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Positive impact of production increase by auto industry *

● Investment in the auto sector has risen to Rs 98 billion● Direct employment is now 192,000 people● Indigenization of auto parts has reached high levels, as the local engineering industry

develops with more and more technology transfer● Auto industry contributed Rs 63 billion to the government exchequer● Saved the country Rs 22 billion in foreign exchange

* Daily Times, February 2, 2007ECC (Economic Co-ordination Committee), Govt. Of Pakistan

Automobile IndustryIn 2006-07, the local automotive industry for the fifth year running made an impressivecontribution towards the economic growth of the country. The market for locally assembledpassenger cars and light commercial vehicles grew by 9% to 204,212 units compared to187,436 units sold in 2005-06. Continued import of used cars and rise in interest ratesrestricted the growth rate compared to earlier years.

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Used Vehicles Increase in local production to meet market demand and restriction on import of used vehicles that are morethan 5 years old led to a decline in used vehicle imports to 28,493 units compared to 46,278 units in 2005-06.These imports are still 14% of the domestic passenger car and LCV production and continue to impede growthof the local auto industry.

In the 2007-08 budget, the government hadannounced a restriction on the age of imported usedvehicles, disallowing imports of vehicles older than 3years.This is a welcome step. However, this restrictionhas been waived till August 31, 2007 and vehiclesolder than 3 years continue to find their way into thePakistani market.

In addition, the depreciation rate of 2% per monthamounting to 50% in two years, creates a furtheranomaly as locally produced cars are allowed adepreciation of only 15% per year. Compared to India,Thailand and other countries in the region, our policiesfor used car imports through Personal Baggage Rulesare quite liberal besides being prone to misuse.

The Engineering Development Board, in consultation with the industry, has finalized a long term policyframework for the auto industry. This policy set out tariffs for CBUs, CKDs, and components looking forward sixyears.This is a very welcome development and we commend the GOP for putting in place an environment thatis forward looking and provides the much needed framework in which the industry can confidently invest for thefuture.

Company ReviewThe Company is pleased to report that 2006-07 was another record year. Significant milestones were achieved.Your company crossed production of 250,000 units since its inception. We achieved over 50,000 units of salesduring the year. Our dealership network expanded from 25 to 29 dealers. In Product Quality and Safety, weimproved upon previous benchmarks.

SalesSales of locally manufactured vehicles and CBU variants for the year ended June 30, 2007 were 50,557 units,compared to 42,406 units last year, up by 19%.

Toyota Corolla out-performed its competition and established a market segment leadership position in Pakistanwith 59% market share in the year 2006-07.

CKD Passenger Car Small-High Segment

Vehicle Imports

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Daihatsu Cuore increased its share to 26% in 2006-07 from 18% last year in the economy car segment thatcontinues to show impressive growth.

The New Generation Camry introduced in the beginning of 2006-07 fiscal year showed impressiveperformance. It increased its share from 16% last year, to 54% by June 2007, in its segment.

In the new SUV category, we increased our market share from 62% to 88% this year, with increased focus onfleet customers who are secure in the reliable performance, durability and after sales service and productsupport capability of Indus.

CKD Passenger Car Economy Segment

New CBU Passenger Car - Luxury Segment

New SUV (Land Cruiser/Prado)

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Our Hiace and Hilux increased market share from an already impressive 63% last year to a market dominantposition of 84% this year.

Preparations are underway to commence manufacture of the New Generation Hilux in Pakistan in late 2007.This new generation model, which is featured in our Annual Report, has performed exceptionally wellthroughout the world and is both powerful and stylish. It is a quantum upgrade over the previous model.

Sales Revenue, ProfitSales revenues for the year 2006-07 increased by 11% to a record Rs 39 billion, compared to Rs 35 billionachieved last year. Achievement of higher sales volumes, efficient operations and favorable foreign exchangerates contributed to the overall earnings and enabled the Company to absorb cost push inflationary pressuresemanating from high fuel prices in order to provide maximum value and relief to our customers. The Companyposted a record profit before tax of Rs 4.2 billion, up 3.8% compared to Rs 4.1 billion achieved last year.

