Pak Suzuki Motor Company Limited (Hereinafter referred to as 'the Company' or 'PSMC') has been delisted from the Pakistan Stock Exchange on April 22, 2024. Previously the Company was incorporated in Pakistan as a Public Limited Company in August 1983 under the Companies Act, 1913 (repealed with the enactment of the Companies Act, 2017 on 30 May 2017) and started commercial production in January 1984.

PSMC was established Joint Venture between Pakistan Automobile Corporation Limited (PACO) and Suzuki Motor Corporation Japan (SMC-Japan) in 1982. The Joint Venture Agreement ended in 1996 and PACO divested its entire shareholding to SMC-Japan.

The principal business activity of the Company is assembling, progressive manufacturing, and marketing Suzuki cars, pickups, vans, 4 x 4s, and motorcycles. Further, the Company is also involved in the trading activity of Suzuki cars, Heavy bikes, outboard motors, and related spare parts. The Company’s head office and production facilities are situated in Karachi.

Suzuki Motor Corporation (SMC-Japan) owns ~99.12% of the total equity in the Company. This significant ownership reflects SMC-Japan’s firm commitment to maintaining strategic control and operational oversight within a unified corporate framework. As a result, the structure enhances long-term stability, promotes more efficient decision-making, and empowers the sponsor to execute both global and local business strategies with greater agility and cohesion.

Suzuki Motor Corporation (SMC-Japan) stands as a globally acclaimed automotive brand with a heritage that stretches back to 1909. Headquartered in Hamamatsu, Japan, it has spent over a century pioneering excellence in vehicle manufacturing. Through its deep-rooted expertise in engineering, commitment to innovation, and reputation for reliability, SMC-Japan has earned its position as a respected leader in the global automotive landscape. With more than 100 years of operational experience, Suzuki has built a strong foundation of trust and technical mastery. Its expansive global footprint, continuous investment in advanced automotive technologies, and customer-first philosophy have enabled it to deliver high-performing, dependable vehicles tailored to the unique needs of diverse markets around the world.

Globally recognized for its engineering prowess and spirit of innovation, Suzuki Motor Corporation (SMC-Japan) manufactures a wide array of products, ranging from automobiles and four-wheel drive vehicles to motorcycles, all-terrain vehicles (ATVs), outboard marine engines, wheelchairs, and compact internal combustion engines. This diverse portfolio reflects SMC’s commitment to technical excellence and versatility across multiple mobility platforms. On September 12, 2024, Rating and Investment Information, Inc. (R&I) upgraded SMC-Japan’s credit ratings to 'A+' with stable outlook. This evaluation highlights the SMC-Japan's strong fiscal discipline, resilient global operations, and well-structured governance model. The rating not only affirms the sponsor’s credibility but also reinforces stakeholder confidence in its strategic direction and long-term stability.

PSMC enjoys a robust financial position, underpinned by its dominant market share in the domestic automotive industry. The Company holds the largest portion of the market among PAMA-member manufacturers, reflecting its strong brand presence and consumer trust. Vehicles assembled and manufactured by PSMC are competitively priced, making them accessible to a broad customer base and contributing to strong sales volumes. Additionally, Suzuki models maintain high resale value across the market, further enhancing brand appeal and ownership economics. The Company’s extensive and well-established distribution network—recognized as the largest among industry peers—facilitates efficient market penetration, after-sales support, and nationwide availability of products and services. Further reinforcing its financial stability, the sponsor, Suzuki Motor Corporation (SMC-Japan), posted consolidated revenue of approximately ¥5.37 trillion in FY24. This global financial backing provides additional strength to the Company’s operational resilience, investment capabilities, and strategic growth initiatives.

The Company entrusts its strategic direction and overarching governance to a Board of Directors composed of seven seasoned members. This governing body is pivotal in steering the organization's long-term vision and ensuring responsible oversight. Among its members, the Managing Director serves a dual role—leading executive functions and managing day-to-day operations—thereby bridging strategic intent with operational execution. Currently, all the directors are nominee of the parent Company. 

The Board of Directors is composed of highly experienced professionals with diverse backgrounds spanning multiple industries, each bringing valuable perspectives and deep expertise to the Company’s governance framework. Many Board members have cultivated enduring relationships with the Company over the years, contributing to continuity, trust, and a comprehensive understanding of its culture and strategic priorities. This diverse blend of knowledge and experience empowers the Board to provide strong leadership, informed strategic oversight, and sound decision-making at the highest level of corporate governance. Their collaborative efforts play a critical role in ensuring that the Company remains agile, competitive, and aligned with long-term stakeholder interests. Mr. Masafumi Harano, serves as Chairman of the Board.

