annual report 2007 - hinopak motorshinopak is a group company of toyota motors corporation (tmc) and...

Annual Report 200730

corporatesocial responsibilitySeeking harmony betweenTechnology, Society and Environment

Always Ahead 31

Seeking harmony between Technology, Society and Environment

Our Approach towards Corporate Social Responsibilities (CSR) :We at Hinopak Motors Limited believe on contribution to the enrichment of society through better manufacturing and services. Our business activities have been carried out with an awareness of our social responsibility and the public interest, even before CSR became a major concern in the world.The Company philosophy framework focuses on developing relationship of trust with the Company's many stake holders, including shareholders, customers, suppliers and employees as well as protecting environment and promoting good governance practices.

In 2007 the company has establish a CSR & Global Compact Committee to focus on activities towards a sustainable society.

SOCIAL ASPECT

Customers:Customer firstHinopak's Quality Policy

Shareholders:Regular & open Communication

Business Partners:3S Dealers NetworkTraining and educating Suppliers & Vendors

Employees:Training and DevelopmentOccupational Health & SafetyWorkplace improvementEmployee Recreational activities Labour Management Relations

Community:Internship ProgramsAwareness visits by various schoolsNeighbor Complaint ResolutionHealth, Education & Safety Awareness Sports & Welfare Activities

ENVIRONMENT

Environment Management System:EMS Committee & Regular AuditsTraining & Awareness

Controlling Environmental Impacts:Reducing pollution Impact Environment Day & Tree Plantation initiativeControlling Material and Environmental Impact.

Social Aspect

CSR & Global Compact Committee

CSRInitiatives

Environment Management Committee

Whistle Blowing Committee

Sports Club

Health & Safety Committee

Human Resource Development Committee

COMPLIANCE Governance: Board of Directors Audit Committee Internal Audit Function Code of Conduct

Whistle Blowing Mechanism: Suggestion Box Open Communication Regular Reporting

ComplianceGovernance FrameworkWhistle Blowing Mechanism

EnvironmentEnvironment Management SystemControlling Environmental impacts

CustomersShareholdersBusiness PartnersEmployeesCommunity


Hinopak's Governance StructureMultidirectional Monitoring Approach

Appointment

Reporting

Reporting

Reporting

External Auditors

Audit CommitteeMonitoring

Company Ordinance &Listing Regulation

Corporate Governance &Sarbanes Oxley

Act (Internal ControlSystem) Readiness

Project

Financial reportingFramework &International

Accounting Standards

Board of Directors

Senior Management(Management Committee)

Shareholders

CSR & Global Compact Committee

Suggestion boxes have been installed across the plant and head office area to increase vigilance.

complianceAs a contribution to enrichment of society, Hinopak Motors Limited is carrying out fair and transparent business practices, while improving its internal control environment.

Whistle Blowing Mechanism:We recognise whistle blowing as one important way to ensure good governance. The Company operates a working environment that supports and ultimately protects employees who, in good faith, report instances of suspected misconduct. Hinopak has a viable whistle blowing protection mechanism that is designed to balance the interests of the Company and the subject of the complaint of misconduct, without jeopardising the protection owed to those employees who ‘blow the whistle’.

Compliance at Hinopak is not just about observing the laws and regulation. It also means respecting social norms and corporate ethics, complying with the expectation of all the stake holders and engaging in fair corporate activities.

Board of Directors: In Hinopak, the Board of Directors is composed of executive and non-executive directors.The Board convened five times in 2007. The Board reviewed and approved Company's future strategy and short and mid term plan.

Audit Committee:An Independent audit committee has been established by the board for monitoring of compliance activities in the company. The Committee is comprised of three board members including two non executive directors. An Internal Audit department supports the committee. The committee held four meetings in 2007. Two meetings were also attended by the external auditors of the Company.

Internal Controls System and Financial Reporting: The Company maintains a system of internal controls and procedures designed to ensure reliable and transparent financial reporting and disclosures. Hinopak is a group company of Toyota Motors Corporation (TMC) and was selected for TMC's project to strengthen Internal controls and compliance with the requirements of US Sarbanes - Oxley Act. The Company is working on the project under the guidelines from TMC.

Code of Conduct:Using the Hinopak Code of Conduct as a guideline for day-to-day work will ensure that we comply with applicable laws and regulations. Further, it will encourage all our employees to act fairly and openly and to strive to meet stockholder expectations.

