| Pak Suzuki Motor Company Limited |
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| Annual
Report 2001 |
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| Contents |
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| Company
Profile |
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| Company
Information |
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| Notice
of Meeting |
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| Highlights
of the Accounts |
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| Chairman's'
Review |
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| Directors'
Report |
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| Auditors'
Report |
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| Balance
Sheets |
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| Profit
& Loss Account |
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| Cash
Flow Statement |
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| Statement
of Changes in Equity |
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| Notes
to the Accounts |
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| Selected
Financial Data |
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| Pattern
of Share holdings |
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| COMPANY
PROFILE |
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| Pak
Suzuki Motor Company Limited (PSMC) is a public limited company with its
shares quoted on Stock |
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| Exchanges
in Pakistan. The Company was formed in August 1983 in accordance with the
terms of a joint |
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| venture
agreement concluded between Pakistan Automobile Corporation Limited
(representing |
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| Government
of Pakistan) and Suzuki Motor Corporation (SMC) - Japan. The Company started |
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| commercial
production in January 1984 with the primary objective of progressive
manufacturing, |
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| assembling
and marketing of Cars, Pickups, Vans and 4 x 4 vehicles in Pakistan. |
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| The
foundation stone laying ceremony of the company's existing plant located at
Bin Qasim was |
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| performed
in early 1989 by the Prime Minister then in office. By early 1990, on
completion of first phase of |
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| this
plant, in-house assembly of all the Suzuki engines started. In 1992, the
plant was completed and |
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| production
of the Margalla Car commenced. Presently the entire range of Suzuki products
currently |
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| marketed
in Pakistan are being produced at this Plant. |
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| Under
the Government's privatization policy, the Company was privatized and placed
directly under the |
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| Japanese
management in September 1992. |
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| At
the time of privatization, SMC increased its equity from 25% to 40% .
Subsequently, SMC |
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| progressively
increased its equity to 72.8% by purchasing remaining shares from PACO. The
total |
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| foreign
investment brought in by SMC- Japan since inception stands at Rs. 1026.36
million. |
|
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| The
Suzuki Management immediately after privatization started expansion of the
Bin Qasim Plant to |
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| increase
its installed capacity to 50,000 vehicles per year. The expansion was
completed in July 1994. |
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| Keeping
this in view, the company's long term plans inter-alia include tapping of
export markets. The |
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| company
has acquired additional land measuring about 30 acres from Pakistan Steel
Mills Corporation in |
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| proximity
to its Bin Qasim Plant to set up production facilities for manufacture of
some local components. |
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| The
Company continues to be in the fore-front of automobile industry of Pakistan.
Over a period of time, |
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| the
company has developed an effective and comprehensive network of sales,
service and spare parts |
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| dealers
who cater to the needs of customers and render effective after sale service
country wide. PSMC |
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| is
serviced by over 180 active vendors who are engaged in the local manufacture
and supply of |
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| automotive
parts to the company. |
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| BIN
QASIM PLANT IN BRIEF: |
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| LOCATION |
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: Downstream Industrial
Estate of Pakistan Steel |
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| TOTAL
AREA |
: 259,200 M2 (64acres) |
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| COVERED
AREA |
: 41,000 M2 |
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| FACILITIES |
|
: Press Shop, Welding
Shop, Paint Shop, Engine and Transmission |
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|
Assembly Shop, Final
Assembly & Hi-Tech Inspection Shop. The |
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|
Company has also
established a modern Waste Water Treatment Plant |
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|
as its contribution to
the environment. |
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| COST |
|
: Rs.3.0billion |
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| PRODUCTION
CAPACITY |
: 50,000units perannum (double shift) |
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| COMPANY
INFORMATION |
|
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| BOARD
OF DIRECTORS |
|
| Yasuo Suzuki |
|
Chairman & Chief
Executive. |
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| Capt.
