Anti-Corruption

Hinopak Motors Limited Human Rights Hinopak Motors Limited UNGC Communication on Progress 2014

Organizational Profile

GRI Ref. No.

2.1 Name of the Organization Hinopak Motors Limited

Assembly, manufacturing and sales of Hino Trucks and 2.2 Primary brands, products, and/or services. Buses and Sales of Hino Genuine Parts.

Operational structure of the organization, Hinopak is a subsidiary concern of Hino Motors Limited 2.3 including main divisions, operating Japan and Toyota Tsusho Corporation. companies, subsidiaries, and joint ventures.

2.4 Location of organization’s headquarters. Karachi, Pakistan

Number of countries where the organization operates, and names of countries with either 2.5 major operations or that are specifically One (Pakistan) relevant to the sustainability issues covered in the report.

2.6 Nature of ownership and legal form. Public Limited Company

The company serves markets of Pakistan and some of the Middle East & African countries. Markets served (including geographic 2.7 breakdown, sectors served, and types of Types of customers include: customers/beneficiaries). 1. Institutional customers 2. Commercial customers

Number of Employees as on March 31, 2014 = 310 (991 including contract and contractor’s employees)

For following refer to Annual Report 2013-14 available at: http://www.hinopak.com/finance.htm

Scale of the organization  Net sales (2013-14)= Rs. 9.21 billion 2.8  Total capitalization = Rs. 0.72 billion (0% Debt, Surplus funds)  Quantity of Products Produced (2013-14) - Hino Chassis (including exports): 1,452 - Bus and other specialized bodies (including export): 266 - Hilux Frame: 4,160

Significant changes during the reporting 2.9 None period regarding size, structure, or ownership.

1. “Hino Parts & Service Double Victory Award” for the year 2012. Awards / citations received during the 2.10 reporting period 2. EFP/ILO Occupational Health & Safety Best Practices Award 2013.

ISO 14001:2004 Certified Management Systems ISO 9001:2008 Certified OHSAS 18001:2007 Certified

Hinopak Motors Limited Human Rights Hinopak Motors Limited UNGC Communication on Progress 2014

- Employers’ Federation of Pakistan (EFP) - Overseas Investors Chamber of Commerce & Industry (OICCI) - Federation of Pakistan Chamber of Commerce and Industry (FPCCI) Affiliations / Memberships - Management Association of Pakistan (MAP) - Pakistan Automotive Manufacturers Association (PAMA) - S.I.T.E. Association - Pakistan Japan Business Forum (PJBF) - Pakistan Society for Training & Development (PSTD) - Marketing Association of Pakistan Report Parameters

3.1 Reporting period for information provided 1 June 2013 ~ 30 April 2014

1. UNGC Communication on Progress (COP): 21 June 2013 3.2 Date of most recent previous report/s 2. Hinopak Environmental & Social Report 2009-10 3. Annual Report 2013-14

3.3 Reporting cycle Annual

Ahsan Waseem Akhtar Manager HR, Admin & HSE [email protected]

Contact point for questions regarding the Nabila Mujahid Faisal 3.4 Health, Safety & Environment Manager report or its contents [email protected]

Maria Azher Human Resource Development Executive [email protected]

Governance, Commitments and Engagement

Board of Directors (Highest Governance Body)

Board Committees:

The Audit Committee is responsible for:

a. Determination of appropriate measures to safeguard company’s assets; Governance structure of the organization, including committees under the highest b. Review of quarterly, half-yearly and annual financial statements of the Company, prior to the 4.1 governance body responsible for specific approval of the Board of Directors; tasks, such as setting strategy or organizational oversight. c. Review of management letter issued by external auditors and management’s response thereto and monitor the action plan to improve the control environment;

d. Review of the scope and extent of internal audit and ensuring that the internal audit function has adequate resources and is appropriately placed within the Company;

Hinopak Motors Limited Human Rights Hinopak Motors Limited UNGC Communication on Progress 2014

e. Ascertaining that the internal control system including financial and operational controls, accounting system and reporting structure are adequate and effective;

f. Instituting special projects, other investigations on any matter specified by the Board of Directors, and to refer any matter to the external auditors or to any other external body;

g. Monitoring compliance with relevant statutes and best practices of corporate governance.

