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the Company was incorporated in Pakistan as a Public Limited Company in August 1983 under the Companies Act, 1913 (repealed with the enactment of the Companies Act, 2017 on 30 May 2017) and started commercial production in January 1984.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 as 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 activities of the Company include the assembly, progressive manufacturing, and marketing of Suzuki-brand passenger cars, pickup trucks, vans, 4x4 vehicles, and motorcycles. In addition to its manufacturing operations, the Company is engaged in the trading and distribution of Suzuki vehicles, heavy motorcycles, outboard motors, genuine spare parts, and related accessories. Through its diversified product portfolio and nationwide distribution network, the Company has established a strong presence in Pakistan’s automotive market, catering to both individual and commercial customers. The Company remains committed to maintaining quality standards, operational efficiency, and customer satisfaction across its product and service offerings. The Company’s registered head office and production facilities are located in Karachi, Pakistan, where its manufacturing, assembly, and operational activities are principally conducted. These facilities support the Company’s production processes as well as its supply chain and distribution operations across the country.

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 04, 2025, Rating and Investment Information, Inc. (R&I) maintained 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) reported a consolidated revenue of ¥6.293 trillion (approximately $41.5 billion) for its fiscal year ending March 2026. This reflects an 8.0% increase year-over-year, driven by strong overseas demand and record global vehicle sales of 3.55 million units. This global financial backing providesadditional strength to the Company’s operational resilience, investment capabilities, and strategic growth initiatives.

The Company’s strategic direction and corporate governance are overseen by a Board of Directors comprising seven experienced members, who are responsible for providing guidance on key business, operational, and strategic matters. The Board plays a central role in establishing the Company's long-term vision, monitoring organizational performance, and ensuring that business activities are conducted in accordance with applicable regulatory requirements and sound governance principles. The Managing Director serves as the Chief Executive of the Company and is responsible for overseeing day-to-day operations, implementing the strategies approved by the Board, and ensuring the effective execution of corporate objectives. This leadership structure facilitates alignment between the Company's strategic priorities and its operational activities, supporting efficient decision-making and organizational accountability. At present, all directors on the Board are nominees of the Parent Company, Suzuki Motor Corporation (SMC-Japan). This board composition reflects the Parent Company's substantial ownership interest and enables close alignment between the Company's strategic initiatives and the broader objectives of the Suzuki Group. Furthermore, it facilitates the transfer of global expertise, corporate governance practices, and industry knowledge, thereby contributing to informed decision-making and the Company's long-term operational stability and growth.

The Board of Directors comprises experienced professionals with diverse backgrounds and expertise, providing strategic oversight and governance to the Company. Their collective knowledge and professional experience support informed decision-making and contribute to the effective discharge of the Board’s responsibilities. The Board is responsible for overseeing the Company’s strategic direction, monitoring performance, and ensuring that its operations are conducted in accordance with applicable laws, regulations, and corporate governance standards. Through regular review and evaluation of key business matters, the Board provides guidance to management and supports the achievement of the Company’s long-term objectives. The Board’s composition reflects the Company’s ownership structure and facilitates alignment between the Company’s strategic priorities and those of its parent company. The combined experience of the directors contributes to balanced deliberations and effective oversight of the Company’s business and operations. Mr. Masafumi Harano serves as Chairman of the Board of Directors, providing leadership to the Board and overseeing its effective functioning in the discharge of its governance responsibilities.

During the reporting period, the Board of Directors continued to discharge its governance responsibilities through regular meetings and active oversight of the Company's affairs. Board meetings were held in accordance with applicable regulatory requirements and corporate governance practices, providing a forum for reviewing strategic, operational, and financial matters relevant to the Company's business. The directors demonstrated a high level of engagement through consistent attendance and participation in Board proceedings. Discussions and decisions were conducted in a structured manner to support effective governance and informed decision-making. In accordance with established governance procedures, the minutes of all Board meetings were duly recorded and maintained. These records provide an accurate account of the discussions, resolutions, and actions taken by the Board, supporting transparency, accountability, and compliance with applicable corporate governance requirements.