The Board operated with consistent focus and commitment throughout the reporting period. A commendable attendance rate was recorded across all meetings, reflecting the directors’ active participation and engagement in strategic discussions. In keeping with governance protocols, the minutes of each meeting were meticulously documented and securely maintained, ensuring transparency, fostering accountability, and preserving an accurate historical record of Board deliberations and resolutions.

The Company has instituted a comprehensive Internal Audit function designed to operate with full independence, reporting directly to the Audit Committee. This governance structure ensures a robust system of checks and balances, enabling thorough oversight of internal controls, adherence to established policies, and consistent evaluation of risk management practices. By maintaining operational independence, the Internal Audit department serves as a vital mechanism for promoting transparency, mitigating risk, and reinforcing a culture of accountability across all business units. A.F Ferguson & Co are the external auditor of the Company for the financial year ended 31st December 2024. They have given an unqualified opinion for the year ended CY24. Together, the synergy between internal oversight and external assurance forms a cornerstone of the Company’s governance framework—underpinning stakeholder confidence and supporting long-term organizational resilience. 

The management framework at Pak Suzuki Motor Company (PSMC) is structured as a multi-tiered organizational model, encompassing more than a dozen distinct departments. Each department plays a critical role in executing dedicated operational and strategic functions, contributing to the Company’s ability to manage a broad array of business activities with precision and efficiency. This hierarchical design promotes functional specialization, optimizes resource utilization, and fosters operational excellence across diverse corporate domains. Department heads report directly to their respective divisional leaders, who in turn are answerable to higher-level functional executives responsible for shaping strategic direction and ensuring cross-functional integration. Such a layered reporting mechanism enables cohesive decision-making, reinforces effective supervision, and ensures that departmental goals are harmonized with the Company’s overarching strategic vision. Moreover, the framework encourages transparency in performance accountability and facilitates seamless coordination among business units—ensuring agility and resilience in a dynamic market environment.

The Company’s management team is composed of a highly accomplished group of professionals, each bringing a rich blend of expertise, industry knowledge, and leadership experience. This diverse collective plays a pivotal role in shaping the Company’s strategic direction, driving operational excellence, and fostering a culture of innovation across all business segments. Leading this dynamic team is Mr. Hiroshi Kawamura, the Chief Executive Officer, whose longstanding affiliation with Suzuki Motor Corporation (SMC-Japan) dates back to 1998. With a proven track record in the global automotive and allied industries, Mr. Kawamura contributes deep sectoral insight and strategic foresight. His extensive international experience and understanding of evolving market landscapes position him as a visionary leader capable of guiding the Company through dynamic economic conditions and competitive challenges. Mr. Kawamura is supported by an agile and forward-looking management team whose complementary expertise spans product development, operations, finance, marketing, human resources, and corporate governance. Their collaborative leadership approach fosters high performance, strengthens the Company’s governance architecture, and ensures the effective execution of its long-term strategic agenda. Together, this leadership cohort champions a progressive organizational ethos that emphasizes transparency, stakeholder value, and continuous improvement—cornerstones of the Company’s sustained growth and market resilience.

To enhance its corporate governance framework and drive strategic effectiveness, the Company’s management has formally constituted five dedicated management committees. Each of these committees is tasked with overseeing key operational and functional areas, ensuring that strategic decisions are made with precision and informed insight. By allocating distinct responsibilities across these committees, the Company fosters a systematic approach to governance that empowers its leadership to respond swiftly and effectively to emerging business challenges. These committees are instrumental in driving organizational accountability. Through clearly defined roles and expectations, they ensure that individual departments remain aligned with the broader corporate objectives. In addition, the committees facilitate strategic cohesion by bridging operational activities with long-term business goals. This structured approach promotes transparency, encourages cross-functional collaboration, and supports a proactive leadership culture that is responsive to change and opportunity. Simultaneously, the Board of Directors has implemented a strong internal audit function to further safeguard the Company’s governance standards. This function is staffed with highly qualified and experienced professionals who operate independently of the business lines. Their primary mandate is to verify the consistent implementation of internal policies and procedures, ensuring that operations remain in full compliance with applicable legal and regulatory frameworks. Through regular evaluations and control assessments, the internal audit team contributes to risk mitigation and the strengthening of the Company's internal control environment. Their work plays a crucial role in identifying areas for improvement, enhancing operational integrity, and upholding stakeholder confidence. Together, the management committees and the internal audit function form a comprehensive governance system that underpins the Company’s commitment to ethical conduct, performance accountability, and sustainable success.