Internal Audit Department

Always Ahead 33

As part of our continuous commitment to sustainable development, we have renewed our pledge of social responsiveness by voluntarily subscribing to the principles of UN Global Compact. The Global Compact is a voluntary initiative, asking companies to embrace, support and enact, within their sphere of influence its ten principles in the areas of human rights, labour, environment and anti-corruption.

(Global Compact - Ten Principles)

Human RightsPrinciple 1: Business are asked to support and respect

the protection of International human rights within their sphere of Influence; and

Principle 2: Make sure their own corporations are not complicit in human rights abuses.

Labour StandardsPrinciple 3: Businesses are asked to uphold the

freedom of association and the effective recognition of the right to collective bargaining;

Principle 4: The elimination of all forms of forced and compulsory labor;

Principle 5: The effective abolition of child labor; and

Principle 6: The Elimination of discrimination in respect of employment and occupation.

EnvironmentPrinciple 7: Businesses are asked to support a

precautionary approach to environmental challenges;

Principle 8: Undertake initiatives to promote greater environmental responsibility;

Principle 9: Encourage the development and diffusion of environmentally friendly technologies; and

Principle 10: Business should work against corruptions, all its forms, including extortion and bribery.


EnvironmentTo prevent the warming and environmental pollutionthat is advancing on a global scale,we are promoting a reduction in environmental impactthrough the entire vehicle life cycle— from product development to disposal —that goes beyond current laws and regulations.

HPML Environment Policy Hinopak Motors Limited is committed to identify and implement means and measures that would result in minimum environmental impact from its products and every aspect of its business activities ranging from product development to production and servicing.

Our motto at Hinopak is:"Strive for contributing to environment friendly products to our customer satisfaction & support to environmental preservation activities for our employees and community, to the best of our ability."

For this, we set objectives and targets to:

Promote pollution prevention & reduce environmental impacts by proper handling and disposal of waste water, solid waste, hazardous substances & gaseous emissions.

Conserve energy and other resources.

Comply with all the applicable legal and other requirements.

Improve environmental performance continually by reviewing objectives, conducting audits and management reviews under our Environmental Management System.

Educate, train and motivate employees and interested parties to conduct activities in an environmentally responsible manner and as per the company's environmental policy, which is also available to the public.

Reduction ofenvironmental

load in allcompanyactivities

Co-existencewith society

Further promotion of

environmental conservation activities in

HPML

Always Ahead 35

Environment Management System: Hinopak conducted its Initial Environmental Review (IER) in the year 2001 to ascertain its capability for adopting ISO 14001 standard. In a very short pace of time, Hinopak management adopted ISO 14001 Management System and became first automobile company in Pakistan to get this qualification.

Hinopak in its mission to promote activities that reduce environmental impacts, and as directive from the principal Hino Motors Japan acquired ISO 14001:1996. In 2005, we successfully upgraded our ISO 14001:1996 Standard to new ISO 14001:2004 Standard and again became the first automobile company in Pakistan as well as in Hino Group to achieve this qualification worldwide.

Training and Awareness: At Hinopak, various educational activities are organized to give environmental awareness to employees, suppliers and customers. We make it a point that our people develop greater consciousness and sense of responsibility towards the environment. Trainings related to Operational Control, Energy Conservation and Emergency Response are on our regular agenda. Every new employee whether appointed in management or worker cadre is given orientation on EMS.

EnvironmentalManagement

EMS Committee members on receiving ISO 14001 certification

Our Director Mr. F.K. Siddiqi giving lecture on mottainai to employees


EnvironmentalInitiatives

Tree Plantation:Tree plantation activity started in the month of June. The ceremony was inaugurated by Director General Environmental Protection Agency (Government of Pakistan) and Managing Director on June 5, 2007 and was continued through out the month.- 86 trees were planted in Hinopak premises.- 40 trees were planted in a 'School' located near the company.- 58 trees were planted in KV social Security SITE Hospital.- 450 trees were planted in Karachi Central Prison.

Free tune up Camp:HPML celebrated nationwide World Environment Day to educate the customers and create awareness among all Hino customers. Free tune up camps were organized by HPML & dealers at 12 different locations in Pakistan.

Waste water treatment plant

School Exhibition:Employees were made aware about the environmental issues presented by School children in the form of portrait, sceneries, practical models, stories, banners and sketches.

No Smoking Zones:Hinopak has been declared as a Non-Smoking Zone. Separate smoking areas have been assigned in Head Office, Product Support and in both the plants.

