| Indus Motor Co Ltd - 2007 |
|
BALANCE SHEET AS AT JUNE 30, 2007
====================================================================================
Note 2007 2006
(Rupees in '000)
====================================================================================
ASSETS
Non-current assets
Fixed assets 3 2,093,852 1,716,590
Long-term loans 4 4,240 1,019
Long-term deposits 5 6,629 5,181
Finance under musharika arrangements 6 - 4,021
2,104,721 1,726,811
Current assets
Stores and spares 7 227,191 226,169
Stock-in-trade 8 2,859,951 3,959,316
Trade debts 9 665,647 738,281
Current maturity of finance under
musharika arrangements 6 3,710 5,811
Loans and advances 10 426,165 414,338
Short-term prepayments and trade deposits 11 47,523 9,134
Accrued mark-up 132,634 76,211
Other receivables 12 605,725 1,250,217
Taxation - net 13 48,520 -
Cash and bank balances 14 8,543,263 7,416,180
13,560,329 14,095,657
TOTAL ASSETS 15,665,050 15,822,468
EQUITY
Share capital
Authorised capital
100,000,000 (2006:100,000,000)
Ordinary shares of Rs 10 each 1,000,000 1,000,000
Issued, subscribed and paid-up capital 15 786,000 786,000
Reserves 16 7,257,975 5,471,879
8,043,975 6,257,879
LIABILITIES
Non-current liabilities
Liabilities against assets subject
to finance lease 17 - 3,871
Deferred taxation 18 210,149 116,164
210,149 120,035
Current liabilities
Trade and other payables 19 2,892,017 2,599,911
Advances from customers and dealers 20 4,514,480 6,620,869
Accrued mark-up 21 715 22,250
Short-term running finances 22 - -
Current portion of liabilities against
assets subject to finance lease 17 3,714 5,735
Taxation - net 13 - 195,789
7,410,926 9,444,554
CONTINGENCIES AND COMMITMENTS 23
TOTAL EQUITY AND LIABILITIES 15,665,050 15,822,468
====================================================================================PROFIT AND LOSS ACCOUNT FOR THE YEAR ENDED JUNE 30, 2007====================================================================================
Note 2007 2006
(Rupees in '000)
====================================================================================
Net sales 24 39,061,226 35,236,535
Cost of sales 24 34,620,632 31,088,906
Gross profit 4,440,594 4,147,629
Distribution costs 25 509,986 404,917
Administrative expenses 26 265,302 242,456
775,288 647,373
3,665,306 3,500,256
Other operating expenses 28 348,430 321,746
3,316,876 3,178,510
Other operating income 29 935,290 1,021,212
4,252,166 4,199,722
Finance cost 30 22,685 126,945
Profit before taxation 4,229,481 4,072,777
Taxation 31 1,483,780 1,424,313
Profit after taxation 2,745,701 2,648,464
(Rupees)
Earnings per share 32 34.93 33.70
====================================================================================CASH FLOW STATEMENT FOR THE YEAR ENDED JUNE 30, 2007====================================================================================
Note 2007 2006
(Rupees in '000)
====================================================================================
CASH FLOWS FROM OPERATING ACTIVITIES
Cash generated from operations 33 3,999,589 3,155,420
Interest paid (22,207) (91,373)
Workers' Profit Participation Fund paid (227,390) (217,143)
Workers' Welfare Fund paid (67,655) (38,804)
Interest received 780,163 941,148
Income tax paid (1,634,104) (1,072,738)
Long-term loans - net (3,221) (631)
Long-term deposits (1,448) (32)
Net cash inflow from operating activities 2,823,727 2,675,847
CASH FLOWS FROM INVESTING ACTIVITIES
Fixed capital expenditure (805,259) (1,168,227)
Proceeds from disposal of fixed assets 46,989 48,838
Investment made in listed mutual fund (25,000) -
Proceeds from redemption of
investment in listed mutual fund 26,313 -
Receipts from finance under
musharika arrangements 6,570 33,128
Net cash used in investing activities (750,387) (1,086,261)
CASH FLOWS FROM FINANCING ACTIVITIES
Repayments of obligation against assets
subject to finance lease (6,413) (31,948)
Dividend paid (939,844) (861,457)
Net cash used in financing activities (946,257) (893,405)
Net increase in cash and cash equivalents 1,127,083 696,181
Cash and cash equivalents
at beginning of the year 34 7,416,180 6,719,999
Cash and cash equivalents
at end of the year 34 8,543,263 7,416,180
====================================================================================STATEMENT OF CHANGES IN EQUITY FOR THE YEAR ENDED JUNE 30, 2007======================================================================================================================================================
Share Capital Reserves
Capital Revenue
Issued, Premium on Unrealised
subscribed issue of Unappro- gain/(Loss)
and paid-up ordinary General priated on hedging
shares reserve profit instruments Sub-Total Total
(Rupees in '000)
======================================================================================================================================================
Balance at June 30, 2005 786,000 196,500 2,329,900 1,170,249 (6,844) 3,689,805 4,475,805
Final dividend @ 60% for the year ended June 30,
2005 declared subsequent to year end - - - (471,600) - (471,600) (471,600)
Transfer to general reserve for the year ended June 30,
2005 appropriated subsequent to the year end - - 698,600 (698,600) - -
Unrealised loss on cash flow hedge removed from
equity and reported in net profit for the period - - - - 6,844 6,844 6,844
Profit after taxation for the year ended June 30, 2006 - - - 2,648,464 - 2,648,464 2,648464
Unrealised loss on revaluation of forward foreign
exchange contracts - - - - (8,634) (8,634) (8,634)
Interim dividend @ 50% - - - (393,000) - (393,000) (393,000)
Balance at June 30, 2006 786,000 196,500 3,028,500 2,255,513 (8,634) 5,471,879 6,257,879
Final dividend @ 70% for the year ended June 30,
2006 declared subsequent to year end - - - (550,200) - (550,200) (550,200)
Transfer to general reserve for the year ended June 30,
2006 appropriated subsequent to the year end - - 1,705,300 (1,705,300) -
Unrealised loss on cash flow hedge removed from
equity and reported in net profit for the period - - - - 8,634 8,634 8,634
Profit after taxation for the year ended June 30, 2007 - - - 2,745,701 - 2,745,701 2,745,701
Unrealised loss on revaluation of forward foreign
exchange contracts - - - - (25,039) (25,039) (25,039)
Interim dividend @ 50% - - - (393,000) - (393,000) (393,000)
Balance at June 30, 2007 786,000 196,500 4,733,800 2,352,714 (25,039) 7,257,975 8,043,975
======================================================================================================================================================NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED JUNE 30, 20071. THE COMPANY AND ITS OPERATIONS The company was incorporated in Pakistan as a public limited company in December 1989 and started commercial production in May 1993. The shares of the company are quoted on all the stock exchanges in Pakistan. The company was formed in accordance with the terms of a Joint Venture agreement concluded amongst the House of Habib, Toyota Motor Corporation and Toyota Tsusho Corporation for the purposes of assembling, progressive manufacturing and marketing of Toyota vehicles. The company also acts as the sole distributor of Toyota vehicles in Pakistan. The company is also the sole distributor of Daihatsu vehicles in Pakistan and has a license for assembling, progressive manufacturing and marketing of these vehicles in Pakistan. The registered office and factory of the company is situated at Plot No. NWZI1/P-1, Port Qasim Industrial Estate, Bin Qasim, Karachi. 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES 2.1. Statement of compliance These financial statements have been prepared in accordance with approved accounting standards as applicable in Pakistan and the requirements of the Companies Ordinance, 1984. Approved accounting standards comprise of such International Financial Reporting Standards (IFRSs) as notified under the provisions of the Companies Ordinance, 1984. Wherever the requirements of the Companies Ordinance, 1984 or directives issued by the Securities and Exchange Commission of Pakistan (SECP) differ with the requirements of these standards, the requirements of the Companies Ordinance, 1984 or the requirements of the said directives take precedence. Amendments to published accounting standards that are effective in the current period International Accounting Standard (IAS) 19 (Amendment), Employee benefits, is mandatory for the company's accounting periods beginning on or after July 1, 2006. It introduces the option of an alternative recognition approach for actuarial gains and losses. It also adds new disclosure requirements. As the company has not changed the accounting policy adopted for recognition of actuarial gains and losses, application of this amendment only impacts the format and extent of disclosures and presentation in note 27 to these financial statements. The other standards, amendments and interpretations that are effective in the current period but are considered not to be relevant or to have any significant effect to the company's operations are not detailed here. Standards, interpretations and amendments to published approved accounting standards that are not yet effective: The following standards, interpretations and amendments of approved accounting standards are effective for accounting periods beginning July 1, 2007: =================================================================================================
i) IAS 1 - Presentation of Financial Statements
- Capital Disclosures effective from January 1, 2007
ii) IFRIC 10 - Interim Financial Reporting and Impairment effective from November 1, 2006
