The company's sales revenue continues to trend upward without any dip as can be seen from the six years statistical summary appended with its Annual Report 2006. Gross Profit, also continues to rise with increasing momentum because of increased productivity, cost control and higher volume sales.
The company is having a long term vision to export vehicles. According to the Annual Report 2006, the export of Suzuki Ravi pick up to Bangladesh and export of sheet metal parts of Suzuki Cultus to Europe are going well.
The company earned net-profit after taxation at Rs 3.350 billion (2005: Rs 2.236 billion) and announced bonus stock dividend @50% (2005: cash dividend @50%). It has gratifying record of excellent profit distribution rate and regular announcements. In the stock market it is a blue chip company as its shares are invariably priced high. During the last 52 weeks market price of Pak Suzuki Motor Company shares remained between Rs 268 and Rs 572 per 10-rupee share.
According to the company's Annual Report for the period ended December 31, 2006 Pak Suzuki Motor Company Ltd (PSMC) was formed as a joint venture between Pakistan Automobile Corporation Limited (Paco) and Suzuki Motor Corporation, Japan (SMC). The company was formed in 1983 for the purpose of assembling, progressive manufacturing and marketing of Suzuki cars, pick ups, vans and 4x4s.
It is a public limited company and listed on the Karachi and Lahore stock exchanges and started commercial production in January 1984. Its registered office and factory are situated in Pakistan Industrial Estate, Bin Qasim, Karachi. Presently the entire range of Suzuki products, currently marketed in Pakistan, are produced at this factory. By September 19, 1992 SMC increased its shareholding to 40% in the company (PSMC) and took over its management with effect from September 21, 1992. Since then SMC progressively increased its equity to 73.09%. In July 1996, Paco had disinvested its remaining shareholding and these shares were also acquired by Suzuki Motor Corporation Japan as a final move of privatisation.
By July 1994 its installed production capacity way raised to 50,000 vehicles per annum. However, capacity remained substantially under-utilized until 2000 because of recession in the economy.
Thereafter, realising growth in demand, the company increased capacity in phases. "Accordingly, the first phase was completed in January 2005, when capacity was enhanced to 80,000 vehicles.
The second phase was completed in January 2006 with increase in the capacity to 120,000. The third phase was recently completed with 150,000 vehicles capacity expansion facilities.
The company continues to be in the forefront of automobile industry of Pakistan. Over a period of time, the company has developed an effective and comprehensive network of sales, service and spare parts dealers who cater to the needs of customers and render effective after sales service countrywide. PSMC is serviced by over 143 active vendors who are engaged in the local manufacture and supply of automotive parts of the company.
As regards operating results, the production at company's plants increased by 32%. In 2006, sales in terms of quantity increased by 29.5% to 112,173 units as against 86,602 units last year. Sales turnover in 2006, amounted to Rs 47.188 billion (2005: Rs 35.374 billion) and Gross Profit at Rs 5.561 billion (2005: Rs 3.573 billion) showed increase by 33.4% and 55.6% respectively YoY.
The main reason for the impressive growth in sales was due to expanding car market fuelled by consumer finance. The industry for cars and light commercial vehicles witnessed a growth of 17% during the calendar year 2006.
According to the company's Chairman and Chief Executive Kenichi Ayukawa, the manufacturers (in the automobile industry) have made significant investments for capacity expansions which reduced the gap between demand and supply and resultantly, the waiting period has also been minimised. The consistent growth in GDP, lower interest rates and introduction of state of art models have led to substantially increase the demand for cars. Automobile industry is the "mother" of all industries. Therefore, growth of automobile industry benefits other growth industries as well.
While Gross Profit improved by 55.6%, the Ratio of Gross Profit to Sales (GP Margin) improved from 10.10% in 2005 to 11.78% in 2006.
The chairman stressed on the profit that increase in GP Margin was due to increased productivity, cost reduction measures and favourable average exchange rate. Distribution and administration expenses as a percentage of sales increased from 0.5% to 1.1%, mainly because of aggressive advertising and sales promotion to enhance market share.
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Performance Statistics (Million Rupees)
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31 December 2006 2005
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Share Capital Paid-up: 540.44 540.44
Reserves: 10,378.59 7,285.70
Shareholders' Equity: 10,919.03 7,826.14
Deferred Tax Liability: 69.00 151.00
Current Liabilities: 11,062.35 10,770.70
Fixed Assets Tangible: 3,532.98 3,327.49
Intangible Assets: 232.98 123.47
L.T. Investments: 154.40 153.45
L.T. Loans: 11.73 2.59
L.T. Deposits & Prepayments: 22.29 13.75
Current Assets: 18,096.00 15,127.09
Total Assets: 22,050.38 18,747.84
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Sales, Profit & Pay Out:
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Turnover: 47,187.95 35,374.56
Gross Profit: 5,560.73 3,572.96
Finance (Costs): (220.51) (116.55)
Other Operating Income: 1,040.79 694.25
(Depreciation): (903.76) (569.12)
Amortisation - Intangible Assets: (65.71) (74.26)
Share of Profit of Associate: 7.70 40.09
Profit Before Taxation: 5,139.01 3,519.54
Profit After Taxation: 3,350.44 2,236.88
Earnings Per Share (Rs): 61.99 41.39
Dividend Cash %: - 50.00
Dividend Stock (%): 50.00 -
Share Price (Rs) on 10-05-07: 379.00 -
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Financial Ratios:
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Price/Earning Ratio: 6.21 -
Book Value Per Share: 202.04 144.81
Price/Book Value Ratio: 1.88 -
L.T. Debt/Equity Ratio: 0:100 0:100
Current Ratio: 1.64 1.40
Total Asset Turn Over Ratio: 2.14 1.89
Days Receivables: 1 1
Days Inventory: 81 57
Gross Profit Margin (%): 11.78 10.10
Net Profit Margin (%): 7.10 6.32
R.O.A. (%): 15.19 11.93
R.O.C.E. (%): 30.49 28.04
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Plant Capacity & Actual Production
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(Numbers in Units):
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Plant Capacity of all Models: 120,000 80,000
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(Double Shifts Basis)
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Actual Production: 114,214 86,421
Capacity Utilisation (%): 95.18 108.03
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