Fundamental Beliefs

Respect for the Individual

Initiative

Initiative means not to be bound by preconceived ideas but to think creatively and act on your own initiative and judgment, while understanding that you must take responsibility for the results of those actions.

Equality

Equality is at the heart of everything we do. Our people are not employees, they are associates and they all have exactly the same opportunities to progress. We recognize and respect the individual differences in one another and treat each other fairly. An individual’s race, gender, age, religion, national origin, educational background, social or economic status has no bearing on the individual’s opportunities.

Trust

The relationship among associates at Honda should be based on mutual trust. Trust is created by recognizing each other as individuals, helping out where others are deficient, accepting help where we are deficient, sharing our knowledge, and making a sincere effort to fulfill our responsibilities

The Three Joys

The Joy of Buying

The joy of buying is achieved through providing products and services that exceed the needs and expectations of each customer.

The Joy of Selling

The joy of selling occurs when those who are engaged in selling and servicing Honda products develop relationships with a customer based on mutual trust. Through this relationship, Honda associates, dealers, and distributors experience pride and joy in satisfying the customer and in representing Honda to the customer.

The Joy of Creating

The joy of creating occurs when Honda associates and suppliers involved in the design, development, engineering, and manufacturing of Honda products recognize a sense of joy in our customers and dealers. The joy of creating occurs when quality products exceed expectations, and we experience pride in a job well done.

Honda Philosophy

The Honda Philosophy, handed down to the Company by its founders Mr. Soichiro Honda and Mr. Takeo Fujisawa, is composed of Fundamental Beliefs (Respect for the Individual and The Three Joys), the Company Principle and Management Policies. The Philosophy forms the values shared by all Honda Group companies and all of their associates and is the basis for Honda’s corporate activities and the associates’ behavior and decision-making.

Honda incorporates the Philosophy into educational programs for its associates and gives it life by turning it into action, from everyday business activities to management decisionmaking, so that every person in the Company can responsibly continue putting the Philosophy into practice.

Additionally, Honda engages in corporate activities under the concept of “Free and Open, Challenge, Coevolution”. Specifically, this concept puts into practice Honda’s corporate culture of “taking up the challenge without fear of failure, free from the prejudice of preconceived ideas, and with a foundation of teamwork based on trust”

Society’s expectations toward Honda continues to evolve with times. As a responsible company, Honda will resolve problems while listening to the voices of its diverse stakeholders so as to meet their expectations and earn their trust.

HONDA MOTOR CO., LIMITED, JAPAN

Corporate Philosophy

Maintaining a global viewpoint, we are dedicated to supplying products of the highest quality, yet at a reasonable price for worldwide customer satisfaction.

Management Policy

1. Proceed always with ambition and youthfulness.
2. Respect sound theory, develop fresh ideas, and make the most effective use of time.
3. Enjoy your work and encourage open communication.
4. Strive constantly for a harmonious flow of work.
5. Be ever mindful of the value of research and endeavor.

HONDA ATLAS CARS (PAKISTAN) LIMITED

Corporate Philosophy

1. Dynamic manufacturing and marketing of prestigious products to the entire satisfaction of customers.
2. Create ideal working environment for continuous development of products and personnel.
3. Provide adequate return to shareholders and fulfill corporate civic obligations.

Management Policy

1. Respect for all – man has priority over machine.
2. Man is the key in controlling i.e. machines, methods and materials.
3. Follow 3S spirit i.e. small, smart and speed.
4. Believe in 3A “Hands on Approach” i.e. be on Actual Spot, look at the Actual Spot and confront the Actual Situation.
5. Be a good corporate citizen; assume a responsible role in the community.

Priority Standards of Conduct

1. Safety: There can be no production without safety.
2. Quality: To achieve complete customers satisfaction by focusing on smart teamwork, meeting all applicable legal and regulatory requirements & continually improving our strategies and goals.
3. Productivity: With safety and quality, each of us will strive to excel the performance in all fields of our activities i.e Production, Model Planning, Quality Control, Purchasing, Sales & Marketing, After Sales, Finance, Import, Purchase & Logistics, IT, IA, Health Safety and Corporate Governance, Legal IPR and CRM and Human Resources & Administration Division.