The Human Resource & Remuneration Committee is responsible for:

a. Recommending human resource management policies to the board;

b. Recommending to the board the selection, evaluation, compensation (including retirement benefits) and succession planning of the CEO;

c. Recommending to the board the selection, evaluation, compensation (including retirement benefits) of CFO, Company Secretary and Head of Internal Audit; and

d. Considering and approving on recommendations of CEO on such matters for key management positions who report directly to CEO.

Refer to performance indicator ref. no. LA13 for details on the BOD and the Audit Committee.

4.2 Chair of the highest governance body Chairman (Non-Executive Director)

For organizations that have a unitary board Refer to performance indicator ref. no. LA13 structure, state the number and gender of 4.3 members of the highest governance body that The Board of Directors has 9 members; where 6 are non- are independent and/or non-executive executive directors. members.

Shareholders: Mechanisms for shareholders and employees - Annual General Meeting (AGM) 4.4 to provide recommendations or direction to the highest governance body. Employees: - Suggestion Boxes (located at conspicuous places around the company premises)

Hinopak Motors Limited Human Rights

Principle 1: Businesses should support and respect the protection Human Rights of internationally proclaimed human rights; and Commitment: Hinopak Motors Limited is committed to respecting and

Principle 2: make sure that they protecting the dignity of people in all its areas of operations. All stakeholders are not complicit in human rights are assured of sincere efforts to uplift conditions with regard to health and abuses. safety, provide sound labour-management relations and participate in human

resource/community development.

Furthermore, Hinopak is committed to avoiding complicity of human rights abuses in all its areas of operation.

Policies, Systems, Processes and Programs Besides the policies and processes detailed in previous COP documents (published since 2006) the following actions were initiated/emphasized on during the reporting year under each process/system with respect to the Human Rights principles:

A. HEALTH & SAFETY SYSTEMS

. Healthy & Safe Working Environment - 1,610 training man-hours achieved under staff training on

Picture 1: Shop-floor Fire Prevention occupational HSE (ref picture 1). Training - Introduction of a new concept of Complete Check Complete Find- out Activity (CCCF-α) on company wide basis. - Promoting workers participation in developing safety culture in the company by introducing Safety Trophy Competition on the shop floor (ref picture 2). - Two in-house Health & Safety Conferences held during this reporting year (ref picture 3). - Workers were involved to highlight safety problems of their areas through ‘Safety Suggestion Card’. - HSE Training for employees and interested parties (Vendors/ Picture 2: Safety Trophy being Contractors/ Employees’ Children) were organized. presented to the winning shop workers - Medical tests were done for employees working in high risks areas like Chemical Handlers/Food Handlers etc. - Anti-dengue mosquito spray was done within and around the company premises. - Furthermore, in collaboration with neighboring companies, anti- dengue mosquito spray was also done outside the premises of neighboring companies during the monsoon season (ref picture 4).

. Monitoring & Awareness - Daily safety monitoring/patrolling around the assembly and manufacturing facilities being done through the Safety Picture3: 2nd Health & Safety Conference Administration Team (SAT). - Monthly HSE Meeting is held regularly to review progress so far done to enhance HSE system.

Hinopak Motors Limited Human Rights

- 25% reduction in minor accident compared to last year, no major accident reported in Apr 2013 till Mar 2014 (ref. picture 5). - Comprehensive follow up was done of Workers Feedback Forms raised through Complete Check Complete Find-out Activity (CCCF- α).

B. TOTAL QUALITY MANAGEMENT

. Continuous Improvement Picture 4: Anti-dengue mosquito spray being done around the neighborhood - Kaizen initiatives, involving manufacturing and non-manufacturing functions, being implemented and monitored and are also participated by top management. - Kaizen meetings are held periodically. - Recertification of Quality Management System ISO 9001:2008 successfully completed in March 2014 (ref. picture 6).

C. EMPLOYEES

. Labour-Management Relations - 6 workmen were given laptop computers. A lucky draw was done to identify the workmen who received the computers (ref. picture 7). - Nine employees (7 workers and 2 officers) were sponsored Picture 5: Occupational Accident Trend ($2,870/- each; 90% of the total amount) for their religious pilgrimage (Hajj) in 2014. Identification of the recipient workmen and officers under this scheme was also through lucky draw. This year one more executive was added to the total number. - No strike or cessation in work or loss of work hours due to strike, go-slow or lockout reported during the reporting year.

