KARACHI, Jan 14: Dewan Farooque Motors — the producers of Hyundai and KIA vehicles in Pakistan — said the company planned to introduce KIA Sportage Wagon, powered by a two-litre turbo-charged inter-cooled diesel engine. “It will be the very first Sports Utility Vehicle to be assembled in Pakistan,” the company chief executive wrote to the shareholders in Annual Report 2001.

The Annual General Meeting of the company was held on December 29, 2001 at Karachi, where accounts for the first full year ended June 30, 2001 were discussed.

The company had started commercial production through the interim facility from January 1, 2000. The main facility went into commercial operations from January 1, 2001. During the year ended June 30, 2001, the one-ton flat bed truck (Shehzore) was assembled at the facilities of Sind Engineering (Pvt) Limited while the other models were assembled at the company’s assembly facility located at Sajawal.

For the financial year 2001, the company posted sales turnover amounting to Rs4.0 million, which was up from Rs1.2 million and was said to be “basically attributable to a full year’s commercial operations and the introduction of the KIA Spectra 1500cc passenger car in the second half of the year.”

Gross profit for the year increased in absolute amount by Rs86.8 million to Rs184.8 million, but the gross profit margin declined sharply due to depreciation of the rupee against the US dollars by 19 per cent, which the management said, “could not be passed on to the customers”.

The fixed manufacturing overheads increased by Rs225.8 million and administration & selling expenses by Rs69.4 million, compared to the previous year. Financial charges were up by Rs103 million over the earlier year, which the company attributed to charging of financial charges to the profit & loss account from the second half of the year under review, as the main plant had been put to commercial production. The company stated that initial years of a new project were critical as to its capacity for absorbing total cost of the operations and that it had been able to absorb all the operational costs in the first year of full commercial operations.

At the operating level, the company posted profit of Rs95.0 million, up from Rs77.6 million for the six months last year. After accounting for the huge financial charges, the company reported pre-tax loss of Rs31.2 million for the year under review. This was wiped out by the unappropriated profit of Rs63.6 million, leaving net surplus of Rs32.4 million, which was carried forward.

Dewan Farooque Motors was one of the three companies to enter the stock market in 2000: the other two being WorldCall Payphones and Al-Meezan Investment Bank. Dewan Farooque Motor’s Initial Public Offering (IPO) of Rs185 million, floated on May 29, 2000, was over-subscribed by Rs41 million or 22 per cent. The 10-rupee share in the company is currently trading at almost 60 per cent discount to the par value, which must partly be due to low probability of a dividend in the next few years. Break-up value of the share worked out at Rs10.44 at end-June 2001.

The company recorded sales of 7,906 units during the year under review, which it claimed was the highest by any assembler in the country, in its first full year of operation. Two new products were added to the product-mix during the year: KIA Spectra and KIA NGV. The company said that the actual impact of these products on the financial statements would be reflected in the next financial year as KIA Spectra was launched in March and KIA NGV in later part of June 2001.

The company also claimed that its Hyundai Shehzore had continued to dominate the one-ton Pickup segment, achieving a substantial 68 per cent market share of the one-ton Pickup Segment. It sold 2,824 units in the year under review, which were twice the sales of 1,404 units the earlier year.

Including the tangible fixed assets of Rs1.6 billion, the total assets of the company stood in the books at Rs3.5 billion at the close of financial year 2001.