=================================================================================================These standards are not expected to have a material impact on the company's financial statements other than an increase in disclosures in certain cases.2.2. Basis of preparation These financial statements have been prepared under the historical cost convention except that derivative financial instruments have been marked to market and certain staff retirement benefits are carried at present value. The preparation of financial statements in conformity with approved accounting standards requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, income and expenses. It also requires management to exercise judgement in application of the company's accounting policies. The estimates and associated assumptions are based on historical experience and various other factors that are believed to be reasonable under the circumstances. These estimates and assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognised in the period in which the estimate is revised if the revision affects only that period, or in the period of revision and future periods if the revision affects both current and future periods. Significant accounting estimates and areas where judgements were made by management in the application of accounting policies are disclosed in note 2.23 to these financial statements. 2.3. Fixed assets 2.3.1. Property, plant and equipment Owned Property, plant and equipment are stated at cost less accumulated depreciation except capital work-in-progress which is stated at cost. Cost in relation to property, plant and equipment signifies historical cost. All expenditures connected to the specific assets incurred during installation and construction period are carried under capital work-in-progress. These are transferred to specific assets as and when assets are available for use. Depreciation is charged to income applying the straight line method, whereby the depreciable amount of an asset is written off over its estimated useful life. The cost of leasehold land is amortised equally over the lease period. Depreciation is charged on additions from the month the asset is available for use and on disposals upto the month preceding the month of disposal. The rates of depreciation are stated in note 3.2 to these financial statements. The assets' residual values and useful lives are reviewed, and adjusted, if appropriate, at each balance sheet date. Subsequent costs are included in the asset's carrying amounts or recognised as a separate asset, as appropriate, only when it is probable that future economic benefits associated with the item will flow to the company and the cost of the item can be measured reliably. Maintenance and repairs are charged to income as and when incurred. Gains and losses on sale or retirement of property, plant and equipment are included in income currently. Leased Assets held under finance lease are stated at cost less accumulated depreciation. The outstanding obligations under the lease agreements are shown as a liability net of finance charges allocable to future periods. The finance charges are allocated to accounting periods in a manner so as to provide a constant periodic rate of return on the outstanding liability. Depreciation on assets held under finance lease is charged in a manner consistent with that for depreciable assets which are owned by the company. 2.3.2. Intangible Software costs are only capitalised when it is probable that future economic benefits attributable to the software will flow to the company and the same is amortised applying the straight line method at the rates stated in note 3.2 to these financial statements. 2.3.3. Impairment The carrying values of assets are reviewed for impairment when events or changes in circumstances indicate that the carrying value may not be recoverable. If any such indication exists and where the carrying values exceed the estimated recoverable amount, the assets or cash-generating units are written down to their recoverable amount. 2.4. Loans, advances and deposits These are stated at cost less estimates made for doubtful receivables based on review of all outstanding amounts at the year end. Balances considered bad and irrecoverable are written off when identified. 2.5. Finance under musharika arrangements Finance under musharika arrangements are initially recognised at cost, being the fair value of the consideration given. Finances with fixed or determinable payments and fixed maturity, where management has both the intent and the ability to hold to maturity are classified as held-to-maturity. Subsequent to initial recognition at cost, these musharika arrangements are measured at amortised cost, using the effective interest rate method, less provision for impairment in value, if any. For finances carried at amortised cost, gains and losses are recognised in income when the finances are derecognised or impaired. 2.6. Stores and spares Stores and spares are valued at lower of cost and net realisable value. Cost is determined on a moving average basis. Net realisable value signifies the estimated selling price in the ordinary course of business less the estimated costs necessary to be incurred to make the sale. 2.7. Stock-in-trade Stock-in-trade, except in transit, are valued at the lower of cost and net realisable value. Stock in transit is stated at invoice price plus other charges incurred thereon. Cost of raw materials, own manufactured vehicles and trading stock is determined on a moving average basis. Cost of work-in-process is valued at material cost. Net realisable value signifies the estimated selling price in the ordinary course of business less the estimated costs necessarily to be incurred to make the sale. 2.8. Trade debts and other receivables Trade debts are recognised and carried at original invoice amount less an allowance for any uncollectible amounts. Other receivables are carried at cost less estimates made for doubtful receivables. An estimate for doubtful trade debts and other receivables is made when collection of the full amount is no longer probable. Bad debts are written off when identified. 2.9. Derivative financial instruments and hedge accounting Fair value hedge Changes in the fair value of derivatives that are designated and qualify as fair value hedges are recorded in the profit and loss account, together with any changes in the fair value of the hedged asset or liability that are attributable to the hedged risk. The carrying value of the hedged item is adjusted accordingly. Cash flow hedge The effective portion of changes in the fair value of derivatives that are designated and qualify as cash flow hedges are recognised directly in equity through the statement of changes in equity. The gain or loss relating to the ineffective portion is recognised immediately in the profit and loss account. Amounts accumulated in equity are transferred to the profit and loss account in the periods in which the hedged item will affect profit or loss. 2.10. Taxation Current The company falls under the Final Tax Regime under Sections 148 and 169 of the Income Tax Ordinance, 2001 to the extent of commercial import of parts. Provision for tax on local sales and other income is based on taxable income at the rates applicable for the current tax year, after considering rebates and tax credits available, if any. The charge for the current tax also includes adjustments where necessary, relating to prior years which arise from assessment framed / finalised during the year. Deferred Deferred tax is recognised using the balance sheet liability method, on all temporary differences arising between the tax bases of assets and liabilities and their carrying amounts appearing in the financial statements. Deferred tax liabilities are recognised for all taxable temporary differences. Deferred tax assets are recognised for all deductible temporary differences to the extent that it is probable that the temporary differences will reverse in the future and taxable income will be available against which the temporary differences can be utilised. The carrying amount of deferred tax assets is reviewed at each balance sheet date and reduced to the extent that it is no longer probable that sufficient taxable profit will be available to allow all or part of the deferred tax asset to be utilised. Deferred tax assets and liabilities are measured at the tax rates that are expected to apply to the period when the asset is realised or the liability is settled, based on tax rates that have been enacted or substantially enacted by the balance sheet date. 2.11. Cash and cash equivalents For the purpose of the cash flow statement, cash and cash equivalents comprise of cash in hand, bank balances and bank deposits net of running finances. The cash and cash equivalents are readily convertible to known amount of cash and are therefore subject to insignificant risk of changes in value. 2.12. Trade and other payables Liabilities for trade and other amounts payable are carried at cost, which is the fair value of the consideration to be paid in the future for goods and services, whether or not billed to the company. 2.13. Provisions Provisions are recognised when the company has a present legal or constructive obligation as a result of past events, it is probable that an outflow of resources embodying economic benefits will be required to settle the obligation and a reliable estimate of the amount can be made. Provisions are reviewed at each balance sheet date and adjusted to reflect the current best estimate. 2.14. Warranty obligations The company recognises the estimated liability on an accrual basis to repair or replace products under warranty at the balance sheet date. 2.15. Staff retirement benefits Defined contribution plan The company operates a recognised provident fund for its permanent employees. Equal monthly contributions are made to the fund by the company and the employees in accordance with the rules of the scheme. The company has no further payment obligation once the contributions have been paid. The contributions made by the company are recognised as an employee benefit expense when they are due. Defined benefit plan The company also operates an approved pension fund for its permanent employees. The scheme provides life pension to employees and thereafter to their spouse and dependant children. Actuarial valuation of the scheme is carried out annually, using the Projected Unit Credit Method and the latest valuation was carried out as at June 30, 2007. The liability recognised in the balance sheet in respect of the pension scheme is the present value of the defined benefit obligation at the balance sheet date less the fair value of plan assets, together with adjustments for unrecognised actuarial gains or losses and past service costs. Contributions are made to cover the obligations under the scheme on the basis of actuarial recommendations. Cumulative net unrecognised actuarial gains and losses at the end of the previous year which exceed 10% of the higher of the present value of the company's pension obligation and the fair value of the fund's assets are amortised over the expected average remaining working lives of the employees. The future contribution rate is 7.56% (2006: 6.06%) of the basic salary including allowances. The Projected Unit Credit Method, using the following significant assumptions, is used for the valuation of the scheme: -- Expected rate of increase in salaries at 9% (2006: 8%) per annum. -- Expected rate of interest on plan assets at 10% (2006: 9%) per annum. -- Expected discount rate at 10% (2006: 9%) per annum. 2.16. Employees' compensated absences The company accounts for compensated absences on the basis of unavailed earned leave balance of each employee at the end of the year. 2.17. Dividend distribution Dividend distribution (including stock dividend) to the company's shareholders is accounted for in the period in which the dividends are declared. 2.18. Revenue recognition Sales are recognised as revenue when goods are delivered and invoiced. Return on bank deposits and mark-up on advances to suppliers and contractors are accounted for on an accrual basis. Return on musharika arrangements are recognised on a time proportion basis using the effective interest rate implicit in the instrument. Agency commission is recognised when shipments are made by the principal. 2.19. Foreign currency transactions and translation Foreign currency transactions are translated into Pakistani Rupees using the exchange rates prevailing on the dates of the transactions. Monetary assets and liabilities in foreign currencies are translated into Pakistani Rupees at the rates of exchange prevailing on the balance sheet date. Exchange gain/loss on foreign currency translations are included in income/equity along with any related hedge effects. 