HINOPAK MOTORS LIMITED

BALANCE SHEET AS AT MARCH 31, 2013

Note 2013 2012
ASSETS
Non-current assets
Property, plant and equipment 3 1,714,507 1,779,457
Intangible assets 4 438 1,089
Long-term investments 5 4,434 2,391
Long-term loans and advances 6 13,704 10,400
Long-term deposits 6,025 6,015
1,739,108 1,799,352
Current assets
Stores, spares and loose tools 7 21,549 19,194
Stock-in-trade 8 2,161,904 2,410,682
Trade debts 9 276,904 1,823,092
Loans and advances 10 12,244 37,739
Trade deposits and prepayments 11 23,436 34,680
Refunds due from the government 12 206,002 87,893
Other receivables 13 9,619 31,839
Taxation - payments less provision 436,865 324,901
Cash and bank balances 14 173,347 124,526
3,321,870 4,894,546
Total assets 5,060,978 6,693,898
EQUITY AND LIABILITIES
Share capital and reserves
Share capital 15 124,006 124,006
Reserves 1,437,958 1,405,508
1,561,964 1,529,514
SURPLUS ON REVALUATION OF FIXED ASSETS 16 1,002,990 1,026,250
LIABILITIES
Non-current liabilities
Deferred taxation 17 42,235 69,390
Retirement benefits obligations 18 71,412 67,235
113,647 136,625
Current liabilities
Trade and other payables 19 1,703,736 2,721,889
Short-term borrowings 20 645,948 1,238,331
Accrued mark-up 21 32,693 41,289
2,382,377 4,001,509
Total liabilities 2,496,024 4,138,134
Contingency and commitments 22
Total equity and liabilities 5,060,978 6,693,898
Managing Director & Chairman
Chief Executive Officer
Rupees '000
The annexed notes 1 to 39 form an integral part of these financial statements.
HINOPAK MOTORS LIMITED
PROFIT AND LOSS ACCOUNT FOR THE YEAR ENDED MARCH 31, 2013
Note 2013 2012
Sales 23 7,528,140 8,766,997
Cost of sales 24 (6,720,619) (7,858,919)
Gross profit 807,521 908,078
Distribution costs 24 (295,694) (328,212)
Administration expenses 24 (206,738) (192,013)
Other income 25 71,085 113,982
Other expenses 26 (6,293) (9,858)
Profit from operations 369,881 491,977
Finance cost 27 (324,999) (318,541)
Profit before taxation 44,882 173,436
Taxation 28 (17,799) (147,726)
Profit after taxation 27,083 25,710
Other comprehensive income
Change in value of available-for-sale financial
assets - net of deferred tax 5 1,328 1,554
Total comprehensive income 28,411 27,264
Basic and diluted earnings per share 29 Rs 2.18 Rs 2.07
Managing Director & Chairman
Chief Executive Officer
The annexed notes 1 to 39 form an integral part of these financial statements.
Rupees '000
HINOPAK MOTORS LIMITED
CASH FLOW STATEMENT FOR THE YEAR ENDED MARCH 31, 2013
2013 2012
Note
CASH FLOWS FROM OPERATING ACTIVITIES
Cash generated from / (used in) operations 30 1,023,352 (287,523)
Mark-up paid on short-term borrowings (119,787) (140,198)
Return on savings accounts 1,673 1,211
Income taxes paid - net (157,633) (306,879)
Retirement benefits obligations paid (32,144) (38,552)
Increase in long-term deposits (10) (134)
Increase in long-term loans and advances (3,304) (6,492)
Net cash generated from / (used in) operating activities 712,147 (778,567)
CASH FLOWS FROM INVESTING ACTIVITIES
Fixed capital expenditure incurred (71,781) (116,517)
Proceeds from sale of property, plant and equipment 19,968 14,179
Net cash used in investing activities (51,813) (102,338)
CASH FLOWS FROM FINANCING ACTIVITIES
Dividend paid (19,130) (6)
Net increase / (decrease) in cash and cash equivalents 641,204 (880,911)
Cash and cash equivalents at the beginning of the year (1,113,805) (232,894)
Cash and cash equivalents at the end of the year 31 (472,601) (1,113,805)
Managing Director &
Chief Executive Officer Chairman
The annexed notes 1 to 39 form an integral part of these financial statements.
Rupees 000
HINOPAK MOTORS LIMITED
STATEMENT OF CHANGES IN EQUITY FOR THE YEAR ENDED MARCH 31, 2013
Reserves - Revenue
General Unappro-
priated profit
Balance at April 1, 2011 124,006 291,000 1,064,480 -
Realisation of surplus on revaluation of
fixed assets on disposal - net of deferred tax - - 2,255 -
Transferred from surplus on revaluation of
fixed assets on account of incremental
depreciation - net of deferred tax - - 20,509
-
Profit for the year - - 25,710 -
Other comprehensive income for the year - - - 1,554
Balance at March 31, 2012 124,006 291,000 1,112,954 1,554
Final dividend for the year ended
M h 31 2012 @R 1 55 h (19 221)
Share
Capital
Rupees '000
Fair value
reserve
March 31, 2012 @ Rs. 1.55 per share - - (19,221) -
Transferred from surplus on revaluation of
fixed assets on account of incremental
depreciation - net of deferred tax - - 23,260 -
Profit for the year - - 27,083 -
Other comprehensive income for the year - - - 1,328
Balance at March 31, 2013 124,006 291,000 1,144,076 2,882
Managing Director &
Chief Executive Officer Chairman

The annexed notes 1 to 39 form an integral part of these financial statements.
1,479,486
2,255
20,509
25,710
1,554
1,529,514
(19 221)
Total
(19,221)
23,260
27,083
1,328
1,561,964
HINOPAK MOTORS LIMITED
NOTES TO AND FORMING PART OF THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED MARCH 31, 2013
1. THE COMPANY AND ITS OPERATIONS
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
2.1 Basis of preparation
2.1.1 Changes in accounting standards and interpretations
(a)
Hinopak Motors Limited is incorporated in Pakistan as a public limited Company
and listed on Karachi and Lahore stock exchanges.
These financial statements have been prepared in accordance with approved
accounting standards as applicable in Pakistan. Approved accounting standards
comprise of such International Financial Reporting Standards (IFRS) issued by the
International Accounting Standards Board as are notified under the Companies
Ordinance, 1984, provisions of and directives issued under the Companies
Ordinance, 1984. In case requirements differ, the provisions or directives of the
Companies Ordinance, 1984 have been followed.
The financial statements are presented in Pak Rupee, which is the Company's
functional and presentation currency.
The Company's principal activity is the assembly, progressive manufacturing and
sale of Hino buses and trucks. The registered office of the Company is at D-2,
S.I.T.E., Manghopir Road, Karachi.
The principal accounting policies applied in the preparation of these financial
statements are set out below:
There are no amended standards and interpretations that are effective for the first
time in the current year that would be expected to have a material impact on the
Company.
Standards, interpretations and amendments to published approved
accounting standards effective in 2012
The Company is a subsidiary of Hino Motors Limited J apan and the ultimate parent
of the Company is Toyota Motors Corporation J apan.
(b)
2.2 Basis of measurement
2.3 Property, plant and equipment
2.4 Intangible assets - computer softwares
2.5 Impairment
These financial statements have been prepared under the historical cost
convention except as disclosed in the accounting policies below.
Computer software licenses acquired by the Company are stated at cost less
accumulated amortisation. Cost represents the cost incurred to acquire the
software licenses and bring them to use. The cost of computer software is
amortised over the estimated useful life i.e. 2 to 3 years.
These are stated at cost less accumulated depreciation / amortisation and
impairment losses, if any, except land and buildings which are stated at revalued
amount less accumulated depreciation and impairment loss, if any; and capital
work-in-progress which is stated at cost.
Depreciation is charged to profit and loss account applying the straight line
method, whereby the depreciable amount of an asset, if any, is written off over its
estimated useful life. The revalued amount of leasehold land and building is
amortised / depreciated equally over the remaining life fromthe date of revaluation.
Depreciation is charged on additions fromthe month the asset is available for use
and on disposals upto the month preceding the month of disposal.
The carrying values of non-current 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.