. Security & Safety - Security measures around the company (for all local and foreign employees) tightened owing to the security concerns confronting the city. Picture 6: QMS Surveillance Audit - A complete ‘Security Guidelines’ document has been prepared detailing step by step guidance on security management. - On the directives of our principal, a policy on data security / confidentiality management is being prepared along with a detailed guide book for day to day reference by employees. - To ensure and promote road safety among our employees, use of seat belts in cars and safety helmets / side-view mirrors for motorbikes is being encouraged. - To further enhance safety of employees who commute on motorbike, 500 helmets were distributed among workers / officers alike (ref picture 8).

Picture 7: Laptop Distribution

Hinopak Motors Limited Human Rights

D. STAKEHOLDER PARTICIPATION & ENGAGEMENT

. Supplier/Contractor/Vendor Engagement - Vendor’s Convention held in September 2013 and was attended by representatives from 95 vendor companies. (Ref picture 9). - An awareness program on ‘Health, Safety & Environment’ was conducted at the premises of one of Hinopak’s key vendor company, representatives of the vendor company and Hinopak jointly performed a tree plantation activity also. (ref. picture 10)

Figure 8: Safety Helmets are being presented to workers . Education / Community Development & Welfare - This year 109 workers’ children were recognized for their academic achievement through scholarships and a certain amount for course books. The children ranged from grade three to graduation level. - A PhD project on ‘Development of Corrosion Resistance Coatings for Preservation of Marine Installation with emphasis to Karachi Coastal Area Conditions’ was logistically supported for a PhD student. Three stands and steel plates were provided to the student for the assistance of this project. (ref. picture 11)

- The SITE Model School (which was renovated by Hinopak in 2008) Picture 9: Vendor’s Convention 2013 children were continued to be given assistance from Hinopak. - Renovation and maintenance work at the SITE Model School was done in December 2013. (ref. picture 12) - 7 NED University engineering scholars (belonging to Mechanical, Industrial and Automotive technologies) were given scholarships this year as tuition fee for 2nd year engineering. - A half day training program on Time & Self management was conducted for 55 teachers of S.I.T.E. Model School. (ref. picture 13) - Hinopak co-sponsored the Pakistan India Blind Cricket ODI Series which was organized by Pakistan Blind Cricket Council in February 2014. (ref. picture 14) Picture 10: Hinopak and vendor's representatives jointly planted a tree E. CODE OF CONDUCT

. Code of Conduct Adherence - The Whistle Blowing Committee regularly meets to check compliance to the code of conduct through the whistle blowing procedure. - The J-SOX Audit was successfully completed for this year ensuring fair and transparent corporate governance. - Newly inducted employees oriented to the code of conduct during the company-wide orientation program.

Picture 11: A group picture of the staff involved in the PhD project . Credo, Mission, Values, Practice - Training on company’s values – The Hino Spirit – is conducted for newly hired employees. 14 employees trained during the reporting period on the Hino Spirit principles. (ref. picture 15)

Hinopak Motors Limited Human Rights

Planned Initiatives for the Coming Years (under principles 1 and 2):

. Kaizen, Quality Circle, Housekeeping trophies and challenges; . Review of the Code of Conduct to make it more detailed and comprehensive. . Complete/comprehensive documented security guidelines covering all aspects to mitigate security related risks. . Awareness sessions on Human Rights protection for Hinopak Vendors.

Picture 12: Paint work done in the school’s teacher’s room

Picture 13: Teacher’s training on Time & Self Management

Picture 14: Co-sponsorship of Blind Cricket Tournament

Picture 15: Hino Spirit Training (July ’13)

Hinopak Motors Limited Labour

Principle 3: Businesses should uphold the freedom of Labour association and the effective recognition of the right to collective bargaining; Commitment: . We uphold freedom of association and the right of workers to Principle 4: the elimination collective bargaining. of all forms of forced and compulsory labour; . We are committed to the elimination of all forms of forced or compulsory labour in all areas of our or business partners' operations. Principle 5: the effective . We prohibit engagement, in any form, of child labour in all areas of abolition of child labour; and our business operations or our business partners' operations. Principle 6: the elimination of . We advocate equal employment opportunities, diversity and inclusion discrimination in respect of in employment and occupation and prohibit any form of employment and occupation. discrimination in employment terms and conditions.