2.20. Functional and presentation currency Items included in the financial statements are measured using the currency of the primary economic environment in which the company operates. The financial statements are presented in Pakistani Rupees, which is the company's functional and presentation currency. 2.21. Financial instruments All financial assets and financial liabilities are recognised at the time when the company becomes a party to the contractual provisions of the instrument. All the financial assets are derecognised at the time when the company loses control of the contractual rights that comprise the financial assets. All financial liabilities are derecognised at the time when they are extinguished i.e., when the obligation specified in the contract is discharged, cancelled, or expires. Any gain or loss on recognition/derecognition of financial assets and financial liabilities is taken to profit and loss account currently. 2.22. Off-setting of financial assets and financial liabilities Financial assets and liabilities are offset and the net amount is reported in the financial statements only when the company has a legally enforceable right to offset the recognised amounts and the company intends either to settle on a net basis or to realise the asset and settle the liability simultaneously. 2.23. Accounting estimates and judgements The preparation of financial statements in conformity with approved accounting standards requires the use of certain critical accounting estimates. It also requires management to exercise their judgement in the process of applying the company's accounting policies. Estimates and judgements are continually evaluated and are based on historical experience, including expectation of future events that are believed to be reasonable under the circumstances. The areas where various assumptions and estimates are significant to the company's financial statements or where judgement was exercised in application of accounting policies are as follows: i) Staff retirement benefits (notes 2.15 and 27); ii) Warranty obligations (notes 2.14 and 19.6); and iii) Customs duty (note 19.4). 3. FIXED ASSETS ===============================================================================
Note 2007 2006
(Rupees in '000)
===============================================================================
Property, plant and equipment 3.1 2,090,284 1,710,467
Intangible assets 3.2 3,568 6,123
2,093,852 1,716,590
===============================================================================3.1. Property, plant and equipment===============================================================================
Note 2007 2006
(Rupees in '000)
===============================================================================
Operating assets 3.2 1,902,912 1,408,314
Capital work-in-progress 3.5 187,372 302,153
2,090,284 1,710,467
===============================================================================3.2. The following is a statement of operating assets and intangible assets:========================================================================================================================================================================================================================================
2007
Tangible-owned Tangible-leased Intangible
assets
Leasehold Factory Other Plant Motor Furniture Office Computer Tools Jigs Plant Motor Computer Tools Jigs Total
land building building and vehicles and equipment and and and and vehicles and and and tangible
on lease on lease machinery fixtures related equipment fixtures machinery related equipment fixtures assets Computer
hold land hold land accessories accessories software
(Rupees '000)
========================================================================================================================================================================================================================================
At July 1, 2006
Cost 38,662 390,639 70,386 1,983,201 119,039 39,427 40,161 175,762 390,847 405,514 39,027 28,104 3,062 157 518 3,724,506 29,137
Accumulated depreciation
amortisation 8,288 190,865 25,519 1,238,937 36,817 20,173 23,968 110,359 302,396 333,736 15,086 6,619 3.062 93 274 2,316,192 23,014
Net book value 30,374 199,774 44,867 744,264 82,222 19,254 16,193 65,403 88,451 71,778 23,941 21,485 - 64 244 1,408,314 6,123
Year ended June 30, 2007
Opening net book value 30,374 199,774 44,867 744,264 82,222 19,254 16,193 65,403 88,451 71,778 23,941 21,485 - 64 244 1,408,314 6,123
Additions - 159,139 - 531,292 52,917 14,374 15,797 13,417 22,808 108,123 - - - - - 917,867 2,173
Transfers
Cost - - - 25,686 1,603 - - 3,062 157 518 (25,686) (1,603) (3,062) (157) (518) - -
Depreciation - - - 17,044 790 - - 3.062 125 377 (17,044) 790 (3,062) (125) (377) - -
- - - 8,642 813 - - - 32 141 (8,642) (813) - (32) (141) - -
Disposals/write offs
Cost - - - 2,299 59,289 - 443 1,011 - - - 3,324 - - - 66,366 -
Depreciation - - - 2,062 20,412 - 60 847 - - - 1,192 - - - 24,573 -
- - - 237 38,877 - 383 164 - - - 2,132 - - - 41,793 -
Depreciation / amortisation
charge for the year 921 31,436 2,856 208,219 17,520 6,303 5,948 33,652 38,392 25,118 6,779 4,197 - 32 103 381,476 4,728
Closing net book value 29,453 327,477 42,011 1,075,742 79,555 27,325 25,659 45,004 72,899 154,924 8,520 14,343 - - - 1.902,912 3,568
At June 30, 2007
Cost 38,662 549,778 70,386 2,537,880 114,270 53,801 55,515 191,230 413,812 514,155 13,341 23,177 - - - 4,576,007 31,310
Accumulated depreciation /
amortisation 9,209 222,301 28,375 1,462,138 34,715 26,476 29,856 146,226 340,913 359,231 4,821 8,834 - - - 2,673,095 27,742
Net book value 29,453 327,477 42,011 1,075,742 79,555 27,325 25,659 45,004 72,899 154,924 8,520 14,343 - - - 1,902,912 3,568
Depreciation / amortisatlon
rate % per annum 2.38% 10% 5% 10%-20% 20% 20% 20% 33.33% 20% 20%-25% 10%-20% 20% 33.33% 20% 20%-25% 33.33%
========================================================================================================================================================================================================================================
2006
Tangible-owned Tangible-leased Intangible
assets
Leasehold Factory Other Plant Motor Furniture Office Computer Tools Jigs Plant Motor Computer Tools Jigs Total
land building building and vehicles and equipment and and and and vehicles and and and tangible
on lease on lease machinery fixtures related equipment fixtures machinery related equipment fixtures assets Computer
hold land hold land accessories accessories software
(Rupees '000)
========================================================================================================================================================================================================================================
At July 1, 2005
Cost 38,662 317,915 70,386 1,427,229 52,476 28,174 30,378 142,808 370,441 277,644 39,027 48,792 3,062 157 518 2,847,669 29,094
Accumulated depreciation /
amortisation 7,367 167,460 22,663 1,069,552 31,179 16,353 20,386 83,747 270,935 240,773 8,307 5,638 2 042 62 170 1,946,634 18,549
Net book value 31,295 150,455 47,723 357677 21,297 11,821 9,992 59,061 99,506 36,871 30,720 43,154 1,020 95 348 901,035 10,545
Year ended June 30, 2006
Opening net book value 31,295 150,455 47,723 357,677 21,297 11,821 9,992 59,061 99,506 36,871 30,720 43,154 1,020 95 348 901,035 10,545
Additions - 72,724 - 584,707 80,575 11,253 10,023 33,277 32,909 127,870 - - - - - 953,338 43
Transfers
Cost - - - - 15,416 - - - - - - (15,416) - - - - -
Depreciation - - - - 5,388 - - - - - - (5,388) - - - - -
- - - - 10,028 - - - - - - (10,028) - - - - -
Disposals/write offs
Cost - - - 28,735 29,428 - 240 323 12,503 - - 5,272 - - - 76,501 -
Depreciation - - - 2,993 16,451 - 124 186 9,340 - - 1,021 - - - 30,115 -
- - - 25,742 12,977 - 116 137 3,163 - - 4,251 - - - 46,386 -
Depreciation / amortisation
charge for the year 921 23,405 2,856 172,378 16,701 3,820 3,706 26,798 40,801 92,963 6,779 7,390 1,020 31 104 399,673 4,465
Closing net book value 30,374 199,774 44,867 744,264 82,222 19,254 16,193 65,403 88,451 71,778 23,941 21,485 - 64 244 1,408,314 6,123
At June 30, 2006
Cost 38,662 390,639 70,386 1,983,201 119,039 39,427 40,161 175,762 390,847 405,514 39,027 28,104 3,062 157 518 3,724,506 29,137
Accumulated depreciation /
amortisation 8288 190.865 25.519 1,238,937 36,817 20,133 23,968 110,359 302,396 333,736 15,086 6,619 3.062 93 274 1,316,192 23,014
Net book value 30,374 199,774 44,867 744,264 82,222 19,254 16,193 65,403 88,451 71,778 23,941 21,485 - 64 244 1,408,314 6,123
Depreciation / amortisation
rate % per annum 2.38% 10% 5% 10%-20% 20% 20% 20% 33.33% 20% 20%-25% 10%-20% 20% 33.33% 20% 20% 25% 33.33%
========================================================================================================================================================================================================================================3.3. The depreciation charge for the year has been allocated as follows:======================================================================================
Note 2007 2006
(Rupees in '000)
======================================================================================
Cost of goods manufactured 24.2 321,653 346,626
Distribution costs 25 52,749 44,576
7,074 8,471
Administrative expenses 26 381,476 399,673
======================================================================================3.4. Particulars of operating assets having a net book value exceeding Rs 50,000 disposed of during the year are as follows:=======================================================================================================================================================================
Asset description Cost Accumulated Net book SaIe Gain / Mode of disposal Particulars of buyer
depreciation value proceeds (loss) on
disposal
(Rupees in '000)
=======================================================================================================================================================================
Plant and machinery 2,299 2,062 237 606 369 Tender Saleem & Company, Karachi
Computer and related accessories 106 56 50 5 (45) Insurance Claim Habib Insurance Company, Karachi
106 56 50 60 10 Insurance Claim Habib Insurance Company, Karachi
106 56 50 70 20 Insurance Claim Habib Insurance Company, Karachi
Motor Vehicles 2,634 366 2,248 2,199 (49) Teat & Trial Scheme Toyota Faisalabad Motors, Faisalabad
2,634 386 2,248 2,200 (48) Teat & Trial Scheme Toyota Capital Motors, Islamabad
2,634 386 2,246 2,200 (48) Test & Trial Scheme Toyota Central Motors, Karachi
2,634 386 2,248 2,200 (48) Test & Trial Scheme Toyota Township Motors, Lahore
2,634 386 2,248 2,200 (48) Teat & Trial Scheme Toyota Garden Motors, Lahore
2,634 422 2,212 2,200 (12) Test & Trial Scheme Toyota Ravi Motors, Lahore
2,634 422 2,212 2,200 (12) Test & Trial Scheme Toyota Rawal Motors, Rawalpindi
2,634 422 2,212 2,199 (13) Test & Trial scheme Toyota Islamabad Motors, Islamabad
2,634 457 2,177 2,200 23 Test & Trial scheme Toyota Walton Motors, Lahore