IAS 19 (Amendment), 'Employee benefits', is effective for the accounting periods
beginning on or after 1 J anuary 2013. It eliminates the corridor approach and
recognises all actuarial gains and losses in other comprehensive income as they
occur, immediately recognises all past service costs and replaces interest cost and
expected return on plan assets with a net interest amount that is calculated by
applying the discount rate to the net defined benefit liability / asset. The change for
the next year will be retrospectively recorded taking into account unrecognised
actuarial gains and losses.
Standards, interpretations and amendments to published approved
accounting standards that are not yet effective but relevant to the Company
2
Gain or loss on disposal or retirement of property, plant and equipment is included
in profit and loss account.
Costs associated with maintaining computer softwares are charged to profit and
loss account.
2.6 Investments
i) Held to maturity
ii)
iii)
2.7 Taxation
i. Current
3
Available for sale
These are investments designated at fair value through profit and loss account
at inception. Investments in this category are classified as current assets if
they are expected to be realised within twelve months of the balance sheet
date.
Charge for current taxation is based on taxable income at the current rates of
taxation after taking into account tax credits and rebates available, if any, and
taxes paid under the final tax regime.
Available for sale investments are initially recognised at fair value plus
transaction costs, and are subsequently carried at fair value. Changes in the
fair value are recognised in other comprehensive income.
These are investments with fixed or determinable payments and fixed maturity
with the Company having positive intent and ability to hold to maturity. These
are initially recognised at fair value plus transaction cost, and subsequently at
amortised cost using the effective interest method.
The investments of the Company are classified into the following categories:
Investments at fair value through profit and loss account are initially
recognised at fair value, and transaction costs are expensed in the profit and
loss account. These are subsequently carried at fair value. Gains or losses
arising fromchanges in the fair value are taken to profit and loss account in
the period in which they arise.
The Company assesses at each balance sheet date whether there is objective
evidence that an investment is impaired. Impairment loss on all investments is
recognised in the profit and loss account. Whereas, reversal of impairment loss is
recognised in other comprehensive income.
These represent non derivative investments that are either designated in this
category or not classified in any other category. They are included as non-
current assets unless the investment matures or management intends to
dispose off the investments within twelve months of the balance sheet date.
At fair value through profit and loss account
ii. Deferred
2.8 Stores, spares and loose tools
2.9 Stock in trade
2.10 Trade and other debts
2.11 Cash and cash equivalents
These are valued at lower of cost and net realisable value. Cost is determined by
first-in first-out method except for materials for fabrication of bus bodies,
consumable stores, locally manufactured parts, spares for sale and stock in transit.
4
The Company accounts for deferred taxation using the liability method on
temporary differences arising between the tax base of assets and liabilities
and their carrying amounts in the financial statements. Deferred tax liability is
recognised for taxable temporary differences and deferred tax asset is
recognised to the extent that it is probable that taxable profits will be available
against which the deductible temporary differences, unused tax losses and tax
credits can be utilised. Deferred tax is charged or credited to the profit and
loss account except for deferred tax arising on surplus on revaluation of fixed
assets and on change in fair value of investments categorised as available for
sale which is charged to the surplus on revaluation and fair value reserve
respectively.
Cost of material for fabrication of bus bodies, consumable stores, locally
manufactured parts and spares for sale is determined on moving average method.
Cost of stock in transit comprises of invoice value plus other charges incurred
thereon.
Net realisable value is determined on the basis of estimated selling price of the
product in the ordinary course of business less cost of completion and estimated
costs necessarily to be incurred to make the sale.
These are valued at cost determined on moving average basis less provision for
slowmoving and obsolete stores and spares. Items in transit are valued at invoice
value plus other charges incurred thereon.
Cost of work in process and finished goods include direct material, labour and
appropriate portion of manufacturing expenses.
Trade and other debts are carried at original invoice amount being the fair value.
Provision is made against debts considered doubtful of recovery whereas debts
considered irrecoverable are written off.
Cash and cash equivalents are carried at cost. For the purposes of cash flow
statement, cash and cash equivalents comprise cash, cheques in hand, balances
with banks on current, savings and deposit accounts and short term borrowings
under mark-up arrangements.
2.12 Staff retirement benefits
Defined benefit plans
Defined contribution plan
2.13 Compensated absences
2.14 Provisions
Latest actuarial valuations of the schemes were carried out as at March 31, 2013
using the projected unit credit method. The present values of the obligations are
determined by discounting the estimated future cash outflows using interest rates
of high quality government securities that have terms to maturity approximating to
the terms of the related obligations.
Actuarial gains and losses arising from experience adjustments and changes in
actuarial assumptions in excess of the greater of 10%of the value of plan assets or
10%of the obligations are charged or credited to profit and loss account separately
for each scheme over the employees' expected average remaining working life.
The liabilities recognised in respect of gratuity and pension schemes are the
present values of the Company's obligations under each scheme at the balance
sheet date less the fair values of respective plan assets, together with adjustment
for unrecognised actuarial gains or losses.
5
Provisions are recognised when the Company has a present legal or constructive
obligation as a result of past events, it is probable that an outflowof resources will
be required to settle the obligation and a reliable estimate of the amount can be
made.
The Company also operates an approved contributory provident fund for all its
permanent employees to which equal monthly contributions are made, both by the
Company and the employees, to the fund at the rate of 10% of basic salary.
The Company accounts for compensated absences of its employees on unavailed
balance of leave in the period in which the leave is earned.
Contribution to pension fund is made by both, the Company based on actuarial
recommendation, and by employees at 2% and 3% of the basic monthly salary in
case of management and non-management staff respectively.
The Company operates approved funded gratuity and pension schemes for all its
permanent employees. The schemes define the amounts of benefit that an
employee will receive on or after retirement subject to a minimumqualifying period
of service under the schemes. The amounts of retirement benefits are usually
dependent on one or more factors such as age, years of service and salary.
2.15 Borrowings and their costs
2.16 Warranty obligations
2.17 Financial instruments
2.18 Trade and other payables
2.19 Revenue recognition
2.20 Research and development cost
Research and development cost except to the extent that an intangible asset is
recognised, is charged in the year in which it is incurred. Development costs
previously charged to income are not recognised as an asset in the subsequent
period.
Borrowing costs are recognised as an expense in the period in which these are
incurred except to the extent of borrowing costs that are directly attributable to the
acquisition, construction or production of a qualifying asset. Such borrowing costs,
if any, are capitalised as part of the cost of that asset.
Return on bank deposits and short term investments is recognised on accrual
basis.
Trade and other payables are initiallymeasured at cost which is the fair value of the
consideration to be paid for goods and services, whether or not billed to the
Company.
The Company recognises the estimated liability, on an accrual basis, to repair or
replace products under warranty at the balance sheet date, and recognises the
estimated product warranty costs in the profit and loss account when the sale is
recognised.
Commission on handling Complete Built Up (CBU) vehicles and spare parts is
recognised on accrual basis.
Revenue is measured at the fair value of the consideration received or receivable,
and represents amount receivable for goods supplied, stated net of discounts,
returns and value added taxes. Revenue from sale of goods is recognised on
delivery of goods to customers i.e. when the significant risks and reward of
ownership have been transferred to the customer.
Financial instruments include loans and advances, deposits, trade and other debts,
cash and bank balances, borrowings, trade and other payables and accrued mark-
up. The particular recognition methods adopted are disclosed in the individual
policy statements associated with each item.
Borrowings are recognised initially at fair value, net of transaction costs incurred
and are subsequently measured at amortised cost using the effective interest
method.
6
2.21 Foreign currency translation
2.22 Dividend distribution
2.23 Accounting estimates and judgements
(a)
(b) Staff retirement benefits - note 18
(c) Deferred taxation - note 17
(d) Warranty obligations - note 19.1
Note 2013 2012
Rupees 000
3. PROPERTY, PLANT AND EQUIPMENT
Operating assets 3.1 1,708,258 1,755,202
Capital work-in-progress 3.4 6,249 24,255
1,714,507 1,779,457
Dividend distribution to shareholders is recognised as liability in the financial
statements in the period in which the dividend is approved.
7
There have been no critical judgements made by the Company's management in
applying the accounting policies that would have significant effect on the amounts
recognised in the financial statements.
