Atlas Honda : Transmission of Annual Report for the Year Ended 31-March-2025

M Atlas Honda

Journey of Dreams

egrated '

Journey of Dreams

About the Cover

In 1962, a visionary dream took root in Pakistan, a dream carried by our late Chairman, whose foresight and passion sowed the seeds of what would become the country's most iconic name in two-wheel mobility: Atlas Honda Limited.

At the heart of this remarkable journey is a powerful partnership: Atlas Group and Honda Motor Company of Japan. This joint venture blends Pakistani passion with Japanese precision and engineering excellence, a union that has stood the test of time and transformed the local automotive landscape. Over the past six decades, Atlas Honda has not just produced motorcycles; it has fostered economic mobility and become a trusted companion in the lives of customers across generations.

For many in Pakistan, owning a motorcycle is more than a means of transportation; it is a symbol of aspiration, freedom, and pride. And for most, that dream has a name: Hondu! Wkctkcr it's tkc timclcss CD 70, u �ırst motorcyclc for countless young riders, or the powerful CB 150 that commands the roads with authority, Atlas Honda motorcycles are woven into the fabric of everyday dreams. They are the reliable companions of students heading to university, workers commuting to jobs, families exploring

their homeland, and entrepreneurs powering forward on their journey to success. It's the durability, performance, and unmutckcd Pucl cf�ıcicncy oP tkcsc muckincs couplcd witk an extensive nationwide service network that make Atlas Hondu motorcyclcs tkc �ırst ckoicc, tkc trustcd ckoicc, und often, the dream choice for consumers across the country.

Tkis rcport not only rc��ccts u corporutc journcy but ulso celebrates a dream on wheels, one that travels through the diverse and breathtaking landscapes of Pakistan. From the vibrant streets of Lahore to the serene valleys of Swat, from the bustling roads of Karachi to the rugged terrains of Balochistan, from the deserts of Cholistan to the towering peaks of Gilgit-Baltistan, Atlas Honda motorcycles have journeyed through them all.

As Atlas Honda looks ahead, it remains committed to innovation, sustainability, and customer-centric growth. With a continued focus on localization, technology, and excellence, the Company aims to carry forward the legacy of its late Chairman and continue to be a symbol of trust, reliability, and aspiration.

Journey of Dreams is a story still unfolding - one where every turn of the wheel writes a new chapter in the lives of people Because when you ride a Honda, you don't just ride a motorcycle - you ride a dream.

President / CEO's Message

I am pleased to present the Annual Report 2025 featuring another exceptional year of performance and adherence to the regulatory compliances and sustainability practices. This year marks a historic milestone for us as we have achieved record-breaking results reinforcing our position as a leader in Pakistan's motorcycle industry. Our performance is a testament to the relentless dedication of our team, the trust of our customers, and our unwavering commitment to innovation and excellence.

After a period of extreme volatility, the country's economy has gradually stabilised. The State Bank of Pakistan has played a mujor rolc by munuging prudcnt monctury und �ıscul policics tkut kclpcd tumc in��utionury prcssurcs, stubilising tkc exchange rate and neutralising the informal market. A focus on exports through the SIFC, together with attracting fresh in��ows tkrougk Porcign ckunncls kus grcutly kclpcd in shoring up the country's reserves. The ensuing price stability kclpcd ruisc consumcr con�ıdcncc witk customcrs rcturning to markets for the purchase of essential goods.

Our compuny kus bccn u mujor bcnc�ıciury oP tkc ongoing stubilizution mcusurcs. Hcultky ugriculturc cusk��ows, rising urban wages and better than expected remittances have resulted in enhanced liquidity at the household level. Dcmund is outpucing projcctions Por tkc �ırst timc in ncurly three years. I am pleased to convey that we are closing the ycur witk tkc kigkcst sulcs rcvcnuc und pro�ıtubility in our kistory. Tkc tricklc down cfPcct kus bccn u mujor boost Por our parts suppliers and dealers, who are encouraged by the increasing orders and rising footfall. Improvement in year on year sales has no doubt created a positive momentum within our eco-system. The key now is to ensure a sustainable growth path going forward.