The Company has established an Internal Audit function to provide independent assurance regarding the effectiveness of its internal control environment, risk management processes, and governance practices. The Internal Audit function reports directly to the Audit Committee, thereby supporting its independence and enabling objective evaluation of the Company's operations and control framework. The Internal Audit function is responsible for reviewing the adequacy and effectiveness of internal controls, assessing compliance with applicable policies and procedures, and identifying opportunities for process improvements. Through its activities, it assists management and the Audit Committee in monitoring key risks and strengthening the overall control environment. For the financial year ended December 31, 2025, A.F. Ferguson & Co. served as the Company's external auditors who expressed an unqualified opinion on Company's financial statements. 

The Company’s management structure is organized through a multi-tier framework comprising various functional departments, each responsible for specific operational and administrative activities. This organizational arrangement is designed to support the effective management of the Company’s business operations and facilitate the achievement of its strategic objectives. Each department is led by qualified management personnel responsible for overseeing day-to-day activities within their respective functions. Department heads report through established reporting lines to divisional and senior management, ensuring appropriate supervision, coordination, and accountability across the organization. The management framework supports clear allocation of responsibilities, effective communication, and timely decision-making. It also facilitates coordination among different business functions, enabling management to address operational requirements and implement corporate strategies in an efficient manner. Through its structured reporting mechanism and defined roles and responsibilities, the Company seeks to maintain effective oversight of its operations, promote operational efficiency, and ensure alignment of departmental activities with overall business objectives. This management framework supports the Company’s ability to respond to changing business requirements while maintaining appropriate governance and control over its operations.

The Company’s management team comprises experienced professionals with diverse expertise across key business functions. The team is responsible for supporting the Company’s strategic objectives, overseeing operational activities, and ensuring the effective execution of business plans across its operations. The Company is led by Mr. Hiroshi Kawamura, Chief Executive Officer, who has been associated with Suzuki Motor Corporation (SMC-Japan) since 1998. His professional experience in the automotive industry provides valuable industry knowledge and leadership, contributing to the Company’s strategic and operational decision-making processes. Mr. Kawamura is supported by a management team with experience in areas including product development, operations, finance, marketing, human resources, and corporate governance. Through their respective roles and responsibilities, the management team works to maintain operational efficiency, support sustainable business growth, and ensure compliance with applicable governance and regulatory requirements. Collectively, the management team is focused on implementing the Company’s strategic priorities, maintaining sound governance practices, and creating long-term value for stakeholders. Their efforts contribute to the Company’s ability to respond to evolving market conditions and support its ongoing business objectives.

To support effective management oversight and strengthen its governance framework, the Company has established five management committees, each with responsibility for specific operational and functional areas. These committees provide a structured mechanism for reviewing matters within their respective mandates and supporting management in the decision-making process. Through the allocation of clearly defined responsibilities, the committees facilitate the efficient consideration of business matters and contribute to the implementation of the Company’s strategic objectives. The management committees also promote coordination across business functions by providing a forum for the review of operational issues, performance matters, and strategic initiatives. Their activities support accountability, encourage information sharing, and help ensure that departmental objectives remain aligned with the Company’s overall business priorities. This committee structure contributes to an organized and consistent approach to management oversight while supporting effective governance practices. In addition, the Board of Directors has established an internal audit function to provide independent assurance regarding the adequacy and effectiveness of the Company’s internal control environment. The internal audit function is staffed by qualified professionals and operates independently from the business functions it reviews. Its responsibilities include evaluating compliance with internal policies and procedures, assessing the effectiveness of controls, and reviewing adherence to applicable legal and regulatory requirements. Through periodic audits and assessments, the internal audit function assists management and the Board in identifying control deficiencies, process improvement opportunities, and areas of potential risk. The function also contributes to the enhancement of operational effectiveness and supports the continuous improvement of the Company’s governance and control framework. Together, the management committees and the internal audit function form key components of the Company’s governance structure, supporting effective oversight, accountability, risk management, and compliance with applicable policies and regulatory requirements.