Dividend The Company's Return on Equity for the year was 34.1% (2005-06 of 42.3%) while Earnings per Share rose3.7% to Rs 34.9 and Shareholders Equity was up 28.5% to Rs 8 billion. A final payment of Rs 8 per share hasbeen proposed to shareholders, making the total payment for the year of Rs 13 per share, a 8.3% increasecompared to the Dividend payment in 2006. An amount of Rs 1,723.9 million is recommended for appropriationto the General Reserves which will be utilized for continuing growth and capacity expansion.

New CBU 1 Ton CV (Van and Pickup) Segment

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Visits by Toyota Senior ManagementMr Akio Toyoda, EVP, Toyota Motor Corporation

It was a matter of great honor and pride for us that Mr Akio Toyoda, the grandson of "Toyota's founder" and theExecutive Vice President, Toyota Motor Corporation, Japan visited Indus Motor Company on November 10,2006. He was given a rousing welcome by our senior management followed by a tour of the plant and facilities,where he was briefed on the manufacturing processes.The performance and milestones achieved by IMC werehighlighted during a presentation.

Toyoda San praised IMC's performance andcongratulated the Company on increasing itsproduction capacity nearly four times in the last fouryears to meet the tremendous demand of its vehicles.He also commented on the growth of the automobilemarket, "I am optimistic about Pakistan's AutomobileIndustry which has developed substantially in recentyears and I anticipate that it will continue to grow in thefuture."

Mr Akio Toyoda also inaugurated the modern, state ofthe art Toyota Gymnasium at Habib Public School,Karachi. At the ceremony he stated, "I am delighted tovisit Pakistan again and feel honored to launch this sports facility. Toyota Motor Corporation is proud to be

associated with the House ofHabib in not only making acontribution to Pakistan'sautomobile sector but alsobeing part of communityservice as a good corporatecitizen". Mr Akio Toyoda is aformer national field hockeyplayer of Japan and hasplayed international hockeymatches in Pakistan in hisyouth!

Mr Akio Toyoda being briefed in Obeya Room

Mr Akio Toyoda, EVP, Toyota Motor Corporation visits IMC

Mr Akio Toyoda inaugurating the Toyota Gymnasium

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Mr Junzo Shimizu, President, Toyota Tsusho Corporation

We were also honored to welcome Mr Junzo Shimizu, President, Toyota Tsusho Corporation to Indus MotorCompany on May 3, 2007. Following a detailed plant visit and presentation, Shimizu San praised Indus's recordbreaking sales and presented the Vehicle Sales Record Award to Indus and congratulated the Indus Team in

increasing production capacity to over 50,000 units per year. Expressing optimism on Pakistan's auto market,Shimizu San mentioned that the Company will continue to expand capacity by enhancing investment in thecurrent plant as well as consider setting up an additional plant. He noted that the automobile industry has a keyrole to play in increasing employment and transfer of technology and is the major contributor in the growth ofthe engineering sector in Pakistan.

Toyota Gymnasium Inauguration Ceremony

Mr Junzo Shimizu, President, Toyota Tsusho Corporation, presenting the Vehicle Sales Record Awardto Mr Parvez Ghias, CEO, Indus Motor Company

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Toyota Awards for Indus Motor CompanyDuring the year, Toyota Motor Corporation conferred recogni-tion awards to Indus Motor for our outstanding achievements.These awards were presented by Mr Katsuaki Watanabe,President, Toyota Motor Corporation to Chairman IMC.