With improved economic prospects, the automobile sector is again attracting new investments. Licenses have been issued to new entrants in various segments of the industry with new energy vehicles space particularly buoyant trying to enter the two wheeler segment. As the competitive landscape evolves, our Company is planning to respond with renewed vigour to maintain its leadership status. To continue to attract customers, the company aims to improve productivity, brand equity, product quality, cost competitiveness and the skillset of out associates.

Our approach to sustainability continued to evolve with purpose. During the year, we expanded our renewable energy Pootprint signi�ıcuntly, witk solur cncrgy now uccounting Por u mcuningPul portion oP our powcr nccds. Encrgy cf�ıcicncy, rcsourcc rccycling, und sociul inclusion cfPorts wcrc ulso scaled, underscoring our belief that long-term success must go hand in hand with environmental and social responsibility. Tkcsc cfPorts kuvc bccn rccognizcd oncc uguin by proPcssionul institutions, rcuf�ırming our position us u corporutc lcudcr in sustainable practices. On the front of gender inclusivity, female associates have been hired and trained to assemble at various production shops. In a country where female mobility remains severely limited, we have introduced programs aiming to break barriers by providing women with the skills, con�ıdcncc und truining to ridc two-wkcclcrs indcpcndcntly.

Going forward, we are of the view that EV products will be introduced and continue to co-exist side by side with ICE motorcycles for a foreseeable future. Battery cost, infrastructure availability and range anxiety are major challenges to widespread EV adoption. End to end green ambitions may take a little more time than expected - with power generation needing to shift completely to renewable sources. However, climate change is a reality and de-carbonising is a noble cause. Atlas Honda is thus embracing this vision wholeheartedly. The fact that our stakeholders still expect more from our company is both a challenge and a responsibility we must accept. For the coming years, we will, therefore, re energise and focus on enhancing our production level to pre-crisis levels, expand our product line-up and target new markets for increase in exports.

I would like to extend my sincere gratitude to our partner, Honda Motor, for its continued support and guidance in our journey. I would also like to thank our customers, shareholders, employees, suppliers and dealers who supported and contributed to strive for excellence in our journey together. Your continued trust inspires us to aim higher, deliver better, and lead with integrity.

Saquib H. Shirazi CkicP Exccutivc Of�ıccr

About This Report

This Annual Report provides a comprehensive overview of the performance, strategy, governance, and value creation uctivitics oP Atlus Hondu Por tkc �ınunciul ycur cndcd Murck 31, 2025. As a leading manufacturer of two-wheeler vehicles in Pakistan, the Company is committed to transparent communication with its stakeholders, highlighting the operational achievements, future outlook, and strategic dccisions tkut dc�ınc our rolc in u rupidly cvolving industry.

Tkc rcport is structurcd to rc��cct kow tkc Compuny crcutcs sustainable value over the short, medium, and long term. It ofPcrs insigkts into tkc cxtcrnul cnvironmcnt, our busincss model, risks and opportunities, governance practices, and botk �ınunciul und non-�ınunciul pcrPormuncc tkut urc critical to understanding the broader dynamics of our business model and industry context. The aim is to provide a clear understanding of how strategic initiatives are aligned with our vision to remain competitive, customer-focused, and innovation-driven.

We recognize that the automotive industry is undergoing a transformative shift driven by evolving consumer preferences, environmental regulations, and advancements in technology. Accordingly, this report also outlines how we are preparing to meet the future-through enhanced R&D, digital transformation, supply chain resilience, and our adoption of eco-friendlier mobility solutions.

Reporting Scope and Framework

• Reporting Period: This report covers activities, performance, and developments for the period from April 1, 2024, to March 31, 2025.