A. INDUSTRIAL & EMPLOYEE RELATIONS

Picture 16: Labour Agreement Signing . Freedom of Association Ceremony (Apr ’14) - Hinopak workers are represented by a registered Labor Union, namely Hinopak Motors Limited Employees Union, existing since the company's pre-Japanese ownership from 1969. Current membership to-date is 146, represented by the Collective Bargaining Agent. - 15th labor agreement was successfully reached and signed between CBA officials and Hinopak management (ref. picture 16).

. Collective Bargaining as a Tool for Addressing Working Conditions, Terms and Employment and Relations Picture 17: Cricket Tournament - Five trust building meetings were held during the reporting year (Oct ’13) which was attended by representatives from the labour union (mostly CBA officials) and representatives from the management.

. Engagement & Participation - During the reporting year 12,017 training man-hours were achieved for training and awareness activities of workers (technical & non- technical courses – including training of apprentices). - Participation in the Hinopak Tape Ball Cricket Tournament in October 2013 saw enthusiastic participation from the workers side (ref. picture 17). Picture 18: A group picture of the - A thank-you ceremony was held by the workers for Hinopak’s workers with Hinopak’s MD/CEO management for achievement award which was given to the workers against achievement of production targets. (ref. picture 18)

Hinopak Motors Limited Labour

B. ERADICATION OF CHILD LABOUR

. Underage Hiring Prevention Process - We continue to follow the under-age employment clause of the Factories Act 1934 for our workers and apprentices. - We have no record of underage employee/apprentice; youngest apprentice on board is 18 years old (minimum age is 14 years old according to Apprenticeship Rules 1966 (Sindh).

. Vendor / Contractor Evaluation and Engagement - Non-employment of child labor is ensured/checked through our ‘Internal Vendor Evaluation Report’ (refer pictures 19-A/19-B). - Hinopak employees interacting with vendors/contractors and visiting their premises are to report any observation of engaging child labor. Picture 19-A: Front Page of the Vendor Evaluation Report C. EMPLOYEES

. Workforce Diversity - Refer to GRI Indicator LA1 for Workforce profile (including workers).

Planned Initiatives for the Coming Years (under principles 3, 4, 5 & 6):

. Gender Harassment Program and Policy implementation.

Picture 19-B: Page 5 of the Vendor Evaluation Report including the area of 'Welfare / Environment'

Hinopak Motors Limited Environment

Principle 7: Business should support a precautionary approach Environment to environmental challenges;

Principle 8: Business should Commitment: undertake initiatives to promote . We take precautionary approach in meeting environmental challenges greater environmental in all areas of operations; we are committed to avoiding and mitigating responsibility; and negative impact of all our activities on the environment. Principle 9: Business should . Guided by our mission and social responsibility principles, we are encourage the development and committed to promoting environmentally responsible thinking within diffusion of environmentally friendly technologies. the Hinopak family, marked by sincere demonstration of better environmental-friendly practices. We strive to increase our sphere of influence beyond our company by including all other stakeholders and ensure greater positive impact. . We are committed to the adoption of environment-friendly technologies that reduce environment impact from our products and day-to-day operations. We ensure effective environment risk management and compliance across all our business activities, from product design/development to product sale.

A. Environment Management Systems

. Leadership Guidance & Legal Compliance - Top management reviewed progress so far done in environment on bi-annual basis, and give their valuable. Senior Management reviewed Environmental Objectives are derived from commitment can be seen by their participation in Health, Safety & Environment Management Committee and attendance in subsequent meetings. Systems are reviewed and decisions are taken to improve and enhance our management systems. - As per the requirement of Sind EPA, we are monitoring our Waste Water Effluents, Air Emissions, Motor Vehicles Exhaust, Ambient Air, Noise, and Drinking Water as required by S.R.O. 49(1)/2000, S.R.O 722(1)/93, S.R.O. 1062 (1)/ 2010, S.R.O. 1063(1)/ 2010, S.R.O. 1064(1)/2010 and S.R.O. 72(KE)/2009. - Key parameters (energy consumption, material discard, and water conservation) were reported to Hino Motors, Japan every month. - Compliance in all aspects has ensured a clean, green record (no warnings, no penalties) for Hinopak. Water release and air release were both within compliance levels. - Our local and international legal compliance have enabled us to enter the export market.