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 its judgement in the process of applying the Company's
accounting policies. The matters involving a higher degree of judgement or
complexity, or areas where assumptions and estimates are significant to the
financial statements are as follows:
Foreign currency transactions are recorded in Pak Rupee using the exchange rates
prevailing at the dates of the transactions. Monetary assets and liabilities in foreign
currencies are translated into Pak Rupee at the rates of exchange prevailing at the
balance sheet date. Exchange gains and losses are taken to profit and loss
account.
Estimates and judgements are continually evaluated and are based on historical
experience and other factors, including expectations of future events that are
believed to be reasonable under the circumstances.
Provision for stock obsoloscence and doubtful debts - note 8 and 9
3.1 Operating assets
Year ended
March 31, 2013
Opening net book value (NBV) 876,964 562,739 194,687 3,902 84,520 14,419 17,971
Additions - 9,176 28,263 478 44,083 843 6,794
Disposals - at NBV - - (73) - (13,516) - * -
Depreciation / amortisation
charge for the year (20,329) (20,664) (48,731) (873) (17,777) (5,451) (9,167)
Closing net book value 856,635 551,251 174,146 3,507 97,310 9,811 15,598
At March 31, 2013
Cost or revaluation 890,500 591,331 567,290 13,213 167,992 78,152 101,423
Accumulated depreciation /
amortisation (33,865) (40,080) (393,144) (9,706) (70,682) (68,341) (85,825)
Net book value 856 635 551 251 174 146 3 507 97 310 9 811 15 598
8
Furniture
and
fittings
Leasehold
Land
(Revalued -
note 3.2)
Rupees '000
Electrical
Installations
Office and
other
equipments
Vehicles Buildings
on
leasehold
land
(Revalued -
note 3.2)
Plant and
machinery
Net book value 856,635 551,251 174,146 3,507 97,310 9,811 15,598
Year ended
March 31, 2012
Opening net book value (NBV) 890,500 478,441 216,441 4,757 78,135 7,069 16,919
Additions - 108,016 28,949 81 29,327 11,824 9,870
Disposals - at NBV - (4,244) (401) - (8,394) - * -
Depreciation/amortisation
charge for the year (13,536) (19,474) (50,302) (936) (14,548) (4,474) (8,818)
Closing net book value 876,964 562,739 194,687 3,902 84,520 14,419 17,971
At March 31, 2012
Cost or revaluation 890,500 582,154 546,921 12,735 150,934 77,310 97,116
Accumulated depreciation /
amortisation (13,536) (19,415) (352,234) (8,833) (66,414) (62,891) (79,145)
Net book value 876,964 562,739 194,687 3,902 84,520 14,419 17,971
Useful life (years) 76 to 79 40 2 to 10 2 to 10 4 to 5 5 3 to 7
* Assets disposed off having nil net book value
3.2
Had there been no revaluation, the net book values of land and build
leasehold land as at March 31, 2013 would have been Rs. 31 million (2012: Rs. 34 million)
306 million (2012: Rs 305 million) respectively
The Company's land measuring 10.61 acres and 6 acres located at Plot Nos. D-2 and D-136
Karachi respectively and buildings thereon were revalued by an independent valuer - M/
Nanjee &Co. (Pvt) Limited on March 31, 2011 on the basis of present market values for sim
plots in the near vicinityfor land and replacement values of similar type of buildings based o
cost of construction.
1,755,202
89,637
(13,589)
(122,992)
1,708,258
2,409,901
(701,643)
1 708 258
Total
1,708,258
1,692,262
188,067
(13,039)
(112,088)
1,755,202
2,357,670
(602,468)
1,755,202
dings on
and Rs.
6, S.I.T.E,
/s Iqbal A.
milar sized
on present
3.3 Details of operating assets sold
9
The details of operating assets sold, having net book value in excess of
Rs. 50,000 each are as follows:
Description Cost Book Mode of Particulars of purchaser
val ue disposal
Rupees '000
Motor Vehicle 1,529 291 1,238 1,316 Company Policy Mr. Zafar Iqbal - Ex Executive
" 980 659 321 382 " Mr. Muhammad Akram - Executive
" 969 651 318 378 " Mr. Zafar Ali - Executive
" 908 549 359 377 " Mr. Shahab Anwar - Ex Executive
" 893 600 293 495 " Mr. Shams Naveed - Executive
" 651 430 221 336 " Mr. Waqas - Employee
" 636 428 208 341 " Mr. Irfan Ahmed - Executive
" 636 428 208 331 " Mr. Syed Muhammad Aftab -
Executive
" 620 417 203 325 " Mr. Zahid Hassan - Executive
" 620 417 203 325 " Mr. J awahar Lal - Ex Employee
" 620 417 203 325 " Mr. Sirajuddin - Executive
" 590 390 200 275 " Mr. Tahir - Employee
" 478 316 162 162 " Mr. Masihur Rehman - Executive
" 469 315 154 179 " Mr. Badr-ul-Hassan - Executive
" 469 315 154 177 " Mr. Misbahuddin - Executive
" 469 310 159 154 " Mr. Khaliluddin - Executive
" 469 310 159 154 " Mr. Saleem Ismail - Employee
" 469 310 159 154 " Mr. Tariq Haleem - Employee
" 434 292 142 143 " Mr. Salman Abdul Wahab - Employee
" 93 12 81 86 " Mr. Wahid Khan - Employee
" 67 8 59 65 " Mr. Shahid Pervez - Employee
" 1,880 233 1,647 1,636 Insurance Claim EFU General Insurance Limited
Central Division Karachi
" 1,529 240 1,289 1,358 " "
" 1,529 223 1,306 1,351 " "
" 66 10 56 62 " "
" 93 5 88 95 " "
" 93 5 88 96 " "
" 66 12 54 60 " "
Sale
proceeds
Accumulated
depreciation
Description Cost Book Mode of Particulars of purchaser
val ue disposal
Rupees '000
Motor Vehicle 1,529 291 1,238 1,316 Company Policy Mr. Zafar Iqbal - Ex Executive
" 980 659 321 382 " Mr. Muhammad Akram - Executive
" 969 651 318 378 " Mr. Zafar Ali - Executive
" 908 549 359 377 " Mr. Shahab Anwar - Ex Executive
" 893 600 293 495 " Mr. Shams Naveed - Executive
" 651 430 221 336 " Mr. Waqas - Employee
" 636 428 208 341 " Mr. Irfan Ahmed - Executive
" 636 428 208 331 " Mr. Syed Muhammad Aftab -
Executive
" 620 417 203 325 " Mr. Zahid Hassan - Executive
" 620 417 203 325 " Mr. J awahar Lal - Ex Employee
" 620 417 203 325 " Mr. Sirajuddin - Executive
" 590 390 200 275 " Mr. Tahir - Employee
" 478 316 162 162 " Mr. Masihur Rehman - Executive
" 469 315 154 179 " Mr. Badr-ul-Hassan - Executive
" 469 315 154 177 " Mr. Misbahuddin - Executive
" 469 310 159 154 " Mr. Khaliluddin - Executive
" 469 310 159 154 " Mr. Saleem Ismail - Employee
" 469 310 159 154 " Mr. Tariq Haleem - Employee
" 434 292 142 143 " Mr. Salman Abdul Wahab - Employee
" 93 12 81 86 " Mr. Wahid Khan - Employee
" 67 8 59 65 " Mr. Shahid Pervez - Employee
" 1,880 233 1,647 1,636 Insurance Claim EFU General Insurance Limited
Central Division Karachi
" 1,529 240 1,289 1,358 " "
" 1,529 223 1,306 1,351 " "
" 66 10 56 62 " "
" 93 5 88 95 " "
" 93 5 88 96 " "
" 66 12 54 60 " "
Sale
proceeds
Accumulated
depreciation
10
Description Cost Book Mode of Particulars of purchaser
value disposal
Rupees '000
Motor Vehicle 66 12 54 60 Insurance Claim EFU General Insurance Limited
Central Division Karachi
" 90 20 70 80 " "
" 67 6 61 68 " "
" 67 6 61 70 " "
" 67 8 59 65 " "
" 67 8 59 64 " "
" 67 8 59 60 " "
" 1,458 16 1,442 1,853 Negotiation Butt Brothers
" 479 322 157 539 Tender Mr. Raza Khan - House # 1229,
University Road, Karachi
" 886 549 337 855 " Mr. Ziauddin - D-741, Block R,
Usman Ghani Colony, North
Nazimabad, Karachi
" 879 545 334 777 " Mr. Farrukh Amjad Shah Taimori -
House R-25, Gulshan-e-Rizwan, 5-L,
North Karachi
" 367 247 120 401 " Mr. Ajab Khan - Machar Colony,
Sohrab Goth, Karachi
" 427 287 140 426 " Mr. Sanaullah - House 34-E, PECHS,
Block 6, Karachi
Plant and Machinery 466 399 67 41 Auction Mr. Muhammad Umar - Flat 306,
Hangora House, Moosa Lane, Karachi.
