Suzuki Report

Institute of Business Management (IOBM)
Table of Contents
Title
Introduction
Company Profile
Aims and Objectives
Vision
Mission Statement
Product Range
Production and Sales volume
Analysis
Graphical Analysis
Horizontal Analysis
SWOT Analysis
PEST Analysis
Porter's Five Forces
BCG Matrix
Product Life Cycle
Conclusion
Bibliography
PAK SUZUKI MOTORS LIMITED
Page No
2
2
3
3
3
4
7
8
8
13
14
15
16
17
18
19
20
Page 1

INTRODUCTION
The topic I have selected for this presentation is An
analysis of the Planning Strategies of
your choice of organisation.

The planning is normally the key to survival for any organization. It has often been observed that
organisations forced into liquidation have deteriorating planning problems rather than low profits.
Company Profile
Pak Suzuki Limited is the organisation I have selected for this presentation. Pak Suzuki Motor Company
Limited is thelargest automobilecompanies operating in Pakistan. Others are Atlas Honda, Indus Motors,
Gandara Nissan and Deewan Faroque Motors and etc. The basic activities of Pak Suzuki includethe
import, assembling andmanufacturing of automobile products. Having an overall market share of around
(53%) in the sector, Pak Suzuki is undoubtedly the market leader with Indus Motors (23%) and Atlas
Honda (17%).
Market Share
Others; 11%
Indus Motors; 21%

Pak Suzuki; 53%
Atlas Honda; 15%
Page 2
Aims and Objectives

The aim of this report is to analyze the performance of Pak Suzuki in terms of its Financial Planning and
products. This would be achieved by:
The Vertical Analysis Comparison of the key ratios for Pak Suzuki over the years and in some
instances the absolute figures will also be used to analyze the planning function of organization.
The Horizontal Analysis Comparison of Pak Suzukis financial position with the next competing
company operated in the sector, which in this case would be Indus Motors Limited.
Vision
Excellence in all respects.
Our Mission
Our mission to realize this vision is:
To provide automobile of international quality at competitive price.

To improve skills of valued employees by imparting training and inculcating in them a sense of
participation.
To achieve maximum indigenization and promote Pakistans automobile vending industry.
To make valuable contribution to socialdevelopment of Pakistan through developmentof
industryin generaland automobile industry in particular.
Page 3
Product Range
Following are some varieties of Moped with their and Prices:
SWIFT (1300 cc)

The European inspired exterior givesSwift a distinctive look. A unique Stylishand design that turns a
head where you go .
LIANA(1300&1600cc)
The Suzuki Liana available in 1300 cc manual transmission and 1600cc automatic transmission takes
you out of ordinary and into the realm.
Page 4
CULTUS (1000cc)
Cultus is the blend of space and craft. Its trim body conceals ample space &flexibility for both passenger
and storage.
ALTO (1000cc)
Alto has a bright, roomy and comfortablecabin which keeps body relax and strong and lighter body shell
resulting in smooth drive due to reduction of unpleasant noise harshness and vibration.
RAVI PICKUP (800cc)
Page 5

Suzuki Ravi is the veritable cargo vehicle light commercial cargo vehicle referred to as the mini
revolution, replaced the animal-drawnvehicles in Pakistan.
MEHRAN (800cc)
Mehran is Pakistans largestselling car. More smart features like headturning lamp,
matching front grill and a two spoke steering wheel gives it the tidy look. Functional
economy, peak performance or unmatched fuel efficiency.
APV (1500cc)
The New APV (Imported) gives you everything you ever wanted in your vehicle.
Spacious interior for comfort, tough engine to carry large loads and plenty of room for passengers
Page 6

to enjoy a comfortable day long ride.
JIMNY( 1300cc)
Steady, sturdy and smart. Suzuki Jimny (Imported) with new wide tread brings
you the ultimate pleasure of a real4-wheel drive.
Page 7
BOLAN VAN (800cc)

