali S. Habib Trustee Mohamedali Habib Welfare Trust, 2,050 2,250
2nd Floor, Siddiq Sons Tower,
28.7 The weighted average duration of the defined benefit obligation is 16.17 years. Jinnah Co-operative Housing
Society, Shahrah-e-Faisal, Karachi.
28.8 Expected maturity analysis of undiscounted defined benefit obligation for the pension fund at June
30, 2015 as follows: 2. Mr. Mohammedali R. Habib Trustee Habib Education Trust, 1,570 4,000
and Mr. Ali S. Habib 4th Floor, UBL Building,
I. I. Chundrigar Road, Karachi.
Less than a Between Between Over 4
Total
year 1-2 years 2-4 years years 3. Mr. Mohammedali R. Habib Director Habib University Foundation, 30,000 20,000
--------------------- Rupees ‘000 --------------------- and Mr. Ali S. Habib 147, Block 7 & 8, Banglore
Pension 279 592 1,324 6,077 8,272 Cooperative Housing Society,
Tipu Sultan Road, Karachi.

28.9 Historical information 2015 2014 2013 2012 2011 Note 2015 2014
--------------------- Rupees ‘000 --------------------- ------ (Rupees in ‘000) ------
Fair value of plan assets 20,366 16,663 15,506 12,942 11,601 30 OTHER INCOME
Present value of defined benefit obligation (20,007) (17,395) (14,622) (13,380) (11,243)
Surplus / (deficit) 359 (732) 884 (438) 358 Income from financial assets
Return on bank deposits 1,545,094 318,555
Experience gain / (loss) on plan assets 0.7% 0.4% 3.9% -3.4% 1.5% Interest Income on Market Treasury Bills 319,581 152,205
Experience (gain) / loss on obligation 4.6% 5.5% -6.0% 3.5% 0.7% Amortisation Income on Market Treasury Bills 29,784 30,872
Interest Income on Pakistan Investment Bonds 454,806 -
28.10 The expected return on plan assets is determined by considering the expected long-term returns Amortisation Income on Pakistan Investment Bonds 42,693 -
available on the assets underlying the current investment policy. Expected yield on fixed interest Gain on redemption of investments in listed mutual fund units 149,138 341,544
investments are based on gross redemption yield as at the balance sheet date. Expected returns on Unrealised gain on revaluation of listed mutual fund units 14.2 4,870 -
equity are based on long-term real rates experienced in the stock market. Mark-up on advances to suppliers 3,280 6,286

28.11 The expected charge for the defined benefit plan for the year ending June 30, 2016 is Rs 1.121 million. Income from other than financial assets
Agency commission, net of commission expense
28.12 The charge for the year in respect of Pension amounts to Rs 16.521 million (2014 Rs 13.482 million), of Rs 11.941 million (2014: Rs 11.850 million) 183,889 149,508
which includes Rs. 15.522 million (2014: Rs 12.760 million) in respect of members covered under New Exchange loss on agency commission and exports (30,613) (1,425)
Rules and Rs. 0.999 million (2014: Rs 0.722 million) in respect of members covered under Old Rules. Gain on sale of fixed assets 16,256 28,093
Liabilities no longer payable written back 38,758 37,933
Note 2015 2014 Freight and other charges income 147,367 49,745
29 OTHER OPERATING EXPENSES ------ (Rupees in ‘000) ------ Certification income 1,894 -
2,906,797 1,113,316
Workers’ Welfare Fund 293,162 102,378
Workers’ Profit Participation Fund 13.2 759,249 269,415
Auditors’ remuneration 29.1 2,725 2,562
Donations 29.2 116,726 49,655
1,171,862 424,010

110 Annual Report 2015 111

 Indus Motor Company Ltd.

Notes to and Forming Part of the Financial Statements Notes to and Forming Part of the Financial Statements
For the year ended June 30, 2015 For the year ended June 30, 2015

Note 2015 2014 Note 2015 2014

------ (Rupees in ‘000) ------ ------ (Rupees in ‘000) ------
31 FINANCE COST 34 CASH GENERATED FROM OPERATIONS

Mark-up on advances from customers 36 28 Profit before taxation 14,132,569 5,016,497

Bank charges 44,043 25,769
Exchange loss - net realised 7,804 12,323 Adjustment for non-cash charges and other items:
Unrealised loss on revaluation of creditors - 134 Depreciation 1,541,964 895,036
51,883 38,254 Amortisation 2,122 419
Provision for doubtful debts and bad debts 14,581 313
32 TAXATION Gain on sale of fixed assets (16,256) (28,093)
Gain on redemption of investments in listed mutual fund units (149,138) (341,544)
Current - for the year 5,246,900 952,169 Net unrealised gain on revaluation of listed mutual fund units (4,870) -
Net unrealised gain on revaluation of creditors and
- for prior years - (62,661) foreign exchange contracts (17,305) (6,591)
5,246,900 889,508 Return on bank deposits (1,545,094) (318,555)
Interest Income on Pakistan Investment Bonds (454,806) -
Deferred - for the year (224,582) 253,537 Amortisation Income on Pakistan Investment Bonds (42,693) -
(224,582) 253,537 Interest Income on Market Treasury Bills (319,581) (152,205)
32.1 5,022,318 1,143,045 Amortisation Income on Market Treasury Bills (29,784) (30,872)
Workers’ Profit Participation Fund 759,249 269,415
Workers’ Welfare Fund 293,162 102,378
32.1 Relationship between income tax expense and accounting profit
Mark-up on advances from customers 36 28
Working capital changes 34.1 18,469,388 2,187,541
Profit before taxation 14,132,569 5,016,497
32,633,544 7,593,767
34.1 Working capital changes
Tax at the applicable tax rate of 33% (2014: 34%) 4,663,748 1,705,609
Tax effect of permanent differences and super tax 496,803 17,185
(Increase) / decrease in current assets
Tax effect of income taxable at lower rates, tax credit on
Stores and spares (36,940) 12,010
plant & machinery and exempt income (16,997) (429,269)
Stock-in-trade (1,680,988) 3,413,849
Tax effect of income assessed under final tax regime (111,347) (79,213)
Trade debts 1,275,027 (354,910)
Tax effect of change in tax rate for future periods (6,459) (6,704)
Loans and advances (214,564) 551,887
Prior years tax - (62,661)
Short-term prepayments (3,977) (4,143)
Others (3,430) (1,902)
Other receivables 24,405 (12,728)
5,022,318 1,143,045
(637,037) 3,605,965
Increase / (decrease) in current liabilities
33 EARNINGS PER SHARE
Trade and other payables 4,459,219 (1,565,438)
33.1 Basic Advances from customers and dealers 14,647,206 147,014
19,106,425 (1,418,424)
Basic earnings per share has been computed by dividing the net profit for the year after taxation by 18,469,388 2,187,541
the weighted average number of shares outstanding during the year.
2015 2014 35 CASH AND CASH EQUIVALENTS
------ (Rupees in ‘000) ------ Cash and cash equivalents included in the cash flow statement comprises of the following balance
Profit after taxation 9,110,251 3,873,452 sheet amounts:

Note 2015 2014

(Number of shares in ‘000)
------ (Rupees in ‘000) ------
Weighted average number of ordinary shares outstanding during the year 78,600 78,600
Cash and bank balances 15 24,865,388 6,857,084
(Rupees)
Short-term running finances 21 - -
Basic earnings per share 115.91 49.28
24,865,388 6,857,084

33.2 Diluted

No figure for diluted earnings per share has been presented as the Company has not as yet issued any
instruments which would have an impact on basic earnings per share when exercised.