(Retd) Bashir Ahmed |
|
Deputy Managing Director |
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| Katsuichiro
Ota |
|
Director |
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| Sokichi
Nakano |
|
Director |
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| Yoshio Saito |
|
Director |
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| Tariq
Iqbal Khan |
|
Director |
|
| Koki Imamura |
|
Director |
|
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| COMPANY
SECRETARY |
|
| Abdul
Harold Bhombal |
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| AUDITORS |
|
| Sidat
Hyder Qamar & Co. |
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| Chartered
Accountants |
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| BANKERS |
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| ABN-AMRO
Bank |
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| Allied
Bank of Pakistan Limited |
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| Bank
Alfalah Limited |
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| Bank
AL Habib Limited |
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| Citibank N.A. |
|
| Deutsche
Bank AG |
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| Habib
Bank Limited |
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| Muslim
Commercial Bank Limited |
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| National
Bank of Pakistan |
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| The
Bank of Tokyo-Mitsubishi Limited |
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| The
Hongkong and Shanghai Banking Corporation Limited |
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| LEGAL
ADVISORS |
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| Syed
Qamaruddin Hassan |
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| Industrial
Relations Advisor |
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| Orr
Digham & Company |
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| Advocates
& Legal Consultants |
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| REGISTERED
OFFICE |
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| DSU-13,
Pakistan Steel Industrial Estate, |
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| Bin
Qasim, Karachi. |
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| REGISTRAR |
|
| Ferguson
Associates (Pvt) Limited |
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| State
Life Building l-A, |
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| I.I.
Chundrigar Road, Karachi. |
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| NOTICE
OF MEETING |
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| Notice
is hereby given that the Eighteenth Annual General Meeting of the
shareholders of Pak Suzuki |
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| Motor
Company Limited will be held at Pearl Continental Hotel, Club Road, Karachi
on Wednesday |
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| December
05, 2001 at 10.00 a.m. to transact the following business: |
|
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| 1.
To confirm minutes of Seventeenth Annual General Meeting held on December 16,
2000. |
|
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| 2.
To receive, consider and adopt the audited accounts of the Company for the
year ended June 30, |
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| 2001
together with Directors' and Auditors' reports thereon. |
|
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| 3.
To approve payment of cash dividend @ 8% i.e. Re. 0.80 per share of Rs. 10/-
each. |
|
|
| 4.
To appoint auditors and fix their remuneration for the next accounting year. |
|
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| 5.
To consider any other business with the permission of the Chair. |
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| BY
ORDER OF THE BOARD |
|
|
| ABDUL
HAMID BHOMBAL |
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| COMPANY
SECRETARY |
|
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| Karachi:
November 9, 2001 |
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| Notes: |
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| 1.
The share transfer books of the Company shall remain closed from December 01,
2001 to |
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| December
07, 2001 (both days inclusive) and no transfer will be accepted for
registration |
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| during
this period. Transfers received in order till close of business on November
30, 2001 |
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| will
be accepted for transfer. |
|
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| 2.
A member entitled to attend and vote at this meeting may appoint another
person as his/her |
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| proxy
to attend the meeting and vote for him/her. Proxies in order to be effective
must be |
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| received
by the Company not less than 48 hours before the meeting. |
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| 3.
Shareholders are requested to immediately notify the change in their address,
if any, to our |
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| Registrar
Ferguson Associates (Pvt.) Limited, State Life Building l-A, I.I. Chundrigar
Road, |
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| Karachi. |
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| 4.