The Suzuki Bolan Hi-roof gives you everything you ever wanted in a van. Spacious interior for
comfort, tough engine to carry large loads and plenty of room for passengers.
BIKES
Pak Suzuki assembles three models of bikes which are as follows:-
Suzuki GS-150
Suzuki Sprinter (110cc)
Suzuki Shogun (100cc)
Page 8
PRODUCTION & SALE OF SOME VEHICLE FROM 2005 to 2010

Name
Mehran
P
S
2006
38433
38297
2007
41988
41984
2008
27249
27009
2009
13239
13007
2010
20693
20891
Alto
P
S
20841
20792
21546
21492
18805
18904
6641
6550
11437
11299
Cultus
P
S
24823
24367
24897
24759
19097
19117
8109
7924
13388
13076
Bolan
P
S
14429
13842
15520
15507
13891
13907
9639
9123
14963
15001
Liana
P
S
6270
5902
5964
5984
2352
2183
684
577
359
417
Ravi
P
S
9418
8973
10984
11205
9027
9178
12107
12244
15202
14982
Page 9

ANALYSIS
The major part of this analysis will be based upon the financial ratios calculated using the financial
statements as of 31 December 2010. It will also include the graphical analysis of the key performance
indicators affecting the companys financial position. The data of current year is not analysed because
only the data of March 2011 is available and the results of June 2011 is not finalised yet. So for making
a sound analysis the current year is not analysed.
Graphical Analysis
Sales Revenue
50000
40000
30000
Sales Revenue in
Millions
20000
10000
0
2006
2007
2008
2009
2010
Sales Revenue for the FY 2010 has increased by around 62.5%. This is primarily because of increase in
the no. of units sold and increase in unit price due to inflation. In2010, company performed well as
compare to 2009 where its revenue decreased by 34%.
Sales Volume ofCars
Page 10

140000
120000
100000
80000
Sales volume cars in

thousands
60000
40000
20000
0
2006
2007
2008
2009
2010
Sales volume increase by 11% in 2007 which later on decrease by 25% and 44% in 2008 and 2009
respectively due to higher interest rates since most of the customers buy the cars on lease. In 2010, the
economy revived a little and the sales volume increase by 53%.
Gross Profit Margin

14
12
10
8
Gross Profit
Margin
6
4
2
0
2006
2007
2008
2009
2010
The ratio explains the relationship between operating profit and sales. The Gross profit ratio has shown a
decline from 11.8% in 2006 to 9.4% in 2007. Later on, it decreases to 1.5%, 2.2% and 2.4% respectively
in 2008, 2009 and 2010.The primary reason of this decrease is the movement in exchange rates.
Profit before Taxation
Page 11

6000
5000
4000
Profit before tax in
millions
3000
2000
1000
0
2006 2007 2008 2009 2010
Profit before tax is a better indicator as compared to profit after tax because the taxes paid by a
company over the years vary depending upon the variation in tax rates. There has been a phenomenal
decrease in profit before tax from FY 2006to FY 2010 of around 87%. This happened due to the
increase in exchange rate, administration expenses and loss in other operating income.
PAT (Profit after Taxation)

3500
3000
2500
2000
Profit after tax in millions
1500
1000
500
0
2006
2007
2008
2009
2010
Page 12
PAT as % of Sales
7.25
6.25
5.25
PAT as % of Sales
4.25
3.25
2.25
1.25
0.25
2006
2007
2008
2009
2010
Profit after tax as a percentage of sales revenue declined to 1.5% in 2008 as compare to 2007 where it
was 5.5 %. In 2009, it declined to 1% and in 2010 it further declined to 0.5%.
Page 13