Mr Junzo Shimizu, President, Toyota Tsusho Corporation during plant visit

Customer Service Prizefor Achievement 2006

Toyota Marketing Award 2006 (Overall) Toyota Marketing Award for Excellence2006 (Vehicles)

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MarketingThis year marked another milestone for IndusMotor Company with record sales of 50,557 units ina fiscal year.

Corolla continues to dominate as the market leader in its segment, and overall, it is the second largest volumeseller in the country amongst all passenger cars. Corolla's popular 1.3 XLi, the powerful, fuel efficient 2.0Diesel, and the high performance ALTIS have made Corolla the highest selling brand in the 1300-2000 cc carsegment.

Corolla Diesel, the only diesel sedan in Pakistan, is an extremely popular car liked by rural as well as urbancustomers. Responding to customer feedback, a new variant, the Corolla 2.0D SE was launched in early 2007.This variant is a mid-level entry in the Diesel Corolla lineup and comes with a wooden trim, CD Player, rearheadrests, power windows and power locks as standard options. Concurrent with this introduction, we alsoincreased our production, so that Corolla Diesel delivery times reduce further. Compared to the inconvenienceof frequent CNG refueling, Corolla Diesel is preferred by customers who are looking for both luxury witheconomy and fueling convenience.

With its powerful, yet efficient 1.8 VVTI engine, Toyota ALTIS has established itself as the car of choice forcustomers who desire top features and specs with solid drive and superior performance.

Cuore, giving the promise of quality, durability and reliability to its customers, has grown from strength tostrength, capturing a sizable share of the economy car segment. It is recognized as the small car with anexcellent drive, comfort, performance and resale. To add greater luxury to this popular car, known for itscomfortable ride and acceleration, an MP3 audio player has been offered in its Automatic variant, providingmore pleasure in driving. Cuore is the only automatic car amongst small cars.

Our Toyota Camry has scripted its own success story. Launched in mid-2006, this luxury car has overtakenpeople's imagination and has become the dominant brand in its segment.

IMC participated in the AUTO ASIA2007 held at the Expo Centre by adisplay of our product range including aconcept car, CS&S (Compact Sports &Specialty) car which was especiallybrought to Pakistan for showcasing thetechnological advancement andcommitment of Toyota to Pakistan's carenthusiasts

The 50,000th invoicewas generated byIMC dealers andChairman pressing abutton. This invoice was signed by one of the pioneersof our Company, Mr Ayaz A Siddiqui who was retiringthe same day.

Group photograph at the50,000 units sales ceremony

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Parts Another milestone achieved during the year 2006-07 was our Spare Parts business, where sales for the firsttime crossed the One-Billion Rupee mark.

IMC is the only automobile company in Pakistan to achieve this milestone.We achieved 27% growth in the aftersales parts business compared to 2005-06, through aggressive marketing and increasing customer awarenessto use genuine parts for reliability and performance.

Annual After Sales KaizenMarathon was held jointly by

IMC’s Service and Partsdepartments

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Dealerships

Mr Yasuhiko Yokoi, Managing Officer, Toyota Motor Corporation and Mr Ali S. Habib, ChairmanIndus Motor Company present the overall Nationwide Best Dealership Performance Award to

Toyota Faisalabad Motors during the 16th Annual Dealer Conference

Kenya Trip - Our Dealer principals visited Kenya on their annual trip, mixing business with pleasure!

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Dealership Network Expansion

With increasing motorization, our auto market is expanding and Indus wants to continue to play a lead role.Apart from introducing new products and auto solutions, we are enhancing the spatial presence of ourdealership network. During the year, four new 3S dealerships were added to our network in the cities of Sialkot,Hyderabad, Rahim Yar Khan and Gujranwala. Besides these, all our existing dealerships are undergoing majorrenovations and upgrade to offer customers and their families a friendly environment to conduct sales andservice business. We want our customers to have the best possible auto buying and ownership experience.