• Financial Reporting Standards: Following standards were complied with in preparation of this report:

• Integrated Reporting Framework

• Companies Act, 2017

• International Financial Reporting Standards (IFRS) issued by the International Accounting Standard Board us urc noti�ıcd undcr tkc Compunics Act, 2017

• Islamic Financial Accounting Standards (IFAS) issued by the Institute of Chartered Accountants of Pakistan as urc noti�ıcd undcr tkc Compunics Act, 2017

• Directives issued by the SBP and the Securities and Exchange Commission of Pakistan (SECP)

• Listed Companies (Code of Corporate Governance) Regulations, 2019

• Non-Financial Reporting: Sustainability, environmental impact, and social contribution disclosures guided by GRI Standards and the United Nations Sustainable Development Goals (SDGs).

• Reporting Boundary: The report covers the operations of Atlas Honda Limited, including its manufacturing plants, R&D facilities, and distribution network across Pakistan.

• Materiality: The matters included in this report are determined based on their relevance to our business performance, stakeholder interests, and potential to in��ucncc strutcgic dccision-muking.

Board Oversight and Assurance

This Annual Report was approved by the Board of Directors in its meeting held on April 30, 2025 after due review of the disclosurcs und �ınunciul stutcmcnts. Tkc �ınunciul information presented in this report has been audited by our external auditors, M/s. Shinewing Hameed Chaudhri & Co., Chartered Accountants, in accordance with applicable auditing standards. Their independent assurance reinforces tkc crcdibility und uccurucy oP tkc rcportcd �ınunciuls.

Table of Contents

Organisation Overview

The Organizational overview section provides key insights into the Company's vision, core values, leadership, product portfolio, and highlights of the year.

External Environment, Strategy and Resource Allocation

The external environment strategy and resource allocation section outlines strategic goals, market positioning, and the Company's response to external challenges to drive growth and competitiveness.

Future Outlook and Risk & Opportunities

In future outlook and risk and opportunities, the Company shares its forward-looking perspective, emphasizing R&D e

forts and its approach to managing potential risks and emerging opportunities.

Vision and Mission 10

Core Values: The Atlas Way 12

Code of Conduct 14

About the Group 16

About the Company 18

Board of Directors 20

Geographical Presence 22

Product Portfolio 24

Key Performance Highlights 29

Business Model 30

Position within the Value Chain 32

Company History: A Journey to Remember 34

Signi�ıcunt Evcnts 36

Organizational Chart 37

Business Environment 40

Legislative and Regulatory Environment 41

Competitive Landscape and Market Positioning 42

SWOT Analysis 43

Competetive Edge 44

Analysis of Key Stakeholders 45

Strategy and Resource Allocation 46

Linkage of Strategic Objectives with Vision and Mission 48

Impact of Key Factors on Strategy and Resource Allocation Plan 48

Strategy on Market and Product 49

Forward Looking Statement 54

Performance vs Last Year Disclosure 55

Major Capex and Status of Projects 56

Signi�ıcunt Pluns und Dccisions 57

Future R&D Initiatives 58

Risk Management Framework 59

Strategy for Key Risk and Opportuniites 61

Supply Chain Disruptions Risks and Strategy 67

Corporate Governance

The Governance section highlights the Company's oversight practices, board accountability, stakeholder engagement, and progress in digital transformation.

Chariman's Review 70

Director's Report to Shareholders 73

Report of the Board Audit Committee 83

Statement of Compliance with the Code of Corporate Governance (CCG) 85

Review Report on the State of Compliance with the CCG 87

Corporate Governance and Compliance 88

Board Approved Polices 92

Human Resource Management 94

IT Governance and Cybersecurity 98

Digital Transformation 102

Stakeholder's Relationship and Engagement 103

Striving for Excellence 107

Sustainability Report

The Sustainability Report details the Company's ESG strategy and alignment with international standards.

About the Report 110

Sustainable Development Goals 111

Sustainability Targets 112

General Information 113

Sustainability Strategy Framework 114

Voluntary Adoption of IFRS S-1 & S-2 116

Environmental Protection 119

Social Performance 126

Governance Framwork 138

Dc�ınition, Mctkodology und Scopc 142

Independent Assurance Statement 143

GRI Content Index 145

SDG Content Index 150

Financial Statements, Analysis and Shareholder's Information

Financial performance presents a comprehensive view of

�ınunciul und non-�ınunciul results, including audited

�ınunciul stutcmcnts und kcy disclosures to enhance transparency and accountability.