2,406 257 2,149 2,200 51 Test & Trial Scheme Toyota Multan Motors, Multan
6,900 4,900 2,000 2,100 100 Negotiation ThaI Engineering, Karachi
1,319 18 1,301 1,319 18 Insurance Claim Habib Insurance Company, Karachi
1,309 332 977 1,309 332 Insurance Claim Habib Insurance Company, Karachi
1,309 349 960 1,309 349 Insurance Claim Habib Insurance Company, Karachi
897 120 777 830 53 Tender Mr. Zaman Afridi, Karachi
897 120 777 830 53 Tender Mr. Zaman Afridi, Karachi
897 120 777 830 53 Tender Mr. Zaman Afridi, Karachi
897 120 777 830 53 Tender Mr. Zaman Atridi, Karachi
897 120 777 830 53 Tender Mr. Zaman Afridi, Karachi
897 120 777 897 120 Insurance Claim Habib Insurance Company, Karachi
897 131 766 900 134 Negotiation Citizen Foundation, Karachi
897 143 754 801 47 Negotiation House of Habib, Karachi
897 143 754 801 47 Negotiation House of Habib, Karachi
1.169 421 748 600 52 Tender Mr. Ant A Abbas, Karachi
969 258 711 969 258 Insurance Claim Habib Insurance Company, Karachi
474 13 461 474 13 Insurance Claim Habib Insurance Company, Karachi
474 25 449 474 25 Employee Scheme Mr. Khalid Waheed, Karachi (ex-employee)
434 52 382 410 28 Insurance Claim Habib Insurance Company, Karachi
434 52 362 434 52 Insurance Claim Habib Insurance Company, Karachi
2,679 2,337 342 786 444 Tender Mr. Tahir Abbas, Karachi
459 122 337 413 76 Employee Scheme Mr. Kashif Riaz, Karachi (ex-employee)
434 139 295 347 52 Employee Scheme Mr. Syed Faisal Atif, Karachi (ox-employee)
419 128 291 316 25 Insurance Claim Habib Insurance Company, Karachi
449 162 287 368 81 Tender Mr. Tahir Abbas, Karachi
434 162 272 388 116 Tender Mr. Tahir Abbas, Karachi
434 162 272 347 75 Employee Scheme Mr. Zia Ahmed, Karachi (ox-employee)
434 179 255 347 92 Employee Scheme Mr. Salman Gut, Karachi (ex-employee)
1,169 935 234 421 187 Employee Scheme Mr. Adnan Naseem Oazi, Karachi (employee)
1,169 974 195 421 226 Employee scheme Mr. Tariq Saud Ouddusi, Karachi (employee)
1,169 994 175 499 324 Employee Scheme Mr. M. Ilyas Suri, Karachi (Director)
1,169 994 175 374 199 Employee Scheme Mr. Shah M. Saad Husain, Karachi (employee)
685 548 137 650 513 Tender Mr. Zaman Atfridi, Karachi
939 845 94 300 206 Employee Scheme Mr. Khalid Aslam, Karachi (employee)
399 319 80 144 64 Employee Scheme Mr. Anium Sharif, Karachi (employee)
399 339 60 133 73 Employee Scheme Mrs. Parveen A. Khan, Karachi (employee)
=======================================================================================================================================================================3.5. Capital work-in-progress======================================================================================
2007 2006
(Rupees in '000)
======================================================================================
Civil works 30,318 57,302
Plant and machinery 33,241 30,008
Furniture and fixtures 9,088 4,488
Office equipment 350 8,681
Computer and related accessories - 1,709
Tools and equipment 89,507 66,974
Jigs and fixtures 24,868 132,991
187,372 302,153
======================================================================================3.6. During the year capital work-in-progress amounting to Rs 599.761 million (2006: Rs 787.940 million) was transferred to owned assets.4. LONG-TERM LOANS Considered good - secured ======================================================================================
Note 2007 2006
(Rupees in '000)
======================================================================================
Due from
Executives 4.2 & 4.3 7,706 2,848
Employees 1,748 1,195
4.1 9,454 4,043
Less: Recoverable within one year
shown under current assets
Executives 10 3,532 1,901
Employees 10 1,682 1,123
5,214 3,024
4,240 1,019
======================================================================================4.1. These represent house building and personal loans granted to executives and employees. These are granted in accordance with the terms of their employment and are secured against their balances with the Employees' Provident Fund. The loans are repayable over a period of 12 to 72 (2006: 12 to 24) months. House building and personal loans to management employees carry interest at the rate of 3.50% to 6% (2006: 3.50% to 6%) per annum. Personal loans to non-management employees carry no interest.4.2. Reconciliation of carrying amount of loans to executives is as follows: ======================================================================================
2007 2006
(Rupees in '000)
======================================================================================
Opening balance 2,848 1,737
Disbursements during the year 11,072 4,275
Repayments during the year (6,214) (3,164)
Closing balance 7,706 2,848
======================================================================================4.3. The maximum aggregate amount due from executives at the end of any month during the year was Rs 7.706 million (2006: Rs 3.598 million).5. LONG-TERM DEPOSITS ======================================================================================
2007 2006
(Rupees in '000)
======================================================================================
Utilities 4,666 4,666
Others 1,963 515
6,629 5,181
======================================================================================6. FINANCE UNDER MUSHARIKA ARRANGEMENTS======================================================================================
Note 2007 2006
(Rupees in '000)
======================================================================================
Secured
Financial institution 6.1 3,710 9,832
Less: Current maturity shown under current assets (3,710) (5,811)
- 4,021
======================================================================================6.1. These represent musharika arrangements with a financial institution carrying an expected rate to 6.00% (2006: 6.00%) per annum receivable in 12 unequal quarterly installments.The musharika arrangement is expected to mature by June 2008. Furthermore, the arrangement is coupled with the respective obligation under finance lease (refer note 17) entered into by the company and in case of termination of any lease contract the musharika finance pertaining to that particular lease agreement shall be returned to the company with immediate effect. The maximum aggregate amount in respect of finance under musharika arrangements outstanding at the end of any month during the year was Rs 9.300 million (2006: Rs 37.590 million). 7. STORES AND SPARES ======================================================================================
2007 2006
(Rupees in '000)
======================================================================================
Stores 161,957 168,680
Spares 117,709 77,647
279,666 246,327
Less: Provision for slow moving stores and spares (52,475) (20,158)
227,191 226,169
======================================================================================8. STOCK-IN-TRADE======================================================================================
Note 2007 2006
(Rupees in '000)
======================================================================================
In hand
Manufacturing stock:
Raw material and components 1,108,149 1,627,463
Work-in-process 64,533 95,520
Finished goods (vehicles - own manufactured) 8.1 59,162 744,469
Trading stock:
Vehicles 8.2 & 8.3 283,400 413,268
Spare parts 185,549 165,027
Special service tools and publications 222 1,378
469,171 579,673
In transit 1,158,936 912,191
2,859,951 3,959,316
======================================================================================8.1. These include finished goods amounting to Rs 9.006 million (2006: Rs 265.861 million) held with the company's authorised dealers at year end.8.2. These include vehicles amounting to Rs 246.152 million (2006: Rs 252.832 million) held with the company's authorised dealers at year end. 8.3. These include items costing Rs 1.675 million (2006: Rs 94.288 million) which have been valued at their net realisable value amounting to Rs 0.869 million (2006: Rs 93.452 million). 9. TRADE DEBTS - unsecured Considered good ======================================================================================
2007 2006
(Rupees in '000)
======================================================================================
Government agencies 447,705 538,571
Others 217,942 199,710
665,647 738,281
Considered doubtful 2,287 511
667,934 738,792
Less: Provision for doubtful debts (2,287) (511)
665,647 738,281
======================================================================================10. LOANS AND ADVANCES======================================================================================
Note 2007 2006
(Rupees in '000)
======================================================================================
Current portion of long-term loans - considered good
Executives 4 3,532 1,901
Employees 4 1,682 1,123
5,214 3,024
Advances considered good
Suppliers and contractors 10.1 90,760 132,554
Employees 1,197 1,259
Collector of Customs 10.2 328,994 277,501
420,951 411,314
426,165 414,338
======================================================================================10.1. These include a sum of Rs 28.840 million (2006: Rs 33.210 million) bearing interest at the rate of 5% (2006: 5%) per annum. 10.2. This represents amounts paid to the Collector of Customs in respect of the import of raw materials. An amount of Rs 328.994 million (2006: Rs 264.985 million) was cleared subsequent to the year end. 11. SHORT-TERM PREPAYMENTS AND TRADE DEPOSITS ======================================================================================
2007 2006
(Rupees in '000)
======================================================================================
Short - term prepayments - -
Rent 16,391 5,011
Insurance 1,560 1,131
Maintenance 2,782 2,992
20,733 9,134
Trade deposits 26,790 -
47,523 9,134
======================================================================================12. OTHER RECEIVABLES======================================================================================
Note 2007 2006
(Rupees in '000)
======================================================================================
Considered good
Warranty claims, agency commission and other
receivables due from a related party -
Toyota Tsusho Corporation 12.1 32,476 15,942
Warranty claims due from local vendors 1,767 1,185
Earnest money 1,490 1,668
Insurance claims due from related party 391 3,565
Sales tax - net 12.2 567,671 1,225,509
Employees' Pension Fund 27 - 214
Others 1,930 2,134
605,725 1,250,217
======================================================================================12.1. These represent remittances receivable from Toyota Tsusho Corporation in Japanese Yen. The maximum aggregate amount due at the end of any month during the year was Rs 68.689 million (2006: Rs 21.015 million).12.2. This includes a sum of Rs 581.168 million (2006: Rs 859.152 million) that represents the sales tax portion on the customer advances as disclosed in note 20 to these financial statements netted oft against a sum of Rs 13.497 million representing the excess of output over input sales tax (2006: excess of input over output sales tax of Rs 366.357 million). 13. TAXATION - NET The income tax assessments of the company have been finalised by the Income Tax Department or deemed to be assessed under section 120 of the Income Tax Ordinance, 2001 upto the year ended June 30, 2006. 14. CASH AND BANK BALANCES ======================================================================================