In pursuit of operational excellence and enhanced organizational efficiency, the Company has strategically deployed SAP—a globally acclaimed Enterprise Resource Planning (ERP) system. This implementation marks a significant step toward the digital integration of core business functions, enabling seamless coordination between departments, improved transparency across workflows, and robust internal control mechanisms. By centralizing business processes on a unified platform, SAP facilitates streamlined operations, optimizes resource utilization, and strengthens data governance, laying the foundation for smarter and more agile business practices. Complementing the ERP initiative, the Company has also assembled an in-house development team tasked with building sophisticated dashboards and analytical tools tailored to its specific operational needs. These digital solutions empower senior management by delivering real-time insights, enabling performance monitoring across functional domains, and supporting data-driven strategic decisions. The integration of customized analytics fosters visibility, responsiveness, and accountability throughout the organization. Together, these technological advancements underscore the Company's resolute commitment to digital transformation. They reflect an ongoing effort to modernize infrastructure, harness data intelligence, and promote continuous improvement across all business segments—ensuring the Company remains competitive, future-ready, and aligned with global best practices.

The Company has implemented a comprehensive monthly Management Information System (MIS) designed to support effective oversight and strategic control across all business segments. This MIS framework incorporates detailed segment-wise and unit-level performance reports, which are meticulously compiled and presented to senior management for periodic review. These reports provide granular insights into operational efficiency, financial performance, and strategic progress, enabling management to make timely and data-driven decisions. Through the seamless integration of cross-functional data, the MIS enhances visibility into business operations and fosters cohesive alignment between departmental activities and corporate goals. It serves as a pivotal tool in reinforcing the Company's internal control environment by identifying potential deviations, supporting corrective actions, and strengthening compliance mechanisms. Moreover, the structured and consistent deployment of MIS reporting promotes operational transparency, improves responsiveness to emerging business challenges, and facilitates proactive planning. By anchoring decision-making in reliable performance data, the system plays an essential role in driving organizational agility, elevating oversight standards, and contributing to long-term value creation.

The automobile sector in Pakistan is primarily dominated by three major Original Equipment Manufacturers (OEMs): Pak Suzuki Motors, Honda Atlas Cars, and Toyota Indus Motors. These companies sell their vehicles through authorized dealership networks that are spread across the country. Honda Atlas and Toyota Indus focus on producing high-end models with engine capacities above 1300cc, such as the Honda City, Honda Civic, Toyota Corolla, and Toyota Yaris. In contrast, Pak Suzuki Motors offers a broader range of vehicles including the Suzuki Swift (above 1000cc), Cultus, Wagon-R, Bolan, and Alto, targeting various consumer segments. The industry is currently transitioning from traditional dominance to a competitive, multi-brand market landscape. New entrants like Kia, Hyundai, MG, Changan, and others are making significant strides, particularly in the SUVs/crossovers and electric vehicle (EV) categories. These emerging players are reshaping consumer preferences by introducing modern designs and innovative features. Strategic investments paving the way for greater market competition and technological advancement. According to data from the Pakistan Automotive Manufacturers Association (PAMA), passenger car sales grew by ~38% in FY25, rising to 112,203 units from 81,579 units in FY24, while LCVs, Vans & Jeeps segment also registerd a significant growth of ~61% rising to 35,820 units as compared to 22,250 units in FY24. This growth was primarily attributed to favourable macroeconomic environment such as gradual reduction in policy rates, inflation, and stability of exchange rates. These factors cumulatively improved the consumer confidence. Looking ahead, the industry faces emerging challenges as new players have captured a meaningful share of the market. While their direct impact on PSMC’s core 1,000cc and sub-1,000cc segments has been limited thus far, the future entry of Chinese manufacturers in this segment with competitive pricing strategies could exert pressure on sales of these categories. Moreover, increasing imports of used vehicles may introduce another layer of competition. On the regulatory and compliance side, achieving the export targets set under the Auto Industry Development and Export Policy remains a challenge, primarily due to the sector's reliance on imported completely knocked-down (CKD) kits. This reliance limits the industry's ability to remain price-competitive in international markets, constraining export potential, and requires a comprehensive going-forward strategy. 