Current Ratio
4.5
4
3.5
3
2.5
2
1.5
1
2006
Current ratio
2007
2008
2009
2010
A rule of thumb is that the current ratio should be at least 2. It has increased from 1.58 to 2.28 in 2007
and then increased to 4.44 in 2008, representing an increase of 44% and 95% respectively. In 2009,
current ratio decreased to 3.74 and 3.01 in 2010.
Exchange Rates
1.2000
1.0000
0.8000
0.6000
exchange rates (Yen /PKR )
0.4000
0.2000
39052 39417 39783 40148 40513
38869 39234 39600 39965 40330 40695
88.0000
83.0000
78.0000
73.0000
exchange rates ($ /PKR )
68.0000
63.0000
58.0000
38869 39052 39234 39417 39600 39783 39965 40148 40330 40513 40695
Page 14

The increase in exchange rates is excessive which causes the cost of goods sold to increase because
major parts are imported from Japan and trade is only allowed in USD so a double hit of exchange rate
effects the cost of goods sold .Earning Per Share
40
30
20
Earning per Share
10
0
2006
2007
2008
2009
2010
This shows how much of a companys profit can be attributed to each ordinary share. Pak Suzukis EPS
has decreased from Rs 40.75 in 2006 to Rs 33.7 in 2007. Later on, it decreases to 7.6, 3.1 and 2.6
respectively in 2008, 2009 and 2010.
Fair Value per Share

175
165
Fair value per share
155
Year 2006 2007

2008 2009 2010
145
135
2006 2007 2008 2009 2010
The fair value of the share increased to Rs 176.16 in 2010 from Rs 139.98 per share from 2006 which
shows that the company is performing well and the investors can earn good returns by investing in the
shares for the longer-term.
Dividend per Share
Page 15

5.25
4.25
3.25
Dividend per Share
2.25
1.25
0.25
2006 2007 2008 2009 2010
Page 16

This shows how much of a companys profit is distributed to each share holder. Pak Suzukis DPS has
decreased fromRs5.055 in 2007 to Rs.1 in 2008. Later, it decreases to 0.496, 0.494, 2009 and
2010.
Horizontal Analysis
It is important to analyze any companys performance with a competitor. Comparing a companys

performance with previous year may show improvement due to price change. This is referred to as trend
or vertical analysis. It does not use a benchmark to determine whether the companys results are good
or bad. To overcome this problem it is important to compare Pak Suzuki performance with a competitor.
In the case of Pak Suzuki, there is no other company in Pakistan, which can be compared to the giant.
Its closest competitor is Indus Motors with a market share of 23% compared to Pak Suzukis 48%.
Table of Comparison for the year ended 2010-2011

Ratios
Pak Suzuki
Gross Profit Margin
Indus Motors
2.35 %
7.84%
0.5 %
5.73%
Return on Capital Employed
4.61 %
27.36%
Current Ratio
3.01 : 1
1.67:1
Quick Ratio
0.61 : 1
0.9:1
Inventory Turnover
4.76
12
Asset Turnover
2.22
4.66
Capital Gearing
0%
0%
Earning per share
2.57
43.81
Cash Dividend Per Share
0.48
15.00
Net Profit Margin
Price to earning ratio
27.17
5.99
Market Share price as on 31 Dec -2010
69.82
262.38
Fair Value per share as on 31- Dec -2010
176.16
160.15
75
33
No. Of Dealers
Page 17
SWOT ANALYSIS
Strengths
Weaknesses
Highest Market Share.
Scarcity of raw material.
Low Price Vehicles.
Bargaining power of supplier is low.
Resale of Local Assembled Cars.
Large Distribution Channels.

Rising per capita income with changing
demographic distribution.
Lack of coordination and linkage

with Government
Less Technical Training Institute.
Less distribution channels in interior areas.
Highly Innovative and deep product line.
Highly maintained supply chain.
Higher WACC.
Page 18
Easy available of spare parts.

3S (Sales, Service and spare Parts) at
your door step.
Threats
Opportunities
Increasing Demand for Cars.
Efficient EFI engine.
Large Market size to operate.
Global spare part market.
Space saving Small size CNG cylinders.
Local Competitors like Toyota, and Honda.