Always Ahead 37

EnvironmentalInitiatives

Future Plan:In line with the Hino Global Environment Charter, Hinopak is committed to continue its aim for prevention of global warming by reducing CO2 emissions, conserving water resources and minimizing waste generation. To achieve these targets upstream goals have already been established.

Controlling Material and Environmental Impact:Environmental conservation encompasses a wide range of activities in areas related to manufacturing. We are actively working with activities such as measurements aimed at reducing global warming (reducing energy, reducing CO2), waste reduction, and reducing reliance on natural resources (recycling), controlling materials with environmental impact and green procurement.

Assembly Operation Plant

949804 738

0200400600800

1000

2005 2006 2007

CO2 Emissions (Kg CO2 / Unit Production)

Co2 Emis s ion (Kg- Co2 / Unit P roduction)

311

234199

050

100150

250300

200

350

2005 2006 2007

Material Discarded (Kg / Unit Production)


31 30

25

05

1015

2530

20

35

2005 2006 2007

Water Consumption (m3 / unit Production)

Water Cons umption (m3 / Unit P roduction)

608

472403

0100200300

500600

400

700

2005 2006 2007

CO2 Emissions (Kg CO2 / Unit Production)

Co2 Emis s ion (Kg- Co2 / Unit P roduction)

244

230

207

180190200210

230240

220

250

2005 2006 2007


Material Dis carded (Kg / Unit P roduction)


2016

13

05

10

2015

25

2005 2006 2007


(Annual Reporting Period April to March)


LocalCommunity

Customers

Employees

BusinessPartners

Shareholders

Social AspectHinopak Motors Limited activities are

supported by our stake holders such as our customers, employees, business partners and

shareholders. Hinopak Motors Limited is working for the benefit of society, to gain the

trust of its stake holders through the manufacture and servicing of trucks and

buses.

Always Ahead 39

Hinopak Customer First Policy:Our business activities are based on customer first and quality first and we interact with customers with these policies in mind all the time. We believe that a manufacturer’s responsibility is to manufacture high quality vehicles. Hinopak Motors Limited makes its best effort to meet this responsibility throughout the development and manufacturing processes. When any malfunctioning does occur, we collect quality information on such malfunctioning through our product support teams & dealers to clarify the cause and resolve the problem at an early stage. We also maintain the fleet of mobile workshops which provide prompt and efficient backup services to Hinopak customers even at the remotest of locations.

Philosophy Objectives Initiatives

Utmost focus on quality on all stages of production.

Training of employees.

To Deliver Product with ZERO Defect from Factory

To assure Trouble Free Operation of Product through entire service life in field

Developing and strengthening Service Network.

Extending of Warranty Service Mileage.

Offering attractive service incentives.

Free Service Camps in the field.

Customer Complain Resolution.

Educating & training customers on products.

Philosophy

for

Customer

Service

Close Supervision at all levels of production

Customer training & advisory services are a continuous feature of our product support

department.

A course on “Productivity Improvement Techniques” by M. Mian–DGM QAD at Precision

Engineering (PIA) Karachi Air Port

with our customersCustomersCustomers

Social AspectSocial Aspect

Customers


After Sales Service

Spare Parts

Dealership Network

Technical Training

Five times Vehicle free checkups with free replacement of oil & Filter

with our customersCustomersCustomers


Customers

Extension of Warranty Mileage From 40,000 KM to 100,000 KM

Building Customer Confidence in the Product

ENHANCEMENT OF SERVICE INCENTIVESFREE CHECK UPS

5 timesPresent

July 2007 Onward

3 times

PastJune 2007 Backward

to 1 - 1,000 ~ 5,000 kms

- 30,000 kms

- 60,000 kms

- 90,000 kms ~ 100,000 kms

- 10,000 kms

st

2nd

3rd

4th

5th

Always Ahead 41

We offer a wide array of communication tools for various stake holders in order to enable them to correctly understand the ideal image of the Company.

with our shareholdersShareholdersShareholders


Published Financial Statements: The Company publishes quarterly statements as required by the Companies Ordinance,1984. It is ensured that maximum information with respect to Company's financial results and future prospects are provided through quarterly and annual reports. These reports are circulated on a timely basis to the Shareholders, Stock Exchanges and Securities & Exchange Commission of Pakistan. Company's Annual Report for 2006 ranked top in the engineering sector in "Best Corporate Report Award"

General Meetings: General meetings with the shareholders are valuable opportunities to apprise these stake holders about financial performance and progress of Company and its future prospects. Two general meetings were convened during 2007, one of these was the annual general meeting convened on March 29, 2007 for the approval of the results of 2006. The second was the extraordinary general meeting called on November 29, 2007 for the election of directors for the next term of three years.

