Pak Suzuki Motor Company Limited Repaired)

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Financial Management Term Report Pak Suzuki Ltd Indus Motors Ltd

Presented to : Sir Amyn Wahid

Presented by: Sana Taqi 9843 Asadullah-9897 Babar Ansari-10055 Shafiq-10713

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Acknowledgement:We are thankful to Allah, the gracious, the merciful for Helping us at every step and giving us the strength to complete this report on time. We are really grateful to our course facilitator Sir Amyn Wahid who guided us and provided with all his possible assistance during the obstacles faced in the creation of this report, which would not have been possible without his guidance and support. We would like to thank our family who supported us and gave us time to complete our report.

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Table of Contents

INTRODUCTION OF COMPANIES ...................................................................4 PAK SUZUKI MOTOR COMPANY LIMITED ..............................................4 INDUS MOTORS ................................................................................................6 LIQUIDITY RATIO: ..............................................................................................8 FINANCIAL LEVERAGE RATIOS ...................................................................12 EFFICIENCY RATIOS ........................................................................................17 PROFITABILITY RATIOS .................................................................................25 COMMON SIZE ANALYSIS...............................................................................34 INDEXED ANALYSIS ..........................................................................................42 REFERENCES: .....................................................................................................52 APPENDICES ........................................................................................................53

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INTRODUCTION OF COMPANIESPak Suzuki Motor Company Limited

Pak Suzuki Motor Company was formed in August 1983 as a joint venture between Pakistan Automobile Corporation Limited (representing government of Pakistan) and Suzuki Motors Corporation Japan for the manufacturing, assembling and marketing of Suzuki vehicles in Pakistan.

PSMCL started production in 1984. In 1989 the foundation stone of the new Bin Qasim plant was laid. Over the years PSMCL has expanded its capacity to 150,000 vehicles per annum. On 25th April 2007 the board of directors of Pak Suzuki Motor Corporation Limited and Suzuki Motorcycles Pakistan (SMPL) Limited decided to amalgamate SMPL into PSMCL.

It has the largest dealership network in Pakistan. PSMCL also has the highest market share and has become a household name in Pakistan. It is manufacturing eight car models; this is the highest number of models manufactured by any automobile manufacturer in Pakistan.

OUR VISIONTo be Excellent All Around.

OUR MISSION To provide vehicles of international quality at competitive price.

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To iprove skills of employees by imparting training and inculcating in them sense of participation. To achieve maximum indigenization and promote the automobile vending industry. To contribute to Pakistani society through development of industry in general and automobile industry in particular.

Product rangeAutomobile Motorcycles

Cultus:

Swift:

GS 150

Alto

Jimmy

Sprinter

Liana

Cargo van

Sprinter Eco

Mehran

Ravi pickup

Shogun

Bolan van

APV and Jimny

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INTRODUCTION OF INDUS MOTORS Indus Motor Company Limited is an assembler, manufacturer and marketer of Toyota vehicles in Pakistan since July 01, 1990. The company is engaged in sole distributorship of Toyota and Daihatsu Motor Company Ltd. vehicles in Pakistan through its dealership network. IMC is a joint venture between the House of Habib, Toyota Motor Corporation Japan (TMC), and Toyota Tsusho Corporation Japan (TTC). Indus Motor Company was incorporated in 1989 and is listed on all the three stock exchanges of Pakistan. It has a market share of 41%, slightly behind Pak Suzuki Motors (market share: 46%). Thus Indus Motor Company is one of the two leading car manufacturers in Pakistan. The market share of Pak Suzuki declined to 46% in YEAR 2010 from 48% in YEAR 2009. Dewan Motor's market share also decreased from 0.38% in YEAR 2009 to 0% in YEAR 2010. However, Indus Motor and Honda Atlas gained in terms of market share. Honda Atlas' market share increased from 12.22% in YEAR 2009 to 12.49% in YEAR 2010. Indus Motor Company performed better than the other companies in the auto sector during YEAR 2010.The market share of Indus Motors surged from 39% in YEAR 2009 to 41% in YEAR 2010.

VisionIMCs Vision is to be the most respected and successful enterprise, delighting customers with a wide range of products and solutions in the automobile industry with the best people and the best technology". The most respected. The most successful. Delighting customers. Wide range of products. The best people. The best technology.

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MissionMission of Toyota is to provide safe & sound journey.