Foreign Investment and setup production
facilities.
Inflation rate.
Heavy Taxes.
Competition from import cars ( Like

VITZ, PLATZ, DUET etc)
Increase of Fuel Prices.
Load shedding by KESC.
Rise in Interest rates.
Page 19
Law and Order situation.
Exchange Rate Risk.
Earthquake in Japan.
PEST ANALYSIS
Uncontrollable environment are those external factors which can prohibit us or can create hurdles
between us and our business. It is also called pest analyses which are as follow:
Political Environment
Pakistan has to face lots of ups and down since its independence. So many governments have been
broken down by military authority and most of the time martial law applied on Pakistan. In this scenario
no entrepreneur was willing to invest in Pakistan except few. Due to this market environment wasnt so
good in Pakistan. Anyhow Pakistani government never been trustworthy for any investor.
Economic Environment
Pakistan, an impoverished and underdeveloped country, has suffered from decades of internal political
disputes and external ongoing conflict with India. And after economic recession of 2008 the economy of
Pakistan is highly unstable due to increase in interest rates.
Socio-Culture Environment
Pakistan has strong culture background and it has been follow in some particular region of Pakistan
strictly. But with the passage of time it is going to change. Thoughts of people, choices, taste and style
has been totally changed. If we talk about the transportation source in Pakistan, People use buses,
Page 20

pickups etc for journey. They also have their own as well e.g. cycle, bikes etc and lots of people are
pedestrian. But now the people who havent any source of transportation they also want something for
their convenience because they wants to save their time as much as they can. People want to use such
vehicle which looks beautiful and also affordable.
Technological Environment
Technology is grooming with the passage of time. People also want that the product that they have is full
of technology. We never control on technology for example you launched the product last year and your
sale volume on that time is very high but after sometime due to latest invention a lots of substitute exist
in market which affect on your business so you cant hold on it.
Market Analysis
Porters 5 Force
The strategic business manager seeking to develop an edge over rival firms can use this model to better
understand the industry context in which the firm operates.
1. Potential new entrants

In the New Entrant category of Porter's 5 forces, we can see that it would be tremendously
difficult for another car manufacturer to enter into the market. The rate at which the industry is changing
does not allow for new entrants to come into the market very easily, and the cash investment for a new
firm to produce massive quantities of cars is in the billions.
2.
Bargaining power of buyers

Since competition is so strong between auto makers and dealers, consumers will often do research on a
vehicle before making a purchase. The high quantity of dealers forces prices to be very negotiable and
the consumer often knows exactly what the dealer paid for the car. Thus, consumers are in an enviable
position: The market supply is strong, competition between auto makers and auto sellers is very intense,
and there is no set price. --Everything is negotiable. For companies like Pak Suzuki to continue to
compete, the quality of their offerings must be excellent, dealership service must be strong, and they
must focus on offering consumers a product with high durability and value.
Page 21

3. Bargaining
power of suppliers.
Pak Suzukis suppliers have been known to be some of the most dedicated suppliers in the industry. By
virtue of the Just-In-Time production concept pioneered by Pak Suzuki, the auto industry itself has seen
a very positive relationship develop between its suppliers and producers.Suppliers are expected to make
deliveries of parts in small quantities several times a day. Pak Suzuki, by reducing its part inventory, has
been able to speed up production costs, save money by not letting parts sit on the shelf, and improve its
relationship with parts suppliers, which rely on Pak Suzuki for their revenue.
4. Threat
of substitutes
Consumer preference is changing (Mini cars are being replaced by compact or midsized cars) .Setting
up integrated manufacturing facilities may require higher capital investments than establishing assembly
facilities. Pakistan passenger car market is moving towards cars of higher capacity.
5. Rivalry
between competitors
Industry competition between auto makers is fierce. The typical consumer, when searching for a
particular vehicle is bombarded by choices. For example, a search for ALTO (Product of Suzuki) yields a
result of Cuore (Daihatsu) with a minimal extra amount.
BCG MATRIX
Page 22

Star
Question Mark
High
Market
Growth
Sprinter
ECO
Cash Cow
GS-150
Dog
Low
SHOGUN
High
Market
Share
Low
Page 23
BCG positions throughout the product

life cycle:
ALTO
BOLAN
SWIFT
JIMNY
SHOGU
N
SPRINTE
R
MEHRAN
CULTUS
LIANA
RAVI
APV
SHOGUN
Page 24

Conclusion
Automobile industry is a major contributor to the GDP of Pakistan.