Human Resources and Succession Plan

Human Resources Policy is to hire young, fresh, energetic and active associates to meet the existing and future workforce requirements and providing its associates maximum opportunities for internal mobility through personal training and development to enable them to take higher positions. Human Resource Division has succession plan for each key job/area to make sure the continuity of operations in the relevant division and to fill the temporary/permanent vacancy.

Quality Policy

We at Honda Atlas Cars (Pakistan) Limited, strive for supplying top quality Honda Cars to get ultimate customers satisfaction accomplished by:

• Smart team work,
• Complying all applicable legal and regulatory requirements,
• Continually improving our strategies and goals.

Health, Safety and Environmental Policy

Honda Atlas Cars (Pakistan) Limited, being a leading car manufacturing company in Pakistan, is committed to produce Honda Cars with sustainable performance in Health, Safety and Environment (HSE). In order to achieve this, the company shall:

• provide safe and healthy workplace to all stakeholders affected by its operations, for the prevention of injury and ill health.
• assign responsibilities for effective implementation of HSE management systems.
• comply all HSE applicable legal, regulatory and other requirements.
• create awareness and understanding about health, safety and environmental issues amongst our associates.
• empower workers for their participation and consultation on health and safety related matters
• identify and evaluate risks & opportunities to eliminate, reduce or manage risks related to company’s operations proactively to ensure that health & safety hazards and environmental impacts are prevented.
• formulate objectives and targets to eliminate workplace hazards, prevent environment pollution and continually improve HSE management systems, as much as possible.
• keep public and others interested parties informed on our HSE performance, wherever required.

Operating Principles

1. Always keep the deadline
2. Never make excuses
3. Teamwork

BOARD OF DIRECTORS

The Board of Directors is comprised of three Independent Directors and six Directors representing Honda Motor and Atlas Group. In order to respond to the mandate of the shareholders to achieve sustainable growth and enhance the corporate value of the Company over the medium to long term, the duties of the Board include making decisions concerning key Company matters, strategic business direction, corporate governance, management policies and monitoring of operations. In addition, the Board discusses and makes decisions concerning matters specified in the Articles of Association, the Code, and other applicable laws. To fulfill these roles, the candidates for Directors shall be persons of superior characteristics and insight who have high expertise in business & financial management, accounting, quality, production, or the Company’s business operations.

CHANGES ON THE BOARD

Mr. Hironobu Yoshimura, Executive Director and President & CEO was replaced by Mr. Takafumi Koike on April 01, 2022. Mr. Kazunori Shibayama, Director was replaced by Mr. Gaku Nakanishi and Mr. Katsumi Kasai, Executive Director was replaced by Mr. Shinobu Nakamura in regular annual rotations by Honda Motor, Japan on May 17, 2022, and July 01, 2022, respectively. The Board acknowledges the valuable contributions made by the outgoing Directors and welcomes the new members on the Board.

ROLES AND RESPONSIBILITIES OF CHAIRMAN & CEO/ PRESIDENT

To promote a culture of transparency and good governance, the positions of the Chairman of the Board of Directors and the office of the Chief Executive Officer are held by separate incumbents with clear demarcation of roles and responsibilities. The Chairman represents the nonexecutive directors of the Board and is entrusted with the overall supervision and direction of the Board’s proceedings, and has the power to set the agenda, give directions, and sign the minutes of the Board meetings. The Chief Executive Officer is an executive director who also acts as the head of the Company’s Management. He is authorized to implement the Board’s policies within delegated limits besides other responsibilities.

DIRECTOR’S REMUNERATION

In terms of requirements of the Listed Companies (Code of Corporate Governance) Regulations, 2017 (the Code), the Company has formulated a policy namely “Remuneration Policy for Executive & Non-Executive Directors”, which deals with the remuneration of the Directors. The system of remuneration for Directors is designed to enhance their motivation for improved business performance, both over the short term and medium to long term with sustained growth of corporate value. The Executive Directors are paid monthly remuneration and benefits as approved by the Directors, whereas the Company does not pay remuneration to Non-executive Directors, except for advisory and meeting fee.