Hinopak Motors Limited Environment

. Maintenance & Monitoring - A comprehensive study is conducted on yearly basis to identify and evaluate Environmental & Safety Risks involved in our business processes, products and services. Based on the scientific method, their severity is then calculated and appropriate action programs are set to control these high risks through ERIC-P approach. - Analysis of Air Emissions from combustion stacks, generators, engines, exhaust emissions, noise monitoring and ambient air are done on predefined intervals. Picture 20: Mr. Keiichiro Utsumi (MD/CEO, Hinopak) plants a tree during the June Environment Month . Auditing, Certifications & Awards Tree Plantation activity - Two Surveillance Audits against OHSAS 18001 systems were conducted by Certification Body. Neither Major nor Minor Non Conformity was raised; only some observations were highlighted, against which appropriate measures were taken. - EMS Surveillance Audit successfully executed without any major or minor Non Conformity. - Participation of Global Environmental Conference, held in Hino Motors Japan. Hinopak shared its performance in Environmental conservation with other delegates.

Picture 21: A group picture of the Top . Hazardous Substance Control Management after the tree plantation - It is one of our objectives to ensure that every chemical passes activity through Chlorinated Organic Compound (COC) assessment before entering Hinopak premises. Any chemical containing this substance is carcinogenic in nature and is included in TOYOTA Banned Material List. - To date, we have identified 92 new chemicals, which have been checked against COC Compliance.

. Communication, Awareness, Training - The environmental performance of our plants is reported on an annual basis through our annual report. - We celebrate June as Environment Month and submit Picture 22: A group picture of the comprehensive report to Hino Motors Limited, Environmental School cleaning activity Division in mid July. Key parameters are monitored and reported to

Hino Motors Ltd., Japan Environmental Division on monthly basis. (ref. pictures 20/21) - School cleaning activity done in July 2013 with students and teachers of SITE Model School which was actively participated by Hinopak top management (including Japanese expats) – ref picture 22/23. - Eco-bags were distributed among Hinopak employee’s families during Hinopak Family Day 2014 to promote use of eco-bags and

Picture 23: A member of Hinopak’s top discourage use of polythene bags (ref picture 24). management is actively participating - During summer vacations 295 employees’ children visited Hinopak in the cleaning activity. during which environmental promotion activities were also

Hinopak Motors Limited Environment

conducted along with other activities. Environmental promotion activities for children included: - Environmental awareness presentation and videos - Visit to waste water treatment plant (ref picture 25) - Distribution of Environment Awareness Books to children (ref picture 26) - Eco drive training was conducted for heavy duty vehicle drivers of Hinopak (ref picture 27).

Picture 24: Hinopak employees carrying eco bags during Hinopak . Stop Global Warming Family Day 2014 - Hinopak has taken appropriate measures to reduce CO2 Emission (- 10%) based on FY 2012. We are continuously decreasing our energy usage by adopting several strategies regarding energy conservation. These include: > Installation of Energy Saver Bulb (80 W) in place of mercury light (400 W) No of Lights 30. > To maintain temperature up to 26ºC for air conditioners. > To utilize Sunlight where possible to maintain the appropriate light levels. > To switch off the LCDs / Monitors when not on seat. Picture 25: Hinopak children being > To minimize the energy consumption of compressor by removing shown the waste water treatment air leakages. plant > To minimized (Gas & Electricity Consumption) by placing third

frame on IMV Frame Trolley. > To minimize Electricity consumption by placing of Control Switch at PTED Facility. > Replaced Florescent Tube Light (40 W) to LED Tube Lights (18 W) – number of lights installed 24 (ref. pictures 28). > To minimize Electricity consumption by addition of Level Sensor Plant Over Head Tank. > Controlling of unnecessary light at offices and plants. > Asbestos sheets replaced by FRP sheet (Energy saving Component and Press shop done). > Louvers replaced with Glass window (Energy saving FRP and window shop Ongoing project). Picture 26: Environment Awareness > Minimization of energy consumption of compressor by removing Books for children air leakages.

> Installation of energy meters to monitor the energy consumption reading in different areas of plant. - Every year, we conduct Air and Water leakage inspections to identify seepages and take appropriate actions to mitigate the problems. Moreover, equipment and machineries are constantly checked / maintained via Preventive Maintenance to ensure efficiency.