Accumulated Sal e
depreciation proceeds
3.4
2013 2012
Rupees 000
4. INTANGIBLE ASSETS - Computer Softwares
Opening balance
Cost 21,130 20,942
Accumulated amortisation (20,041) (18,904)
Net book value 1,089 2,038
Year ended March 31, 2013
Opening net book value 1,089 2,038
Additions 150 188
Amortisation (801) (1,137)
Closing net book value 438 1,089
Closing balance
Cost 21,280 21,130
Accumulated amortisation (20 842) (20 041)
Capital work-in-progress includes costs incurred in respect of plant and machinery
at Body Manufacturing Division amounting to Rs. 3.6 million. Prior year balance
includes Rs. 21.61 million in respect of assembly facility at Chassis Assembly
Division capitalised during the current year.
Description Cost Book Mode of Particulars of purchaser
value disposal
Rupees '000
Motor Vehicle 66 12 54 60 Insurance Claim EFU General Insurance Limited
Central Division Karachi
" 90 20 70 80 " "
" 67 6 61 68 " "
" 67 6 61 70 " "
" 67 8 59 65 " "
" 67 8 59 64 " "
" 67 8 59 60 " "
" 1,458 16 1,442 1,853 Negotiation Butt Brothers
" 479 322 157 539 Tender Mr. Raza Khan - House # 1229,
University Road, Karachi
" 886 549 337 855 " Mr. Ziauddin - D-741, Block R,
Usman Ghani Colony, North
Nazimabad, Karachi
" 879 545 334 777 " Mr. Farrukh Amjad Shah Taimori -
House R-25, Gulshan-e-Rizwan, 5-L,
North Karachi
" 367 247 120 401 " Mr. Ajab Khan - Machar Colony,
Sohrab Goth, Karachi
" 427 287 140 426 " Mr. Sanaullah - House 34-E, PECHS,
Block 6, Karachi
Plant and Machinery 466 399 67 41 Auction Mr. Muhammad Umar - Flat 306,
Hangora House, Moosa Lane, Karachi.
Accumulated Sal e
depreciation proceeds
2013 2012
Rupees 000
5. LONG-TERM INVESTMENTS
Available for sale
Arabian Sea Country Club Limited - note 5.1 5,000 5,000
Provision for impairment (639) (2,705)
4,361 2,295
Automotive Testing & Training Centre
(Private) Limited - note 5.2 500 500
Provision for impairment (427) (404)
73 96
4,434 2,391
5.1
5 2
This represents cost of 500,000 (2012: 500,000) fully paid-up unquoted ordinary
shares of Rs. 10 each. Company holds 6.45% of the shares of the investee
Company. The fair value of the investment is indeterminable.
This represents cost of 50 000 (2012: 50 000) fully paid-up unquoted ordinary
11
5.2
5.3
2013 2012
Rupees 000
6. LONG-TERM LOANS AND
ADVANCES considered good
Loans and advances to:
- executives 10,206 8,654
- other employees 8,484 6,764
18,690 15,418
Less: Recoverable within one year - note 10 (4,986) (5,018)
13,704 10,400
6.1
This represents cost of 50,000 (2012: 50,000) fully paid-up unquoted ordinary
shares of Rs. 10 each. Company holds 2.77% of the shares of the investee
Company. The fair value of these shares is indeterminable.
The loans and advances are provided to employees under their terms of
employment on interest free basis.
Loans under the schemes have been provided to facilitate purchase of motor
vehicles and purchase / construction of house and are repayable over a period of
five to twelve years. The motor vehicle loans are secured by joint registration of
the vehicle in the name of the Company and employee. The loan for purchase /
construction of house is secured against employees' retirement fund balances.
The provision for impairment reversed during the year is based on the break-up
value computed through latest audited financial statements of investee companies.
2013 2012
Rupees 000
6.2 Reconciliation of carrying amount of loans and
advances to executives:
Opening balances 8,654 3,675
Add: Disbursements 5,531 8,699
14,185 12,374
Less: Repayments (3,979) (3,720)
Closing balances 10,206 8,654
7. STORES, SPARES AND LOOSE TOOLS
Stores and spares
21,315 16,778
Loose tools
7,107 8,531
28,422 25,309
Less: Provision for obsolescence (6,873) (6,115)
21,549 19,194
8. STOCK-IN-TRADE
Raw Materials and components - note 8.1
[including in transit Rs. 46 million
(2012: Rs. 407 million)] 1,454,073 1,409,434
Less: Provision for obsolescence (51,355) (43,945)
1,402,718 1,365,489
Work-in-process 22,729 164,669
Finished goods - note 8.1
[including in transit Rs. Nil
(2012: Rs. 9 million)] 659,360 776,852
Less: Provision for obsolescence (17,479) (21,930)
641,881 754,922
Trading stock - Spare parts
[including in transit Rs. 4 million
(2012: Rs. 3 million)] 144,660 166,608
Less: Provision for obsolescence (50,084) (41,006)
94,576 125,602
2,161,904 2,410,682
8.1 Raw materials and finished goods include stocks held with suppliers and Company's
authorised dealers amounting to Rs. 48.99 million (2012: Rs. 22.61 million) and
Rs. 34.13 million (2012: Rs. 27.22 million) respectively.
12
Advances to employees are in respect of house rent assistance and these are
repayable upto a period of five years. These are secured against employees'
retirement fund balances.
2013 2012
9. TRADE DEBTS
Considered good - unsecured
Related parties - note 9.2
Indus Motor Company Limited 43,425 12,665
Orix Leasing Pakistan Limited - 7,700
Others - note 9.3 233,479 1,802,727
276,904 1,823,092
Considered doubtful
Others 137,076 58,977
413,980 1,882,069
Less: Provision for doubtful debts - note 9.4 (137,076) (58,977)
276,904 1,823,092
13
Rupees 000
9.1
2013 2012
Not yet due 121,377 1,110,034
Past due
- Up to 3 months 65,415 615,036
- 3 to 6 months 42,436 67,720
- 6 to 12 months 117,672 46,339
- More than one year 67,080 42,940
292,603 772,035
413,980 1,882,069
9.2
9.3
As at March 31, 2013, trade debts fromrelated parties were outstanding for not more
than 45 days which were cleared subsequent to year end.
As of March 31, 2013, the age analysis of trade debts is as follows:
Rupees 000
This includes amount receivable from government institutions amounting to
Rs. 174 million (2012: Rs. 1.71 billion).
2013 2012
9.4 Balance at the beginning of the year 58,977 62,108
Charge during the year 82,598 15,242
Written off against provision (4,499) (18,373)
Balance at the end of the year 137,076 58,977
10. LOANS AND ADVANCES
Current maturity of long term loans and advances to:
- executives 2,965 3,156
- other employees 2,021 1,862
4,986 5,018
Advances to:
th l 1 104 863
14
Rupees 000
- other employees 1,104 863
- suppliers 9,789 31,858
10,893 32,721
15,879 37,739
Provision for doubtful advances to suppliers (3,635) -
12,244 37,739
11. TRADE DEPOSITS AND PREPAYMENTS
Trade deposits 17,090 39,314
Provision for doubtful deposits - note 11.1 (5,325) (10,605)
11,765 28,709
Prepayments 11,671 5,971
23,436 34,680
11.1 Balance at the beginning of the year 10,605 14,496
Reversed during the year (884) (3,058)
Written off against provision (4,396) (833)
Balance at the end of the year 5,325 10,605
2013 2012
12. REFUNDS DUE FROM THE GOVERNMENT
Sales tax refundable - note 12.1 233,531 105,170
Custom duty and excise duty refundable 2,710 7,962
236,241 113,132
Less: Provision for doubtful refundables - note 12.2 (30,239) (25,239)
206,002 87,893
12.1 This includes sales tax refundable of Rs. 167 million (2012: Rs. 187 million), net of
provisional refunds of Rs. 519.05 million (2012: Rs. 519.05 million) received against
bank guarantees and undertakings, the recovery of which is dependent upon the
fulfilment of the requirements of standing order no. 1 of 2010 issued by the Federal
Board of Revenue and verification of related sales tax records. The Company is in the
process of complying with the regulatory requirements.
