This has been a year of record profit (before tax) for the company. Profit before tax grew by 18% to Rs 546.2 million but after tax profit fell to Rs 352.1 million. Earning per shares declined to Rs 28.40 from Rs 35.43 because of increased tax liquidity.
The company had wiped out all its losses last year, hence now it will be assessed on the usual tax scales. An amount of Rs 194 million has thus been provided for income tax against only Rs 23 million last year.
Sales revenue rose to a record Rs 4,261.3 million, showing an increase of 38.4% on the previous year.
The directors proposed cash dividend at 85% against 10% in the preceding year. For Pakistan automobile industry, the main challenge arises from Trade Related Investment Measures (TRIM) which directly hit the deletion programme which is the mainstay of the vending industry.
Hinopak Motors Limited is a public limited company incorporated in the province of Sindh. Its registered office and plant are situated at S.I.T.E. Manghopir Road Karachi. Three foreign investors hold 89.01% of the stock of the company.
The company is primarily engaged in the assembly and progressive manufacture and sale of Hino buses and trucks in Pakistan. Since 19th October 1998, Hino Motors Ltd Japan is the Holding Company of Hinopak Motors Ltd, by virtue of its 59.3% shareholding in the company.
During 2003, the period under review, the price of the share increased to Rs 143 per share from Rs 56.25 per share. At present the share is trading at Rs 147.50 per share.
The enhancement in the market value of the share reflects the increasing confidence of the investors in the company in the backdrop of acceleration of the growth of automobile industry.
The abundant liquidity, low mark-up on bank finance and low implicit rate of return (IRR) on lease finance and easy access to these, the automobile industry on the whole has registered 54% growth in production volume as quoted by chairman of the company Kunwar Idris.
He emphasised that every segment of the industry witnessed growth but not, unfortunately buses. Truck sales did increase but not much - from 1,636 to 1,828.
The industry's combined sale of truck and buses increased slightly from 3009 in the year 2000 to 3,211 units in 2003. Hinopak, however outpaced the market growth. Its sale of buses and trucks went up to 1,862 units in 2003 from 1476 in 2002.
The company made deeper penetration in the market and captured very close to half of the market share.
Thus evidences that Hinopak's high quality products prompt delivery, strong distribution channel, above all greater emphasis after sale service. It also shows its efficient inward and outward logistics as well as close interaction with the dealers on the one side and vendors of components on the other side.
One can see from the report under review that Hinopak received the "Hino Spirit" award from the parent company in Japan for outstanding performance for after-sale service to customers.
During the year, first Hino Shell Rimula Service Centre was inaugurated in collaboration with Shell Pakistan. Twenty three more such centres are planned on major highways to provide after sales support to customers.
During the year, new Hino buses are also operating in Karachi as in the Punjab cities. More than 300 buses were sold to urban operators mostly in Punjab.
Combined with Toyota Production System it has resulted in higher productivity and elimination of non-value added activities.
The renovation of the plant has been completed and work has now begun on the main assembly line. New production facilities have helped improved productivity and environment.
To facilitate the induction of new models, computers, printers and plotter of the latest design has been purchased. As regards indigenization the local content in chassis has now gone up to 55%.
The chairman endorses the management's expectations that the growth of the company business is likely to stay ahead of the growth in the GDP as well as large-scale manufacture.
The expectation is reinforced by the higher productivity standards achieved by the company over the past five years and the induction of the Hino 500 series new technology.
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Performance Statistics (Million Rupees)
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31 December 2003 2002
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Liabilities
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Share Capital-Paid-up: 124.01 124.01
Reserves & Profit: 543.31 291.97
Shareholders Equity: 667.32 415.98
Surplus on Revaluation of
Fixed Assets: 231.20 235.82
L.T. Debts: 15.75 -
Deferred Taxation: 120.89 119.84
Current Liabilities: 1,972.35 1,017.52
Tangible Fixed Assets: 639.40 557.16
L.T. Loans & Advances: 5.41 5.54
L.T. Deposits: 11.30 4.04
Current Assets: 2,351.40 1,222.42
Total Assets: 3,007.51 1,789.16
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Sales, Profit & Pay Out
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Sales: 4,261.27 3,078.15
Gross Profit: 783.30 626.16
Operating Profit: 547.69 483.22
Other Income: 45.84 25.62
Financial (Charges): (6.81) (19.24)
(Depreciation): (38.77) (30.92)
Profit Before Taxation: 546.18 462.78
Profit After Taxation: 352.13 439.41
Dividend Cash @85% (2002:@10%): 105.40 12.40
Earnings Per Share (Rs): 28.40 35.43
Share Price (Rs) on 05.05.2004: 147.50 -
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Financial Ratios
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Price/Earning Ratio: 5.19 -
Book Value Per Share: 53.81 33.54
Price/Book Value Ratio: 2.74 -
Debt/Equity Ratio: 2:98 0:100
Current Ratio: 1.19 1.20
Asset Turn Over Ratio: 0.71 1.72
Days Receivables: 47 17
Days Inventory: 134 116
Gross Profit Margin (%): 18.38 20.34
Net Profit Margin (%): 8.26 14.27
R.O.A. (%): 11.71 24.55
R.O.C.E. (%): 34.02 56.94
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