New Dealerships Signing Ceremony - (seated from left to right) Mr Zahid Jamil, CEO, Toyota RahimYar Khan Motors, Mr Mohammad Ashraf, Chairman, Toyota Sialkot City Motors, and Mr Mohammad

Shoaib, CEO, Toyota Hyderabad Motors with IMC’s top management and Marketing Team

Turkey Trip - Dealership and IMC staff on another trip to Istanbul which they enjoyed very much

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Toyota Royal Motors (Rahim Yar Khan)

New Dealerships’ inauguration

Toyota Gujranwala Motors (Gujranwala)

Toyota Hyderabad Motors (Hyderabad)

Toyota Sialkot City Motors (Sialkot)

Mr Abdullah Yousuf, Chairman CBR inaugurating Toyota Gujranwala Motors

Mr Ali S. Habib, Chairman IMC inaugurating Toyota Royal Motors

Mr Yutaka Arae, Vice Chairman IMC inaugurating Toyota Hyderabad Motors

Mr Ali S. Habib, Chairman IMC inaugurating Toyota Sialkot City Motors

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IMC has embarked on the development of an Express Maintenance Program with the assistance of ToyotaMotor Corporation, for both increased service capacity at our dealerships as well as enhanced convenience forour customers.This program, based on Toyota Production System provides for prompt maintenance of vehiclesand has strong customer appeal for speedy delivery of service vehicles with attention to quality detail.

There is a strong emphasis on After Sales Service at Indus and its dealerships. Our Service and PartsDepartments jointly organized the After Sales Kaizen Marathon on 20-21 February, 2007. This event was anopportunity for dealers to share the best Kaizen practices implemented during the year at their dealershipsleading to improved performance.

Service

After Sales Kaizen Award being presented to Toyota Islamabad Motors

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To enhance the skill level of Service staff, our Service Department conducted a National Skill Contest forService Advisors, General Technicians and Paint Technicians of our dealership network. This contest was heldat the dealership level and regional level.

Every year, our Service Department conducts T-TEP (Toyota Technical Education Program) Career Days atthe Govt. College of Technology, Lahore and St. Patrick's Technical Institute, Karachi.T-TEP, which is sponsoredby Indus Motor Company with the assistance of Toyota Motor Corporation, is a comprehensive three yearsautomobile diploma training program where students receive practical advanced training in the latestautomobile technology that enables them to find career opportunities upon graduation.

Jishuken is a self learning processbased on the Japanese concept of'Genchi Genbutsu', and is conductedregularly by our Service Department. Itengages the service staff of ourdifferent dealerships to physically visitthe model dealership as one team toverify and authenticate the Kaizenactivity.

A memento being presented to the ChiefGuest, Capt. M Khurram Agha, Additional

Secretary, Government of Punjab

The award winners and IMC team at the National Skill Contest

T-TEP students being trained on variousautomotive components

Customer RelationsDuring the year, the CR team focused on putting in place customer-friendly policiesand procedures at Indus and its 3S dealerships to achieve quick turnaround oncustomer inquiries and complaints to maximize Customer Satisfaction.

Our vision in CR, as per Toyota's CR Activity Ideals, is to create corporatetrust based on integrity and fair handling of Inquiries and Complaints by:

● Opening a larger window for customers● Handling Inquiries and Complaints swiftly and surely● Making the "Voice of the Customer" the basis for corporate renewal, and● Improving our corporate image and educating customers to support Sales and

Service activities

In living up to this vision, we hope to achieve our long-term goal of becoming # 1 in Customer Satisfaction inPakistan by implementing CR strategies and policies that will motivate CR staff to perform at increasingly higherstandards.

Our Complaint Handling Procedure provides clear guidelines on how to achieve swift resolution of customercomplaints. Co-ordination with key departments at the plant and dealerships helps improve teamwork and instilla customer focus that is quickly cascading throughout the Company and our Dealer network.