Rupees 000
15
2013 2012
12.2 Balance at the beginning of the year (25,239) (5,239)
Charge during the year (5,000) (20,000)
Balance at the end of the year (30,239) (25,239)
13. OTHER RECEIVABLES
Considered good
Receivable from related parties
Toyota Tsusho Corporation, J apan 5,430 28,183
Hino Motors Limited, J apan 228 2,633
Employees' Provident Fund - 187
Workers Profits Participation Fund - note 13.1 2,495 -
Others 1,466 836
9,619 31,839
Rupees 000
2013 2012
13.1 Workers Profits Participation Fund
Opening liability (8,835) (2,173)
Allocation for the year (2,505) (8,835)
(11,340) (11,008)
Interest on funds utilised in the Companys business - (60)
(11,340) (11,068)
Amount paid to the Fund 13,835 2,233
Closing asset / (liability) 2,495 (8,835)
14. CASH AND BANK BALANCES
Balances with banks:
- on current accounts 117,211 28,013
- on PLS savings accounts 55,160 24,738
Cheques in hand 619 71,641
Cash in hand 357 134
173,347 124,526
14.1
2013 2012
15. SHARE CAPITAL
15.1 Authorised share capital
20,000,000 ordinary shares of Rs. 10 each 200,000 200,000
15.2 Issued, subscribed and paid-up capital
Ordinary shares of Rs. 10 each
shares issued for consideration
62,003 62,003
shares issued for consideration otherwise
than in cash - fixed assets 41,335 41,335
shares issued as bonus shares 20,668 20,668
12,400,560 124,006 124,006
2,066,760
Rupees 000
6,200,280
paid in cash
2,066,760
Rupees 000
16
4,133,520
At March 31, 2013, the rates of mark-up on savings accounts is 6% per annum
(2012: ranging from 5% to 6% per annum).
15.3
2013 2012
16. SURPLUS ON REVALUATION OF FIXED ASSETS
Opening balance 1,026,250 1,049,014
Realisation on disposal of fixed asset
during the year - net of deferred tax - (2,255)
Transferred to unappropriated profit on account
of incremental depreciation for the
year - net of deferred tax (23,260) (20,509)
Closing balance 1,002,990 1,026,250
17. DEFERRED TAXATION
Credit balances arising in respect of:
- accelerated tax depreciation allowances 89,929 90,946
- surplus arising on revaluation of fixed assets 82,293 86,150
- others 1,552 14,002
173,774 191,098
Debit balances arising in respect of:
- provision for stores and stocks obsolescence (42,706) (38,253)
- provision for doubtful trade debts, deposits
advances and other receivables (60,239) (32,133)
- provision for warranty (28,594) (43,081)
- recoupable carried forward tax losses - (8,241)
(131,539) (121,708)
42,235 69,390
17.1
At March 31, 2013 and March 31, 2012 Hino Motors Ltd, J apan - holding company
and Toyota Tsusho Corporation, J apan - associated company respectively held
7,357,665 and 3,678,833 ordinary shares of Rs. 10 each.
At March 31, 2013 and March 31, 2012 Hino Motors Ltd, J apan - holding company
and Toyota Tsusho Corporation, J apan - associated company respectively held
7,357,665 and 3,678,833 ordinary shares of Rs. 10 each.
17
Rupees 000
Deferred tax of Rs. 229.95 million on minimumtax paid in prior years has not been
recognised as based on latest projections it is not probable that taxable profits will be
available to offset the unrecognised balance.
2013 2012
18. STAFF RETIREMENT BENEFITS
Gratuity Fund 2,257 1,545
Pension Fund 4,408 299
Unfunded Gratuity - Contractual Staff 64,747 65,391
71,412 67,235
18
Rupees 000
Unfunded Unfunded
Gratui ty Pension Gratuity Gratuity Pension Gratuity
Fund Fund Fund Fund
Rupees '000
18.1 Movement in asset / (l iabi li ty)
Opening balance (1,545) (299) (65,391) 25 (16,200) (56,905)
Charge for the year (7,907) (13,555) (14,859) (7,993) (10,508) (14,206)
Payments during the year 6,863 7,645 15,503 6,423 24,754 5,720
Employee contributions - 1,765 - - 1,655 -
Benefits paid on behalf of Fund 332 36 - - - -
Closing balance (2,257) (4,408) (64,747) (1,545) (299) (65,391)
18.2 Balance sheet reconcil iation as at
March 31, 2013
Fair value of plan assets 75,505 104,376 - 63,026 86,222 -
Present value of obligations (99,768) (154,378) (65,665) (75,555) (118,976) (64,673)
Deficit (24,263) (50,002) (65,665) (12,529) (32,754) (64,673)
U i d t i l l / ( i ) 22 006 44 288 918 10 984 30 823 (1175)
Funded
2013 2012
Funded Unfunded Unfunded
Gratui ty Pension Gratuity Gratuity Pension Gratuity
Fund Fund Fund Fund
Rupees '000
18.1 Movement in asset / (l iabi li ty)
Opening balance (1,545) (299) (65,391) 25 (16,200) (56,905)
Charge for the year (7,907) (13,555) (14,859) (7,993) (10,508) (14,206)
Payments during the year 6,863 7,645 15,503 6,423 24,754 5,720
Employee contributions - 1,765 - - 1,655 -
Benefits paid on behalf of Fund 332 36 - - - -
Closing balance (2,257) (4,408) (64,747) (1,545) (299) (65,391)
18.2 Balance sheet reconcil iation as at
March 31, 2013
Fair value of plan assets 75,505 104,376 - 63,026 86,222 -
Present value of obligations (99,768) (154,378) (65,665) (75,555) (118,976) (64,673)
Deficit (24,263) (50,002) (65,665) (12,529) (32,754) (64,673)
Unrecognised actuarial loss / (gain) 22,006 44,288 918 10,984 30,823 (1,175)
Transitional liability not yet reognised - - - - - 457
Past service cost - non vested - 1,306 - - 1,632 -
(2,257) (4,408) (64,747) (1,545) (299) (65,391)
18.3 Charge for the year
Current service cost 5,980 6,582
9,411
6,260 5,993 6,055
Interest cost 9,138 14,478
7,115
8,542 12,269 7,694
Expected return on plan assets (7,701) (10,535)
-
(7,429) (8,278) -
490 2,704 - 620 198 -
Curtailment gain
- - (2,124) - - -
Recognised transitional liability
- - 457 - - 457
Past service cost - vested - 326
-
- 326 -
7,907 13,555 14,859 7,993 10,508 14,206
18.4 Movement in the present value of
obli gati on
Opening balance 75,555 118,976 64,673 62,350 87,633 57,819
Current service cost 5,980 6,582 9,411 6,260 5,993 6,055
Interest cost 9,138 14,478 7,115 8,542 12,269 7,694
Curtailment gain - - (2,124) - - -
Actuarial loss / (gain) 13,993 20,647 2,093 1,069 18,765 (1,175)
Benefits paid (4,898) (6,305) (15,503) (2,666) (5,684) (5,720)
Closing balance 99,768 154,378 65,665 75,555 118,976 64,673
18.5 Movement in fai r val ue of plan assets
Opening balance 63,026 86,222 - 51,185 59,132 -
Expected return on plan assets 7,701 10,535 - 7,429 8,278 -
Actuarial gain / (loss) 2,481 4,478 - 655 (1,913) -
Employer contributions 6,863 7,645 - 6,423 24,754 -
Employee contributions - 1,765 - - 1,655 -
Benefits paid on behalf of Fund 332 36 - - - -
Benefits paid (4,898) (6,305) - (2,666) (5,684) -
Closing balance 75,505 104,376 - 63,026 86,222 -
18.6 Actual return on plan assets 10,182 15,013 - 8,084 6,365 -
Actuarial loss recognised
during the year
Funded
2013 2012
Funded
19
2012
Unfunded Unfunded
Gratuity Pension Gratuity Gratuity Pension Gratuity
Fund Fund Fund Fund
18.7 Plan assets comprise of:
Equity (%) 7 2 - 5 2 -
Debt (%) 76 64 - 75 56 -
Others (%) 17 34 - 20 42 -
100 100 - 100 100 -
18.8
Expected rate of return on investments (%) 11.5 11.5 - 12.0 12.0 -
Expected rate of increase in salaries (%) 10.5 10.5 11.5 11.5 11.5 12.5
Discount factor used (%) 11.5 11.5 11.5 12.5 12.5 12.5
60 60 60 60 60 60
2013
Key actuarial assumpti ons used:
Retirement age (years)
Funded Funded
18.9 Comparison for fi ve years:
March 31, March 31, March 31, March 31, March 31,
2013 2012 2011 2010 2009
18.10
18.11
The expected return on plan assets is based on the market expectations and depends
upon the asset portfolio of the plan, at the beginning of the period, for returns over the
entire life of the related obligation.