Note 2007 2006
(Rupees in '000)
======================================================================================
Cash in hand 143 614
With banks in:
current accounts 64,738 44,114
deposit accounts 14.1 & 14.2 8,478,382 7,371,452
8,543,120 7,415,566
8,543,263 7,416,180
======================================================================================14.1. This includes a balance of Rs 215.341 million (2006: Rs 317.437 million) representing a book overdraft netted off against the balance in deposit accounts.14.2. This includes a balance of Rs 7,900 million (2006: Rs 7,350 million) representing term deposit receipts having maturity dates ranging from 30 days to 90 days. These term deposit receipts carry profit at rates ranging between 9.10% and 10.50% (2006: 10.00% and 10.75%) per annum, which is due on maturity. 15. ISSUED, SUBSCRIBED AND PAID-UP CAPITAL =================================================================================
2007 2006 2007 2006
(Number of shares in '000) (Rupees in '000)
=================================================================================
Ordinary shares of Rs 10
78,600 78,600 each fully paid in cash 786,000 786,000
=================================================================================16. RESERVESCapital reserve =================================================================================
2007 2006
(Rupees in '000)
=================================================================================
Premium on issue of ordinary shares 196,500 196,500
Revenue reserves
General reserve
Balance brought forward 3,028,500 2,329,900
Transferred from unappropriated profit 1,705,300 698,600
4,733,800 3,028,500
Unappropriated profit 2,352,714 2,255,513
Net unrealised loss on hedging instruments (25,039) (8,634)
7,257,975 5,471,879
=================================================================================17. LIABILITIES AGAINST ASSETS SUBJECT TO FINANCE LEASEMinimum lease payments under finance lease together with the present value of the minimum lease payments are as follows: =======================================================================================================================
2007 2006
Minimum Finance Present Minimum Finance Present
lease cost for value of lease cost for value of
payments future minimum payments future minimum
periods lease periods lease
payments payments
(Rupees in'000)
=======================================================================================================================
Within one year 3,886 172 3,714 6,318 583 5,735
After one year but not more than five years - - - 4,031 160 3,871
Total minimum lease payments 3,886 172 3,714 10,349 743 9,606
=======================================================================================================================This represents finance leases entered into with a financial institution for plant and machinery, motor vehicles, computer and related accessories, tools and equipment and jigs and fixtures. Financing rate of 7.00% (2006: 7.00%) per annum has been used as a discounting factor. These facilities are secured by demand promissory notes of Rs 34.464 million (2006: Rs 68.640 million).18. DEFERRED TAXATION ========================================================================================
2007 2006
(Rupees in '000)
========================================================================================
Deferred tax credit arising on:
Differences between written down
values and tax bases of fixed assets 210,149 116,164
========================================================================================19. TRADE AND OTHER PAYABLES========================================================================================
Note 2007 2006
(Rupees in '000)
========================================================================================
Trade creditors
-- Associated undertakings/related parties 19.1 192,647 227,071
-- Others 572,841 418,032
Bills payable to associated
undertakings/related parties 19.2 802,320 671,362
Accrued liabilities 569,148 453,360
Unclaimed dividends 24,207 20,851
Royalty payable to associated undertakings/related parties:
-- Toyota Motor Corporation 109,511 205,799
-- Daihatsu Motor Corporation 29,440 17,975
Security deposits from dealers 19.3 62,800 53,800
Customs duty 19.4 108,015 213,902
Retention money 11,853 11,412
Workers' Profit Participation Fund 19.5 7,116 7,359
Workers' Welfare Fund 86,913 68,252
Technical fee payable to associated
undertakings/related parties 15,887 5,938
Warranty obligations 19.6 118,822 91,670
Commission payable to dealers 124,469 112,526
Tax deducted at source 3,041 3,415
Other government levies payable 17,117 -
Net unrealised loss on revaluation of forward
foreign exchange contracts 19.7 35,870 17,187
2,892,017 2,599,911
========================================================================================19.1. This represents amounts payable to the following associated undertakings/related parties:========================================================================================
2007 2006
(Rupees in '000)
========================================================================================
Toyota Tsusho Corporation 160,259 179,440
Thai Engineering Limited 32,388 47,631
192,647 227,071
========================================================================================19.2. This represents amounts payable to the following associated undertakings/related parties:========================================================================================
2007 2006
(Rupees in '000)
========================================================================================
Toyota Tsusho Corporation 665,006 525,075
Daihatsu Motor Corporation 137,314 146,287
802,320 671,362
========================================================================================19.3. These represent interest free deposits, repayable to dealers upon the termination of dealership agreements.19.4. This represents expected demand of customs duties for possible shortfall in the deletion targets in respect of certain components of vehicles manufactured by the company during the year determined in accordance with SRO 436(1) 12001 dated June 18, 2001 and SRO 453(1)/2004 dated June 12, 2004. 19.5. Workers' Profit Participation Fund ========================================================================================
2007 2006
(Rupees in '000)
========================================================================================
Opening balance 7,359 6,547
Add: Allocation for the year 227,147 217,955
Interest on funds utilised in the company's business 229 404
227,376 218,359
234,735 224,906
Less: Amount paid during the year 227,619 217,547
7,116 7,359
========================================================================================19.6. Warranty obligations========================================================================================
2007 2006
(Rupees in '000)
========================================================================================
Opening balance 91,670 67,831
Add: Claims lodged during the year 34,046 31,339
125,716 99,170
Less: Claims paid during the year 6,894 7,500
118,822 91,670
========================================================================================19.7. Net unrealised loss on revaluation of forward foreign exchange contracts========================================================================================
2007 2006
(Rupees in '000)
========================================================================================
Fair value hedge 10,831 8,553
Cash flow hedge 25,039 8,634
35,870 17,187
========================================================================================20. ADVANCES FROM CUSTOMERS AND DEALERS========================================================================================
2007 2006
(Rupees in '000)
========================================================================================
4,514,480 6,620,869
========================================================================================These represent advances received by the company from customers in respect of sale of vehicles including sales tax portion amounting to Rs 581.168 million (2006: Rs 859.152 million) which has already been paid to the Sales Tax Authority.21. ACCRUED MARK-UP Mark-up accrued on: ========================================================================================
2007 2006
(Rupees in '000)
========================================================================================
-- advances from customers 689 22,166
-- liabilities against assets subject to finance lease 26 84
715 22,250
========================================================================================22. SHORT-TERM RUNNING FINANCESAt June 30, 2007 the company has unutilised short-term running finance facilities under mark-up arrangements in the aggregate of Rs 2,800 million (2006: Rs 2,800 million) available from various commercial banks carrying mark-up rates based on 1 month KIBOR Plus 0.20% to 0.25% (2006: 1 month KIBOR Plus 0.20% to 0.25%) per annum. The company also has a facility for opening letters of credit under mark-up arrangements as at June 30, 2007 amounting to Rs 6,250 million (2006: Rs 6,030 million) from various commercial banks. The unutilised balance at June 30, 2007 was Rs 2,038.169 million (2006: Rs 3,776.662 million). These arrangements are secured by pari passu hypothecation charge on movable assets and receivables to the extent of Rs 2,086 million (2006: Rs 2,086 million). 23. CONTINGENCIES AND COMMITMENTS Contingencies 23.1. The company during the years 2005-2006 and 2006-2007 received demand notices from the Collector of Customs, claiming short recovery of Rs 480.311 million in aggregate on account of custom duty amounting to Rs 305.426 million and sales tax amounting to Rs 174.885 million on royalty payment to the Joint Venture Partner, Toyota Motor Corporation. The demand has been raised based on the view that royalty value should be included as part of imported CKD kits which is opposed to the view of the company based on factual position that the royalty pertains to locally deleted parts. The company has taken up this matter with the appeal forums. Final decisions are pending in these matters. No provision has been made by the company in the financial statements against the above-referred sums as the management is confident that the matters will be decided in favour of the company. 