It has enormous potential for growth.
The overall economic indicators of the country are improving.
Auto Industry is on path to recovery after two consecutive years of market
recession.
Good for long-term investment.
Page 25
Bibliography
(1)
PakSuzuki Annual Report 2010 [online] retrieved from:

http://www.paksuzuki.com.pk/Automobile/PDFfile/Financial/SuzukiAnnualReport10LR.pdf
(2)

(3)

(4)

(5)
(6)
Indus Motors Annual Report 2010 [online] retrieved from:
(7)
Wikipedia used to gain information about the history of PAK SUZUKI
(8)
Karachi Stock Exchange [online] retrieved from:
http://www.toyota-indus.com/financial/Annual-Rep-2010.asp
www.kse.com
(9)
Newsletter of Pak Suzuki
(10) Foreign Exchange Rates

http://www.exchangerates.org.uk/PKR-JPY-exchange-rate-history.html
Page 26

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Institute of Business Management (IOBM)

PAK SUZUKI MOTORS LIMITED

Institute of Business Management (IOBM)

analysis of the Planning Strategies of

your choice of organisation.

Indus Motors; 21%

Atlas Honda; 15%

PAK SUZUKI MOTORS LIMITED

Institute of Business Management (IOBM)

Aims and Objectives

To provide automobile of international quality at competitive price.

PAK SUZUKI MOTORS LIMITED

Institute of Business Management (IOBM)

SWIFT (1300 cc)

PAK SUZUKI MOTORS LIMITED

Institute of Business Management (IOBM)

RAVI PICKUP (800cc)

PAK SUZUKI MOTORS LIMITED

Institute of Business Management (IOBM)

PAK SUZUKI MOTORS LIMITED

Institute of Business Management (IOBM)

PAK SUZUKI MOTORS LIMITED

Institute of Business Management (IOBM)

BOLAN VAN (800cc)

Pak Suzuki assembles three models of bikes which are as follows:-

Suzuki Sprinter (110cc)

Suzuki Shogun (100cc)

PAK SUZUKI MOTORS LIMITED

Institute of Business Management (IOBM)

PRODUCTION & SALE OF SOME VEHICLE FROM 2005 to 2010

PAK SUZUKI MOTORS LIMITED

Institute of Business Management (IOBM)

Sales Volume ofCars

PAK SUZUKI MOTORS LIMITED

Institute of Business Management (IOBM)

Sales volume cars in

Gross Profit Margin

Profit before Taxation

PAK SUZUKI MOTORS LIMITED

Institute of Business Management (IOBM)

PAT (Profit after Taxation)

PAK SUZUKI MOTORS LIMITED

Institute of Business Management (IOBM)

PAK SUZUKI MOTORS LIMITED

Institute of Business Management (IOBM)

exchange rates (Yen /PKR )

exchange rates ($ /PKR )

PAK SUZUKI MOTORS LIMITED

Institute of Business Management (IOBM)

Earning per Share

Fair Value per Share

Fair value per share

Year 2006 2007

Dividend per Share

PAK SUZUKI MOTORS LIMITED

Institute of Business Management (IOBM)

PAK SUZUKI MOTORS LIMITED

Institute of Business Management (IOBM)

It is important to analyze any companys performance with a competitor. Comparing a companys

Table of Comparison for the year ended 2010-2011

Gross Profit Margin

Return on Capital Employed

Earning per share

Cash Dividend Per Share