As part of its efforts to enhance operational efficiency and strengthen business process integration, the Company has implemented SAP Enterprise Resource Planning (ERP) systems across key functional areas. The ERP platform supports the integration of business processes, facilitates information sharing across departments, and provides a standardized framework for managing operational activities. The system also contributes to improved process consistency, data management, and internal control through the use of centralized information and automated workflows. The implementation of SAP enables the Company to streamline business operations, improve resource planning, and enhance the availability of information for operational and managerial purposes. By consolidating data within a unified platform, the Company is better positioned to support timely reporting, monitor performance, and maintain effective control over its business processes. In addition to its ERP initiatives, the Company has established an in-house development team responsible for designing and maintaining customized dashboards, reports, and analytical tools to address specific business requirements. These solutions provide management with access to operational and performance-related information, supporting monitoring activities and informed decision-making across various functions. The use of customized analytics and reporting tools enhances visibility into business operations and facilitates the evaluation of key performance indicators. These tools also support management in identifying trends, monitoring progress against objectives, and responding to evolving business needs in a timely manner. Collectively, the Company’s investments in ERP systems and internally developed digital solutions reflect its ongoing commitment to the continuous improvement of business processes, information management, and operational effectiveness. These initiatives support the Company’s objective of maintaining efficient operations and adapting to changing business and technological requirements.

The Company has implemented a monthly Management Information System (MIS) to support management oversight, performance monitoring, and decision-making across its business operations. The MIS framework includes segment-wise and unit-level reports that are prepared on a regular basis and reviewed by senior management. These reports provide information on operational performance, financial results, and other key business indicators, enabling management to assess performance against established objectives and identify areas requiring attention. The availability of timely and relevant information supports informed decision-making and facilitates the monitoring of business activities across various functions. By consolidating information from multiple departments and operational units, the MIS enhances visibility into the Company’s overall performance and assists in aligning operational activities with strategic priorities. The system also supports the Company’s internal control and governance processes by facilitating the identification of operational variances, monitoring compliance with policies and procedures, and enabling the implementation of corrective actions where necessary. The regular preparation and review of MIS reports contribute to greater transparency, accountability, and coordination across the organization. Furthermore, the system assists management in evaluating trends, monitoring key performance indicators, and supporting business planning activities. Overall, the Company’s MIS serves as an important management tool that supports effective oversight, operational control, risk management, and the achievement of the Company’s strategic and operational objectives.