Information with Hino website: A wide range of information including Company's philosophy, corporate information, business activities, financial information, product information are available on our website. In addition to the disclosure of information from the Company, we are also establishing a point of contact via our website as a communication tool for requesting material and receiving inquiries from all of our stake holders. Company's quarterly accounts are also placed on the website

Increasing corporate value:Hinopak Motors Limited intends to meet the expectations and win the trust of our shareholders by increasing corporate value from the following three perspectives:

To act promptly based on an appropriate recognition of the business environments;

To continue growing stably;

To secure transparency by conducting fair public information activities.

Interaction between our shareholder and top management


with our business partners

Suppliers & Vendors:The core mission of procurement is to harvest the best possible goods from around the world by comprehensively examining quality, price and time of delivery. This is achieved by establishing a relationship with each supplier that is based on mutual trust and that brings prosperity to both parties through manufacturing.

Vendors’ training and education for the improvement in product quality is one of the priority activities of Hinopak management. Training sessions for vendors were conducted throughout the year on various topics including "inspection and measurement techniques". The Company's Progressive Manufacturing Department worked with vendors to established their 2007 objectives in the beginning of the year and vendors sessions were held to review the actual achievements through out the year.

Business PartnersBusiness Partners


BusinessPartners

A group photograph of Hinopak companies management with Hinopak's dealers

Educating during process of Audits at vendor premises

Director Production advising our vendors during his factory visit.

Dealers Network:The Company is the first in the commercial vehicle sector to start the establishment of a 3S dealer network which offers Sales, Service and Spare Parts facilities all under one roof. Our comprehensive network of offices, 3S service dealers and spare parts dealers are strategically located through out the country.

Hinopak Motors strives together with our dealers across Pakistan to provide service that is prompt, uniform and of high quality, and that meets the expectation of customers.

2007

TRAINING &DEVELOPMENT OF

EMPLOYEESCAPACITY

ENHANCEMENT

VENDORS' OBJECTIVES

PRO

DU

CTIVITY /

SYSTEM

IMPR

OVEM

ENT

CO

ST R

ED

UC

TIO

N

QU

AL

ITY

IMP

RO

VE

ME

NT

Always Ahead 43

Safety and health policy:Hinopak Motors Limited is committed to have all its operations safe and protected against all hazards effecting occupational safety and health of its employees.

Our Aim at Hinopak is:To create and develop such working conditions and environment which are conducive to safety and health of employees.

To make our process free from accidents and illnesses, gradually.

To work in an organized manner to make CONTINUAL IMPROVEMENT in the areas of OSH.

To make objective based efforts for reducing unsafe and un - healthy work practices/conditions.

To educate / train our employees in the area of OSH and make continuous efforts to create awareness among all concerned on the subject.

To develop an adequate investigation system which can help avoiding reoccurrence of accidents.

To comply with all the applicable legislation / regulations and to cooperate with the authorities concerned.

with our employeesEmployeesEmployees


Employees

Human Resource Development:Personnel development and training remains top priority for the Company. We offer courses with contents that is useful to employees at every level from regular employees all the way up to the management.

Safety and Health for Labour:Safety takes priority over all business activities, as embodied in the Hinopak's Safety and Health Policy. We are making concerted efforts in safety and hygiene management, and that the development of a workplace that is safe, healthy and decent.

Another workshop, this time dealing with "soft" skillsOne of the "hard" skill trainings given

to our employees in 2007

Our IR Manager introducing a guest doctor as part of our regular Health/Disease

Management Program


Labour Management Relationship:Mutual trust and respect between labour and management is a fundamental principle of Hinopak Motors Limited employee relations. 11 Charters of Demand in 22 years negotiated in a record period of 1 to 3 weeks testifies to the company's respect to the labour rights.

with ouremployees

Daily warm-up exercises gear up our employees for a busy day

Briefings follow daily morning exercises; review of past day's activities/plans for the day are discussed

Fire fighting drills regularly conducted as part of our Emergency Response Plan

Employees' physical well-being is expected to improved through our newly-refurbished

Recreational Center

Sign off ceremony of the charter of demandCelebrating the 11th CBA agreement

Always Ahead 45

Sports: The Company sponsored many sports activities and events such as the annual Inter - Firms Hinopak Cricket Trophy, Hinopak Golf Trophy and Karachi Hockey Association Tournament. We take pride in contributing to the promotion of healthy sports among the youngsters.