Picture 27: Eco drive training being - Hinopak established a greenhouse right beside a smoking zone to given to HTV Hinopak drivers promote environmental preservation awareness among employees

Hinopak Motors Limited Environment

who smoke (ref picture 29). - Our active involvement in the upkeep and maintenance of our gardens has resulted in Hinopak winning 3rd prize in Karachi’s local industrial horticultural competition this year (ref pictures 30/31)

B. Environmental Responsibility Guidelines

. Hino Credo – Corporate Mission, CSR Charter, Hino Spirit Figure 28: After replacement of - Hino Motors' mission statement explicitly indicates environmental Florescent Tube Lights with LED Tube responsibility: "To make the world a better place to live in by Lights helping people and goods get where they need to go- safely,

economically and with environmental responsibility- while focusing on sustainable development." - Hino's CSR Chapter reiterates this commitment… "we strive to provide products that are safe and environmentally-friendly, pursuing a responsible balance with the environment in all of our corporate activities." - Hino Spirit enjoins all employees to practice the "Spirit of Contribution" – where it further elaborates that "With a deep respect for all people, we approach our work with openness and Figure 29: A greenhouse established honesty, and a true dedication to fulfilling our social adjacent to smoking zone responsibilities." - Our employees are trained on the Hino Spirit principles.

C. Environment-friendly Technology

. Manufacturing Vehicles that Burn Cleaner Fuels and Emit Less Fuel - Euro-II engine technology fitted in some Hino products, despite the absence of local regulations on the same mainly because of absence of clean fuel. - This year fitting of Euro II technology in being done for all Hino products. Figure 30: A picturesque view of Hinopak’s well maintained garden . Use of Environment-Friendly Parts / Raw Material - Use of environment-friendly gas R-134a & R-404a for air conditioning of buses and refrigeration of trucks is ensured. - We monitored and reduced use of diesel in our generator sets and other machinery used for production processes. - Quality of fuel, lubricants and other components are being checked by standard specification.

. Environmental-friendly Processes - Production/Manufacturing processes reviewed regularly. - For proper maintenance of vehicles, Hinopak provides authorized Figure 31: Hinopak’s representative is receiving 3rd prize in the Horticultural service stations/workshops. Competition - Paint sludge, FRP and glass wool incineration are done by third

Hinopak Motors Limited Environment

party to reduce hazardous waste.

D. Disaster Recovery Management and Capability Enhancement

. Disaster Management and Recovery - A complete risk assessment was performed this year to assess human and capital risks associated natural calamities especially earthquake followed by a comprehensive emergency response plan in case of natural disaster.

Figure 32: Awareness Program on E. Stakeholder Engagement Environmental Conservation at dealer’s premises . Promotion of Low Carbon Society

- Environmental conservation concept was introduced in Dealers with the main intention to educate the dealers about environmental preservation along with other business processes and to involve them in building ‘Low Carbon Society’ (ref picture 32)

. Promotion of Vehicle Maintenance for Environmental Preservation - Through free service and tune-up camps Hinopak promoted culture of vehicle maintenance among Hino customers and users. Proper and timely maintenance of vehicles ensures fewer emissions of harmful gases (ref picture 33). Figure 33: Free service camp underway at a truck stand

Hinopak Motors Limited Anti-Corruption

Principle 10: Business should Anti-Corruption work against corruption in all its forms, including extortion and bribery. Commitment: . We support the anti-corruption principle and are committed to continue our 'no-tolerance' policy to any corruption practice.

A. Ethical Guidelines

. UNGC Subscription - Hinopak is very vocal about its UNGC subscription and commitment to all 10 principles. This commitment is communicated through publications, press releases, presentations, displays, annual report, COP report etc.

. Hinopak Code of Conduct - Our basic Code of Conduct is still under revision to make it more comprehensive and explicit, as per the observation of the board of directors. However, Principles 2, 3, 8 and 11 are clear on our pledge to work against anti-corruption practices. - The Code of Conduct was circulated again among all management Picture 34: Whistle Blowing Procedure employees to reiterate the standards of ethics presented in the Code. - Orientation of new hires includes briefing on basic Code of Conduct, Whistle Blowing procedure and the UNGC's principles. - The code of conduct is displayed on conspicuous places (e.g. notice boards) for our non-management staff. Same has been translated in Urdu for better comprehension and understanding of workers.

. Hinopak Whistle Blowing System - The Whistle Blowing Committee (WBC), leading in the oversight of our anti-corruption commitment, meets monthly as minimum requirement (ref. pictures 34/35/36). - Similar to the previous years, during 2013-14 employees sent in their suggestions/grievances through the Whistle Blowing procedure and/or suggestion box. Accordingly, our MD/Chairman Picture 35: Whistle Blowing Form Whistle Blowing Committee addressed our employees' concerns.