Based on actuary's advice, the amount of expected contribution to gratuity and pension
funds in 2013-14 will be Rs. 9.37 million and Rs. 13.21 million respectively.
2012
Unfunded Unfunded
Gratuity Pension Gratuity Gratuity Pension Gratuity
Fund Fund Fund Fund
18.7 Plan assets comprise of:
Equity (%) 7 2 - 5 2 -
Debt (%) 76 64 - 75 56 -
Others (%) 17 34 - 20 42 -
100 100 - 100 100 -
18.8
Expected rate of return on investments (%) 11.5 11.5 - 12.0 12.0 -
Expected rate of increase in salaries (%) 10.5 10.5 11.5 11.5 11.5 12.5
Discount factor used (%) 11.5 11.5 11.5 12.5 12.5 12.5
60 60 60 60 60 60
2013
Key actuarial assumpti ons used:
Retirement age (years)
Funded Funded
18.9 Comparison for fi ve years:
March 31, March 31, March 31, March 31, March 31,
2013 2012 2011 2010 2009
Gratuity fund
Fair value of plan assets 75,505 63,026 51,185 76,711 73,784
Present value of defined benefit
obligation (99,768) (75,555) (62,350) (98,321) (83,592)
(Deficit) / surplus (24,263) (12,529) (11,165) (21,610) (9,808)
Experience adjustment
Actuarial loss on obligation 13,993 1,069 1,226 1,227 9,350
Actuarial (gain) / loss on plan assets (2,481) (655) 1,507 2,542 5,828
Pension fund
Fair value of plan assets 104,376 86,222 59,132 82,761 65,290
Present value of defined benefit
obligation (154,378) (118,976) (87,633) (105,088) (94,797)
(Deficit) / surplus (50,002) (32,754) (28,501) (22,327) (29,507)
Experience adjustment
Actuarial loss / (gain) on obligation 20,647 18,765 7,377 (7,752) 2,216
Actuarial (gain) / loss on plan assets (4,478) 1,913 (3,213) (3,370) (18,911)
Rupees '000
2013 2012
19. TRADE AND OTHER PAYABLES
Creditors 87,207 134,597
Bills payable to
- Toyota Tsusho Corporation, J apan
- associated company 169,239 1,405,931
- Hino Motors Limited, J apan - holding company 839 5,778
Accrued liabilities 189,759 245,886
Provision for warranty services - note 19.1 84,225 127,258
Advances from customers 855,778 448,563
Provision for compensated absences - note 19.2 43,549 37,013
Custom duties payable - note 19.3 158,750 157,969
Payable to Hino Motors, Ltd. J apan - holding company
- royalty 16,305 44,721
- other - 9,592
Security deposits from dealers 32,000 32,000
Provision for infrastructure cess 23,249 23,249
Employees related obligation - note 19.4 27,672 22,357
Tax deducted at source and payable to
statutory authorities 4,108 6,860
Workers profits participation fund - note 13.1 - 8,835
Workers welfare fund 933 -
Excise duty payable 630 4,472
Unclaimed dividend 2,056 1,965
Others 7,437 4,843
1,703,736 2,721,889
19.1 Provision for warranty services
Balance at the beginning of the year 127,258 85,579
Recognised during the year 4,542 100,907
Expenses against provision (47,575) (59,228)
Balance at the end of the year 84,225 127,258
Rupees 000
20
2013 2012
19.2 Provision for compensated absences
Balance at the beginning of the year 37,013 24,977
Net charge during the year 16,962 19,437
Payments made (10,426) (7,401)
Balance at the end of the year 43,549 37,013
19.3
19.4
2013 2012
20. SHORT-TERM BORROWINGS
Short-term loans 350,000 950,000
Running finance 295,948 288,331
645,948 1,238,331
The facilities for short term borrowings under mark-up arrangements with various
banks amounted to Rs. 3.75 billion (2012: Rs. 3.73 billion) of which the amount
remaining unutilised at the year end was Rs. 3.11 billion (2012: Rs. 2.49 billion).
Rupees 000
The short termloans have been obtained fromvarious banks and carry mark-up at
rates ranging from 9.60% per annum to 9.97% per annum (2012: 12.33% per
annum to 12.46% per annum). The loans are repayable by April 24, 2013.
These include contributions made by employees towards the sale price of vehicles
provided to them by the Company in accordance with the Company's vehicle policy.
21
The facilities for opening the letters of credit and guarantees as at
March 31, 2013 amounted to Rs. 6.83 billion (2012: Rs. 6.77 billion) of which
the amount remaining unutilised at the year end was Rs. 5.16 billion
(2012: Rs. 4.07 billion).
Rupees 000
The above facilities are secured by way of hypothecation charge on stock-in-trade.
These represent demands raised by Collector of customs in respect of customduty
payable on CKD kits imported in 1993 and between 1998 to 2006. The same have
been appealed against at appropriate levels and reply from authorities is awaited.
2013 2012
21. ACCRUED MARK-UP
Short-term loans 17,900 25,641
Running finance 14,793 15,648
32,693 41,289
22. CONTINGENCY AND COMMITMENTS
22.1
22.2
2013 2012
23. SALES
Gross sales 8,882,255 10,310,798
Sales tax and excise duty (1,210,726) (1,377,440)
7,671,529 8,933,358
Commission and discounts (103,209) (109,337)
Sale returns (40,180) (57,024)
7,528,140 8,766,997
23.1 Sales to Government institutions of Rs. 2.12 billion (2012: Rs. 3.23 billion) account
for over 28 percent (2012: 36 percent) of the net sales.
22
Rupees 000
Commitments for capital expenditures as at March 31, 2013 amounted to
Rs. 4.08 million (2012: Rs. 2.07 million).
As at March 31, 2013 the Company has received provisional refunds of
Rs. 519.05 million (2012: Rs. 519.05 million) fromthe sales tax department against
undertakings and bank guarantees.
Rupees 000
The rates of mark-up applicable on running finance are based on KIBOR and range
from 10.21% per annum to 10.71% per annum (2012: 12.67% per annum to
15.53% per annum).