23.2. During the year ended June 30, 2002, the company received a notice under Section 85 of the repealed Income Tax Ordinance, 1979 from the Azad Jammu and Kashmir tax authorities demanding Rs 126.690 million in respect of income tax and education cess in Azad Jammu and Kashmir for the assessment years 1991-1992 to 2000-2001. The company thereafter filed appeals against the above-referred assessments with the Commissioner of Income Tax (Appeals) who has set aside the orders for the assessment years 1991-1992 and 1999-2000 and instructed the subordinate tax authorities to re-examine the case. While giving effect of the order of the CIT(A) the tax authorities have now dropped the proceedings for the assessment years 1991-1992 to 1996-1997 on the basis that notice under Section 56 of the repealed Ordinance cannot be issued beyond the period of five years. Moreover, the Taxation Officer has now calculated the tax liability on the basis of tax assessed in Pakistan as against an arbitrary basis adopted earlier in the original assessment. The above basis of amended assessments has resulted in a reduction of tax liability from Rs 126.690 million to Rs 11.394 million (including Rs 0.543 million in respect of education cess). Further the Azad Jammu and Kashmir tax authorities have also finalised the assessment for the assessment year 2001-2002 and have raised a tax demand of Rs 3.347 million (including Rs 0.152 million in respect of education cess). However, the company continued to agitate the liability in Azad Jammu and Kashmir and accordingly had filed further appeals against the above mentioned assessments before the CIT(A). The CIT(A) has rejected the appeals filed by the company and confirmed the assessment orders framed by the income tax authorities. In addition the income tax authorities in Azad Jammu and Kashmir have levied a penalty amounting to Rs 2.809 million for non-payment of income tax to the Azad Jammu and Kashmir authorities. The management is still of the view that the income of the company is not taxable in Azad Jammu and Kashmir as it does not have its own presence in Azad Jammu and Kashmir and all sales are made in Pakistan ex-factory, therefore, no income accrues or arises to the company in Azad Jammu and Kashmir. The company has filed a further appeal against the decision of CIT(A) with the Income Tax Appellate Tribunal(ITAT), Azad Jammu and Kashmir the hearing of which has been concluded on May 16, 2007. However, the appellate order is awaited from the ITAT. 23.3. ========================================================================================
2007 2006
(Rupees in '000)
========================================================================================
Outstanding bank guarantees 1,185,235 419,880
Commitments
========================================================================================23.4. Commitments in respect of capital expenditure at June 30, 2007 amounted to Rs 858.614 million (2006: Rs 520.176 million).23.5. Commitments in respect of letters of credit, other than for capital expenditure, amounted to Rs 3,558.962 million (2006: Rs 2,115.021 million), out of which commitments, valuing Japanese Yen 3,854.311 million (2006: Japanese Yen 3,088,164 million) [Rs 1,959.304 million (2006: Rs 1,646.240 million)], are covered under forward foreign exchange contracts. 23.6. Commitments in respect of operating lease related to leasehold land from Port Qasim Authority as at June 30, 2007 amounted to Rs 95.729 million (2006: Rs 97.584 million). 24. OPERATING RESULTS =======================================================================================================================
Manufacturing Trading Total
Note 2007 2006 2007 2006 2007 2006
(Rupees in '000)
=======================================================================================================================
Gross sales 40,204,978 37,026,990 6,179,539 4,760,635 46,384,517 41,787,625
Sales tax (5,241,876) (4,819,541) (777,077) (597104) (6,018,953) (5,416,645)
34,963,102 32,207,449 5,402,462 4,163,531 40,365,564 36,370,980
Commission (915,883) (870,805) (185,164) (118,612) (1,101,047) (989,417)
Discounts (403) (119) (202,888) (144,909) (203,291) (145,028)
Net sales 34,046,816 31,336,525 5,014,410 3,900,010 39,061,226 35,236,535
Cost of sales
Opening stock 744,469 214,482 579,673 590,579 1,324,142 805,061
Cost of goods manufactured 24.2 29,740,106 28,425,858 - - 29,740,106 28,425,858
Purchases - - 4,084,717 3,182,129 4,084,717 3,182,129
Closing stock (59,162) (744,469) (469,171) (579,673) (528,333) (1,324,142)
30,425,413 27,895,871 4,195,219 3,193,035 34,620,632 31,088,906
Gross profit 3,621,403 3,440,654 819,191 706,975 4,440,594 4,147,629
Distribution costs 25 451,452 364,072 58,534 40,845 509,986 404,917
Administrative expenses 26 231,244 215,621 34,058 26,835 265,302 242,456
682,696 579,693 92,592 67,680 775,288 647,373
2,938,707 2,860,961 726,599 639,295 3,665,306 3,500,256
Other operating expenses 28 343,941 317,813 4,489 3,933 348,430 321,746
2,594,766 2,543,148 722,110 635,362 3,316,876 3,178,510
Other operating income 29 738,213 876,913 197,077 144,299 935,290 1,021,212
3,332,979 3,420,061 919,187 779,661 4,252,166 4,199,722
Finance cost 30 19,773 112,895 2,912 14,050 22,685 126,945
Profit before taxation 3,313,206 3,307,166 916,275 765,611 4,229,481 4,072,777
=======================================================================================================================24.1.Finance cost, other operating expenses (other than charge in respect of Workers' Profit Participation Fund and Workers' Welfare Fund), administrative expenses and distribution costs (other than warranty claims and pre-delivery inspection charges, development expenditure and running royalty), have been allocated between manufacturing and trading activities on the basis of net sales. Warranty claims and pre-delivery inspection charges, development expenditure and charges in respect of Workers' Profit Participation Fund and Workers' Welfare Fund have been allocated to manufacturing activity. Running royalty has been allocated to trading activity.24.2. Cost of goods manufactured ========================================================================================
Note 2007 2006
(Rupees in '000)
========================================================================================
Raw materials and vendor parts consumed
Opening stock 1,627,463 1,380,676
Purchases 27,327,660 26,923,813
Closing stock 8 (1,108,149) (1,627,463)
27,846,974 26,677,026
Stores and spares consumed 643,887 607,661
Salaries, wages and other benefits 24.3 229,973 215,007
Rent, rates and taxes 1,833 1,732
Repairs and maintenance 84,910 86,301
Depreciation 3.3 321,653 346,626
Legal and professional 797 334
Travelling 17,294 16,021
Transportation 1,913 3,033
Insurance 19,168 15,766
Vehicle running 4,812 5,068
Communication 4,410 4,128
Printing, stationery and office supplies 3,006 3,211
Subscription 288 53
Fuel and power 125,738 88,024
Running royalty 246,314 220,920
Technical fee 15,968 29,863
Parts development 1,836 3,058
Staff catering, transport and uniforms 104,726 82,812
Staff training 16,737 3,314
Others 16,882 5,290
1,862,145 1,738,222
29,709,119 28,415,248
Add: Opening work-in-process 95,520 106,130
Less: Closing work-in-process 8 64,533 95,520
29,740,106 28,425,858
========================================================================================24.3. Included herein is a sum of Rs 5.375 million (2006: Rs 3.822 million) in respect of defined contribution plan and Rs 2.979 million (2006: Rs 3.167 million) in respect of defined benefit plan.25. DISTRIBUTION COSTS ========================================================================================
Note 2007 2006
(Rupees in '000)
========================================================================================
Salaries, allowances and other benefits 25.1 61,148 49,804
Rent, rates and taxes 674 610
Insurance 43 -
Repairs and maintenance 1,278 1,938
Depreciation 3.3 52,749 44,576
Advertising and sales promotion 245,558 188,901
Travelling 22,645 13,962
Legal and professional 6 298
Vehicle running 5,597 4,309
Communication 3,793 6,869
Printing, stationery and office supplies 4,089 2,735
Staff training 11,951 5,011
Staff transport & canteen 3,166 3,657
Subscription 600 184
Warranty claims and pre-delivery inspection 69,648 57,024
Development expenditure 4,734 7,447
Utilities 160 122
Transportation 14,675 13,113
Running royalty 2,999 3,558
Bad debts 4,473 799
509,986 404,917
========================================================================================25.1. Included herein is a sum of Rs 1.887 million (2006: Rs 1.356 million) in respect of defined contribution plan and Rs 1.202 million (2006: Rs 1.146 million) in respect of defined benefit plan.26. ADMINISTRATIVE EXPENSES ========================================================================================
Note 2007 2006
(Rupees in '000)
========================================================================================
Salaries, allowances and other benefits 26.1 99,666 88,165
Rent, rates and taxes 2,768 3,061
Insurance 17,699 11,924
Repairs and maintenance 13,820 10,351
Depreciation 3.3 7,074 8,471
Amortisation 3.2 4,728 4,465
Travelling 22,230 19,101
Legal and professional 30,719 25,276
Vehicle running 10,828 10,154
Communication 7,142 6,245
Printing, stationery and office supplies 2,841 3,288
Staff training 12,339 10,726
Staff transport and canteen 10,407 19,205
Security 7,101 6,269
Subscription 2,718 3,511
Utilities 588 596
Share registrar and related expenses 5,151 3,858
Transportation 6 46
Others 7,477 7,744
265,302 242,456
========================================================================================26.1. Included herein is a sum of Rs 2.376 million (2006: Rs 1.915 million) in respect of defined contribution plan and Rs 1.519 million (2006: Rs 0.585 million) in respect of defined benefit plan.27. DEFINED BENEFIT PLAN - Approved pension fund As mentioned in note 2.15, the company operates an approved pension fund for its permanent employees. Based on the latest actuarial valuation carried out at June 30, 2007, the company has recognised the following amounts in the financial statements: (a) The amount recognised in the balance sheet is as follows: ========================================================================================
2007 2006
(Rupees in '000)
========================================================================================
Fair value of plan assets 82,496 67,389
Present value of defined benefit obligation (71,322) (60,658)
11,174 6,731
Unrecognised actuarial gains (11,174) (6,517)
- 214
======================================================================================== (b) The amount recognised in the profit and loss account is as follows:========================================================================================
2007 2006
(Rupees in '000)
========================================================================================
Current service cost 6,280 5,399
Interest cost 5,739 4,674
Expected return on plan assets (6,319) (5,175)
Pension cost recognised during the year 5,700 4,898
======================================================================================== (c) Movement in net asset recognised in the balance sheet========================================================================================
2007 2006
(Rupees in '000)
========================================================================================