AUDIT COMMITTEE

The Audit Committee is composed of four members, including Independent and Non-Executive Directors. The Chairman of the Audit Committee is an Independent Director. The Committee quarterly reviews the appropriateness of resources and authority of this function. The Head of Internal Audit functionally reports to the Audit Committee which approves the audit plan, based on an annual and quarterly assessment of the operating areas. To respond to the entrustment of the shareholders, the Audit Committee reviews the audit reports, internal control systems, and financial statements and performs other duties of the Committee as prescribed by the laws and regulations, with the aim of ensuring sound and sustainable growth of the Company. Reporting is required whenever there is an item that has a major impact on the Company. The internal auditors review the department processes to ensure compliance with the policies, regulations, and SOPs of the Company. The Internal Audit Division directly reports to the Chairman Audit Committee.

HUMAN RESOURCE & REMUNERATION COMMITTEE

The Human Resource and Remuneration Committee consists of five members, the majority of whom are non-executive directors. The Chairman of the Committee is an independent director. The Committees provides strategic guidance to the management on human resource, review the annual performance evaluations, personnel policies, and compensation & benefits for the associates.

CORPORATE GOVERNANCE

The Company strives to enhance corporate governance as one of the most important tasks for its management, based on the Company’s basic principles, to strengthen the trust of its shareholders, customers, and society. The Board always encourages timely, decisive, and risk-considered decision-making; seeks sustainable growth and the enhancement of corporate value over the mid-to-long term; and becomes “a company that society wants to exist.” To clearly segregate the supervisory and execution function of management and to enable prompt & and flexible decisions, the Company has an Audit Committee, a Human Resource and Remuneration Committee, and an Executive Committee which allows broad delegation of the business execution authority to the Executive Officers.

COMPLIANCE

To improve compliance culture, the Company has nominated a Compliance Officer designated by the Board of Directors. The Compliance Officer makes decisions regarding important internal control system measures including formulation and amendment of compliance policies. In addition, the responsibilities of the Compliance Officer encompass confirming the status of the establishment and operation of internal control systems to appropriate management of the Business Ethic Proposal Line and deciding measures to prevent recurrences when any breach transpires. For matters of compliance that are of particularly high importance, deliberation or reporting at a meeting of the Executive Committee is carried out depending on the details of the matter. There were no such violations of laws or regulations in the year under review.

HONDA CODE OF CONDUCT

To earn the trust of customers and society for sustainable growth, we must not only comply with laws & regulations but go beyond those legal structures by practicing sincere and ethical conduct. Recognizing this, the Company has formulated the Honda Code of Conduct. It summarizes the sincere behavior to be practiced by the people working at Honda around the world. The Company works to instill the Honda Code of Conduct in every associate through actions such as training, the distribution of leaflets, the publication of in-house newsletters, and posting of information on its intranet. This year, the Company conducted a comprehensive written test on the Honda Code of Conduct. More than 85% of associates participated in the test with an understanding level of 92%.

BUSINESS ETHICS PROPOSAL LINE

The Company has established the Business Ethics Proposal Line as a structure to improve corporate ethics. This hotline addresses issues that compromise corporate ethics through violation of laws or internal rules. This allows the Company to accept proposals and provide consultation, from a fair and neutral standpoint, for associates who face barriers in improving or resolving issues at the workplace. In addition, this hotline responds to inquiries about the internal rules hen questionable actions have occurred and engages in fact evaluation related to such cases. Proposals are accepted by email, letter, telephone, or drop-box from all associates and business partners. We ensure the protection of the proposers and anonymous proposals are also accepted.

INITIATIVES TO PREVENT BRIBERY AND CORRUPTION

The Company strictly prohibits bribery and corruption. The Honda Code of Conduct requires the Company to comply with the laws & and regulations. The Code states, “As an independent corporate entity, the Company maintains appropriate relationships with political entities and administrative entities and will interact in an appropriate manner in compliance with laws, regulations & Company policies and will not offer entertainment or gifts (both monetary and non-monetary) that are prohibited by laws, regulations, and company policies.” Moreover, the Code stipulates that the associates will not receive from or provide to business partners benefits in the form of goods (both monetary and non-monetary) or entertainment beyond what is generally considered appropriate by society. In addition to the above, the Company also has established the Honda Policy on the Prevention of Bribery and Corruption. It stipulates basic policy about bribery & and corruption and the Honda Guideline for the Prevention of Bribery and Corruption specifies compliance and prohibited items. The reinforcement of the policy is ensured through training, emails of any policy change, and through the Company’s intranet. The Company has also trained the trainer, division-wise, on Honda Policy on the Prevention of Bribery and Corruption which are able to give further training to associates in their respective division.