Hinopak Inter-Firms Cricket Trophy:For the last 17 consecutive years, we have been in collaboration with the Karachi City Cricket Association in organising Inter-Firms Cricket Trophy, annually played for around three months and participated by cricket teams from 40 to 45 private and public-sector enterprises. As it stands out as the longest business and sports partnership sponsored by a single business organisation within the country, the trophy is the testament to our role in promoting sports as social responsibilities.

Hinopak Golf Tournament:The Company sponsored Golf Tournament at Arabian Sea Country Club. Golf players representing various institution participated in the tournament.

2nd Hinopak - KHA Trophy:After the great success of Hinopak Cricket Trophy on the city circuit, it is a matter of great pride that Hinopak is sponsoring 2nd Hockey tournament to be organized by Karachi Hockey Association. Hinopak firmly believe that by organizing such hockey tournaments, Karachi will provide the skilled hockey players for the national level.

with local communityLocal CommunityLocal Community



With Local Community

Summer Internship Program: Hinopak yet again opened its doors to students through its summer internship program. 63 students of various disciplines from different universities and colleges were placed practically in departments including Marketing, Human Resource, Design and Internal Audit. With the Company's project based internship program, the students are sure to go back to their classes equipped with more confidence gained from practical knowledge.

One of the recruitment practice Hinopak observes is job fair participation, in this picture at Institute of Business Management.

A fleet of fire tender is available not just for Hinopak, we answer to the call of any fire emergency outside our premises

ACCA Student Visit: ACCA students along with their student affair manager paid a visit to both plants. They were briefed about the Company in general and Finance and Internal Audit functions in particular.

School children are often given plants tour to provide them practical knowledge

Always Ahead 47

Hino 500 Series: The new Hino 500 series is a dynamic combination of power, economy, style and safety. Vast improvements in engine technologies have allowed us to create engines with more horse power by offering lower fuel consumption.These dynamic new vehicles featuring revolutionary technologies such as multi-valve engine, new air intake system, turbo charger with intercooler, overhead cams, heavy duty clutch, synchronized transmission and power steering, promised to change the face of transportation with new standards in comfort, luxury, safety and specially economy.

Dutro-The Mighty Light Duty Truck:Another feature of our product line is Dutro Light Duty Truck. Unrivaled in its class Dutro's superior technology and advanced features make ideal for urban and inter-city operations.

product line-upproductsproductsTrucks


Buses:Hinopak remains the pioneer in supplying the largest number of Urban buses which are successfully facilitating the urban commuters. Our bus line-up is built up on reliable FB2W, AKIJ & RK1J Series which are suitable for urban operations. In order to address the growing concerns about pollution, Hinopak has also introduced the first ever dedicated CNG engine bus manufactured in Pakistan on its AK1J Chassis.

HINO CNG Rear Engine bus built on AK1JRKA HINO SPLENDOR Rear Engine A/C Luxury Bus built on RK1JSLU Chassis and possess J08C Intercooler Engine

HINO ROADLINER Supreme A/C intercity Luxury Bus built on AK1JRKA chassis

HINO SENATOR Pride A/C Luxury Coach built on FB2WJKZ chassis

product line-upproductsproductsBuses

Always Ahead 49

Specialized Vehicles: Hinopak offers complete transportation solutions and our extensive specialized vehicle portfolio includes Dump Trucks, Water Bowsers, Mobile Workshops, Fuel Bowsers, Freight Vans, Cargo Trucks and many more. Our Cargo Vans and Bottle Carriers deliver edible and other merchandise every day to millions of people across Pakistan.

Dump Truck

Beverage Carrier

Sludge Carrier

Garbage Collector

ATM Van

Concrete Mixer

Body Operation Plant is geared for the production of various bus bodies and specialized vehicles that incorporate innovative styling, safety features, passenger comfort and superior finish.

Mobile Dispensary

product line-upproductsproductsSpecialised

Vehicles

Mobile Canteen

Crane mounted cargo body


A Photo frame is being presented to Mr. K.Maeda on his farewell

Hinopak Starts Export of Wind Deflectors for Trucks

Mr. Hideya Iijima takes charge of Hinopak as MD & CEO

Parts & Service Dealers Conference-2007

Hinopak receives Presidential award from Hino Motors Japan

Hinopak participates in Pakistan Association of Automotive Parts and Accessories manufacturers (PAPS) Exhibition

activities during the year

Always Ahead 51

annual report 2007 - hinopak motorshinopak is a group company of toyota motors corporation (tmc) and...

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