112 Annual Report 2015 113

 Indus Motor Company Ltd.

Notes to and Forming Part of the Financial Statements Notes to and Forming Part of the Financial Statements
For the year ended June 30, 2015 For the year ended June 30, 2015

36 REMUNERATION OF CHIEF EXECUTIVE, DIRECTORS AND EXECUTIVES 2015 2014

Un-audited Audited
2015 2014 ------ (Rupees in ‘000) ------
Chief Chief 39 DISCLOSURE RELATING TO PROVIDENT FUND
Directors Executives Directors Executives
Executive Executive
--------------------------- (Rupees in ‘000) --------------------------- (i) Size of the Fund 583,336 505,127
Managerial remuneration 24,790 11,568 377,463 21,333 11,490 282,533 (ii) Cost of investments made 421,014 427,452
Retirement benefits - - 26,368 - - 21,800 (iii) Percentage of investment made 72.17% 84.62%
Medical expenses 107 - - 45 - - (iv) Fair value of investments 541,555 465,731
24,897 11,568 403,831 21,378 11,490 304,333
Breakup of investments 2015 2014
Number of persons 1 2 136 1 2 128 Rupees in ‘000 Percentage Rupees in ‘000 Percentage
36.1 The Chief Executive, Directors and some Executives have been provided free use of the Company Bank deposits 110,000 18.86% - 0.00%
maintained cars, residential telephones and club facilities. Government Securities* 74,136 12.71% 225,959 44.73%
Listed Securities 116,079 19.90% 141,082 27.93%
36.2 During the year, an amount of Rs. 0.875 million (2014: Rs. Nil) have been paid to a Non-Executive Pakistan Investment Bonds* 241,340 41.37% 98,690 19.54%
director, as fee for attending board and other meetings.
541,555 92.84% 465,731 92.20%
37 TRANSACTIONS AND BALANCES WITH ASSOCIATED UNDERTAKINGS / RELATED PARTIES
* This represent investment classified as held to maturity at amortised cost
The associated undertakings / related parties comprises of associated companies, staff retirement
funds and key management personnel. Transactions carried out with associated undertakings / The figures for 2015 are based on the un-audited financial statements of the provident Fund.
related parties during the year are as follows: Investments out of Provident Fund have been made in accordance with the provisions of Section 227
2015 2014 of the Companies Ordinance 1984 and the rules formulated for this purpose.
------ (Rupees in ‘000) ------
2015 2014
With associated undertakings / related parties:
40 NUMBER OF EMPLOYEES (Number of staff)
Sales 296,961 127,793
Purchases 43,292,976 30,245,483
Number of employees as at June 30 2,322 2,091
Insurance premium 77,744 89,568
Average number of employees during the year 2,190 2,157
Agency commission 195,830 161,358
Running royalty 2,144,192 709,002
Rent expense 10,896 13,134 41 FINANCIAL INSTRUMENTS BY CATEGORY
Return on bank deposits 1,167,024 300,686
Proceeds from disposal of fixed assets / insurance claim 7,060 12,376 ----------------------As at June 30, 2015----------------------
Bank charges 39,380 21,264
Financial
LC charges 6,733 7,619
Loans and Held to assets at ‘fair
Total
With key management personnel: receivables maturity value through
- Salaries and benefits 149,339 96,647 profit or loss’
- Post employment benefits 6,247 4,247 ------------------------ (Rupees in ‘000) ------------------------
- Sale of fixed assets 3,366 513
Assets
37.1 Contribution to and accruals in respect of staff retirement benefits are made in accordance with Loans and advances 371,100 - - 371,100
actuarial valuations / terms of contribution plan and disclosed in respective notes to the financial Deposits 9,667 - - 9,667
statements. Trade debts 447,750 - - 447,750
37.2 The status of outstanding balances with associated undertakings / related parties as at June 30, Accrued return 418,829 - - 418,829
Other receivables 150,662 - - 150,662
2015 and donations made during the year ended June 30, 2015 are included in the respective notes
Investments - 7,956,780 3,754,870 11,711,650
to the financial statements.
Derivative used for hedging - - 14,363 14,363
2015 2014 Cash and bank balances 24,865,388 - - 24,865,388
38 PLANT CAPACITY AND PRODUCTION Number of units 26,263,396 7,956,780 3,769,233 37,989,409

Capacity based on double shift basis 54,800 54,800

Production 56,888 33,012

The Company has been operating on a double shift basis from March 2003 based on market demand.
The capacity has been calculated based on average normal working hours in a year, whereas actual
production may vary in response to market demand. During the year, the Company operated the plant
for more than normal working hours.
114 Annual Report 2015 115
 Indus Motor Company Ltd.

Notes to and Forming Part of the Financial Statements Notes to and Forming Part of the Financial Statements
For the year ended June 30, 2015 For the year ended June 30, 2015