Opening balance 214 1,101
Charge for the year (5,700) (4,898)
Contributions paid during the year 5,486 4,011
Closing balance - 214
======================================================================================== (d) Movement in fair value of plan assets========================================================================================
2007 2006
(Rupees in '000)
========================================================================================
Opening balance 67,389 55,077
Expected return on plan assets 6,319 5,176
Contributions by the employer 5,486 4,011
Benefits paid (159) (218)
Actuarial gain 3,461 3,343
Closing balance 82,496 67,389
======================================================================================== (e) Movement in present value of defined benefit obligation========================================================================================
2007 2006
(Rupees in '000)
========================================================================================
Opening balance 60,658 49,268
Current service cost 6,280 5,399
Interest cost 5,739 4,674
Benefits paid (159) (218)
Actuarial (gain)/ loss (1,196) 1,535
Closing balance 71,322 60,658
======================================================================================== (f) Expected and actual return on plan assets========================================================================================
2007 2006
(Rupees in '000)
========================================================================================
Expected return on plan assets 6,319 5,176
Actuarial gain on plan assets 3,461 3,343
Actual return on plan assets 9,780 8,519
======================================================================================== (g) Plan assets comprises as follows:========================================================================================
2007 2006
(Rupees in '000)
========================================================================================
Equity 12,819 10,391
Debt 60,737 49,482
Cash and bank balances 8,940 7,516
82,496 67,389
======================================================================================== (h) Historical information=================================================================================================
2007 2006 2005 2004 2003
(Rupees in '000)
=================================================================================================
Fair value of plan assets 82,496 67,389 55,077 38,016 29,704
Present value of defined
benefit obligation (71,322) (60,658) (49,268) (39,290) (28,181)
Surplus/(deficit) 11,174 6,731 5,809 (1,274) 1,523
Experience (gain)/loss on obligation -2% 3% -4% 20% -
Experience gain on plan assets 8% 7% 7% 3% -
================================================================================================= (i) The expected return on plan assets is determined by considering the expected long-term returns available on the assets underlying the current investment policy. Expected yield on fixed interest investments are based on gross redemption yield as at the balance sheet date. Expected returns on equity are based on long-term real rates experienced in the stock market.(j) The contribution rate for the year 2006-2007 was 6.06% of basic salary including allowances (2005-2006: 6.32%). The expected contributions to the defined benefit plan for the year ending June 30, 2008 are Rs 6.564 million. 28. OTHER OPERATING EXPENSES ================================================================================
Note 2007 2006
(Rupees in '000)
================================================================================
Auditors' remuneration 28.1 1,067 869
Workers' Profit Participation Fund 19.5 227,147 217,955
Workers' Welfare Fund 86,316 68,252
Donations 28.2 33,900 34,670
348,430 321,746
================================================================================28.1. Auditors' remuneration================================================================================
2007 2006
(Rupees in '000)
================================================================================
Audit fee 525 525
Interim review and other certifications 403 311
Out-of-pocket expenses 139 33
1,067 869
================================================================================28.2. DonationsDonations include the following in which a director or his spouse is interested: =================================================================================================
Name of Interest Name & Address of Donee Amount donated
Director(s) in Donee 2007 2006
(Rupees in '000)
=================================================================================================
1. Ali S. Habib Trustee Mohammedali Habib Welfare Trust,
2nd Floor, Siddiq Sons Tower,
Jinnah Co-operative
Housing Society, Shahrah-e-Faisal,
Karachi. 150 150
2. Mohammedali Trustee Habib Education Trust,
Habib and 4th Floor, UBL Building,
Ali S. Habib I. I. Chundrigar Road, Karachi. 5,000 -
=================================================================================================29. OTHER OPERATING INCOME===================================================================================
2007 2006
(Rupees in '000)
===================================================================================
Income from financial assets
Return on bank deposits 837,896 971,041
Return on finance under musharika arrangements 451 1,323
Gain on redemption of investment
in listed mutual fund 1,313 -
Mark-up on advances to suppliers and contractors 1,561 1,112
Exchange (loss) / gain (1,492) 5,725
Income from other than financial assets
Agency commission, net of commission expense
of Rs 27.972 million (2006: Rs 18.355 million) 88,353 35,162
Gain on sale of fixed assets 5,196 2,452
Liabilities no longer payable written back 2,012 4,397
935,290 1,021,212
===================================================================================30. FINANCE COST===================================================================================
2007 2006
(Rupees in '000)
===================================================================================
Mark-up on advances from customers 730 103,136
Mark-up on liabilities against
assets subject to finance lease 463 1,591
Bank charges 17,062 17,146
Interest on Workers' Profit Participation Fund 229 404
Loss on revaluation of creditors 1,923 1,752
Loss on revaluation of forward
foreign exchange contracts 2,278 2,916
4,201 4,668
22,685 126,945
===================================================================================31. TAXATION===================================================================================
Note 2007 2006
(Rupees in '000)
===================================================================================
Current - for the year 1,389,795 1,352,842
-- for prior years - (2,000)
1,389,795 1,350,842
Deferred 93,985 73,471
31.1 1,483,780 1,424,313
===================================================================================31.1. Relationship between income tax expense and accounting profit===================================================================================
2007 2006
(Rupees in '000)
===================================================================================
Profit before taxation 4,229,481 4,072,777
Tax at the applicable tax rate of 35% (2006: 35%) 1,480,318 1,425,472
Tax effect of expenses that are inadmissible in
determining taxable profit 11,366 15,781
Tax effect of exempt income on redemption of
investment in listed mutual fund (460) -
Effect of tax on commercial imports
under Final Tax Regime (7,444) (14,940)
Effect of change in prior years' tax - (2,000)
1,483,780 1,424,313
===================================================================================32. EARNINGS PER SHARE32.1. Basic Basic earnings per share has been computed by dividing the net profit for the year after taxation by the weighted average number of shares outstanding during the year. ===================================================================================
2007 2006
===================================================================================
Profit after taxation 2,745,701 2,648,464
===================================================================================
Number of shares
===================================================================================
Weighted average number of ordinary shares
outstanding during the year 78,600,000 78,600,000
===================================================================================
(Rupees)
===================================================================================
Basic earnings per share 34.93 33.70
===================================================================================32.2. DilutedNo figure for diluted earnings per share has been presented as the company has not as yet issued any instruments which would have an impact on basic earnings per share when exercised. 33. CASH GENERATED FROM OPERATIONS ===================================================================================
Note 2007 2006
(Rupees in '000)
===================================================================================
Profit before taxation 4,229,481 4,072,777
Adjustment for non-cash charges and other items
Depreciation 381,476 399,673
Amortisation 4,728 4,465
Gain on sale of fixed assets (5,196) (2,452)
Bad debts 4,473 799
Net unrealised loss on revaluation of creditors and
forward foreign exchange contracts 4,201 4,668
Return on bank deposits (837,896) (971,041)
Return on finance under musharika arrangements (451) (1,323)
Workers' Profit Participation Fund 227,147 217,955
Workers' Welfare Fund 86,316 68,252
Mark-up on advances from customers and dealers 730 103,136
Mark-up on liabilities against
assets subject to finance lease 463 1,591
Working capital changes 33.1 (95,883) (743,080)
3,999,589 3,155,420
===================================================================================33.1. Working capital changes===================================================================================
2007 2006
(Rupees in '000)
===================================================================================
Decrease/(increase) in current assets
Stores and spares (1,022) (89,141)
Stock-in-trade 1,099,365 (790,461)
Trade debts 68,161 (354,569)
Loans and advances (11,827) (111,450)
Short-term prepayments and trade deposits (38,389) (4,763)
Other receivables 644,492 (1 09,625)
1,760,780 (1,460,009)
(Decrease)/increase in current liabilities
Trade and other payables 249,726 537,823
Advances from customers and dealers (2,106,389) 179,106
(1,856,663) 716,929
(95,883) (743,080)
===================================================================================34. CASH AND CASH EQUIVALENTSCash and cash equivalents included in the cash flow statement comprise of the following balance sheet amounts: ===================================================================================
Note 2007 2006
(Rupees in '000)
===================================================================================
Cash and bank balances 14 8,543,263 7,416,180
Short-term running finances 22 - -