Dealerships’ CR Managers and Indus CR Team at the Quarterly CR Workshop held at Swat

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Toyota. Since then, VOC has been implemented successfully at Indus and all 29 dealerships. It is used torecord, classify and analyse inquiries and complaints. Customer feedback is regularly studied by seniormanagement at Indus and our dealerships for continuous improvement.

The CR Performance Criteria and individual dealer Action Plans identify minimum operating standards forCR. Relevant, transparent and measurable, this performance management tool allows us to evaluate progress,identify performance gaps and provide feedback to management regularly.

This year, for the first time ever, the top-performing Dealership CR Managers, who achieved their CRperformance target of 80%, earned themselves an opportunity to visit Toyota Lanka, Colombo to undertakeGenchi Genbutsu and see first-hand the CR practices, processes and systems adopted by a leadingdistributor and dealership in the region.

To reinforce our commitment to developing our people, CR regularly undertakes Training in CustomerHandling Skills and conducts Quarterly Workshops to keep a continuous dialogue with our dealership CRteams. By doing so, we wish to bring about positive change in their knowledge, skills and behaviours andimprove the customer experience in their every interaction with us.

To promote visible demonstration of Customer First policies among our customers, CR staff at our Dealershipsconduct Free First Service and Regular Maintenance follow-ups and solicit Post-Service feedback to notonly highlight CR in a positive way, but also to build long-term relationships with customers while promotingcustomer retention and loyalty.

At Indus, we introduce CR to our customers each time a car leaves our plant. A CR introduction letter withcontact details of our CR team is placed in every vehicle to encourage customers to call or write to us with anycomplaints, inquiries or suggestions they may have.

Another way we engage customers is through the quarterly Customer Satisfaction Index and ProductQuality Surveys that is conducted through an independent research agency. More than 2500 customers arerandomly selected to provide feedback on the quality of our products as well as the quality of the Sales andService that they experience at our dealerships.

With the above initiatives already in place, CR has progressed in leaps and bounds in the last one year. Thisis clearly evident from the numerous acknowledgements and appreciation letters that we receive from satisfiedcustomers.

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OperationsWhile your Company has continuously increased production to meet the growing demand for the products, ourcapacity now is at an all time high of 200 cars/day or 53,000 cars/year. We have undertaken several measuresto further enhance our engineering capability, production quality, standardization of work processes, safety, skilldevelopment of team members, etc.

For the first time in the history of IMC, M-Type Jig has been installed for Hilux production which is used in theweld shop for assembly of the main body. This advanced jig has the flexibility of handling the main body of allfuture IMV models.

As in other Toyota companies, KI-J activity has been initiated at IMC to further enhance the quality of productwhile maintaining a safe working environment. KI-J stands for Kaizen Initiatives through Jiritsuka. Jiritsuka is aJapanese concept that means self-reliance. KI-J involves hazards identification, visualization and fixingproblems on a priority basis.The basic concept of KI-J is to visualize and share weaknesses globally, by settingcommon targets voluntarily, considering capability and built-in-quality and achieving these targets through teamwork and cross functional support.

In order to achieve the desired targets results, training and awareness sessions were conducted to enhancethe capabilities of our members in the areas of Quality, Safety and Standardized Work, as these areas ensureBuilt-in-Quality. A total of 550 man hours training was provided to staff. Furthermore, to enhance Safety at plant-site, several display and message boards were installed at prominent locations to create greater awareness

Quality Audit by Toyota experts

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through visualization. The activity has also enabled team members to identify hazard points and takeappropriate countermeasures to create a safer working environment in the plant.

The quality of our products isdirectly related to the skill level ofour Team Members andsupervisory staff. Therefore, thereare on-going and continuous multiskill development programs. Theskill level of our workforce is quitehigh. We took part for the first timeand excelled in the Asia PacificSkill Contest at APGPC (AsiaPacific Global ProductionCentre), Thailand.