---------------As at June 30, 2015-------------------- Concentrations of credit risk arise when a number of counterparties are engaged in similar business
activities or have similar economic features that would cause their ability to meet contractual
Liabilities at fair Financial obligations to be similarly affected by changes in economic, political or other conditions.
value through liabilities at Total Concentrations of credit risk indicate the relative sensitivity of the Company’s performance to
profit or loss amortised cost developments affecting a particular industry.
--------------------Rupees in ‘000-------------------- Credit risk arises from derivative financial instruments, investments (except for the investments
in Government securities) and balances with banks and financial institutions, as well as credit
Liabilities exposures to customers, including trade receivables and committed transactions. Out of the total
Trade, other payables and provisions - 7,479,931 7,479,931 financial assets of Rs 37,989.409 million (2014: Rs 13,267.515 million), the financial assets which
- 7,479,931 7,479,931 are subject to credit risk amounted to Rs 26,276.223 million (2014: Rs 8,932.310 million), including
GoP balances.
----------------------As at June 30, 2014----------------------
Out of the total receivable from customers amounting to Rs 447.750 million (2014: Rs 1,737.358 million),
Financial an amount of Rs 125.584 million (2014: Rs 1,247.773 million) relates to direct customers.
Loans and Held to assets at ‘fair
Total Out of the total bank balance and term deposit receipt of Rs 24,863.852 million (2014: Rs 6,854.266 million)
receivables maturity value through
profit or loss’ placed with banks, amounts aggregating to Rs 17,692.310 million (2014: Rs 3,472.780 million) have
been placed with banks having credit rating of AA+ and above, whereas the remaining amounts are placed
------------------------ (Rupees in ‘000) ------------------------
with banks having long term minimum credit rating of AA.
Assets Due to the Company’s long standing business relationships with its counterparties and after giving
Loans and advances 68,598 - - 68,598 due consideration to their strong financial standing, management does not expect non–performance
Deposits 9,667 - - 9,667 by these counter parties on their obligations to the Company.
Trade debts 1,737,358 - - 1,737,358
Accrued return 87,354 - - 87,354 For trade receivables, internal risk assessment process determines the credit quality of the customer,
Other receivables 175,067 - - 175,067 taking into account its financial position, past experience and other factors. Individual risk limits
Investments - 4,332,387 - 4,332,387 are set based on internal or external ratings in accordance with limits set by the management. The
Cash and bank balances 6,857,084 - - 6,857,084 utilisation of credit limits is regularly monitored. Accordingly, the management believes that the
8,935,128 4,332,387 - 13,267,515 credit risk is minimal and in the opinion of the management, the Company is not exposed to major
concentration of credit risk.
---------------As at June 30, 2014--------------------
42.2 Liquidity risk
Liabilities at fair Financial
value through liabilities at Total Liquidity risk is the risk that the Company will be unable to meet its funding requirements. To
profit or loss amortised cost guard against the risk, the Company has diversified funding sources and assets are managed with
liquidity in mind, maintaining a healthy balance of cash and cash equivalents. The maturity profile
--------------------Rupees in ‘000--------------------
is monitored to ensure adequate liquidity is maintained. The management forecasts the liquidity of
Liabilities the Company on the basis of expected cash flow considering the level of liquid assets necessary to
Trade, other payables and provisions - 4,114,494 4,114,494 meet such risk.
Derivative used for hedging 2,942 - 2,942 The maturity profile of the Company’s liability based on contractual maturities is disclosed in note
2,942 4,114,494 4,117,436 42.3.2 to these financial statements.

42 FINANCIAL RISK MANAGEMENT OBJECTIVES AND POLICIES 42.3 Market Risk

The Company’s activities expose it to certain financial risks. Such financial risks emanate from various Market risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate
factors that include, but are not limited to market risk, credit risk and liquidity risk. because of changes in market prices. Market risk comprises of three types of risks: currency risk,
interest rate risk and other price risk.
The Company currently finances its operations through equity and management of working capital
with a view to maintain an appropriate mix between various sources of finance to minimise risk. The 42.3.1 Currency risk
Company’s risk management policies and objectives are as follows:
Foreign currency risk arises mainly where receivables and payables exist due to transactions entered
42.1 Credit risk exposure and concentration of credit risk into in foreign currencies. The Company manages its exposure against foreign currency risk by
entering into foreign exchange contracts where considered necessary.
Credit risk represents the risk of a loss if the counter party fails to discharge its obligation and causes
the other party to incur a financial loss. The Company attempts to control credit risk by monitoring
credit exposures, limiting transactions with specific counterparties and continually assessing the
creditworthiness of counterparties.

116 Annual Report 2015 117

 Indus Motor Company Ltd.

Notes to and Forming Part of the Financial Statements Notes to and Forming Part of the Financial Statements
For the year ended June 30, 2015 For the year ended June 30, 2015

Foreign currency risk arises mainly where receivables and payables exist due to transactions entered -----------------------------------------------------2014-----------------------------------------------------
into in foreign currencies. The Company primarily has foreign currency exposures in US Dollars (USD) Interest / mark-up bearing Non-interest / mark-up bearing Total
and Japanese Yen (JPY). The net foreign currency exposure at June 30, 2015 is USD 15.078 million Effective
Maturity Maturity Maturity Maturity
(2014: USD 6.648 million) and JPY 1,016.254 million (2014: JPY 366.913 million). interest/ June 30,
mark-up rate upto one after one Sub-total upto one after one Sub-total
2014
year year year year
42.3.2 Interest rate risk
% --------------------------------------- (Rupees in ‘000) ---------------------------------------
Interest / mark-up rate risk is the risk that the value of a financial instrument will fluctuate due to On balance sheet financial instruments
changes in the market interest / mark-up rates. Sensitivity to interest / mark-up rate risk arises
from mismatches of financial assets and financial liabilities that mature or reprice in a given period. Assets
The Company manages these mismatches through risk management strategies where significant Loans and advances 3.00-3.50 14,144 6,194 20,338 48,260 - 48,260 68,598
changes in gap position can be adjusted. The Company is exposed to interest / mark-up rate risk in
Deposits - - - - - 9,667 9,667 9,667
respect of the following:
Trade debts - - - - 1,737,358 - 1,737,358 1,737,358
Accrued return - - - - 87,354 - 87,354 87,354
------------------------------------------------------2015------------------------------------------------------
Other receivables - - - - 175,067 - 175,067 175,067
Effective Interest / mark-up bearing Non-interest / mark-up bearing Total
Investments 9.94 - 9.96 4,332,387 - 4,332,387 - - - 4,332,387
interest/ Maturity Maturity Maturity Maturity
mark-up June 30,
upto one after one Sub-total upto one after one Sub-total Cash and bank balances 8.85 - 10.5 6,836,689 - 6,836,689 20,395 - 20,395 6,857,084
rate 2015
year year year year 11,183,220 6,194 11,189,414 2,068,434 9,667 2,078,101 13,267,515
% ---------------------------------------- (Rupees in ‘000) ---------------------------------------- Liabilities
Trade, other payables and provisions - - - - 4,117,436 - 4,117,436 4,117,436
On balance sheet financial instruments - - - 4,117,436 - 4,117,436 4,117,436