Hinopak Motors Limited Anti-Corruption

. Hino Credo, Mission, CSR Charter - "Trust" is invoked twice in the Hino Credo containing overall company mission, core principle and CSR charter, whereby complying with laws and regulations and maintaining high ethical standards is a major focus. - As indicated by our CSR charter which forms a part of the Hino Credo reflects on our commitment to good corporate citizenship, comply with laws and regulations and maintain high ethical standards.

. Hino Spirit - Hino Spirit is a set of 6 key corporate values emanated from our principal Hino Motors, Japan. - 14 new Hinopak family members were trained on Hino Spirit (corporate values) achieving 49 man-hours during the reporting year (refer pictures 37/38).

Picture 36: Suggestion box located at B. Risk Assessment System the Head Office entrance . J-SOX - Internal Control Framework guides Hinopak in following the J-SOX (Japan's version of Sarbanes-Oxley Act). - During the reporting year fifteen (15) reportings were done on J- SOX covering areas on financial reporting, ITGC, and control environment. - Five (5) internal audits were conducted within period April 2013 to March 2014 while three were follow-up audits as compared to six audits conducted in the previous corresponding period. - For this reporting year, internal controls / value additions were

Picture 37: Participants learning provided in the following areas: experientially during the Hino Spirit  Information technology Training  Price change requests  Scrap sales  Controls over inventory (stock check twice a year)  Warranty - in process - For the reporting year, Hinopak's MD/CEO again declared compliance with the J-SOX requirements in a report sent to our principal in Japan.

. Audit Committee - An independent Audit Committee ensures monitoring of compliance activities. All five out of five members of the Picture 38: Hino Spirit Training Committee are non-executive directors. underway - Newly appointed chairman of the Audit Committee in an independent member of the board of directors. - The independent audit committee reports directly to the Board of Directors.

Hinopak Motors Limited Anti-Corruption

. Corporate Governance / Compliance - External auditors publicly attested Hinopak's financial reporting integrity as contained in our Annual Report 2013-141. - Hinopak's MD/CEO publicly affirmed compliance with corporate governance regulations as indicated in our Annual Report for the year ended March 31, 2014. - Other compliances: SECP’s Code of Corporate Governance, Stock Exchange regulations, International Accounting Standards, International Financial Reporting Standards, Companies Ordinance 1984 and other taxation laws, etc.

. Process Improvement - Continuous process improvement activity is underway through ‘Business Process Reengineering’ objective mostly driven by automation of various processes to minimize human error and risks. - Improvements underway through the implementation of Oracle R12 (replaced with previous version R11i).

. Vendor Pre-qualification - Our vendors are subjected to a pre-qualification assessment through the Initial Vendor Evaluation Report before they are inducted as business partners. - Tender bids are opened in the presence of internal auditor to make the process transparent.

1 Available on our website http://www.hinopak.com/finance.htm

Hinopak Motors Limited GRI Performance Indicators

GRI G3.1 Performance Indicators

Human Rights Ref. Number Performance Indicator Performance HR2 Percentage of significant suppliers, All significant vendors and contractors undergo contractors and other business partners that Human Rights screening (both at the time of induction have undergone human rights screening, and during the service tenure) and actions taken. HR4 Total number of incidents of discrimination None and corrective actions taken. HR5 Operations and significant suppliers None identified in which the right to exercise freedom of association and collective bargaining may be violated or at significant risk, and actions taken to support these rights. HR6 Operations and significant suppliers Suppliers: None* identified as having significant risk for Vendors: 100%** incidents of child labor, and measures taken to contribute to the effective abolition of * Due to the nature of the procurement process child labor. through suppliers currently in effect ** Vendors are assessed through the ‘vendor evaluation report’; ensuring no significant risks for incidents of child labour which is evaluated / ensured by regular visits by our team to the vendor’s premises. HR9 Total number of incidents of violations None involving rights of indigenous people and actions taken. HR10 Percentage and total number of operations 100% company processes confirm with the human that have been subject to human rights rights requirements and the standards set forth by The reviews and/or impact assessments. Universal Declaration of Human Rights.