Analysis of Financial Performance 154

Anulysis oP Non-�ınunciul pcrPormuncc 156

Dupont Analysis 157

Six Years Analysis of Financial Statements 158

Statement of Cash Flows - Direct Method 174

Share Price Sensitivity Analysis 175

Segmental Performance Analysis 176

Sensitivity Analysis of Material 177

Statement of Value Addition 178

Statement of Economic Value Added 179

Quarterly Performance Analysis 180

Audit Report on the Financial Statements 181

Financial Statements 184

Pattern of Shareholding 227

Notice of the 61st Annual General Meeting 230

Shareholder's Information 233

BCR Index Criteria 236

Glossary of Terms 241

Feedback Form 243

Organization Overview

• Vision and Mission

• Core Values: The Atlas Way

• Our Code of Conduct

• Group Shareholding

• About the Group

• About the Company

• Board of Directors

• Geographical Presence

• Product Portfolio

• Key Performance Highlights

• Business Model

• Position within the Value Chain

• Company History: A Journey to Remember

• Signi�ıcunt Evcnts

• Organizational Chart

Vision

Market leader in the motorcycle industry, emerging as a global competitive centre of production and exports.

Mission

A dynamic growth oriented company through market leadership, excellence in quality and service and maximizing exports, ensuring attractive returns to equity holders, rewarding associates according to their ability and performance, fostering a network of engineers and researchers ensuing unique contribution to the development of the industry, customer satisfaction and protection of the environment by producing cmission Pricndly grccn products us u good corporutc citizcn Pul�ılling its social responsibilities in all respects.

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Organisation Overview | 11

Core Values

Our core values are derived from group's philosophy which is based on the "Atlas Way". It enumerates the principles of "Atlas Culture" and "Atlas System"

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Atlas Way

Corporate Governance

Respect, Recognition and Reward

Value of Time

Recruitment and career advancement based on integrity, merit, experience and skills

Education and Truining oP stufP und descendants

Self Reliance

Leading by Example

Humility and Excellence

Living within one's means, saving for the future and donating for good cause

To be happy and healthy

Atlas Systems

Management by Objectives (MBO) to align activities towards agreed company goals

Implementing 7S vision (Strategy, Structure, System, Stylc, StufP, Skills und Shared values) for the company

Inducting and retaining competent und skillcd stufP -right man for the right job

Using BCG model for strategic direction

Creating values through implementations of internal controls (SOPs and policy manuals)

Management development to produce performers, organization builders and strategists

Active participation in management meetings for continuous performance improvements

Ensuring accuracy and control of information / data tkrougk cf�ıcicnt MIS

Judicious sharing of pro�ıtubility bctwccn employee bonuses, dividend payout and pro�ıt rctcntion

Organisation Overview | 13

Code of Conduct

The Company conducts its operations with honesty, integrity and, respect for human rights and interests of the employees, for which the Company has shaped its governance framework, aligned with regulatory requirements and industry's best practices. Every individual associated with the Company is required to comply with the Code of Conduct which clearly lays down the guidelines, principles and standards for the organization as a whole. Below is the brief summary of Code of the Conduct of the Company. Our detailed Code of Conduct is accessible via our website (https://www.atlashonda.com.pk)

Compliance with the Laws & Regulations

• We shall not make, recommend, or cause to be taken any action, contract, agreement, investment, expenditure or transaction known or believed to be in violation of any law, regulation or corporate policy

  Human Capital

• We should create a working environment where there is mutual trust and respect for everyone.