On balance sheet gap* 11,183,220 6,194 11,189,414 (2,049,002) 9,667 (2,039,335) 9,150,079
Assets
Loans and advances 3.00-3.50 19,653 11,097 30,750 340,350 - 340,350 371,100
Off-balance sheet financial instruments
Deposits - - - - - 9,667 9,667 9,667
Commitment in respect of capital expenditure - - - 179,702 - 179,702 179,702
Trade debts - - - - 447,750 - 447,750 447,750
Commitment in respect of letters of credit - - - 4,923,620 - 4,923,620 4,923,620
Accrued return - - - - 418,829 - 418,829 418,829
Outstanding bank guarantees - - - 617,169 3,054,844 3,672,013 3,672,013
Other receivables - - - - 165,025 - 165,025 165,025
- - - 5,720,491 3,054,844 8,775,335 8,775,335
Investments 6.53-12.56 3,002,016 4,954,764 7,956,780 3,754,870 - 3,754,870 11,711,650 *The on balance sheet gap represents the net amounts of on-balance sheet items.
Cash and bank balances 6.25-8.00 24,835,430 - 24,835,430 29,958 - 29,958 24,865,388
27,857,099 4,965,861 32,822,960 5,156,782 9,667 5,166,449 37,989,409 a) Sensitivity analysis for variable rate instruments
Liabilities
Presently, the Company does not hold any variable rate financial instruments.
Trade, other payables and provisions - - - - 7,479,931 - 7,479,931 7,479,931
- - - 7,479,931 - 7,479,931 7,479,931 b) Sensitivity analysis of fixed rate instruments

Fixed rate instruments comprise of Pakistan Investment Bonds, Market Treasury Bills, TDRs,
On balance sheet gap * 27,857,099 4,965,861 32,822,960 (2,323,149) 9,667 (2,313,482) 30,509,478 balances with banks and loans to employees. The income from these financial assets are
substantially independent of changes in market interest rates except for changes, if any, as a
Off-balance sheet financial instruments result of fluctuation in respective fair value. The Company’s income from these investments /
Commitment in respect of capital expenditure - - - 392,911 - 392,911 392,911 financial assets does not have any fair value impact since these are classified as either held to
Commitment in respect of letters of credit - - - 4,919,914 - 4,919,914 4,919,914
maturity or loans and receivables.
Outstanding bank guarantees - - - 4,278,680 1,235,785 5,514,465 5,514,465 42.3.3 Price risk
- - - 9,591,505 1,235,785 10,827,290 10,827,290
Price risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate as
a result of changes in market prices (other than those arising from interest rate risk or currency risk)
whether those changes are caused by factors specific to the individual financial instrument or its
issuer, or factors affecting all similar financial instruments traded in the market.

The Company is exposed to price risk because of investments held by the Company in mutual fund
units. The investments are marked to market based on the net assets value of the funds which are
declared on daily basis. In case of 1% increase / decrease in net asset value of the funds the net
income of the Company would be higher / lower by Rs 37.549 million.

118 Annual Report 2015 119

 Indus Motor Company Ltd.

Notes to and Forming Part of the Financial Statements Notes to and Forming Part of the Financial Statements
For the year ended June 30, 2015 For the year ended June 30, 2015

45 GENERAL
42.3.4 Fair value of financial instruments
45.1 Figures in these financial statements have been rounded off to the nearest thousand Rupees.
Fair value is the amount for which an asset could be exchanged, or liability settled, between
knowledgeable willing parties in an arm’s length transaction. Consequently, differences can arise 46 CORRESPONDING FIGURES
between carrying values and the fair value estimates.
46.1 Corresponding figures have been rearranged and reclassified, wherever necessary, for the purpose
Underlying the definition of fair value is the presumption that the Company is a going concern of better presentation and comparison. There have been no significant re-arrangements or
without any intention or requirement to curtail materially the scale of its operations or to undertake reclassifications to be disclosed in these financial statements except as follows:
a transaction on adverse terms.
Rupees
Note Reclassification from component Note Reclassification to component
Financial assets which are traded in an open market are revalued at the market prices prevailing on ‘000
the reporting date. The estimated fair value of all other financial assets and liabilities is considered
not significantly different from carrying values as the items are either short term in nature or 20 Advances from customers 19 Trade, Other Payables
periodically repriced. and dealers and Provisions
- Payable to dealers 39,244
International Financial Reporting Standard 7, ‘Financial Instruments: Disclosure’ requires the - Payable to customers 138,225
Company to classify fair value measurements using a fair value hierarchy that reflects the significance
of the inputs used in making the measurements. The fair value hierarchy has the following levels: 47 DATE OF AUTHORISATION
- quoted prices (unadjusted) in active markets for identical assets or liabilities (level 1); These financial statements were authorised for issue on August 28, 2015 by the Board of Directors
of the Company.
- inputs other than quoted prices included within level 1 that are observable for the asset or
liability, either directly (i.e., as prices) or indirectly (i.e., derived from prices) (level 2); and
- inputs for the asset or liability that are not based on observable market data (unobservable
inputs) (level 3).
The level in the fair value hierarchy within which the fair value measurement is categorised in its
entirety shall be determined on the basis of the lowest level input that is significant to the fair value
measurement in its entirety.

Investment of the Company carried at fair value are categorised as follows:

As at June 30, 2015 As at June 30, 2014
Level 1 Level 2 Level 3 Level 1 Level 2 Level 3
------------------------------- Rupees in ‘000-------------------------------
Financial assets / (liabilities) ‘at fair value
through profit or loss’
- Derivative financial instruments - - 14,363 - - (2,942)
- Investments in mutual fund units 3,754,870 - - - - -

43 CAPITAL RISK MANAGEMENT

The Company’s objectives when managing capital are to safeguard the Company’s ability to continue
as a going concern in order to provide returns for shareholders and benefits for other stakeholders
and to maintain an optimal capital structure to reduce the cost of capital. The Company is currently
financing its operations through equity and working capital. The Company has no gearing risk in the
current and prior year.

44 NON-ADJUSTING EVENT AFTER THE BALANCE SHEET DATE

The Board of Directors in its meeting held on August 28, 2015 has proposed a cash dividend in
respect of the year ended June 30, 2015 of Rs 40 (2014: cash dividend of Rs 23.5) per share. This is
in addition to the interim cash dividend of Rs 40 (2014: Rs 6) per share resulting in a total dividend
for the year of Rs 80 (2014: Rs 29.5) per share. The Directors have also announced appropriation of
Rs 3,000.000 million (2014: Rs 2,000.000 million) to general reserve. These appropriations will be
approved in the forthcoming Annual General Meeting. The financial statements for the year ended
June 30, 2015 do not include the effect of these appropriations which will be accounted for in the Parvez Ghias Keiichi Murakami
financial statements for the year ending June 30, 2016. Chief Executive Vice Chairman & Director

120 Annual Report 2015 121

 Indus Motor Company Ltd.