According to data released by the Pakistan Automotive Manufacturers Association (PAMA), Pakistan’s automotive industry recorded a significant recovery during FY25, supported by improving macroeconomic conditions and a revival in consumer demand. Passenger car sales increased by approximately 38% to 112,203 units, compared to 81,579 units in FY24, while sales of light commercial vehicles (LCVs), vans, pickups, and jeeps rose by approximately 61% to 35,820 units from 22,250 units in the preceding year. The commercial vehicle segment also exhibited robust growth, with truck and bus sales increasing by approximately 103% and 74%, respectively, reflecting improved economic activity, higher logistics demand, and renewed investment in the transportation sector. Meanwhile, motorcycle and three-wheeler sales grew by approximately 32% to around 1.5 million units, indicating a broad-based recovery across the mobility sector. The industry's recovery was primarily driven by easing inflationary pressures, a reduction in policy rates, exchange-rate stability, improved consumer confidence, and the gradual normalization of auto financing activity. In addition, improved supply-chain conditions, greater availability of imported components, and the introduction of new vehicle variants contributed positively to sales momentum. The increasing penetration of hybrid vehicles, particularly within the SUV and crossover categories, has also broadened consumer choice and supported demand for higher-value vehicle segments. Looking ahead, the outlook for FY26 remains generally positive. Industry participants expect demand to remain supported by lower borrowing costs, improving economic activity, and the continued recovery of auto financing. Several manufacturers have announced or introduced new models across conventional, hybrid, plug-in hybrid, and electric vehicle (EV) categories, which is expected to further stimulate market growth and diversify the product mix. Notwithstanding the improving demand environment, competitive intensity within the industry is increasing. The entry and expansion of Chinese and Korean automotive brands, including players operating in the SUV, crossover, hybrid, and emerging EV segments, have significantly altered the competitive landscape. These manufacturers are gaining market share through diversified product portfolios, advanced features, and competitive pricing strategies. While incumbent assemblers continue to benefit from established dealer networks, brand recognition, and localized operations, sustained competition may exert pressure on market shares, pricing power, and profitability. Furthermore, the industry remains exposed to regulatory changes, taxation measures, exchange-rate movements, and import policies, all of which may influence consumer purchasing behavior and industry growth prospects. Overall, the automotive industry's fundamentals have improved considerably compared to prior years, supported by a more stable economic environment and recovering consumer demand. Continued growth in financing availability, product innovation, localization initiatives, and the transition toward hybrid and electric mobility are expected to remain key drivers of industry development over the medium term, although competitive and regulatory challenges are likely to persist.

Pak Suzuki Motor Company Limited is one of the leading automobile assemblers in Pakistan and maintains a strong market position in the passenger vehicle segment. The Company benefits from its long-established presence in the local automotive industry, technical association with Suzuki Motor Corporation, Japan, an extensive dealer and after-sales service network, and a product portfolio primarily focused on the entry-level and small passenger car categories. Its key models include Alto, Cultus, Swift, and Fronx which collectively cater to a broad customer base within the country. During FY25, PSMC remained the largest passenger car manufacturer among PAMA-member companies, recording sales of approximately 72.7k units amid a recovery in overall industry volumes. The Company continued to benefit from the strong market acceptance of the Suzuki Alto, which remained one of the highest-selling passenger vehicles in the country. PSMC is estimated to hold approximately 60% market share within the PAMA-member passenger car segment, reflecting its established position in the affordable and small-car categories. The Company's competitive position is supported by its strong brand recognition, nationwide distribution footprint, relatively higher localization levels, and established customer base. These factors contribute to operational resilience and support its ability to serve demand across various geographic markets. Furthermore, the Company's concentration in the entry-level vehicle segment provides exposure to a customer category that remains comparatively underpenetrated and sensitive to affordability considerations. Notwithstanding these strengths, the competitive landscape of Pakistan's automotive industry has evolved considerably in recent years. The entry and expansion of Chinese and Korean manufacturers, including Kia, Hyundai, Changan, MG, Haval, and other emerging brands, have increased competition across multiple vehicle categories, particularly in the SUV, crossover, hybrid, and electric vehicle segments. As consumer preferences continue to shift towards technologically advanced, fuel-efficient, and feature-rich vehicles, industry participants are expected to face increasing pressure to expand and modernize their product offerings. Going forward, PSMC's market position is expected to remain supported by its established franchise, extensive dealership network, strong presence in the small-car segment, and ongoing localization efforts. However, the Company's ability to sustain its competitive position will depend on its responsiveness to evolving consumer preferences, changing market dynamics, technological developments, and increasing competition from both existing and new market participants.

During CY25, the Company's net sales increased by approximately 35% year-on-year, the improvement was driven by higher vehicle sales, improving consumer demand, and normalization in supply chain dynamics.

During CY25, the Company’s profitability profile came under some pressure, with gross profit margins declining slightly compared to the previous year. This contraction was primarily driven by changes in the sales mix, pricing pressures, and higher operating costs arising from the prevailing business environment. At the bottom line, net profit margin declined to ~7.5% in CY25 from ~15.0% in CY24. The deterioration in net profitability was mainly attributable to a significant increase in finance costs and lower exchange gains during the review period. Going forward, management’s ability to sustain operating efficiencies, maintain cost discipline, and strengthen profitability metrics will remain key determinants of the Company’s credit profile and overall financial strength.

