2019 annual report DELIGHTING CUSTOMERS Over decades, it has been the top priority at IMC to delight its customers. Happiness and respect are our key goals and we work hard to ensure that every customer’s experience at Toyota is enjoyable. This is manifested in our pleasant customer service, the availability of genuine products and the complete satisfaction of customers’ needs. Corporate Profile Indus Motor Company Limited (IMC) is a joint venture between certain companies of House of Habib of Pakistan, Toyota Motor Corporation and Toyota Tsusho Corporation of Japan. Incorporated in 1989, the Company manufactures and markets Toyota brand vehicles in Pakistan. These include several variants of the flagship ‘Corolla’ in the passenger car segment, ‘Hilux’ in the light commercial vehicle segment and ‘Fortuner’ in Sports Utility Vehicle segment. IMC’s manufacturing facility and offices are located at a 107 acre site in Port Qasim, Karachi. The product is delivered to end customers nationwide through a strong network of 46 independent 3S Dealerships spread across the country. Over 29 years, since inception, IMC has sold more than 875,000 CBU/CKD vehicles. It has also demonstrated impressive growth in terms of volumetric increase. From a modest beginning of 20 vehicles per day production in 1993, daily production of the Company has now increased to 268 (with overtime) units per day in 2018-19. This has been made possible through the development of human talent embracing the ‘Toyota Way’ of quality and lean manufacturing. In this period, IMC has made large scale investments in enhancing its own capacity and in meeting customer requirements for new products. Corolla is, today, the largest selling automotive brand model in Pakistan. This country is the highest Corolla-selling nation in the Asia-Pacific region and also has the distinction of being # 1 in Toyota’s Asian market. The Company has a workforce of 3,349 persons at year end. It invests heavily in training the team members and management employees and creating a culture of high performing and empowered teams who work seamlessly across the various processes in search of quality and continuous improvement. IMC employees are encouraged to pursue high standards of business ethics and safety according to the core values of the Company; they communicate candidly by giving bad news first and extend respect to people. Employees rate IMC high on work environment and level of job satisfaction as per the bi-annual TMC morale survey. IMC has played a major role in the development of the entire value chain of the local auto industry. It is also proud to have contributed in poverty alleviation at the grass root level by nurturing localization. This, in turn, has directly created thousands of job opportunities and transferred technology to over 46 vendors supplying parts. The Company is also a major tax payer and significant contributor to the Government’s exchequer. Indus Motor Company Ltd. Contents Vision and Mission 08 Fun Facts & Tips for Safety 76 Core Values 10 Statement of Compliance with the Code of Corporate Governance 84 Toyota Guiding Principles 14 Review Report to the Members 86 Toyota Motor Corporation CSR Policy 15 Auditor’s Report to the Members 87 Strategic Objectives 16 Financial Statements 92 Board of Directors 18 Pattern of Shareholding 137 Company Information 26 Ten Years Performance Indicators 140 Corporate Governance 28 Notice of Annual General Meeting 142 Organization Chart 29 Notice of Annual General Meeting (Urdu) 145 Shareholder Information 32 Directors’ Report (Urdu) 161 Operating Highlights 34 Chairman’s Review (Urdu) 163 Financial Summary 35 Form of Proxy Vertical and Horizontal Analysis 38 Form of Proxy (Urdu) Statement of Value Addition 40 Electronic Dividend Mandate From Chairman’s Review 42 Electronic Dividend Mandate From (Urdu) Directors’ Report 46 Global Vision for Those We Serve 75 BAHAWALPUR 1 MULTAN 1 Strengthening NETWORK IMC believes in developing networks of confidence and dependability with its customers and partners. Sustaining and preserving the environment is our key goal. We also endorse and pursue localization with great diligence in an effort to stay connected with our roots. Our expanding network of dealerships keeps us bonded to a motivated cycle of growth and accessibility. We make significant advances to further strengthen our hallmark ownership culture and keep our fundamentals strong. HEYDARBAD KARACHI ISLAMABAD 3 LAHORE 10 QUETTA 2 HYDERABAD 2 PESHAWAR 2 KARACHI 11 Vision & Mission Vision “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.” Respect & Corporate Image Customer Satisfaction Production & Sales Act # Quality & Safety Action, Commitment, Best