Pattern of Shareholding
As at June 30, 2015

Number of Shareholders From Shareholding To Number of Shares Held

Combined Pattern of CDC and Physical Shareholding
528 1 100 29,451 Category wise
Number of Category wise
2,151 101 500 1,002,010 No. Categories Of Shareholders No. of Folios / Percentage
Shares held Shares held
253 501 1,000 233,409 CDC Accounts
275 1,001 5,000 662,977 7 ASSOCIATED COMPANIES, UNDERTAKINGS AND RELATED PARTIES 4 4,932,600 6.28%
62 5,001 10,000 443,587 HABIB INSURANCE COMPANY LIMITED 41,600
12 10,001 15,000 150,001
THAL LIMITED 4,890,000
13 15,001 20,000 225,630
9 20,001 25,000 204,000 MOHAMEDALI HABIB WELFARE TRUST 5,000
12 25,001 30,000 340,770 8 BANKS, DFIs, NBFIs, INSURANCE COMPANIES, MODARABAS AND PENSION FUNDS 24 1,463,534 1.86%
8 30,001 35,000 263,153 9 MUTUAL FUNDS 44 3,233,838 4.11%
11 35,001 40,000 413,690 CDC - TRUSTEE PIML ISLAMIC EQUITY FUND 1,000
4 40,001 45,000 168,400 CDC - TRUSTEE PIML STRATEGIC MULTI ASSET FUND 1,300
6 45,001 50,000 286,708
CDC - TRUSTEE PIML VALUE EQUITY FUND 2,050
3 50,001 55,000 160,000
1 55,001 60,000 55,415 CDC - TRUSTEE FIRST CAPITAL MUTUAL FUND 2,300
1 60,001 65,000 62,000 CDC - TRUSTEE AKD INDEX TRACKER FUND 3,377
3 70,001 75,000 212,780 CDC - TRUSTEE HBL PF EQUITY SUB FUND 5,500
3 75,001 80,000 237,687 CDC - TRUSTEE HBL IPF EQUITY SUB FUND 6,500
2 80,001 85,000 163,750 CDC - TRUSTEE JS ISLAMIC PENSION SAVINGS FUND-EQUITY ACCOUNT 6,600
1 100,001 105,000 103,464
CDC - TRUSTEE PAKISTAN STRATEGIC ALLOCATION FUND 8,550
3 105,001 110,000 323,865
2 110,001 115,000 225,700 CDC - TRUSTEE JS PENSION SAVINGS FUND -EQUITY ACCOUNT 10,000
1 125,001 130,000 130,000 CDC - TRUSTEE PAKISTAN SARMAYA MEHFOOZ FUND 12,500
1 130,001 135,000 135,000 CDC - TRUSTEE PAKISTAN CAPITAL MARKET FUND 15,000
1 135,001 140,000 139,700 CDC - TRUSTEE AL-AMEEN ISLAMIC RET. SAV. FUND-EQUITY SUB FUND 21,100
2 145,001 150,000 296,000 CDC - TRUSTEE AL-AMEEN ISLAMIC ASSET ALLOCATION FUND 22,850
1 190,001 195,000 192,400
CDC - TRUSTEE NIT-EQUITY MARKET OPPORTUNITY FUND 23,900
1 205,001 210,000 210,000
1 220,001 225,000 223,537 CDC - TRUSTEE HBL MULTI - ASSET FUND 24,200
4 255,001 260,000 1,032,667 CDC - TRUSTEE PAK. INT. ELEMENT ISLAMIC ASSET ALLOCATION FUND 27,000
1 270,001 275,000 272,384 CDC - TRUSTEE NAFA ISLAMIC PRINCIPAL PROTECTED FUND-I 27,850
1 280,001 285,000 281,414 CDC - TRUSTEE UBL ASSET ALLOCATION FUND 29,500
1 310,001 315,000 310,500 CDC - TRUSTEE ABL STOCK FUND 29,500
1 400,001 405,000 403,600
CDC - TRUSTEE NIT ISLAMIC EQUITY FUND 30,450
1 540,001 545,000 543,354
1 550,001 555,000 552,685 CDC - TRUSTEE NAFA ISLAMIC PRINCIPAL PROTECTED FUND-II 32,450
1 595,001 600,000 600,000 CDC - TRUSTEE UBL RETIREMENT SAVINGS FUND-EQUITY SUB FUND 33,450
1 600,001 605,000 604,806 CDC - TRUSTEE HBL ISLAMIC STOCK FUND 34,050
1 825,001 830,000 828,462 CDC - TRUSTEE NAFA MULTI ASSET FUND 41,500
1 1,570,001 1,575,000 1,571,950 CDC - TRUSTEE NAFA ISLAMIC STOCK FUND 49,150
1 1,625,001 1,630,000 1,630,000
CDC - TRUSTEE NAFA ISLAMIC ASSET ALLOCATION FUND 51,000
1 2,555,001 2,560,000 2,555,364
1 3,255,001 3,260,000 3,260,000 MCBFSL - TRUSTEE ABL ISLAMIC STOCK FUND 54,000
1 4,155,001 4,160,000 4,157,533 CDC - TRUSTEE JS ISLAMIC FUND 55,000
1 6,995,001 7,000,000 7,000,000 MCBFSL - TRUSTEE JS VALUE FUND 62,000
1 9,820,001 9,825,000 9,825,000 CDC - TRUSTEE MEEZAN BALANCED FUND 71,130
1 16,225,001 16,230,000 16,225,197 CDC-TRUSTEE NAFA ASSET ALLOCATION FUND 71,250
1 19,645,001 19,650,000 19,650,000
CDC - TRUSTEE MEEZAN TAHAFFUZ PENSION FUND-EQUITY SUB FUND 78,155
3,393 78,600,000 CDC - TRUSTEE JS LARGE CAP. FUND 80,000
CDC - TRUSTEE MCB PAKISTAN ASSET ALLOCATION FUND 81,250
CDC - TRUSTEE UNIT TRUST OF PAKISTAN 82,500
Combined Pattern of CDC and Physical Shareholding
CDC - TRUSTEE AL MEEZAN MUTUAL FUND 103,464
Category wise
Number of Category wise CDC - TRUSTEE MCB PAKISTAN STOCK MARKET FUND 114,400
No. Categories Of Shareholders No. of Folios / Percentage
Shares held Shares held CDC - TRUSTEE UBL STOCK ADVANTAGE FUND 139,700
CDC Accounts
1 INDIVIDUALS 3,187 2,948,287 3.75% CDC - TRUSTEE NAFA STOCK FUND 147,000
2 INVESTMENT COMPANIES 1 500 0.00% CDC - TRUSTEE HBL - STOCK FUND 192,400
3 JOINT STOCK COMPANIES 28 422,429 0.54% MC FSL - TRUSTEE JS GROWTH FUND 210,000
4 DIRECTORS ,CHIEF EXECUTIVE AND THEIR SPOUSE AND MINOR CHILDREN 7 273,112 0.35% CDC - TRUSTEE AL-AMEEN SHARIAH STOCK FUND 310,500
MR. ALI S. HABIB 135,000 CDC - TRUSTEE MEEZAN ISLAMIC FUND 828,462
MR. MOHAMEDALI R. HABIB 130,000 10 FOREIGN INVESTORS 57 64,038,465 81.47%
MR. FARHAD ZULFICAR 2,000 Holding 5% or more voting interest
MR. PARVEZ GHIAS 4,561 OVERSEAS PAKISTAN INVESTORS AG 27,382,730
MR. AZAM FARUQUE 500 TOYOTA MOTOR CORPORATION 19,650,000
MR. RAZA ANSARI 450 TOYOTA TSUSHO CORPORATION 9,825,000
MRS. MUNIZEH ALI HABIB 601 OTHERS - holding below 5% 7,180,735
11 OTHERS 29 81,270 0.10%
5 EXECUTIVES 8 39,774 0.05%
TOTAL 3,393 78,600,000 100.00
6 PUBLIC SECTOR COMPANIES AND CORPORATIONS 4 1,166,191 1.48%
NATIONAL DEVELOPMENT FINANCE CORPORATION 5,000 Detail of trading of shares by Executives / Directors during the period from July 1, 2014 to June 30, 2015:
STATE LIFE INSURANCE CORPORATION OF PAKISTAN 552,685
CDC-TRUSTEE NATIONAL INVESTMENT (UNIT) TRUST 604,806 Name of Executive / Director No. of shares purchased
INVESTMENT COrporation of Pakistan 3,700 Mr. Ali Asghar Abbas Jamali 22,000

