Indus Motor Company Limited (IMC) manufactures and markets Toyota brand vehicles in Pakistan. These include several variants of the flagship Corolla and Yaris in the passenger car segment, Hilux in the light commercial vehicle segment and Fortuner in the sports utility vehicle segment.
Over 32 years, since its inception, IMC has sold greater than 1.03 million CKD/CBU vehicles. It has also demonstrated impressive growth in terms of volumetric increase. According to the financial statement of Indus Motor Company Limited, the combined sales of CKD and Completely Built-up Units (CBU) vehicles of IMC for the quarter closed September 30, 2022, declined by 52 percent to 8,994 units as compared to 18,855 units sold in the corresponding quarter previous year.
The experts recorded that IMC’s overall market share for the quarter reached almost 19.1 percent. Indus Motor produced 9,218 vehicles for the first quarter of the fiscal year, recording a 45 percent decline, as against 16,896 units produced in the corresponding quarter previous year. It is said that the fall in production was mostly because of limited imports of CKD kits as permitted through the State Bank of Pakistan (SBP), forcing IMC to observe regular plant shutdowns during the quarter under review. During the quarter that ended September 30, 2022, the Company received various accolades, like the “Environment Excellence Award 2022” by the National Forum for Environment & Health (NFEH); four awards by The Professionals Network (TPN) in the categories, “Best Environment Practices”, “Hazards & Controls Associated with Work Equipment”, “Water Treatment” and, “Support for Healthcare Organizations” and the “Best Sustainability Report 2021” award through the Institute of Cost and Management Accountants (ICMA) and Institute of Chartered Accountants of Pakistan (ICAP).
Statistics in the financial statement also released that Indus Motor’s net sales turnover for the first quarter closed September 30, 2022 declined by 43 percent to Rs. 37.25 billion, as against 65.55 billion for the corresponding period last year, while profit after tax also declined by 76 percent to Rs. 1.30 billion, as compared to Rs. 5.42 billion attained in the same quarter last year. IMC has played a major role in the development of the entire value chain of the local auto industry. It is also proud to have contributed to poverty alleviation at the grass root level by nurturing localization. This, in turn, has directly created thousands of job opportunities and transferred technology to 54 vendors supplying parts. IMC has made large-scale investments in enhancing its own capacity and in meeting customer requirements for new products.
Furthermore, the Company also launched Toyota Hilux REVO Rocco and Toyota Fortuner Legender in FY 2021-22. The Company invests heavily in training the team members and management employees, as well as creating a culture of high performing and empowered teams who work seamlessly across the various processes in search of quality and continuous improvement. The Financial Experts of IMC also registered in the financial statement that the volatility of the Pak Rupee against the US Dollar, growing inflation, international commodity prices and resultant Government fiscal and monetary initiatives will continue to be vital factors that have an impact on the future financial statements of the Indus Motor. The Management understands the initiatives and measures taken by the government to confront the economic challenges being faced by the country.
However, the management states the government of Pakistan to reconsider its restrictions placed on CKD imports. Imports through the automobile sector contribute merely 3 percent of the total import bill of Pakistan, however, the restrictions posed are having a significant adverse impact on the automotive sector market. Moreover, these import restrictions are not only impacting the automobile players but also the local vendor industry of the country and the associated 3 million direct and indirect labor employed with this sector.
The financial statement of IMC also identified that the net profit has been impacted in this quarter, mostly because of lower CKD and CBU sales volume and a rise in input costs, chiefly on account of severe PKR devaluation against USD. This has been partially offset by a rise in other income because of higher fund size and higher interest rates, as against the previous quarter last year. Earnings per Share of IMC for the first quarter closed September 30, 2022, is Rs.16.50 in comparison to Rs. 69.02 recorded in the corresponding period last year.
Despite the challenging quarter faced by the Company in terms of volumes and profitability, the management declared an interim cash dividend of Rs. 8.20 per share for the quarter against Rs. 34.50 per share in the corresponding period of the previous year. Despite the broader macroeconomic challenges in Pakistan. No doubt Indus Motor Company is managing the cost pressures by enhancing efficiency and implementing tighter controls on overheads.