ESTABLISHING AN EFFECTIVE RISK MANAGEMENT STRUCTURE

The Risk Management Policy aims at driving the Company’s sustainable growth and stabilizing management based on the Honda Philosophy. It targets all the risks having a potential impact on the operations of the Company. The Company has developed a risk management framework which is headed by the Risk Management Officer. The risk assessment activities are carried out by each Business and Functional Division. The purpose of these activities is to foresee potential risks surrounding the business and to respond beforehand to mitigate these risks. Each department performs risk evaluation by using the common risk items and the assessment criteria to identify the priority risks of each Division. The Company-wide priority risks are identified by the Risk Management Officer after due deliberation over the risk status of each operation. The concerned division then includes such risk items in its business plan for continuous monitoring, improving the situation, and risk mitigation. During the year, the Company arranged a special four-day training program at Punjab Emergency Services 1122 academy to develop an Emergency Response Team. The objective of this training was to respond appropriately to disasters/emergencies like fire incidents, earthquakes, floods, etc., and provide necessary “First Aid” treatment to victims of disaster before shifting to hospitals. The trained staff of the Company is now part of “Volunteers” of Rescue 1122 and can extend their services to the community accordingly. This team also participated in the “Annual Volunteers National Contest” this year and its performance, as beginners, was much appreciated by the higher management of 1122 Rescue

INFORMATION MANAGEMENT

To protect the information assets, including confidential & personal information, the Company has adopted the Global Confidentiality Policy (GCP) and the Global IT Security Policy (GITSP). These policies stipulate a systematic response structure and compliance items for handling confidential & personal information along with security standards. information systems and networks. They also specify the line of reporting in the event of any information leakage. While effectively applying these policies, the Company has set up the Confidentiality Committee to ensure timely response to changes. Besides strengthening activities to ensure information security against increasingly sophisticated and complex cyberattacks, the Company continuously monitors its capability of immediately responding to the events that must be addressed.

PERSONNEL MANAGEMENT

Honda believes that human beings are born as free and unique individuals with the capacity to think, reason, create – and the ability to dream. The Company wishes to nurture and promote these characteristics by respecting individual differences, trusting each other as equal partners, exercising abilities to the fullest and sharing joy. From this standpoint, the Company adopts Respect for the Individual as one of the Company’s ‘Fundamental Beliefs’. The Company follows the ‘Three Principles’ of Personnel Management, specifically Respecting Initiative, Ensuring Fairness and Encouraging Mutual Trust, when managing its human resources in areas such as recruitment, training, assignment, evaluation and treatment. The Company always seeks to create an environment which supports to develop abilities and ambitions of associates and provides them with a workplace where these skills may actively be exercised. During the year, three associates, from the Management cadre, attended “International Training Program” organized by AOTS in Japan. As a part of Asia & Oceania Exchange Expatriate Program, two associates were seconded to Thailand for a couple of years. Further, for enhancement of managerial skills, one-year Executive Diploma in Management Excellence (EDME) from LUMS was attended and successfully completed by three associates. The fourth batch of twenty associates has been enrolled in Forman Christian College Lahore for a one-year “Diploma of Business Management (DBM)”, In addition, various public and customized programs from LUMS, PIM, PSTD, and other prominent institutes and trainers were organized for associates with a focus on growth and evolving business needs.

OCCUPATIONAL HEALTH AND SAFETY

The Company always endeavors to build a safe and secure work environment for associates. Under the fundamental safety principle of “no safety, no production”, the Company seeks to realize a work environment that brings joy to the people working with a true sense of safety & security. Based on this principle, the Health & Safety Division has established basic policies for preventing industrial accidents and their recurrence, as well as ensuring the health of associates. During the year, all associates went through mandatory annual medical checkups, and necessary precautions were taken in case of any deviation from standard health parameters. The Company continued to focus on the health of associates in the controlled pandemic environment. All workstations & lunch tables were protected, and where needed, the work-from-home protocols and E-meetings were observed. The Company obtained certification of ISO 45001 (Occupational Health and Safety Management System) without any major observation, despite the first attempt. The Company has been taking various measures to upgrade the fire safety system on the premises. It includes adding new fire safety fixtures, improving existing installations, and conducting firefighting drills for associates. This year HACPL has also conducted Fire Fighting Drill to coup the situation in future.