122 Annual Report 2015 123

 Indus Motor Company Ltd.

Ten Year (Performance Indicators)

Financial Summary 2015 2014 2013 2012 2011 2010 2009 2008 2007 2006

Income Statement
Net revenue Rs in ‘000 96,516,322 57,063,622 63,829,075 76,962,642 61,702,677 60,093,139 37,864,604 41,423,843 39,061,226 35,236,535
Gross profit Rs in ‘000 14,244,230 5,793,582 5,857,037 6,561,854 4,089,135 4,856,514 2,324,186 3,848,487 4,440,594 4,147,629
Profit before taxation Rs in ‘000 14,132,569 5,016,497 4,969,775 6,312,267 4,011,455 5,242,539 2,046,013 3,541,711 4,229,481 4,072,777
Profit after taxation Rs in ‘000 9,110,251 3,873,452 3,357,545 4,302,715 2,743,384 3,443,403 1,385,102 2,290,845 2,745,701 2,648,464
Dividends Rs in ‘000 6,288,000 2,318,700 1,965,000 2,515,200 1,179,000 1,179,000 786,000 825,300 1,021,800 943,200

Balance Sheet
Share capital Rs in ‘000 786,000 786,000 786,000 786,000 786,000 786,000 786,000 786,000 786,000 786,000
Reserves Rs in ‘000 23,249,520 19,129,652 16,907,291 16,227,858 13,333,648 11,801,615 9,510,973 8,650,340 7,257,975 5,471,879
Fixed Assets Rs in ‘000 5,193,477 6,033,264 2,742,140 3,472,906 4,225,710 3,324,333 3,934,473 4,033,762 2,093,852 1,716,590
Net current assets Rs in ‘000 13,861,221 14,062,278 14,775,801 13,693,056 10,326,779 9,566,387 6,830,469 5,885,153 6,125,156 4,651,103
Long term liabilities Rs in ‘000 - - - - - - - - - 3,871

Investor Information
Gross profit ratio % age 14.76 10.15 9.18 8.53 6.63 8.08 6.14 9.29 11.37 11.77
Net profit ratio % age 9.44 6.79 5.26 5.59 4.45 5.73 3.66 5.53 7.03 7.52
Earning per share Rs 115.91 49.28 42.72 54.74 34.90 43.81 17.62 29.15 34.93 33.70
Inventory turnover Times 15 8 8 11 11 12 11 14 10 9
Debt collection period Days 4 10 8 7 9 10 14 9 6 6
Average fixed assets turnover Times 17.19 13.01 18.32 19.99 16.34 16.56 9.50 13.52 20.50 25.95
Breakup value per share Rs 305.80 253.38 225.11 216.46 179.64 160.15 131.00 120.06 102.34 79.62
Market price per share
- as on June 30 Rs 1,249.00 537.92 311.00 245.08 220.00 262.38 107.72 200.05 305.50 191.00
- High value during the period Rs 1,320.00 549.00 364.60 305.00 309.73 278.00 198.05 419.00 321.00 231.00
- Low value during the period Rs 520.00 300.00 237.00 187.00 205.51 107.10 50.40 171.96 183.35 88.50
Price earning ratio Times 10.78 10.92 7.28 4.48 6.30 5.99 6.11 6.86 8.75 5.67
Dividend per share Rs 80.00 29.50 25.00 32.00 15.00 15.00 10.00 10.50 13.00 12.00
Dividend yield % age 6.41 5.48 8.04 13.06 6.82 5.72 9.28 5.25 4.26 6.28
Dividend payout % age 69.02 59.86 58.52 58.46 42.98 34.24 56.75 36.03 37.21 35.61
Dividend cover Times 1.45 1.67 1.71 1.71 2.33 2.92 1.76 2.78 2.69 2.81
Return on equity % age 37.90 19.45 18.98 25.29 19.43 27.36 13.45 24.28 34.13 42.32
Debt to equity Ratio 0:1 0:1 0:1 0:1 0:1 0:1 0:1 0:1 0:1 0:1
Current ratio Ratio 1.53 : 1 3.35 : 1 2.99 : 1 2.32 : 1 1.84 : 1 1.67 : 1 1.69 : 1 2.56 : 1 1.83 : 1 1.49 : 1

Other Information
Units sold Nos. 57,387 34,470 38,517 55,060 50,943 52,063 35,276 50,802 50,557 42,406
Units Produced Nos. 56,888 33,012 37,405 54,917 50,759 50,557 34,298 48,222 47,821 41,552
Manpower Nos. 2,322 2,091 2,225 2,292 2,187 1,948 1,893 2,030 1,841 1,632
Contribution to National Exchequer Rs in ‘000 32,076,453 19,261,559 21,267,303 24,725,706 22,043,581 20,332,421 14,143,597 14,478,096 13,790,932 12,473,970

124 Annual Report 2015 125

 Indus Motor Company Ltd.