During the year, the Companystarted the environment friendlyCo-generation Power Plant. Thisfacility will help in reduction ofcarbon dioxide emissions throughthe use of natural gas to operateengines and turbines.

A group photograph of Asia Pacific Skill Contest at APGPC. IMC secured the Gold Medal in Paint(Team Leader) category and the Bronze Medal in Inspection (Team Member) category.

Abdul Riaz (Team Leader of Paint shop) receives Gold Medal andAward from Mr R Sasaki, President TMAP-EM. Abdul Riaz will

also honor IMC by representing Asia in the Global Skill Contest tobe held in TMC, Japan later this year.

Co-generation Power Plant

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As part of our on-going plant expansion, severalother projects are also being implemented.These include a new Jig Shop for making jigs forfuture models, extensions to our CKDWarehouse and CBU yard, a new Skill TrainingCentre to develop world-class, quality-consciousteam members as well as expansion andupgrading of our Canteen Block to cater to theincreasing members of our workforce.

Continuous improvement is a process that ispursued, both at Indus and at its businesspartners. We work very closely with our vendorsand hold Vendor Workshops regionally in Karachi and Lahore. These workshops discuss in detail theProduction Plan and Quality and Delivery performance against predetermined targets. This open and usefulinteraction with our vendors has played a major role in enhancing the performance of our Product DevelopmentDepartment.

The Annual VendorConvention, with thetheme "Go See theWorld", was held inDecember, 2006 atKarachi, with the purpose ofhighlighting the annualachievements and activitiescarried out during the yearin parts localization and skillimprovement. Automobilevendors from all over thecountry, representatives ofToyota and Daihatsu fromJapan, and the Indus teamwere present.

In order to enhance ourlearning from globalpractices, our ProductDevelopment departmentorganized study visits tovendors in Thailand and

Indonesia during 2006 and 2007. The purpose of these visits was to support our local vendors in improvingtheir production, quality systems, tool/checking fixtures designing and development. The visits also helped inlearning the best practices of foreign parts manufacturers by understanding the implementation of 5S, GenchiGenbutsu, and Visual Management Systems.

New Jig Shop

Mr Shinichi Yasui, Chief Engineer, Toyota Motor Corporation, Japan, ChiefGuest at the Annual Vendor Convention receiving a memento from

Chairman, IMC

IMC vendors in Indonesia during study tour

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Human Resource DevelopmentIndus continued its thrust for fast paced employee and organization development programs consistent with itspresent business needs and future growth plans. Meaningful upgrades were implemented in all key areas ofHuman Resource Management and Organization Development to keep the processes current and aligned tothe best in the industry. Several initiatives materialized with full participation and support of line management.

During 2006-07, training at 112,000 man-hours was up 13% compared to the same period last year. On acumulative basis, Indus has completed around one million man-hours training since inception.

The trainings targeted technical skills as well as soft side competencies. On the infrastructure side, in additionto the existing facilities, construction of an impressive Technical Training Building was undertaken. It is designedto boost core and multi-skills trainings and refreshers for the production staff. The project is planned forcompletion in September 2007.

The Apprenticeship Training Program continued to be pursued aggressively. Around 400 apprentices wereinducted during the year and given quality class room and on-the-job training.

IMC participated in the TMC Global EmployeeMorale survey which covered all regional affiliates.The survey results were encouraging in terms ofemployee satisfaction, commitment and pride in thebrand. Interactive sessions with diverse employeegroups were held after the survey to work towardscontinuous improvements. The Indus top teamparticipated in these sessions.

Human Resource Department

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Indus has excellent labor-management relations. The Collective Labor Agreement due for negotiations inApril 2007 was successfully concluded. Negotiations were held in a very cordial and professional environment.The new agreement covers twenty four months period up to March 30, 2009.

The Company instituted its Hajj Policy for the teammembers. Two lucky team members, SalmanAnsari from PPMC and Noman-ul-Haq from

Assembly Shop were selected through balloting.

