"Maien tae Honda e Laisaan" slogan of the company created strong brand preference among the consumers. The recall value of the ads has been so powerful that all over the country customers have been willing to wait for the company's product. The year under review has been not only of major challenges but also of intense business activity. Massive expansion programme was undertaken to raise the capacity to address the expanding demand. Production made quantum jump and sales both in terms of value and volume were the ever-highest.
The competition has become fierce and pushing the price downward. Hence eroding gross profit margin became a factor to be reckoned in the market place. But the 40 years of investment in brand and distribution.
Channel neutralised the effect which can be seen in the higher sales and profitability. The increased capacity will support the enterprises in restoring the market share from temporary reduction.
Atlas Honda Limited is one of the constituent members of Atlas Group of Companies which has diverse interest in motorcycle and car assembly, leasing and investment banking, insurance and investment activities.
At its apex is the leading and pioneering industrialist of Pakistan - Yusuf H. Shirazi.
The company was incorporated as a public limited company on October 16, 1962 having its registered office located at 1 Mcleod Road Lahore. In the same year, technical agreement was signed with Honda Motor Company. Which had 35% stake in the Pakistani Company on June 30, 2004, the date of the balance sheet under review.
The directors of the company their spouses aggregate shareholding works out to 32.54%. The shareholdings of its other associate companies Muslim Insurance Co Ltd, and Shirazi Investment (Pvt) Limited is 18.24% of the company's stock.
Atlas Honda's shares are listed on Karachi and Lahore Stock Exchanges. On 3rd November 2004, closing rate of the share was quoted at Rs 231.90 which is more than 23 times of the par value.
Its shares have always been considered blue chips considering strong financial fundamentals persistent upward trend in revenue and profitability and above all being a joint venture between two great conglomerates.
The rising share market index gave further boost to its market value. During the last one year the market value of the share zoomed to Rs 300 per share from Rs 93 per share.
The excellent track record of profit distribution profile also fuelled the increase in the market value. The company has always declared dividends and pay out rates continued to improve.
For the period under review the company declared cash dividend @75% (2003: 70%) and bonus stock dividend at 25%. At the prevalent price of the share the yield on bonus stock dividend works out to higher than the announced rate.
Atlas Honda Limited is principally engaged in progressive manufacture and sales of motorcycles and auto parts. Its growing workforce is abundant evidence is that the company believes in providing more jobs and reducing unemployment.
The company employed 903 persons at the balance sheet date (2003: 785). This contrary to the counter benevolent personnel policy of many corporate bodies which includes many pharmaceutical and chemical multinationals and banks.
The Chairman of the company has documented in the report his positive stance toward Human Resource. He said, "In terms of manpower, the company is growing exponentially. Human Resource Management is thus becoming a key success factor going forward."
The manufacturing/assembly facilities of the company are located at Karachi and Sheikhupura with branches/Warranty and training centres at Karachi, Multan, Lahore and Rawalpindi. During the FY 2003-04 the year under review, the company made additions in the fixed assets at the capital outlay of Rs 1.057 billion (2002-03: Rs 132.059 million).
Most of the additions in fixed assets went for BMR which effectively enabled the company to double its rated capacity. The joint Atlas Honda Pakistan-Japan teams have put up the facilities in record time to enable the company to start the year 2004-05 in strong footing.
The expansion was necessary to meet the rising demand. During the year the company achieved admirable output of 190 thousand units from a plant with rated capacity of just 150 thousand units.
The company achieved ever-highest sales both in terms of value and quantity. The competition forced the price to go down. Hence gross profit margin suffered erosion but increase in volume sales not only neutralised the lower price effect but also gave strong impetus to growth in sales.
The cost rationalisation and benefits of localisation contributed towards ever highest profit
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Performance Statistics (Million Rupees)
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Balance sheet -As At-
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June 30
2004 2003
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Share Capital-paid-Up: 204.37 204.37
Reserves & Profit: 1,288.08 872.24
Shareholders Equity: 1,492.45 1,076.61
L T Debts: 415.00 115.34
Deferred Liabilities: 143.88 56.95
Current Liabilities: 2,060.61 1,408.22
Fixed Assets: 1,405.61 566.09
Intangible Assets: 1.52 1.79
L T Advances & Deposits Prepayments
Loans & Other Receivables: 13.25 13.87
Current Assets: 2,691.56 2,075.37
Total Assets: 4,111.94 2,657.12
Sales, Profit & Pay Out:
Sales: 9,948.09 6,977.44
Gross Profit: 1,234.20 1,027.80
Operating Profit: 872.56 667.75
Miscellaneous Revenue: 50.66 58.44
Financial (Charges): (19.31) (26.43)
(Depreciation): (263.48) (89.65)
Profit Before Taxation: 842.49 650.93
Profit After Taxation: 544.75 427.40
Dividend Cash @ 75% (2003 @ 70%): (153.28) 143.06
Reserve for Bonus Stock @ 25%
(2003: Nil): (51.09) -
Earnings Per Share (Rs): 26.66 20.91
Share Price (Rs) Dated 3-11-2004: 231.90 -
Financial Ratios:
Price/Earning Ratio: 8.69 -
Stock Value Per Share: 73.03 52.68
Price/Book Value Ratio: 3.18 -
Debt/Equity Ratio: 22:78 10:90
Current Ratio: 1.31 1.47
Assets Turn Over Ratio: 2.42 2.63
Days Receivables: 3 3
Days Inventory: 54 34
Gross Profit Margin (%): 12.41 14.73
Net Profit Margin (%): 5.48 6.12
R O A (%): 13.24 16.09
R O C E (%): 26.55 34.22
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