In review period, the Company achieved a notable market presence, with its share rising to ~60% in passenger cars segments, among member companies of the Pakistan Automotive Manufacturers Association (PAMA). According to data reported by PAMA, the Company sold 67,233 cars units during FY25, reflecting an increase from ~51,667 cars units in FY24. In LCVs, Vans & Jeeps segment the Company sold 5,452 units of  Suzuki Ravi, and captured ~15% of market share during FY25 within this segment (FY24: 2,731 units of Suzuki Ravi). This represents a  strong volume-based growth. The Company’s performance underscores its strengthened competitive positioning within the domestic automotive industry. Key industry peers include Toyota Indus Motors, Hyundai Nishat, and Honda Atlas, who collectively contribute to the evolving market dynamics. The sustained growth in unit sales highlights the effectiveness of the Company’s product strategy, market responsiveness, and customer engagement efforts.

In CY24, the Company recorded a substantial increase in net sales, with year-over-year growth of ~65.5%. This surge in revenue was primarily driven by a marked rise in sales volumes, reflecting higher market demand and improved customer outreach. The strong top-line performance contributed meaningfully to overall profitability and highlights the effectiveness of the Company’s strategic initiatives in sales acceleration and market expansion.

During CY24, the Company’s gross profit margins witnessed improvement, primarily driven by enhanced capacity utilization, which enabled more efficient absorption of fixed manufacturing overheads. This operational leverage contributed to cost efficiency and better margin realization. Consequently, the operating margins also recovered, benefiting not only from the improved gross margins but also from the positive impact of foreign exchange gains, which reduced the overall cost burden. The recovery in operating margins reflects the Company’s ability to optimize its cost structure in a more stable macroeconomic environment. At the bottom line, net profitability recorded a notable improvement, largely attributable to a substantial reduction in finance costs, as the Company settled all outstanding foreign liabilities.

The Company remains committed to maintaining optimal inventory levels of automotive parts to ensure seamless continuity of operations. This objective is pursued in strict adherence to established Standard Operating Procedures (SOPs), reinforcing the Company's focus on operational discipline and regulatory compliance. With new market entrants intensifying competition, existing industry players are expected to face mounting pressure to differentiate. In response, the Company recognizes the imperative to accelerate innovation, enhance product quality, and optimize value delivery to sustain its competitive edge and meet evolving customer expectations. Furthermore, as part of its long-term growth strategy, the Company has outlined plans to launch new vehicle models by the end of CY26. This initiative reflects its proactive approach to product diversification, customer engagement, and brand evolution.

During CY24, the Company demonstrated notable improvement in operational efficiency, as evidenced by key working capital metrics. Inventory days were reduced to ~81 days, down from ~122 days in CY23, largely attributable to the timely delivery of vehicles and improved inventory turnover. Trade receivable days also improved, reaching ~4 days in CY24, compared to ~8 days in the previous year—indicating enhanced collections and stronger customer payment discipline. Conversely, trade payable days decreased significantly to around ~55 days, from ~153 days in CY23, reflecting faster payment cycles and renegotiated supplier terms. As a result of these movements, the Company's gross working capital cycle shortened to ~85 days in CY24, a substantial improvement from ~129 days in CY23. This reduction highlights greater liquidity efficiency, reduced cash conversion time, and stronger overall working capital management.

In CY24, the Company’s Free Cash Flow from Operations (FCFO) surged to PKR 26,654 million, marking a significant jump from PKR 8,819 million in CY23. This substantial increase highlights a notable improvement in operational efficiency, driven by stronger profitability, better working capital management, and effective cost controls. The growth in FCFO reflects the Company’s ability to generate sufficient internal cash to support ongoing operations and capital expenditures, without depending on external borrowings. This not only enhances the Company’s financial flexibility but also strengthens its liquidity position, enabling it to withstand market volatilities more effectively. Furthermore, the improvement in FCFO indicates increased internal funding capacity to finance future strategic initiatives, including product development or capacity expansion. In parallel, the Company’s interest coverage ratio, a critical measure of its ability to meet financial obligations improved markedly during the year. This enhancement is primarily attributed to higher earnings before interest and taxes (EBIT) and significantly lower finance costs, following the complete settlement of foreign currency liabilities. The strong cash flow generation and improved coverages collectively reflect a sound financial risk profile and reinforce the Company’s resilience in a competitive and evolving industry landscape.

In CY24, the Company’s financial leverage improved to 5% (CY23: 17%). This improvement reflects prudent capital structure management, supported by robust internal cash generation and a reduced reliance on debt financing. The Company did not utilize any short-term borrowings during the year, which highlights its strong liquidity position and operational self-sufficiency. Despite this, it continues to maintain access to banking lines, ensuring financial flexibility to meet any unforeseen working capital requirements. The overall improvement in leverage underscores the Company’s conservative financial strategy and its ability to operate efficiently within internally generated resources, reinforcing its resilience in a competitive market environment.