Note: Comprehensive internal and third party external audits of company systems (e.g. J-SOX, ISO 14001, ISO 9001, OHSAS 18001 etc.) all endorse compliance with the set standards, including human rights. HR11 Number of grievances related to human None rights filed, addressed and resolved through formal grievance mechanisms. Note: The grievances reported / filed through the formal grievance mechanism relate to other areas of operations but not human rights. Labour LA6 Percentage of total workforce represented Health, Safety & Environment Systems Steering in formal joint management–worker health Committee: and safety committees that help monitor and advise on occupational health and General Secretary of CBA is a member of this safety programs. committee and the General Secretary represents 100% workers (contractor’s workers/permanent workers) to review compliance with the company policies relating to occupational HSE.

Hinopak Motors Limited GRI Performance Indicators

LA8 Education, training, counseling, prevention, 1,610 OHS training man-hours were achieved during and risk-control programs in place to assist the reporting year. workforce members, their families, or community members regarding serious Training and education of the workforce on risks diseases. associated with their concerned section/ shops. Moreover, different health programs held to identify medical issues associated with employees. Some of the programs include: - Comprehensive Medical Tests of Chemical Handlers and their appropriate treatments. - Medical Tests of Plant/ Admin Drivers, including Eye Testing, ECG, and CPC. - Medical tests are conducted for Food Handlers to identify whether they are suffering from any contiguous disease.

LA1 Total workforce by employment type, and Total workforce: 991* employment contract, broken down by Non-management contract / contractor’s employees: gender 564 (all males) Non-management permanent: 146 (all males) Apprentices: 34 (all males) Management contract: 83 (males= 80, females= 03) Management permanent**: 164 (males= 153, females= 11)

Pakistani Nationals: 985 (females= 14, males= 971) Japanese Expats: 6 (all males)

* As on March 31, 2014 ** Including top management

LA2 Total number and rate of new employee 2012-13 * hires and employee turnover by age group, Total Hires: 01 where females= 0, male= 1 gender, and region. Total Separations: 21 where female= 2, males= 15

2013-14 * Total Hires: 09 where females= 0, males= 9 Total Separations: 15 where female= 1, males= 14

*Data for management staff only. LA15 Return to work and retention rates after Males*= 100%, Females*= 100% parental leave, by gender.

*Reporting period: June 2013 ~ April 2014

LA4 Percentage of employees covered by 15% collective bargaining agreements.

Hinopak Motors Limited GRI Performance Indicators

LA5 Minimum notice period(s) regarding Followed as per the requirement of applicable laws and operational changes, including whether it is terms of employment specified in collective agreements. LA10 Average hours of training per year per Management Employees: 78 (males and females) employee by gender, and by employee Non-management Employees: 16 (all males) category. LA13 Composition of governance bodies and Board of Directors: All males; 7 Japanese, 2 Pakistani breakdown of employees per employee nationals. category according to gender, age group, minority group membership, and other indicators of diversity. Product Responsibility PR5 Practices related to customer satisfaction, The following practices relating to customer satisfaction including results of surveys measuring are in place: customer satisfaction. 1. Customer Satisfaction Index (CSI) Survey; done annually. 2. “Knocking the Door Project”; done monthly to visit customers at their door step. 3. Routine service camps 4. Training of Hino customers and drivers Economic EC4 Significant financial assistance received from None government. EC8 Development and impact of infrastructure The following amount was expanded by the Company investments and services provided primarily (since 2008) for public benefit: for public benefit through commercial, inkind, or probono engagement. Year Actual Spending (PKR) 2008-09 7,164,000 2009-10 1,024,000 2010-11 838,000 2011-12 1,023,000 2012-13 2,855,000 2013-14 1,597,250

Details on impact assessment mentioned in Human Rights-Stakeholders Participation & Engagement.

Environmental EN1 Materials used by weight or volume. 8900 kg approx. per unit (for our standard bus model)

EN3 Direct energy consumption by primary 1971 kg energy consumption during for production energy source. process.

Society SO2 Percentage and total number of business 100% Divisions (currently nine) have been assessed for units analyzed for risks related to risks related to corruption. corruption. The Audit Committee, headed by the BOD chairman, is responsible for periodic reporting on such risks to the Board of Directors.

SO4 Actions taken in response to incidents of No incidents of corruption have been reported to date.

Hinopak Motors Limited GRI Performance Indicators

corruption.

SO8 Monetary values of significant fines and None total number of non-monetary sanctions for noncompliance with laws and regulations.