24 TOTAL COST OF SALES, DISTRIBUTION COSTS AND ADMINISTRATION EXPENSES
2013 2012 2013 2012 2013 2012 2013 2012
Raw materials consumed 5,648,039 7,233,127 - - - - 5,648,039 7,233,127
Staff costs - note 24.1 371,237 398,003 104,824 104,820 88,559 79,042 564,620 581,865
Depreciation and amortisation 102,008 93,107 8,521 8,573 13,264 11,545 123,793 113,225
Rent, rates and taxes 5,232 10,033 3,872 2,710 3,288 2,396 12,392 15,139
Insurance 3,890 4,436 770 722 3,987 4,010 8,647 9,168
Vehicle running and maintenance 12,583 12,682 14,757 13,660 10,135 10,722 37,475 37,064
Fuel and power 36,231 43,935 2,320 2,018 8,611 9,170 47,162 55,123
Travelling and entertainment 5,109 8,172 8,219 7,411 8,132 5,596 21,460 21,179
Repairs and maintenance 21,003 23,321 1,192 1,906 9,849 9,384 32,044 34,611
Communication and stationery 3,920 3,635 4,075 5,867 4,416 5,743 12,411 15,245
Royalty and technical assistance 75,055 88,845 - - - - 75,055 88,845
Provision / (Reversal) for obsolete
3,717 (2,977) - - - - 3,717 (2,977)
Legal and professional charges 2,554 - 1,584 - 10,676 11,733 14,814 11,733
Auditors' remuneration - note 24.2 - - - - 2,723 2,498 2,723 2,498
Security and maintenance - - 1,398 - 39,622 35,312 41,020 35,312
Outward freight and handling - - 1,325 6,927 - - 1,325 6,927
Advertising and sales promotion - - 21,205 16,523 - - 21,205 16,523
Product maintenance charges - - 23,940 20,948 - - 23,940 20,948
stock-in-trade, stores and spares
23
TOTAL COST OF
SALES
DISTRIBUTION
COSTS
ADMINISTRATION
EXPENSES
Rupees '000
Warranty services - - 4,542 100,907 - - 4,542 100,907
Provision for doubtful receivables,
- - 85,349 12,184 - - 85,349 12,184
Provision for doubtful sales tax
- - 5,000 20,000 - - 5,000 20,000
- - 541 - - 997 541 997
Other expenses 7,041 8,915 2,260 3,036 3,476 3,865 12,777 15,816
6,297,619 7,925,234 295,694 328,212 206,738 192,013 6,800,051 8,445,459
Opening stock of work in process 164,669 280,809
Closing stock of work in process (22,729) (164,669)
Cost of goods manufactured 6,439,559 8,041,374
Opening stock of finished goods 754,922 421,470
Closing stock of finished goods (641,881) (754,922)
6,552,600 7,707,922
Consumption of trading goods 168,019 150,997
6,720,619 7,858,919
24.1 Staff costs
advances and deposits
Receivables written off
refundable
2013 2012 2013 2012 2013 2012 2013 2012
341,522 371,224 96,412 97,129 81,515 73,201 519,449 541,554
24,523 22,257 6,421 5,858 5,377 4,592 36,321 32,707
5,192 4,522 1,991 1,833 1,667 1,249 8,850 7,604
371,237 398,003 104,824 104,820 88,559 79,042 564,620 581,865
Charge for defined
contribution plan
Rupees '000
COST OF
SALES
DISTRIBUTION
EXPENSES
ADMINISTRATION
EXPENSES
TOTAL
Salaries, wages, allowances
and staff welfare
Charge for defined
benefit plans
2013 2012
Rupees 000
24.2 Auditors' remuneration
Audit fee 1,370 1,250
Fee for limited review of half yearly financial
statements and other certifications 1,030 925
Out of pocket expenses 323 323
2,723 2,498
25. OTHER INCOME
Income from financial assets
Return on PLS savings accounts 1,673 1,211
Income from non financial assets
24
Income from non-financial assets
Gain on disposal of non-current assets 6,379 1,140
Others
Scrap sales 22,708 31,839
Commission from an associated company 28,068 71,714
Liabilities no longer required written back 10,026 766
Others 2,231 7,312
71,085 113,982
26. OTHER EXPENSES
Donations and charities - note 26.1 2,855 1,023
Workers' Profits Participation Fund 2,505 8,835
Workers' Welfare Fund 933 -
6,293 9,858
26.1 None of the directors or their spouses had any interest in the donees.
2013 2012
Rupees 000
27. FINANCE COST
Mark-up on short-term borrowings 111,191 171,724
Exchange loss - net 203,057 133,774
Bank charges and others 10,751 13,043
324,999 318,541
28. TAXATION
Current - for the year 51,169 99,314
- for prior years (5,500) 27,231
Deferred (27,870) 21,181
17,799 147,726
28.1
Profit before taxation 44,882 173,436
Tax calculated at the rate of 35% (2012: 35%) 15,709 60,703
Effect of final tax regime (1,795) (13,337)
(Reversal) / Charge of prior years' tax provision (5,500) 27,231
Tax effect of other than temporary differences 9,385 73,129
Tax charge for the year 17,799 147,726
29. BASIC AND DILUTED EARNINGS PER SHARE
27,083 25,710
Number of ordinary shares (in '000s) issued and
subscribed at the end of the year 12,401 12,401
Earnings per share Rs 2.18 Rs 2.07
29.1
25
A diluted earnings per share has not been presented as the Company does not have any
convertible instruments in issue as at March 31, 2013 and March 31, 2012 which would
have any effect on the earnings per share if the option to convert is exercised.
Profit after taxation attributable to
ordinary shareholders
Relationship between tax expense and
accounting profit
2013 2012
Rupees 000
30. CASH GENERATED FROM OPERATIONS
Profit before taxation 44,882 173,436
Depreciation and amortisation 123,793 113,225
Gain on disposal of operating fixed assets (6,379) (1,140)
Retirement benefits charge 36,321 32,707
Mark-up on short-term borrowings 111,191 171,724
Return on PLS savings accounts (1,673) (1,211)
Profit before working capital changes 308,135 488,741
EFFECT ON CASH FLOW DUE TO WORKING
CAPITAL CHANGES
Decrease / (Increase) in current assets
Stores, spares and loose tools (2,355) 600
Stock-in-trade 248,778 (733,157)
Trade debts 1,546,188 (1,340,522)
Loans and advances 25,495 45,643
Trade deposits and prepayments 11,244 (7,427)
Refunds due from the government (118,109) 137,586
Other receivables 22,220 (2,988)
1,733,461 (1,900,265)
Increase / (Decrease) in current liabilities
Trade and other payables (1,018,244) 1,124,001
715,217 (776,264)
1,023,352 (287,523)
31. CASH AND CASH EQUIVALENTS
Cash and bank balances - note 14 173,347 124,526
Short-term borrowings - note 20 (645,948) (1,238,331)
(472,601) (1,113,805)
26
Add / (less): Adjustments for non cash charges
and other items
32.
27
The amounts charged in these financial statements for remuneration of the Managing
Director, Directors and Executives of the Company are as follows:
REMUNERATION OF MANAGING DIRECTOR / CHIEF
EXECUTIVE, DIRECTORS AND EXECUTIVES
MANAGING DIRECTOR /
CHIEF EXECUTIVE DIRECTORS EXECUTIVES
2013 2012 2013 2012 2013 2012
Managerial remuneration
and allowances 6,425 5,154 11,388 8,781 63,804 61,020
Bonus 2,108 1,470 3,699 2,493 20,559 14,287
Retirement benefits - - - - 10,392 8,416
Rent and utilities 466 2,432 3,355 4,113 23,446 20,393
Leave passage 418 369 768 624 3,636 2,989
Club expenses - - - - 371 385
Medical expenses 154 146 332 291 3,960 3,215
9,571 9,571 19,542 16,302 126,168 110,705
Number of persons 1 1 3 2 39 33
Rupees '000
32.1
32.2
2013 2012
Units
33. PLANT CAPACITY AND PRODUCTION
Plant capacity (single shift without overtime)
- Chassis 6,000 6,000
- Bodies 1,800
1,800
Actual production
- Chassis 1,359 2,222
- Bodies 305 1,067
33.1
Consultancy fee of Rs. 5.27 million (2012: Rs. 4.58 million) is paid to the Chairman and
he is also provided with free use of Company maintained car.
The Managing Director, Executive Directors and certain executives of the Company are
provided with free use of Company maintained cars and housing facilities in accordance
with their terms of employment.
Low chassis and bodies production during the year was consequent to low market
demand.
MANAGING DIRECTOR /
CHIEF EXECUTIVE DIRECTORS EXECUTIVES
2013 2012 2013 2012 2013 2012
Managerial remuneration
and allowances 6,425 5,154 11,388 8,781 63,804 61,020
Bonus 2,108 1,470 3,699 2,493 20,559 14,287
Retirement benefits - - - - 10,392 8,416
Rent and utilities 466 2,432 3,355 4,113 23,446 20,393
Leave passage 418 369 768 624 3,636 2,989
Club expenses - - - - 371 385
Medical expenses 154 146 332 291 3,960 3,215
9,571 9,571 19,542 16,302 126,168 110,705
Number of persons 1 1 3 2 39 33
Rupees '000
34. RELATED PARTY DISCLOSURES
Disclosure of transactions between the Company and related parties:
Relationship Nature of transaction 2013 2012
i. Holding company - Purchase of goods 63,642 129,562
- Royalty charge 67,279 78,085
- Technical assistance fee 7,776 10,760
- Dividend paid 11,404 -
9,592 -
ii. Associated companies - Purchase of goods 4,145,561 5,374,813
- Sale of goods 728,083 633,451
21,013 24,941
- Commission earned 28,068 71,714
- Dividend paid 5,702 -
iii.