8,543,263 7,416,180
===================================================================================35. REMUNERATION OF CHIEF EXECUTIVE, DIRECTORS AND EXECUTIVES=======================================================================================================
2007 2006
Chief Directors Executives Chief Directors Executives
Executive Executive
(Rupees in '000)
=======================================================================================================
Managerial remuneration 10,205 9,440 56,808 4,950 11,016 35,104
Retirement benefits - - 2,324 - 96 1,588
Utilities and upkeep - 138 - - 217 -
Leave passagessistance - 80 - - 171 -
Medical expenses 84 20 128 65 13 570
10,289 9,678 59,260 5,015 11,513 37,262
Number of persons 1 2 36 1 2 27
=======================================================================================================35.1. The Chief Executive, Directors and some executives have been provided free use of the company maintained cars and residential telephones.36. TRANSACTIONS WITH ASSOCIATED UNDERTAKINGS / RELATED PARTIES The associated undertakings/related parties comprise of associated companies, staff retirement funds and key management personnel. Transactions carried out with associated undertakings/related parties during the year are as follows: ========================================================================================
2007 2006
(Rupees in '000)
========================================================================================
Sales 87,409 28,399
Purchases 18,128,758 17,682,380
Insurance premium 139,287 128,154
Agency commission 116,325 53,517
Running royalty 249,313 224,478
Technical fee 15,968 29,863
Share registrar's fee, charges and other services 14,957 12,321
Return on bank deposits 185,214 185,297
Proceeds from disposal of fixed asset /insurance claim 11,134 3,848
Key management personnel compensation
-- Salaries and benefits 54,527 41,990
-- Post employment benefits 1,005 916
========================================================================================36.1. Transactions with associated undertakings/related parties are made under normal commercial terms and conditions.36.2. Contribution to and accruals in respect of staff retirement benefit plans are made in accordance with actuarial valuations / terms of contribution plan (refer notes 2.15 and 27 to these financial statements for the details of the transactions). 36.3. The status of outstanding balances with associated undertakings/related parties as at June 30, 2007 is included in the respective notes to the financial statements. 37. PLANT CAPACITY AND PRODUCTION ========================================================================================
2007 2006
Number of units
========================================================================================
Capacity based on double shift basis 53,040 44,298
Production 47,821 41,552
========================================================================================The company has been operating on a double shift basis from March 2003 based on market demand.38. FINANCIAL INSTRUMENTS 38.1. Interest/mark-up rate risk management Interest/mark-up rate risk is the risk that the value of a financial instrument will fluctuate due to changes in the market interest/mark-up rates. Sensitivity to interest/mark-up rate risk arises from mismatches of financial assets and financial liabilities that mature or reprice in a given period. The company manages these mismatches through risk management strategies where significant changes in gap position can be adjusted. The company is exposed to interest/mark-up rate risk in respect of the following: =================================================================================================================================================
2007
Effective Interest/mark-up bearing Non-.interest/mark-up bear Total
Interest/ Maturity Maturity Sub-total Maturity Maturity Sub-total June 30,
Mark-up upto one after one upto one after one 2007
rate year year year year
(Rupees in 000)
=================================================================================================================================================
On balance sheet financial instruments
Assets
Loans 3.50-6.00 3,805 4,240 8,045 1,409 - 1,409 9,454
Long-term deposits - - - - 6,629 6629 6,629
Finance under musharika arrangements 6.00 3,710 - 3,710 - - - 3,710
Trade debts - - - 665,647 - 665,647 665,647
Trade deposits - - - - 26,790 - 26,790 26,790
Accrued mark-up - - - - 132,634 - 132,634 132,634
Other receivables - - 38,054 38,054 38,054
Cash and bank balances 0.75-10.50 8,478,382 - 8,478,382 64,881 - 64,881 8,543,263
8,485,897 4,240 8,490137 929,415 6,629 936,044 9,426,181
Liabilities
Trade and other payables - - - - 2,633,945 - 2,633,945 2,633,945
Accrued mark-up - - - - 715 - 715 715
Liabilities against assets
subject to finance lease 7.00 3,714 - 3,714 - - - 3,714
3,714 - 3,714 2,634,660 - 2,634,660 2,638,374
Off-balance sheet financial instruments
Commitment in respect of capital expenditure - - - 858,614 - 858,614 858,614
Commitment in respect of letters of credit - - - 3,558,962 - 3,558,962 3,558,962
Outstanding bank guarantees - - - 819,193 366,042 1,185,235 1,185,235
- - - 5,236,769 366,042 5,602,811 5,602,811
=================================================================================================================================================
2006
Effective Interest/mark-up bearing Non-interest/mark-up beari Total
Interest/ Maturity Maturity Sub-total Maturity Maturity Sub-total June 30,
Mark-up upto one after one upto one after one 2007
rate year year year year
(Rupees in 000)
=================================================================================================================================================
On balance sheet financial instruments
Assets
Loans 3.50-6.00 2,158 1,019 3,177 866 - 866 4,043
Long-term deposits - - - - - 5,181 5,181 5,181
Finance under musharika arrangements 6.00 5,811 4,021 9,832 - - - 9,832
Trade debts - - - - 738,281 - 738,281 738,281
Accrued mark-up - - - 76,211 - 76,211 76,211
Other receivables - - - - 24,708 - 24,708 24,708
Cash and bank balances 0.75-10.75 7,371,452 - 7,371,452 44,728 - 44,728 7,416,180
7,379,421 5,040 7,384,461 884,794 5,181 889,975 8,274,436
Liabilities
Trade and other payables - - - - 2,289,796 - 2,289,796 2,289,796
Accrued mark-up - - - - 22,250 - 22,250 22,250
Liabilities against assets subject to finance 7.00 5,735 3,871 9,606 - - - 9,606
5,735 3,871 9,606 2,312,046 - 2,312,046 2,321,652
Oft-balance sheet financial instruments
Commitment in respect of capital expenditure - - - 520,176 - 520,176 520,176
Commitment in respect of letters of credit - - - 2,115,021 - 2,115,021 2,115,021
Outstanding bank guarantees - - - 412,071 7,809 419,880 419,880
- - - 3,047,268 7,809 3,055,077 3,055,077
=================================================================================================================================================38.2. Credit risk exposure and concentration of credit riskCredit risk is the risk which arises with the possibility that one party to a financial instrument will fail to discharge its obligation and cause the other party to incur a financial loss. The company attempts to control credit risk by monitoring credit exposures, limiting transactions with specific counterparties and continually assessing the creditworthiness of counterparties. Concentrations of credit risk arise when a number of counterparties are engaged in similar business activities or have similar economic features that would cause their ability to meet contractual obligations to be similarly affected by changes in economic, political or other conditions. Concentrations of credit risk indicate the relative sensitivity of the company's performance to developments affecting a particular industry. Out of the total financial assets of Rs 9,399.391 million (2006: Rs 8,274.436 million), the financial assets which are subject to credit risk amounted to Rs 9,399.248 million (2006: Rs 8,273.822 million). The company manages credit risk in trade receivables by limiting significant exposure to any individual customer and by obtaining advance against sales. The company is exposed to credit risk on loans, advances, deposits, trade debts, finances under musharika arrangements and other receivables. The company seeks to minimise its credit risk exposure through limiting exposures to only customers considered credit worthy and by obtaining securities where applicable. 38.3. Liquidity risk Liquidity risk is the risk that the company will be unable to meet its funding requirements. To guard against the risk, the company has diversified funding sources and assets are managed with liquidity in mind, maintaining a healthy balance of cash and cash equivalents. The maturity profile is monitored to ensure adequate liquidity is maintained. 38.4. Foreign exchange risk management Foreign currency risk arises mainly where receivables and payables exist due to the transactions with foreign undertakings. Payables exposed to foreign currency risks are usually covered through forward foreign exchange contracts on the basis of the management's assessment of fluctuation in exchange rates. 38.5. Fair value of financial instruments Fair value is the amount for which an asset could be exchanged, or a liability settled, between knowledgeable willing parties in an arm's length transaction. Consequently, differences may arise between the carrying values and the fair value estimates. The estimated fair value of financial assets and liabilities are not materially different from their book values at the balance sheet date. Underlying the definition of fair value is the presumption that the company is a going concern without any intention or requirement to curtail materially the scale of its operations or to undertake a transaction on adverse terms. 39. NON-ADJUSTING EVENT AFTER THE BALANCE SHEET DATE The Board of Directors in its meeting held on August 31, 2007 has proposed a cash dividend in respect of the year ended June 30, 2007 of Rs 8 per share (2006: cash dividend of Rs 7 per share). This is in addition to the interim cash dividend of Rs 5 (2006: Rs 5) per share resulting in a total dividend for the year of Rs 13 (2006: Rs 12) per share. The Directors have also announced appropriation of Rs 1,723.900 million (2006: Rs 1,705.300 million) to general reserve. These appropriations will be approved in the forthcoming Annual General Meeting. The financial statements for the year ended June 30, 2007 do not include the effect of these appropriations which will be accounted for in the financial statements for the year ending June 30, 2008. 40. CORRESPONDING FIGURES Corresponding figures have been rearranged and reclassified, wherever necessary, for the purpose of comparison. There have been no significant reclassifications in these financial statements. 41. DATE OF AUTHORISATION These financial statements were authorised for issue on August 31, 2007 by the Board of Directors of the company. 42. GENERAL Figures in these financial statements have been rounded off to the nearest thousand Rupees. |