Account holders and sub-account holders holding book entry securities of the
Company in |
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| Central
Depository System of Central Depository Company of Pakistan Limited who wish
to |
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| attend
the Annual General Meeting are requested to please bring original I.D. Card
with |
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| copy
thereof duly attested by their Bankers for identification purpose. |
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|
| HIGHLIGHTS
OF THE ACCOUNTS |
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| FOR
THE YEAR ENDED JUNE 30, 2001 |
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|
Increase/(Decrease) |
|
|
2001 |
2000 |
Amount |
% |
|
|
----------------------(Rupees
in thousand)----------------------- |
|
| Production
volume (units) |
|
19,139 |
20,404 |
(1,265) |
(6.2) |
|
|
| Sales
volume (units) |
|
20,434 |
19,816 |
618 |
(3.1) |
|
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| Net sales |
|
7,976,122 |
6,889,145 |
1,086,977 |
15.80 |
|
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| Gross Profit |
|
376,683 |
310,247 |
66,436 |
21.4 |
|
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| as
a % of net sales |
|
4.7 |
4.5 |
-- |
0.2 |
|
|
| Expenses
- Selling & admin. |
|
201,729 |
234,790 |
(33,061) |
(14.1) |
|
|
| -
Financial & other charges |
|
72,480 |
221,971 |
(149,491) |
(67.3) |
|
|
| - Total |
|
275,209 |
456,761 |
(182,552) |
(40.0) |
|
|
| as
a % of net sales |
|
3.40 |
6.60 |
-- |
(3.2) |
|
|
| Other income |
|
27,688 |
74,188 |
(46,500) |
(62.7) |
|
|
| as
a % of net sales |
|
0.3 |
1.1 |
-- |
(0.8) |
|
|
| Provision
/ (reversal of provision) for diminution |
|
|
| in
value of investments / WAPDA Bonds |
|
5,600 |
(74,250) |
79,850 |
107.5 |
|
|
| Profit
before taxation |
|
124,562 |
1,924 |
122,638 |
6,374 |
|
|
| as
a % of net sales |
|
1.6 |
0.03 |
-- |
1.57 |
|
|
| Profit
/ (loss) after taxation |
|
87,013 |
(26,600) |
113,613 |
427.1 |
|
| as
a % of net sales |
|
1.10 |
(0.4) |
-- |
1.5 |
|
| Stocks |
|
1,535,836 |
1,913,050 |
(377,214) |
(19.7) |
|
|
| as
a % of net sales |
|
19.3 |
27.8 |
-- |
(8.5) |
|
|
| number
of days stocks held |
|
74 |
106 |
(32) |
-- |
|
|
| inventory
turn over ratio |
|
4.9 |
3.4 |
-- |
1.5 |
|
|
| Cash
and bank balances - net |
|
729,243 |
(1,058,666) |
1,787,909 |
168.90 |
|
| Shareholders'
equity |
|
1,807,840 |
1,760,132 |
47,708 |
2.70 |
|
| Current ratio |
|
1.33:1 |
1.16: 1 |
-- |
-- |
|
|
| Profit
/ (loss) per share (Rs.) |
|
1.77 |
(0.54) |
-- |
-- |
|
|
| Break-up
value per share (Rs.) |
|
36.80 |
35.83 |
-- |
-- |
|
|
| Capital
expenditure |
|
35,645 |
262,651 |
(227,006) |
(86.4) |
|
| No.
of permanent employees |
|
|
|
| - Officers |
|
254 |
288 |
(34) |
(11.8) |
|
|
| -
Staff/workers |
|
321 |
322 |
(1) |
(0.3) |
|
|
| - Total |
|
575 |
610 |
(35) |
(5.7) |
|
|
|
|
|
| CHAIRMAN'S
REVIEW |
|
|
| I
am pleased to present my review on the performance |
|
| oftheCompanyfortheyearendedJune30,2001. |
|
|
| PRODUCTION
& SALES |
|
| During
the year 19,139 units were produced as |
|
| compared
to 20,404 units produced in the previous |
|
| year.
The lower production was due to depressed |
|
| market
demand resulting from persistent economic |
|
| recession
particularly experienced in the first half and |
|
| some
competition from new entrants. |
|
|
| Sales
volume marginally increased by 618 units. |
|
| During
the year 20,434 units were sold against 19,816 |
|
| units
sold in the preceding year. Plant capacity |
|
| utilization
stood at 38%. |
|
|
| OPERATING
RESULTS |
|
| The
Company earned a net profit of Rs. 87.013million |
|
| against
a loss of Rs. 26.600 million incurred last year. |
|
| This
achievement accrued from savings in financial |
|
| cost
and selling and admin expenses. |
|
|
|
| Gross
profit as a percentage of sales marginally |
|
| improved
from 4.5 to 4.7. In absolute terms it |
|
| increased
by Rs. 66.436 million over the previous |
|
| year.