Notice of Annual General Meeting Notice of Annual General Meeting

Notice is hereby given that the Twenty Sixth Annual General Meeting of INDUS MOTOR COMPANY LIMITED will be held NOTES:
on Tuesday, October 6, 2015 at 9:00 a.m. at the Institute of Chartered Accountants of Pakistan (ICAP Auditorium),
1. The Share Transfer Books of the Company will be closed from September 23, 2015 to October 6, 2015 (both days
situated at Chartered Accountants Avenue, Clifton, Karachi -75600 to transact the following business:
inclusive) for the purpose of the Annual General Meeting and payment of the final dividend.
ORDINARY BUSINESS
1. To receive, consider and adopt the Audited Accounts of the Company for the year ended June 30, 2015, together 2. Transfer requests received by the Company’s Share Registrar, “M/s. Noble Computer Services (Private) Limited,
with the Report of the Directors and Auditors thereon. Share Department, First Floor, House of Habib Building, (Siddiqsons Tower), 3-Jinnah Cooperative Housing Society,
Main Shahrah-e-Faisal, Karachi-75350, Tel: (021) 34325482-84, Fax: (021) 34325442, Email: ncsl@hoh.net“ at the
2. To approve and declare cash dividend (2014-2015) on the ordinary shares of the Company. The directors have close of business on September 22, 2015 will be treated in time for the purpose of determining above entitlement
recommended a Final Cash dividend at 400% i.e. Rs 40 per share. This is in addition to the combined Interim to the transferees for payment of final dividend and to attend the Annual General Meeting.
Dividend of 400% i.e. Rs. 40 per share (First Interim Cash Dividend of 200% and Second Interim Cash Dividend of
3. All members are entitled to attend and vote at the meeting. A member may appoint a proxy to attend and vote on
200%) already paid in March 2015 and May 2015 respectively. The total dividend for 2014-2015 will thus amount
behalf of him / her. Proxy forms must be deposited at the Share Registrar of the Company not less than 48 hours
to 800% i.e. Rs. 80 per share.
before the Meeting.
3. To appoint auditors and fix their remuneration for the year ending June 30, 2016. The present auditors M/s. A.F. 4. Shareholders are requested to promptly notify change in their registered postal address, if any, to the Company’s
Ferguson & Co., Chartered Accountants, retire and being eligible have offered themselves for re-appointment. Share Registrar.
SPECIAL BUSINESS 5. Shareholders are also requested to provide the following information to enable the Company to comply with the
4. To consider and if thought fit, to pass the following as a Special Resolution:
directives of the Securities & Exchange Commission of Pakistan.
RESOLVED as and by way of Special Resolution THAT the authorised share capital of the Company be and is hereby
CDC Account Holders are additionally required to follow the guidelines mentioned hereinbelow as laid down in Circular
increased to Rs. 5,000,000,000 (Rupees Five Billion) by the creation of 500,000,000 (Five Hundred Million) 1 dated January 26, 2000 issued by the Securities and Exchange Commission of Pakistan.
ordinary shares of Rs. 10 each, such new shares to rank pari passu in all respects with the existing ordinary shares in
A. For attending the meeting:
the capital of the Company, and that accordingly:
i) In case of individuals, the account holder or sub-account holder and / or the person whose securities are in group
(a) Clause V of the Memorandum of Association of the Company be and is hereby substituted by the following account and their registration details are uploaded as per the Regulations, shall authenticate his identity by showing
new Clause V, namely: his original Computerized National Identity Card (CNIC) or original passport at the time of attending the meeting.

ii) In case of corporate entity, the Board of Directors’ resolution / power of attorney with specimen signature of the
“V. The Capital of the Company is Rs. 5,000,000,000 (Rupees Five Billion) divided into 500,000,000 (Five
nominee shall be produced (unless it has been provided earlier) at the time of meeting.
Hundred Million) ordinary shares of Rs.10/- each of the classifications and with the rights and privileges
attaching thereto, as are or may be provided by the Regulations of the Company for the time being. The B. For appointing Proxies:
Company shall have power to issue redeemable capital including participatory redeemable capital or to i) In case of individuals, the account holder or sub-account holder and / or the person whose securities are in group
increase or reduce the capital and to divide the shares in the capital for the time being into several classes account and their registration details are uploaded as per the Regulations, shall submit the proxy form as per the
and to attach thereto respectively such special rights, privileges or conditions as may be determined by above requirement.
or in accordance with the Regulations of the Company and to vary the classifications and to modify or ii) The proxy form shall be witnessed by two persons whose names, addresses and CNIC numbers shall be mentioned
abrogate any such rights, privileges or conditions, in such manner as may for the time being be provided on the form.
by the Regulations of the Company and to consolidate or sub-divide the shares and issue shares of higher iii) Attested copies of CNIC or the passport of the beneficial owners and the proxy shall be furnished with the proxy
or lower denomination, provided however, that the rights as between various classes of ordinary shares form.
as to profits, votes and other benefits shall be strictly proportionate to the paid up value of shares .” iv) The proxy shall produce his / her original CNIC or original passport at the time of meeting.

(b) Article 4 of the Articles of Association of the Company be and is hereby substituted by the following new v) In case of corporate entity, the Board of Directors’ resolution / power of attorney with specimen signature shall be
Article 4, namely: submitted (unless it has been provided earlier) along with proxy form to the Company.

“4. The authorised capital of the Company is Rs. 5,000,000,000 (Rupees Five Billion) divided into Submission of copies of CNIC and NTN Certificate (Mandatory)
500,000,000 (Five Hundred Million) ordinary shares of Rs. 10 (Rupees ten) each”.
Pursuant to the directive of the Securities & Exchange Commission of Pakistan (SECP), Dividend Warrants shall
FURTHER RESOLVED THAT the Company Secretary of the Company, be and is hereby authorized, to do all acts, mandatorily bear the Computerized National Identity Card (CNIC) numbers of shareholders. Shareholders are therefore
deeds and things and take all steps necessary to complete the legal formalities and file the required documents as
requested to fulfill the statutory requirements and submit a copy of their CNIC (if not already provided) to the Company’s
may be necessary or ancillary for the purpose of implementing the aforesaid resolution.
Share Registrar, M/s. Noble Computer Services (Pvt.) Limited without any delay.
A statement as required under Section 160(1)(b) of the Companies Ordinance 1984 in respect of the special business
to be considered at the meeting is annexed to this Notice of Meeting being sent to the members/ shareholders. In case of non-availability of a valid copy of the Shareholders’ CNIC in the records of the Company, the company shall be
constrained to withhold the Dividend Warrants in terms of Section 251(2)(a) of the Companies Ordinance 1984, which
will be released by the Share Registrar only upon submission of a valid copy of the CNIC in compliance with the aforesaid
By order of the Board SECP directives.