Zulfiqar Ahmed, General Secretary of Indus PeopleWorkers Union and Tariq Quddusi Sr. GM Technical

sign the Collective Labor Agreement

The traditional IMC Family Day was organized with its usual enthusiasm and excitement at the PAFMuseum lawns. Over 3600 employees and their family members attended this event. The occasion was

also used to recognize employees with the Best Attendance Award.

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Our slogan, "Concern Beyond Cars", reflects what we really are.We are not just a Company that makes cars.We go beyond.While doing our utmost to satisfy customers, as a good corporate citizen, we also serve in manyareas of Pakistani society.The Company sets aside 1% of profit before tax for social projects and contributions.

We are amongst the first to respond when natural calamities affect our beloved country. In the recent floodsthat hit Balochistan and Sindh after cyclone "Yemyin", we immediately responded by not only donating dryfood rations for airlift to Balochistan, but as after the earthquake of Oct 8, 2005, we also conducted reliefoperations working with an NGO, HOPE, in interior Sindh and set up a medical camp treating over 1000patients and providing food and temporary shelter to 100 families.

Your Company provides 50 Scholarships each yearto deserving, under privileged students and assistsover two dozen schools and educational institutions.This year, construction of the TCF - Indus MotorCompany Campus II School Complex at DehMehrani near Hyderabad was completed. In the firstphase, the project has started a Primary School that iscurrently providing education to over 360 studentsfrom rural villages in the vicinity.The project is plannedto expand to Secondary Level in the near future.

In November 2006, a state-of-the-art gymnasium-cum-auditorium was inaugurated at the Habib PublicSchool. This facility, which was constructed with theassistance of IMC and Toyota Motor Corporation, isused by Habib Public School for its own events as wellas for inter-school tournaments and extra curricularActivities.

At Indus, we run a very successful Apprenticeship Program that has done over 400,000 man-hours of trainingsince inception. We provide internships in different departments of the Company to engineering, business,accounts and IT students of various universities from within and outside Pakistan.

School at Deh Mehrani, near Hyderabad

Corporate Social Responsibility

People from several villages get relief goods and medical treatment

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In continuation of our commitmenttowards spreading technology, wehave started an All PakistanEngineering Students DesignCompetition in which engineeringstudents from different universitieswill work on real engineeringproblems and design technicalsolutions, particularly in the area ofrobotics.

As a leading Company in the autosector, we have taken severalinitiatives to try to improve RoadSafety. Our Road Traffic Injury Research Project with JPMC and NED for evaluating the nature, location andmagnitude of traffic injuries in Karachi has generated invaluable data that is very useful for traffic police, roaddesigners, hospitals, road users, etc.

In order to promote road safety amongst school children, your Company, in partnership with WWF and FamilyEducational Services Foundation (FESF) conducted an extensive Toyota Road Safety Campaign targetingaround 25,000 children in nearly 100 schools.

Engineering students participate in the Design Competition at IMC

Toyota Road Safety Walk in which about 1500 school children, their parents, NGOs, the IndusTeam and other safety conscious citizens participated

The Road Traffic Injury Research Project Team collecting data from road accident victims andentering into the database

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During the UN Global Road Safety Week (April 23~29, 2007) as a member of United Nations GlobalCompact, we also undertook a number of other activities. These included the 1st National Road SafetyConference which was organized with the help of Sindh Education Foundation on April 24, 2007. Withparticipation of about 500 people, the conference aimed at initiating a dialogue with different stakeholders on

road safety issues and developingrecommendations through five workingsessions on Corporate Sector,Engineering Sector, Health Sector,Education Sector and Road TrafficSystem.

To encourage auto journalism inPakistan and to developprofessionalism and capacity buildingin the field of Auto Journalism, we heldPakistan's First National AutoJournalists Workshop on May 29,2007. The workshop was conducted byan international expert on AutoJournalism. We announced the launchof the National Auto Journalists AnnualAward at the event.