The main reasons of improvement were |
|
| increase
in sale revenues and savings accruing from |
|
| reduction
in production overheads. |
|
|
| The
selling and administration expenses as a |
|
| percentage
of sales declined from 3.4 to 2.5. In |
|
| absolute
terms a saving of Rs. 33.061 million was |
|
| recorded
which represented a reduction of 14.1% |
|
| over
the previous year. Savings arose mainly in the |
|
| areas
of advertising, sales promotion, depreciation, |
|
| salaries
and travelling. |
|
|
| Other
income decreased by Rs. 46.500 million from |
|
| Rs.
74.188 million to Rs. 27.688 million since income |
|
| from
WAPDA Bonds of Rs. 50.625 million which |
|
| matured
in May 2000 had been included last year. The |
|
| other
income mainly represents income from surplus |
|
| deposits. |
|
|
| The
financial and other charges reduced substantially |
|
| by
67.3% from Rs. 221.971 million to Rs. 72.480 |
|
| million.
The saving in financial charges arose from |
|
| improved
liquidity as a result of maturity of WAPDA |
|
| Bonds,
supply of CKD by SMC Japan on 90 days |
|
| credit
and :'educed inventory levels. |
|
|
| MARKETING |
|
| Company's
products are well placed viz-a-viz new |
|
| competitors
and continue to enjoy confidence of |
|
| potential
customers. |
|
|
| In September 2000, the
Company introduced |
|
| Suzuki Alto 1000cc
and in January 2001, Company |
|
| launched
Re-born Mehran with some improvements. |
|
| The
customers' response was very encouraging. The |
|
| Company
also introduced Mehran with CNG in June |
|
| 2001.
The product has been well accepted in the |
|
| market.
The Company has plans to progressively |
|
| introduce
CNG in all models. |
|
|
| Your
Company made a modest beginning with export |
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| of
Ravi Pickups. The product has been well accepted |
|
| and
Bangladesh has emerged as the importer. |
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| Exports
have gradually increased and a cumulative |
|
| 239
units have been exported since commencement. |
|
|
| During
the year Company sold all the taxis which |
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| were
stuck up after the discontinuation of the scheme |
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| by
the present government. |
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|
| DELETION |
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| The
Company is strictly adhering to Deletion |
|
| Programmes
and would continue to meet the deletion |
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| targets
set by the Government. The Company's |
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| resolve
and commitment to localization is evidenced |
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| with
the achievement of higher deletion levels in its |
|
| products
including the recently introduced Cultus and |
|
| Alto Cars. |
|
|
| PERSONNEL |
|
| Management
and employee relations continued to |
|
| remain
cordial and industrial peace prevailed during |
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| the
year. The new charter of demand by the CBA was |
|
| negotiated
in a congenial atmosphere and agreement |
|
| was
entered into with CBA for two years for the period |
|
| July
2000 to June 2002. |
|
|
| Improving
efficiency and skill of workers in order to |
|
| improve
productivity and quality of products continues |
|
| to
be the key objective of personnel management. |
|
| During
the year, 38 employees were sent to Japan for |
|
| six
months on-the-job training. |
|
|
| ECONOMIC
CONTRIBUTION |
|
| Despite
adverse factors, the Company maintained its |
|
| distinctive
position in the automobile industry as a |
|
| leading
contributor to the public exchequer. The |
|
| duties
and taxes paid and the foreign exchange saved |
|
| by
the Company in its last five years of operations are |
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| as follows: |
|
|
|
|
Duties |
Foreign |
|
| Year |
and |
exchange |
|
|
taxes |