The Company remains committed to maintaining optimal inventory levels of automotive parts to ensure uninterrupted operational continuity. This objective is pursued through strict adherence to established Standard Operating Procedures (SOPs), reflecting the Company's emphasis on operational discipline, efficiency, and regulatory compliance. With the entry of new competitors into the market, competitive intensity within the industry is expected to increase, placing additional pressure on existing players to differentiate their offerings. In response, the Company recognizes the need to continuously drive innovation, enhance product quality, and optimize value delivery in order to sustain its competitive position and effectively address evolving customer expectations. Furthermore, as part of its long-term growth strategy, the Company plans to introduce new vehicle models by the end of CY26. This initiative underscores management’s commitment to product diversification, strengthening customer engagement, and reinforcing brand positioning. The successful execution of these expansion plans, coupled with the Company's ability to maintain operational excellence and adapt to changing market dynamics, will remain important factors supporting its future growth prospects and competitive standing.

During CY25, the Company's working capital profile remained largely stable, with mixed trends observed across key operating metrics. Inventory holding period increased to ~87 days from ~81 days in CY24, indicating relatively higher inventory levels maintained during the year. However, trade receivable days improved to around ~2 days compared to ~4 days in the preceding year, reflecting efficient collection practices, a disciplined credit policy, and the predominantly cash-based nature of sales. On the other hand, trade payable days declined significantly to ~22 days from ~55 days in CY24, primarily due to accelerated supplier payments and changes in payment arrangements with vendors. Resultantly, the Company's gross working capital cycle increased to ~89 days in CY25 from ~85 days in the previous year. Despite the marginal extension in the cash conversion cycle, the overall working capital requirements remained manageable, supported by strong operating cash flows and adequate liquidity buffers. The efficient receivables management and robust cash generation capacity continue to provide support to the Company's liquidity profile and mitigate risks associated with higher inventory holdings and shorter payment terms. Overall, the Company's working capital management remains satisfactory and is commensurate with the scale and nature of its operations.

In CY25, the Company's Free Cash Flow from Operations (FCFO) stood at PKR 21,650mln, compared to PKR 26,654mln in CY24. Although FCFO declined on a year-on-year basis, it remained at a strong level, reflecting the Company's continued ability to generate healthy cash flows from its core operations. The sustained cash flow generation was supported by robust profitability, efficient working capital management, and disciplined cost controls. The Company's ability to generate substantial internal cash resources reduces its reliance on external funding sources and supports funding requirements related to operations and capital expenditure. Consequently, the Company's liquidity profile remains strong, providing a buffer against potential market volatility and adverse business conditions. Furthermore, the Company's debt servicing capacity strengthened during the year, as reflected in an improvement in its interest coverage ratio. The enhancement in coverage metrics was primarily driven by healthy operating profitability and a significant reduction in finance costs following the complete settlement of foreign currency liabilities. Overall, the Company's strong cash flow generation, robust liquidity position, and improved coverage indicators underpin a sound financial risk profile and demonstrate its resilience amid a competitive and evolving operating environment.

During CY25, the Company's financial leverage increased significantly to  ~32%, compared to ~5% in CY24. The notable rise in leverage is primarily attributable to the acquisition of additional debt financing to support working capital requirements. Despite the increase, the leverage level remains within a manageable range; however, it indicates a higher reliance on borrowed funds compared to the previous year. Consequently, the Company's ability to maintain adequate cash flow generation and debt-servicing capacity will remain a key consideration from a credit perspective. Going forward, the management's strategy regarding debt repayment, profitability enhancement, and capital structure optimization will be important in determining the sustainability of the Company's financial risk profile.