IMC is a major promoter of sports and during the year sponsored a number of sporting events across Pakistan.

The Prime Minister presenting the key of a Toyota Corolla to the winner of Hole-in-One at thePakistan Open Golf Championship

Mr Jahangir Khan Tareen, Minister of Industries, Production and Special Initiatives with the winning teamat Toyota Polo Cup, Lahore

Chief Guest, Mr Salahuddin Haider, Advisor Information,Government of Sindh addressing the final session of the

National Auto Journalists Workshop

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During the year, altogether, we welcomed over a thousand visitors including senior management from TMC,TTC and DMC, shareholders, customers, delegations from government organizations, educational institutions,engineering companies, defense organizations, shareholders, financial analysts, press and media, regulatorydepartments, banks, associations and trade bodies, companies from the private sector, etc.

Mr Choudhry Amir Hussain (Speaker National Assembly) does a plant tour

In recognition of the efforts to protect theenvironment, IMC received the EnvironmentExcellence Award for the fourth consecutiveyear. Mr M. Mohiyuddin, Sr GM, QA & SHE

receiving the award.

Dr Ashfaq Hassan Khan (Economic Advisor to Prime Minister) observes our manufacturing processes

Mr Arif Nizami, Editor of The Nation duringthe plant visit

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In appreciation of its CSR initiatives, Indus Motor received the Pakistan Centre for Philanthropy (PCP)Award for the third largest donor in Pakistan. The Award was presented by the Prime Minister.

Indus Motor received the First Helpline Trust CSR Award for its "commitment to customers as well as thecommunity within which it operates". The Management Association of Pakistan presented us a CorporateExcellence Award in the Engineering and Allied Sector.

In consonance with our Company's vision of being the most respected and successful enterprise, we reaffirmour commitment to demonstrate responsible corporate conduct in all our activities and operations, and to doour best to meet societal expectations.

Mr Saeed Jung, Director LAC receiving theCSR Award from Mr Mian Muhammad

Soomro, Chairman Senate

Mr Parvez Ghias, CEO, Indus Motor Company receiving the PCP Award for the 3rd LargestCorporate Donor in Pakistan, from Mr Shaukat Aziz, Prime Minister of Pakistan

Corporate Excellence Award in Engineering& Allied Sector from MAP

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Future OutlookThe success of any sector is largely dependent upon the economy as well as the policies that govern the sector.Our country has witnessed economic growth in recent years and we are pleased that this year the Auto IndustryDevelopment Plan has been finalized. This is a positive step which will enhance the confidence of local automanufacturers and auto parts assemblers and will encourage further investment, employment andsustainability of the domestic auto industry.

We are grateful to the government for its efforts to reduce the inflow of used cars into the country by restrictingimports of vehicles older than three years. However, this decision, announced in June 2007 has beenpostponed for implementation till September 2007.

There are challenges ahead for us from the perspective of rising interest rates also. For the auto industry and,indeed for the country to grow, we pray that the political and business environment continues to remain stable.On our part, we continue to increase capacity to meet the requirements of our customers and will make fullefforts in being competitive in both cost and quality, in delivering maximum value to our customers, and inworking very closely with the industry, our business partners and other stakeholders.

As a member of the UN Global Compact and a Concern Beyond Cars, we will strive to be the most respectedCorporate Citizen and will continue to enhance our social initiatives. Our CSR projects, particularly in the areasof Road Safety, Education and Health, are making a significant impact.

I thank our Board of Directors and the management team for steering the Company towards another successfulyear.

We are grateful to our customers for buying and driving our vehicles. We continue to do our best in providingthem the best designed, most durable and high quality products as well as efficient after sales service.

I would also like to thank our Indus Team, our shareholders, our dealers and vendors and business partners.

We bow to Allah and pray for His blessings and guidance.

Ali S. HabibChairman