34,861 37,254
Rupees 000
Staff retirement funds
- Payments to retirement
benefit plans
28
- Purchase of property,
plant and equipment
- Liability written back
, ,
34.1
34.2
35. PROVIDENT FUND RELATED DISCLOSURES
The following information is based on latest un-audited financial statements of the Fund:
2013 2012
Size of the fund - Total assets 126,504 122,711
Percentage of investments made 99% 100%
Fair value of investments 125,405 122,712
35.1 The cost of above investments amounted to Rs. 112 million (2012: 113 million).
35.2 The break-up of fair value of investments is:
2013 2012 2013 2012
Percentage
National savings scheme 28% 58% 34,945 70,596
Bank deposits 20% 14% 24,861 17,742
Government securities 25% 25% 31,641 30,416
Debt securities 3% 3% 3,886 3,958
Mutual funds 24% 0% 30,072 -
100% 100% 125,405 122,712
35 3 The investments out of provident fund have been made in accordance with the provisions of
Rupees 000
Outstandingbalances with related parties as at year end have been included in trade debts, other
receivables and trade and other payables respectively. These are settled in ordinary course of
business.
Rupees 000
Details of compensation to key management personnel comprising of Managing Director and
Directors is disclosed in note 32 above.
p
36. FINANCIAL INSTRUMENTS AND RELATED DISCLOSURES
Financial assets and liabilities
Maturity Maturity Sub-total Maturity Maturity Sub-total
up to one after one up to one after one
year year year year
Financial assets
Available for sale
Long term investments - - - - 4,434 4,434 4,434
Loans and receivables
Loans and advances - - - 4,986 13,704 18,690 18,690
Deposits - - 11,765 6,025 17,790 17,790
Trade debts - - - 276,904 - 276,904 276,904
Other receivables - - - 9,619 - 9,619 9,619
Cash and bank balances 55,160 - 55,160 118,187 - 118,187 173,347
55,160 - 55,160 421,461 24,163 445,624 500,784
24,738 - 24,738 1,988,312 18,806 2,007,118 2,031,856
Financial liabilities
Rupees 000
29
Interest / Mark-up bearing Non Interest / Mark-up bearing Total
2013
2012
At amortised cost
Trade and other payables - - - 532,514 - 532,514 532,514
Short-term borrowings 645,948 - 645,948 - - - 645,948
Accrued mark-up - - - 32,693 - 32,693 32,693
645,948 - 645,948 565,207 - 565,207 1,211,155
1,238,331 - 1,238,331 1,948,959 - 1,948,959 3,187,290
On balance sheet gap
(590,788) - (590,788) (143,746) 24,163 (119,583) (710,371)
(1,213,593) - (1,213,593) 39,353 18,806 58,159 (1,155,434)
OFF BALANCE SHEET FINANCIAL INSTRUMENTS
Commitments for capital
expenditure
4,077
Letters of credit
291,356
Letters of guarantee 1,376,711
1,672,144
2,700,445
(i) Interest / Mark-up rate risk
2012
The Companys interest rate / mark-up risk arises fromborrowings as the Company has no
significant interest-bearing assets. Borrowings issued at variable rates expose the Company
to cash flow interest rate risk.
2013
2012
The effective interest / mark-up rates for the monetary financial assets and liabilities are
mentioned in respective notes to the financial statements.
2013
2012
2013
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. As at
March 31, 2013 the Company's interest bearing financial liabilities of
Rs. 645.95 million (2012: Rs. 1,238.33 million) represent the short-termborrowings
at floating rate to manage the working capital requirements of the Company. These
borrowings are repriced at a maximum period of three months. Hence the
management believes that the Company is not materially exposed to interest rate
changes. The effective mark-up rates for financial assets and liabilities are
mentioned in respective notes to the financial statements.
For the above mentioned interest bearing financial liabilities, had the interest rates
varied by 200 basis points with all the other variables held constant, profit
before tax for the year would have been approximately lower / higher by
Rs. 12.92 million (2012: lower / higher by Rs. 24.77 million), mainly as a result of
higher / lower interest expense on floating rate borrowings.
30
The sensitivityof 200 basis points movement in the interest rates has been used as
historically (five years) floating interest rates have moved by an average of 200
basis points per annum.
(ii) Credit risk
(iii) Liquidity risk
The Company attempts to control credit risk by monitoring credit exposure, limiting
transactions with specific counterparties and continually assessing the
creditworthiness of counterparties.
Credit risk represents the accounting loss that would be recognised if counterparts
failed to performas contracted. The financial assets exposed to credit risk amount
to Rs. 500.43 million (2012: Rs. 2,031.86 million). The Company believes that it is
not materially exposed to credit risk as major part of these financial assets
comprises of receivable from government institutions and bank balances which
represent low credit risk as they are placed with banks and other financial
institutions having good credit ratings assigned by credit rating agencies.
Liquidity risk reflects the Company's inability in raising funds to meet its
commitments. The Company manages liquidity risk by maintaining sufficient cash
and bank balances and the availability of financing through banking arrangements.
Management monitors rolling forecast of the Company's liquidity reserve which
comprises undrawn borrowing facility and cash and cash equivalents on the basis
of expected cash flow.
The other financial assets are neither material to the financial statements nor
exposed to any significant credit risk.
(iv) Foreign exchange risk
The sensitivity of foreign exchange rate looks at the outstanding foreign exchange
balances of the Company as at the balance sheet date and assumes this is the
position for a full twelve-month period The volatility percentage for movement in
31
Foreign exchange risk arises mainly when receivables and payables exist due to
transactions based on currencies other than Pak Rupee. As at March 31, 2013
payable exposed to foreign exchange risk is of Rs. 186.38 million
(2012: Rs. 1,466.02 million).
As at March 31, 2013, if the Pak Rupee had weakened / strengthened by 10%
against US Dollar withall other variables held constant, profit before taxfor the year
would have been lower / higher by Rs. 17.01 million (2012: Nil), mainly as a result
of foreign exchange losses / gains on translation of J apanese Yen denominated
financial assets and liabilities.
As at March 31, 2013, if the Pak Rupee had weakened / strengthened by 16%
against J apanese Yen with all other variables held constant, profit before tax for the
year would have been lower / higher by Rs. 2.61 million (2012: Rs. 234.56 million),
mainly as a result of foreign exchange losses / gains on translation of J apanese
Yen denominated financial assets and liabilities.
(v) Fair values of financial assets and liabilities
37. CAPITAL RISK MANAGEMENT
2013 2012
Total Borrowings 678,641 1,279,620
Cash and Bank (173,347) (124,526)
Net debt 505,294 1,155,094
Total equity 1,561,964 1,529,514
Total capital 2,067,258 2,684,608
Gearing ratio 24% 43%
position for a full twelve-month period. The volatility percentage for movement in
foreign exchange rates has been used due to the fact that historically (5 years) rate
has moved on average basis by the mentioned percentage per annum.
During the year, the Company's strategy was to maintain leveraged gearing. The
gearing ratio as at March 31 is as follows:
The carrying values of all financial assets and liabilities reflected in the financial
statements approximate their fair values.
The Companys objectives when managing capital are to safeguard the entitys
ability to continue as a going concern, so that it can continue to provide adequate
returns to shareholders and benefits to other stakeholders and to maintain an
optimal capital structure to reduce cost of capital.
Rupees 000
38. NUMBER OF EMPLOYEES
2013 2012
Number of employees at March 31
- Permanent 302 289
- Contractual 698 902
Average number of employees during the year
- Permanent 305 291
- Contractual 752 916
39. SUBSEQUENT EVENTS AND DATE OF AUTHORISATION FOR ISSUE
The capital structure of the Company is equity based with no financing throughlong
term borrowings. Company avails short-term borrowings for working capital
purposes only.
32
39. SUBSEQUENT EVENTS AND DATE OF AUTHORISATION FOR ISSUE
39.1
39.2
Managing Director & Chairman
Chief Executive Officer
The Board of Directors in its meeting held on May 23, 2013 proposed a cash
dividend of Rs. 1.638 per share (2012: 1.550 per share) amounting to Rs. 20.31
million (2012: 19.22 million) subject to the approval of the members at the
forthcoming annual general meeting of the Company.
These financial statements were approved and authorised for issue in the Board of
Directors meeting held on May 23, 2013.