Karachi. Anam Fatima Khan

August 28, 2015 Company Secretary

126 Annual Report 2015 127

Notice of Annual General Meeting

Withholding Tax on Dividend

Form of Proxy
Twenty Sixth Annaul General Meeting
Government of Pakistan through Finance Act, 2015 has made certain amendments in section 150 of the Income Tax
Ordinance, 2001 whereby different rates are prescribed for deduction of withholding tax on the amount of dividend paid
by the companies. These tax rates are as under: I/We _____________________________________________________________________________________________________________
(a) For filers of income tax returns: 12.5% of ________________________________________________________________________________________________________________
(b) For non-filers of income tax returns: 17.5% being member(s) of INDUS MOTOR COMPANY LIMITED, holding ___________________________________________
Ordinary shares, hereby appoint ______________________ of ______________________ Folio No. _____________ of
Shareholders who are filers are advised to make sure that their names are entered into latest Active Tax Payers List (ATL)
provided on the website of FBR at the time of dividend payment, otherwise they shall be treated as non-filers and tax on ______________________ or failing him / her _______________________ of _______________________ CDC Part. ID & A/c
their cash dividend will be deducted at the rate of 17.5% instead of 12.5%. _____________ of ______________________ who is/are also member(s) of INDUS MOTOR COMPANY LTD as my
Withholding tax on Dividend in case of Joint Account Holders / our proxy in my/our absence to attend and vote for me/us and on my/our behalf at the Twenty Sixth
Annual General Meeting of the Company to be held on October 6, 2015 and/or any adjournment thereof.
In order to enable the Company to follow the directives of the regulators to determine shareholding ratio of the
Joint Account Holder(s) (where shareholding has not been determined by the Principal shareholder) for deduction As witness my / our hand/ seal this ____________day of ____________
of withholding tax on dividends of the Company, shareholders are requested to please complete the forms (earlier Signed by the said __________________________________________________________________________ in the presence of
dispatched) to furnish the shareholding ratio details of themselves as Principal shareholder and their Joint Holders ,
to the Company’s Share Registrar, enabling the Company to compute withholding tax of each shareholder accordingly.
In the event of non-receipt of the information by September 22, 2015, each shareholder will be assumed to have equal Witness 1 Witness 2
proportion of shares and the tax will be deducted accordingly. Signature ______________________________________ Signature
______________________________________
Payment of Cash Dividend Electronically (Optional) Name ___________________________________________ Name ___________________________________________
CNIC / Passport No. _____________________________ CNIC / Passport No. ____________________________
The SECP has initiated e-dividend mechanism through its Notification 8(4) SM/CDC/2008 dated April 05, 2013. In order
to avail benefits of e-dividend shareholders are hereby advised to provide details of their bank mandate specifying: (i) Address _________________________________________ Address
_________________________________________
title of account, (ii) account number, (iii) bank name, (iv) branch name, code and address to Company’s Share Registrar
M/s. Noble Computer Services (Private) Limited. Shareholders who hold shares with Participants / Central Depository
Company of Pakistan (CDC) are advised to provide the mandate to the concerned Broker / CDC.
Signature on revenue
Distribution of Annual Report through Email stamp of appropriate value

We are pleased to inform shareholders that the Securities and Exchange Commission of Pakistan has under and pursuant The signature should agree
to SRO No. 787(I)/2014 dated 8 September 2014, permitted companies to circulate their annual balance sheet and profit

Member’s with specimen registered
and loss accounts, auditor’s report and directors’ report etc. (“Annual Report”) along with the Notice of Annual General with the Co.
Meeting (“Notice”), to its shareholders by email. Shareholders of the Company who wish to receive the Company’s Folio / CDC Account No.
Annual Report and notices of Annual General Meeting by email are requested to provide the completed Electronic
Communication Consent Form already dispatched, to the Company’s Share Registrar, Noble Computer Services (Private) NOTES
Limited. 1. This proxy form duly completed and signed, must be received at the office of the Company’s
STATEMENT UNDER SECTION 160 (1) (B) OF THE COMPANIES ORDINANCE, 1984 Share Registrar of the Company, by close of business at 5pm on Tuesday, 22 September, 2015.
2. No person shall act as proxy unless he/she himself/herself is a member of the Company, except
The material facts concerning the special business to be transacted at the Annual General Meeting of the Company to
that a corporation may appoint a person who is not a member.
be held at Institute of Chartered Accountants of Pakistan (ICAP) Auditorium, Karachi on Tuesday, October 6, 2015, at 9
a.m. are as follows: 3. If a member appoints more than one proxy and more than one instrument of proxy are deposited
by a member with the Company, all such instruments of proxy shall be rendered invalid.
At present the Company has an authorised share capital of Rs. 1,000,000,000 (Rupees One Billion) divided into
100,000,000 (One Hundred Million) ordinary shares of Rs. 10 each of which 78,600,000 (Seventy Eight Million Six
Hundred Thousand) ordinary shares are issued and the remainder are unissued. The Company intends to increase For CDC Account Holders/Corporate Entities:
its authorised share capital to Rs. 5,000,000,000 (Rupees Five Billion) by the creation of 500,000,000 (Five Hundred
Million) ordinary shares of Rs. 10 each, in order to accommodate the size of the Company and sustain its operations.
In addition to the above the following requirements have to be met:
While the Company has traditionally utilized its reserves for this purpose, owing to recently proposed legislation whereby i. The proxy form shall be witnessed by two persons whose names, addresses and CNIC numbers
the Company’s reserves would have been unreasonably taxed, the Company is seeking to increase its authorized share shall be mentioned on the form.
capital. ii. Attested copies of CNIC or the passport of the beneficial owners and the proxy shall be furnished
The increase in the authorised share capital will also require Clause V of the Memorandum of Association and Article 4 of the with the proxy form.
Articles of Association to be amended in order to reflect the increased capital. iii. The proxy shall produce his original CNIC or original passport at the time of meeting.
The text of the resolution for increasing the authorised share capital and the consequential amendments to the iv. In case of corporate entity, the Board of Directors’ resolution / power of attorney with specimen
Memorandum and Articles of Association of the Company is set forth in the Notice convening the Annual General signature shall be submitted (unless it has been provided earlier) alongwith proxy form to the
Meeting which resolution will be proposed and passed as a Special Resolution. Company.

128
 AFFIX
CORRECT
POSTAGE Registrar, Indus Motor Company Limited
Noble Computer Services (Private) Limited
First Floor, House of Habib Building
(Siddiqsons Tower), 3-Jinnah C. H. Society,
Main Shahrah-e-Faisal, Karachi-75350,
Pakistan.
INDUS MOTOR COMPANY LTD.
Plot No. N.W.Z/1/P-1, Port Qasim Authority,
Karachi, Pakistan.
www.toyota-indus.com