• We should provide equal opportunities to all the employees and hiring should solely be based on quuli�ıcutions und skills nccdcd Por tkc job

• We are committed to creating a safe and healthy working environment for all our employees

• We should develop employees, enhancing their skills and competencies through on-job trainings, educational growth and career development opportunities

  Customers

• Wc skould dclivcr quulity products und scrviccs, consistcntly ofPcring vuluc in tcrms oP pricc und quality

• We should actively promote safe working practices throughout our value chain

• We should comply with product labelling requirements

• We should conduct the business in accordance with the principles of good governance, fairness, transparency and integrity

• Wc skould providc timcly, rcgulur und rcliublc inPormution oP our uctivitics, structurc, �ınunciul position and performance to all stakeholders

  Business Partners

• Wc skould bc committcd to cstublisking mutuully bcnc�ıciul rclutionskip witk our busincss partners and our business partners should adhere to our best business practices to ensure transparency and integrity

  Community Involvement

• We should build and maintain fair communication with society as well as stakeholders, and should be committed to accurate and timely disclosures of information

  Public Activities

• Wc skould not support politicul uctivitics nor contributc Punds to �ınuncc suck uctivitics.

• We should engage with industry associations for development of proposed legislations and other regulations, protecting our legitimate business interest

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The Environment

• We should develop a sustainable business model to reduce our environmental impact and contribute to overall wellbeing of the society

• We should encourage our supply chain partners for adoption of environmental friendly policies and procedures

  Innovation

• The Company should make innovations to meet customers' demands, working on the basis on research & development and high quality standards

  Competition

• We should support establishment of appropriate competition laws and conduct our operations in accordance with principles of fair competition and all applicable rules and regulations

  Business Integrity

• We should not give or receive bribes, whether directly or indirectly or other unethical and illcgitimutc udvuntugcs Por busincss or �ınunciul guins

• We should not give or receive any gift or payment that may be construed as being a bribe. Any dcmund Por, or ofPcr oP, u bribc must bc rcjcctcd immcdiutcly und rcportcd to munugcmcnt

  Con��ict of Interests and Confıdentiality

• Wc skould uvoid pcrsonul uctivitics und �ınunciul intcrcsts, wkick could con��ict witk tkc intcrcst of the Company

• Wc skull not tukc udvuntugc oP our of�ıciul position to scck pcrsonul guins tkrougk tkc inappropriate use of Company's information or misuse our position

• Wc skull not usc or disclosc tkc Compuny's trudc sccrct, proprictury or con�ıdcntiul inPormution, us u mcuns oP muking privutc pro�ıt, guin or bcnc�ıt

  Compliance - Monitoring - Reporting

• The Ethical business principles should be communicated to, understood and practiced by all our employees and associates

• Any breach of the policies, procedures, laws or regulations should immediately be reported to Business Ethics Committee

  Media, Publishing and Public Appearances

• We should refrain from providing any corporate information to someone outside the Company unless authorized to do so. If not authorized, we should refer the person to the appropriate area within the Company

• We should refrain from commenting on social media platforms regarding any corporate information unless authorized to do so

• Before publishing, making speeches, giving interviews, or making public appearances that are conncctcd to busincss intcrcsts tkut muy rc��cct on tkc Compuny, wc must gct writtcn upprovul from the competent authority

  Shareholders

• We strives to serve the best interests of its shareholders to provide consistent growth and a fair rate of return on their investment

• Conducting the business in accordance with the principles of good governance, fairness, decency and integrity help the company to build shareholder's value

• Wc providcs timcly, rcgulur und rcliublc inPormution oP its uctivitics, structurc, �ınunciul position and performance to all stakeholders

Organisation Overview | 15

About the Group

The foundation of Atlas Group was laid in the year 1962 by Mr. Yusuf H. Shirazi when "Shirazi Investments (Private) Limited" was formed with an initial capital of Rs. 500,000 and 2 associates by his side. It was Mr. Shirazi's vision of empowering Pakistan by building institutions of excellence. This drove the nation's largest motorcycle manufacturing Company's chronicles, showcasing the "Power of Dreams, Generation after Generation."

