Annual Report PROGRESSING with Localization
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2018 annual report PROGRESSING with Localization IMC’s financial highlights were further improved than previous years and have observed increased turnover and profitability. IMC has been a major contributor towards economic progress in our country, with its focus on empowering the local market for parts. With the launch of two new models this year, the Fortuner and Hilux REVO, our localization has gone even further. With a constant increase in local suppliers, IMC has come a long way from just 15 parts suppliers in 1993 to 45 in 2018. Let us share some of the facts with you on our journey to progress as the theme of our annual report this year. Corporate Profile Indus Motor Company Limited (IMC) was incorporated in 1989 as a joint venture company between certain companies of House of Habib of Pakistan, Toyota Motor Corporation and Toyota Tsusho Corporation of Japan. The Company manufactures and markets Toyota brand vehicles in Pakistan. The main product offerings include several variants of the flagship ‘Corolla’ in the passenger car category, ‘Hilux’ in the light commercial vehicle segment and the ‘Fortuner’ Sports Utility Vehicle. The manufacturing facility and offices are located at a 105 acre site in Port Qasim, Karachi, while the product is delivered to end customers nationwide through a strong network of 45 independent 3S Dealerships spread across the country. In its 29 years history since inception, IMC has sold more than 800,000 CBU/CKD vehicles and has demonstrated impressive growth, in terms of volumetric increase from a modest beginning of 20 vehicles per day production in 1993 to 268 (with overtime) units daily at present through the development of human talent embracing the ‘Toyota Way’ of quality and lean manufacturing. Over the years, IMC has made large scale investments in enhancing its own capacity and in meeting customer requirements for new products. Today, Corolla is the largest selling automotive brand model in Pakistan and it also has the distinction of being # 1 in Toyota’s Asian market. The Company invests heavily in training its 3,200 plus workforce of team members and management employees and creating a culture of high performing empowered teams working seamlessly across processes in search of quality and continuous improvement. The core values of the Company encourage employees to pursue high standards of business ethics and safety; communicating candidly by giving bad news first and to respect people. The bi-annual TMC morale surveys show that employees rate IMC high on work environment and level of job satisfaction. The Company has played a major role in the development of the entire value chain of the local auto industry and is proud to have contributed in poverty alleviation at the grass root level of nurturing localization that, in turn, has directly created thousands of job opportunities and transferred technology to over 45 vendors supplying parts. IMC is also a major tax payer and significant contributor to the GOP exchequer. Contents Vision, Mission and Core Values 08 Operating Highlights 54 Toyota Guiding Principles 14 Financial Summary 55 Toyota Motor Corporation CSR Policy 15 Vertical and Horizontal Analysis 58 Strategic Objectives 16 Statement of Value Addition 60 Board of Directors 18 Chairman’s Review 62 Company Information 46 Directors’ Report 64 Corporate Governance 48 Global Vision for Those We Serve 87 Organization Chart 49 Fun Facts & Tips for Safety 88 Shareholder Information 52 Statement of Compliance with the Code of Corporate Governance 95 Review Report to the Members 98 Auditor’s Report to the Members 99 Financial Statements 104 Pattern of Shareholding 151 Ten Year Performance Indicators 154 Notice of Annual General Meeting 156 Notice of Annual General Meeting (Urdu) 159 Directors’ Report (Urdu) 180 Chairman’s Review (Urdu) 182 Form of Proxy 183 Form of Proxy (Urdu) 185 Electronic Dividend Mandate From 187 Electronic Dividend Mandate From (Urdu) 188 SAVING Foreign Exchange Foreign exchange reserves of the country seem to be standing on a critical point. Foreign debt burden on the economy is getting wider. In this situation IMC’s focus is on saving the reserves through localization of different parts. This contribution has helped in saving millions of dollar outflow from the economy. Achieving a significant level of localization every year, IMC plays its role in narrowing the trade deficit gap by procuring parts from local vendors. 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.” Mission IMC’s Mission is reflected in the Company’s slogan Action, Commitment and Teamwork to become # 1 in Pakistan Respect & Corporate Image Customer Satisfaction Production & Sales Act # Quality & Safety Action, Commitment, Best Employer Teamwork Profitability 1 8 Indus Motor Company Ltd. Annual Report 2018 9 10 Indus Motor Company Ltd. 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 Annual Report 2018 11 CREATING Jobs Looking forward to the level of localization, the industry is expanding rapidly. With a growing number of people, coming of employable age, job creation becomes essential to broad-base benefits of growth. The progressive growth in the auto sector has led in the creation of job opportunities and providing livelihood to millions of households. This has further ensured the fulfillment of one of the government’s macroeconomic indicators by reducing unemployment. The increased number of employment opportunities has also provided the circular flow of money in the economy. Toyota Guiding Principles Akio Toyoda President, Toyota Motor Corporation 14 Indus Motor Company Ltd. Toyota Motor Corporation CSR Policy Contribution Towards 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 harmonious and sustainable and dealers and work with them through long-term development of society and the earth through all business relationships to realize mutual growth based on activities that we carry out in each country and region, mutual trust. (Guiding Principles 7) based on our Principles. We comply with local, national and international laws and regulations as well as the • Whenever we seek a new business partner, we spirit thereof and we conduct our business operations are open to any and all candidates, regardless of with honesty and integrity. In order to contribute to nationality or size, and evaluate them based on their sustainable development, we believe that management overall strengths. (Guiding Principles 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’s competition and maintain sound relationships with our stakeholders 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 a stable and long-term growth for the benefit of our shareholders. (Guiding Principles 6) • Based on our philosophy of “Customer First,” 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 customers’ 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’s privacy laws. (Guiding Principles 1) We aim for growth that is in harmony with the environment by seeking to minimize the environmental impact of Employees our business operations, such as by working to reduce the effect of our vehicles and operations on climate • We respect our employees and believe that the change and biodiversity. We strive to develop, establish success of our business is led by each individual’s and promote technologies enabling the environment creativity and good teamwork. We stimulate personal and economy to coexist harmoniously, and to growth for our employees. (Guiding Principles 5) build close and cooperative relationships with • We support equal employment opportunities, a wide spectrum of individuals and organizations involved diversity and inclusion for our employees and do not in environmental preservation. (Guiding Principles 3) discriminate against them. (Guiding Principles 5) Community • We strive to provide fair working conditions and to maintain a safe and healthy working environment for • We implement our philosophy of “respect for people” all our employee. (Guiding Principles 5) by honoring the culture, customs, history and laws of each country. (Guiding Principles 2) • We respect and honor the human rights of people involved in our business and, in particular, do not use • We constantly search for safer, cleaner and superior or tolerate any form of forced or child labor.