Employer Teamwork Profitability 1 8 Indus Motor Company Ltd. Mission IMC’s Mission is reflected in the Company’s slogan Action, Commitment and Teamwork to become # 1 in Pakistan Annual Report 2019 9 Core Values • World class production quality • Achieving the ultimate goal of complete customer satisfaction • Being seen as the best employer • Fostering the spirit of teamwork • Inculcating ethical and honest practices 10 Indus Motor Company Ltd. Annual Report 2019 11 Gaining TRUST Customer satisfaction takes us to new heights. It is this indispensable trust of customers in the Toyota Way, which keeps us moving forward. Toyota is a name that goes hand in hand with caring for its customers. We have never failed to satisfy our customer’s expectations and have always facilitated them in every aspect. Toyota Guiding Principles Honor the language and spirit of the law of every country and region, and undertake open and fair business activities to be a strong corporate citizen of the world. Akio Toyoda President, Toyota Motor Corporation Respect the culture and Dedicate our business to Create and develop customs of every country providing clean and safe advanced technologies and region, and contribute products and to enhancing and provide outstanding to economic and social the quality of life everywhere products and services that development through through all of our activities. fulfill the needs of custormers corporate activities in their worldwide. respective communities. Foster a corporate culture Pursue growth through Work with business partners that enhances both individual harmony with the global in research and manufacturing creativity and the value of community via innovative to achieve stable, long-term teamwork, while honoring mutual management. growth and mutual benefits, trust and respect between labor while remaining open to new and management. partnerships. 14 Indus Motor Company Ltd. Toyota Motor Corporation CSR Policy Contribution toward Sustainable Development Preamble Business Partners We, Toyota Motor Corporation and our subsidiaries, take • We respect our business partners such as suppliers initiative to contribute to the harmonious and sustainable and dealers and work with them through long-term development of society to earth through all business relationships to realize mutual growth based on activities that we carry out in each country and region, mutual trust. (Guiding Principle: 7) based on our Guiding Principles. We comply with local, national and international laws and regulations as well as • Whenever we seek a new business partner, we the spirit thereof, and conduct our business operations are open to any and all candidates, regardless of with honesty and integrity. In order to contribute to nationality or scale, and evaluate them based on their sustainable development, we believe that management overall strengths. (Guiding Principle: 7) interacting with its stakeholders as described below is of • We maintain fair and free competition in accordance considerable importance, and we will endeavor to build with the letter and spirit of each country and region’s and maintain sound relationships with our stakeholders competition laws. (Guiding Principles: 1 and 7) through open and fair communication. We expect our business partners to support this initiative and act in Shareholders accordance with it. • We strive to enhance corporate value while achieving Customers stable and long-term growth for the benefit of our shareholders. (Guiding Principle: 6) • Based on our “Customer First” philosophy, we develop and provide innovative, safe and outstanding • We provide our shareholders and investors with high-quality products and services that meet a wide timely and fair disclosure on our operating results and variety of customer demands to enrich the lives of financial condition. (Guiding Principles: 1 and 6) people around the world. (Guiding Principles: 3 and 4) Global Society / Local Communities • We will endeavor to protect the personal information of customers and everyone else we are engaged in Environment business with, in accordance with the letter and spirit of each country and region’s privacy laws. (Guiding We aim for growth that is in harmony with the environment Principle: 1) by seeking to minimize the environmental impact of our business operations, such as by working to reduce the Employees effect of our vehicles and operations on climate change and biodiversity. We strive to develop, establish, and • We respect our employees and believe that the promote technologies that enable the environment and success of our business is led by each individual’s economy to coexist harmoniously, and to build close creativity and solid