savings |
|
|
(Rupees in million) |
|
| 1996-97 |
2,728 |
2,539 |
|
| 1997-98 |
2,571 |
2,924 |
|
| 1998-99 |
3,203 |
3,751 |
|
| 1999-2000 |
2,064 |
2,594 |
|
| 2000-2001 |
2,446 |
2,700 |
|
|
| FUTURE
PROSPECTS & CONCLUSION |
|
| The
present disturbed regional condition poses a |
|
| threat
to the economy. However the management is |
|
| optimistic
that the country's economy would benefit in |
|
| the
long run. In fact the situation has created new |
|
| business
opportunities. |
|
|
| Pakistan
has been pursuing policy of progressive |
|
| local
manufacture of automobiles. Under this |
|
| programme,
the local manufactures have been |
|
| encouraged
to pursue their indigenisation plans |
|
| through
concessional customs tariffs. As a result a |
|
| high
level of cost effective local manufacturing has |
|
| been
achived and your company has remained in the |
|
| forefront
with achievements of higher deletion level in |
|
| its products. |
|
|
| However
the automobile industry is now faced with a |
|
| major
threat with the application of W.T.O. |
|
| conditionalities
which would lead to the elimination of |
|
| Trade
Related Investment Measures (TRIMs). In July |
|
| 2001,
the W.T.O allowed Pakistan an extension in the |
|
| transition
period upto December 31, 2001 and has |
|
| recently
also allowed another extension for further two |
|
| years
upto December 2003. The industry has been |
|
| seeking
a longer extension of atleast upto December |
|
| 2006. |
|
|
| The
Company would earn reasonable return on equity. |
|
| However
Rupee / Yen parity, economic conditions viz- |
|
| a-viz
impending conditions in the country / region, |
|
| Government
policies and growing competition would |
|
| play
a vital role in this achievement. |
|
|
| Company's
key objectives continue to remain: |
|
|
| To
provide automobiles of international quality at |
|
| reasonable
prices; |
|
|
| To
improve skills of employees by imparting |
|
| training
and by inculcating in them a sense of |
|
| participation;
and |
|
|
| To
abide by the deletion policy of the |
|
| Government,
achieve maximum indigenisation |
|
| and
promote the automobile vending industry. |
|
|
| In
conclusion, I on behalf of the Board and |
|
| shareholders
would like to express my appreciation to |
|
| the
management, executives, workers, dealers, |
|
| vendors
and Suzuki experts for their efforts and |
|
| contribution
to the affairs of the Company. My sincere |
|
| gratitude
also goes to all the Government agencies for |
|
| their
continued support and encouragement. |
|
|
| Yasuo Suzuki |
|
| Chairman
& Chief Executive |
|
|
|
| DIRECTORS'
REPORT |
|
|
| 1.
The Directors of the Company take pleasure in submitting their report with
audited accounts of |
|
| the
Company, together with Auditors' Report thereon, for the year ended June 30,
2001. |
|
|
| 2.
ACCOUNTS |
|
|
(Rupees in thousand) |
|
|
| Profit
before taxation |
|
124,562 |
|
| Taxation |
|
(37,549) |
|
|
--------- |
|
| Profit
after taxation |
|
87,013 |
|
| Unappropriated
profit brought forward |
|
-- |
|
|
--------- |
|
| Net
profit available for appropriation |
|
87,013 |
|
| Less:
Appropriations |
|
|
|
| Proposed
cash dividend @ 8% |
|
39,305 |
|
| Transfer
to general reserve |
|
47,000 |
|
|
--------- |
|
|
86,305 |
|
|
--------- |
|
| Unappropriated
profit carried forward |
|
708 |
|
|
========== |
|
|
|
|
| 3.
PROFIT PER SHARE |
|
| The
profit per share for the year is Rs. 1.77 |
|
|
| 4.
HOLDING COMPANY |
|
| The
Company is a subsidiary of Suzuki Motor Corporation which is incorporated in
Japan. |
|
|
| 5.
ASSOCIATED COMPANIES |
|
| Arabian
Sea Country Club Limited is an associated company of Pak Suzuki Motor Co.
Ltd. |
|
| because
of common directorship. Mr. Yasuo Suzuki - Chairman and Chief Executive of
Pak |
|
| Suzuki
Motor Co. Ltd. is also director of Arabian Sea Country Club Limited. Pak
Suzuki holds |
|
| 7.22%
shares of the total share capital of Arabian Sea Country Club Limited. |
|
|
| Suzuki
Motorcycles Pakistan Limited is an associated company of Pak Suzuki Motor Co.