Toduy Atlus is u divcrsi�ıcd group dculing in cnginccring, powcr gcncrution, truding, und �ınunciul scrviccs. Tkc Group embodies the spirit of development as it endeavours to fuel the growth of Pakistan's economy through 19 companies out of which four are quoted on the Pakistan Stock Exchange.

The Group has harmonized professional management and institutionalized the Group shareholding to build businesses that last generation after generation. Atlas has also been playing a leading role as a corporate citizen promoting professional education centers, contributing to health facilities, helping law enforcement agencies, and improving the standard of life.

Our Group Companies

1962

1962

1966

1975

1980

1981

1992

1997

2002

2007

2007

2008

2011

2012

2015

2016

2020

2019 2019

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Group Shareholding

Shirazi Investments (Private) Limited [SIL] was incorporated in 1962 and is the holding company of Atlas Group. SIL holds 52.43% of the shares of Atlas Honda Limited. Besides being holding company of Atlas Group, it is engaged in the businesses of real estate, warehousing and investments in capital markets.

Atlas Insurance Limited is engaged in general insurance and takaful business. The company was founded by Sir Muhammad Iqbal in 1934 and was acquired by Atlas Group in 1980. Atlas Insurance holds 2.84% shares of Atlas Honda Limited.

Honda Motor Company Limited, Japan is the joint venture partner of Atlas Group and holds 35% shareholding of Atlas Honda Limited.

Atlas Honda Limited is a joint venture between Atlas Group and Honda Motor Company Limited Japan

Atlas Hitec (Private) Limited is a joint venture between Atlas Honda Limited, Atlas Autos (Private) Limited and Denso Corporation, Japan engaged in the business of manufacturing automotive parts and components. Atlas Honda Limited holds 29.23% shares of Atlas Hitec (Private) Limited.

Performance of Associate

During tkc ycur , our ussociutcd compuny dclivcrcd u commcndublc pcrPormuncc, rc��ccting continucd opcrutionul stubility und strutcgic disciplinc. It rccordcd u Pro�ıt APtcr Tux oP Rs. 177.7 million, skowing u ycur-on-ycur improvcmcnt Prom Rs. 40 million reported in the previous year-an increase of nearly 344%. This growth was primarily driven by enhanced production cf�ıcicncy, improvcd sulcs, cost rcduction tkrougk loculizution und pro�ıt Prom its ussociutcd compuny Atlus GCI (Privutc) Ltd.

As a result, the Company recognized a dividend income of Rs. 16.1 million during the year. This dividend receipt, along with tkc skurc oP pro�ıts, contributcd to un incrcusc in tkc currying vuluc oP tkc invcstmcnt in tkc ussociutc, us prcscntcd in tkc Compuny's �ınunciul stutcmcnts.

Tkc ussociutc continucs to dcmonstrutc �ınunciul rcsilicncc und rcmuins un importunt strutcgic ussct in tkc Compuny's investment portfolio. The management maintains regular oversight of the associate's performance and governance, and rcmuins con�ıdcnt in its long-tcrm vuluc contribution.

Organisation Overview | 17

About the Company

Atlas Honda Limited is a public limited company listed on the Pakistan Stock Exchange. It is a joint venture between Shirazi Investments (Private) Limited (SIL) and Honda Motor Company Limited, with SIL holding 52.43% of issued, subscribed and paid-up capital as at March 31, 2025. The Company operates in Pakistan and is engaged in manufacturing and marketing of motorcyclcs, spurc purts und cnginc oil. Tkc rcgistcrcd of�ıcc oP tkc Compuny is locutcd ut Lukorc wkcrcus its munuPucturing & assembly facilities are located at Karachi and Sheikhupura.

The Company serves the needs of automotive sector in Pakistan. The Company's customers mainly include dealers and institutions. The Company manufactures and sells various types of motorcycles in the categories of 70cc, 100cc, 125cc and 150cc tkrougk u nution-widc nctwork oP dculcrs. Tkc Compuny ulso murkcts motorcyclc purts und ofPcrs uPtcr-sulc scrviccs through its dealer network.

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