Automobiles Camry Hilux

Corolla

Imported vehicles

Cuore

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Liquidity Ratio:a. Current Ratio = Current Assets Current LiabilitiesRs Indus Motors Ltd 2009 16,715,319.00/ 9,884,850.00 Indus Motors Ltd 2010 23,791,253.00 /14,224,866.00 Pak Suzuki Co Ltd 2009 12,427,633,000/ 3,325,134,000 Pak Suzuki Co Ltd 2010 14,313,132,000/ 4,752,499,000 Current Ratio 2009 2010 Indus Motors Ltd1.69 1.67

1.69

1.67

3.74

3.01

Pak Suzuki Co Ltd 3.74 3.01

4 3.5 3 2.5 2 1.5 1 0.5 0

3.74 3.01

1.69

1.67

2009 Indus Motors Ltd

2010 Pak Suzuki Co Ltd

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Internal analysis of Indus MotorsSince the company has increased its current assets has increased by 7075934, and our liabilities has increased by 4340016,therefore our current ratio has increased because current assets grew less in comparison to current liabilities. The ratio is mainly used to give an idea of the company to pay back its short tern liabilities with its short term assets.

Internal analysis of Pak SuzukiCurrent ratio shows firm`s ability to cover its current liabilities over its current assets. As the current ratio decreased by 0.73 in 2010 due to increase in current liabilities by 1427365000, which causes decrease in the liquidity position of Pak Suzuki in 2010 in comparison of 2009 CR.

External AnalysisPaki Suzuki is in a better position than Indus motors to pay off its current liabilities with its current assets. Pak Suzuki both current assets and current liabilities are much higher than Indus motors. However both firms have shown improvement in 2010 in terms of current ratio.

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b. Quick Ratio =

Current Assets Inventories Current Liabilities Rs

Indus Motors Ltd Indus Motors Ltd

2009 2010

(16,715,319.00-4,217,341.00)/9,884,850.00 (23,791,253.00 -5,309,934.00)/14,224,866.00 (12,427,633,000 6,879,729,000) /3,325,134,000 (14,313,132,000 8,748,031,000) /4,752,499,000

1.26 1.30 1.67 1.147

Pak Suzuki Co Ltd 2009 Pak Suzuki Co Ltd 2010

Quick Ratio 2009 2010

Indus Motors Ltd 1.26 1.30

Pak Suzuki Co Ltd 1.67 1.14

2 1.5 1 0.5 0 Indus Motors Ltd 2009 1.26 1.3

1.67 1.14

Pak Suzuki Co Ltd 2010

Internal analysis of Indus MotorsThe company is able to pay off its short term obligations with its current assets other than inventories, which denotes that company is managing its inventories efficiently inventories.

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Internal analysis of Pak SuzukiQuick ratio of Pak Suzuki decreased by 0.523 which show Pak Suzuki is in not position to cover its current liabilities with most liquidating of its assets. This decrease in Quick ratio shows increase in obsolete inventory which shows inefficient inventory management and have got less liquidate items to pay off its debts

External AnalysisIndus motors are not having any inventory issues, which is evident by quick ratio which is increasing in 2010. But Pak Suzuki quick ratio declined which means that its not managing its inventory well in 2010.

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Financial Leverage Ratiosa. Debt to Asset ratio: Total Debt Total Assets Rs Indus Motors Ltd Indus Motors Ltd Pak Suzuki Co Ltd Pak Suzuki Co Ltd 2009 2010 2009 2010 10,388,550.000/ 20,685,523.00 14,550,663.00/ 27,138,278.00 3,330,134,000 / 17,655,734,000 4,752,449,000 / 19,250,364,000 50.22% 53.62% 19% 25%

Indus Motors Ltd 2009 2010 50.22% 53.62%

Pak Suzuki Co Ltd 19% 25%

60.00% 50.00% 40.00% 30.00% 20.00% 10.00% 0.00%

50.22%

53.62%

25% 19%

Indus Motors Ltd 2009

Pak Suzuki Co Ltd 2010

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Internal analysis of Indus MotorsThis ratio indicates that the proportion of total debt relative to its total assets. This shows in year 2009 we had debt financing of 50.22% and equity financing was 49.78%, however in 2010, our debt financing was increased to 53.62 and equity financing is 46.38%.

Internal analysis of Pak SuzukiDebt to total assets shows the percentage of the firm`s assets supported by the debt financing. As in 2009 23.2% debts were of assets to 2010 33% of the total assets. This shows that 23.2% of the assets are being financed by liabilities and rest 76.8% are being financed by equity. This variation of 9.8% occurs because of increase in total debts by 1422315 and also increases in total assets by 172315.

External AnalysisBoth the companies has shown that total debt to total assets ratio have increased in 2010.however Indus motors finance almost half of its assets by debt financing, which is very risky, while P