Ltd. |
|
| as
Pak Suzuki holds 41% shares of the total share capital of Suzuki Motorcycles
Pakistan |
|
| Limited. |
|
|
| Automotive
Testing & Training Centre (Pvt) Ltd. is an associated company of Pak
Suzuki Motor |
|
| Co.
Ltd. because of common directorship. Capt. (Retd) Bashir Ahmed - Deputy
Managing |
|
| Director
is Chairman of Automotive Testing & Training Centre (Pvt) Ltd. Pak Suzuki
holds |
|
| 12.5%
shares of the total share capital of Automotive Testing & Training Centre
(Pvt) Ltd. |
|
|
| 6.
CHAIRMAN'S REVIEW |
|
| The
Chairman's review on page 7 to 9 deals with the year's activities and the
directors of the |
|
| Company
endorse contents of the same, |
|
|
| 7.
PATTERN OF SHAREHOLDING |
|
| The
pattern of shareholdings is given on page 40. |
|
|
| 8.
BOARD CHANGES |
|
| Mr.
Tariq Iqbal Khan was appointed director in place of Mr. Istaqbal Mehdi who
resigned. |
|
|
| 9.
CHANGE OF ACCOUNTING YEAR |
|
| The
management has decided to adopt calender year as the accounting year w.e.f.
January |
|
| 2002.
In order to implement this change the next accounting year would be closed on
31st |
|
| December
2001. However the change in accounting year is subject to approval by
competent |
|
| authority. |
|
|
| 10.
AUDITORS |
|
| Messrs.
Sidat Hyder Qamar & Co. Chartered Accountants retire and being eligible
offer |
|
| themselves
for appointment as the auditors of the Company for the next accounting year. |
|
|
| BY
ORDER OF THE BOARD |
|
|
| YASUO
SUZUKI |
|
| Chairman
& Chief Executive |
|
|
| Karachi |
|
| November
07, 2001 |
|
|
|
| AUDITORS'
REPORT TO THE MEMBERS |
|
|
| We
have audited the annexed balance sheet of PAK SUZUKI MOTOR COMPANY LIMITED as
at 30 |
|
| June
2001 and the related profit and loss account, 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
all the information and explanations which, to the best of our knowledge and
belief, were |
|
| necessary
for the purposes of our audit. |
|
|
| 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 requirements of the Companies Ordinance, 1984. Our
responsibility is |
|
| to
express an opinion on these statements based on our audit. |
|
|
| We
conducted our audit in accordance with the auditing standards as applicable
in Pakistan. These |
|
| standards
require that we plan and perform the audit to obtain reasonable assurance
about whether |
|
| the
above said statements 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 statements. We
believe that our audit |
|
| provides
a reasonable basis for our opinion and, after due verification, we report
that: |
|
|
| a)
in our opinion, proper books of account have been kept by the Company as
required by the |
|
| Companies
Ordinance, 1984; |
|
|
| b)
in our opinion: |
|
| i)
the balance sheet and profit and loss account together with the notes thereon
have been |
|
| drawn
up in conformity with the Companies Ordinance, 1984, and are in agreement
with the |
|
| books
of account and are further in accordance with accounting policies
consistently applied; |
|
|
| ii)
the expenditure incurred during the year was for the purpose of the Company's
business; and |
|
|
| iii)
the business conducted, investments made and the expenditure incurred during
the year |
|
| were
in accordance with the objects of the Company; |
|
|
| c)
In our opinion and to the best of our information and according to the
explanations given to us, |
|
| the
balance sheet, profit and loss account, 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 30 June 2001 and of the profit, its cash flows and changes in equity
for the year |
|
| then
ended; and |
|
|
| d)
in our opinion, no Zakat was deductible at source under the Zakat and Ushr
Ordinance,1980. |
|
|
| Sidat
Hyder Qamar & Co. |
|
| Chartered
Accountant |
|
|
| Karachi:
November 07, 2001 |
|
|
|
| BALANCE
SHEET |
|
