pel report final

Pak Elektron Limited

Pak electron limited

Presented To Prof, Dr. Liaqat Ali

Principal HAILEY COLLEGE OF COMMERCE

Presented By Talal Haroon

ROLL NO 1030

Semester 8th

Class B.com (hons)

Section F(Afternoon)

Session 2006-2010

Hailey College of CommerceUniversity of the Punjab,

Lahore

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I DEDICATE THIS REPORT TO MY PARENTS

& THE WHOLE TEAM OF FP-AD.

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I am thankful to Almighty Allah for His help in the completion of this report. I am

highly obliged and thankful to these personalities for taking keen interest in

providing material regarding my report. Without their cooperation, I could not be

able to perform this task efficiently and effectively. Last, but not the least, many

thanks to respectable G.M. MR. NUMAN KHALID BUTT of FP-AD and Head of

FP-AD. MR. GHULAM MOHAY-UD-DIN who gave me proper guideline,

opportunity to learn and to polish my skills under their supervision. Without their

endorsement I would never been able to gain practical exposure, confidence

and self-belief in my personalities.

Special thanks to Mr. Rashid Hanif (Junior Executive), Mr. Ali Asad

(Accountant), Mr. Ghulam Abbas (Junior Executive), Mr. Naveed (E3 Officer)

and Mr. Hassan Raza (HR Officer) for assisting me and providing practical

knowledge during my internship program.

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TABLE OF CONTENT

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Executive Summary

The Pak Electronic Limited is Public Limited Company with the objective of

initially producing transformers, switchgears and electric motors. The designing

and production of the equipment was carried out jointly by AEG experts and

PEL personnel. After the conclusion of Joint Venture Agreement with AEG the

majority of share holding was acquired by Saigol Group. Its Appliances Division

was introduced and initially the production of window type air conditioners was

taken up and was well received in the market for its quality. The present range

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of power products includes Transformers up to 33KV 5MVA capacity,

Switchgears up to 33KV, Cage Induction Motors up to 40HP, Single Phase

Energy Motors, Small Generators, Shunt Capacitor, Banks and Re-closer etc.

The company has also started the production with the technical collaboration of

Hitachi Corporation, Japan, for the production of Vacuum Circuit Breakers for its

switchgear. In the year 1980 the company expanded into consumer products

with the introduction of Window Type Air Conditioners and today also

manufactures Split Air Conditioners, Refrigerators, Microwave ovens, Deep

Freezers and Compressors etc.

The summary of PEL’s market share (Product wise)

Refrigerator 32%

Split A/C 13%

Microwave Oven 22%

Water dispenser 8%

During my internship period I performed my assigned duties on time and

under the prescribed instructions of my immediate boss. I hope that this

practice experience will create glorious opportunities in future.

I am really thankful to my immediate bosses, managers at PEL in helping me

regarding different matters during my internship period.

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The Saigol Group (also referred to as the Sehgal or Sahgal Group) is located in

Lahore, Punjab, Pakistan. This group is owned by the Saigol family of Pakistan,

and owns a number of domestic automobile and textile plants.

Group Profile

In 1948, the Saigols migrated from Calcutta and initiated their business in

Lyallpur (later named to as Faisalabad), the textile city of Pakistan, under the

banner of Kohinoor Industries Limited.

KOHINOOR TEXTILE MILLS LIMITED

The Saigols set up the first major textile unit - The Kohinoor Textile Mills

under the umbrella of Kohinoor Industries Limited. The Kohinoor Textile Mill has

state-of-the-art quality control from raw material to finished product

manufacturing. Its laboratory is top rated amongst the best laboratories in

Pakistan for testing of textile raw materials, other inputs and yarn.

PAK ELEKTRON LIMITED (PEL)

In 1978, the Saigol Group of Companies purchased major shares of Pak

Elektron Limited. At that juncture, the company was only manufacturing

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Initial Capacity 25,000 spindles

Current Capacity 71,648 spindles

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transformers and switchgears. With the Saigols in management, PEL started

expanding its product range by entering into Air Conditioner manufacturing.

SARITOW SPINNING MILLS & AZAM TEXTILE MILLS

In 1987, the Saritow Spinning Mills and Azam Textile Mills were

established under the banner of Saigol Group of Companies. Saritow Spinning

Mills is a spinning unit with 25,440 spindles capacity. Facilitated with the most

modern and efficient Japanese and European machinery, its knitted yarn is

renowned in the Far East and Europe for its fine quality.

Azam Textile Mills is reputed for its carded and combed yarn, which is quite

popular for premier knitting and weaving

KOHINOOR POWER COMPANY LIMITED

In 1991, the first power unit commissioned in Pakistan, in the Private

sector, was Kohinoor Power Company Limited. Its present production capacity

is 15 MW.

KOHINOOR ENERGY LIMITED

1995, another power unit, Kohinoor Energy Limited, was established.

Kohinoor Power Limited is a 120 MW power plant located on the outskirts of the

city of Lahore. This project has an annual turnover of $80 million.

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Pak Elektron Limited (PEL)


Elektron Limited. At that juncture, the company was only manufacturing


expanding its product range by entering into Air Conditioner manufacturing.

HISTORY

Pak Electron Ltd. (PEL) was established in 1956 with the technical collaboration

of M/S AEG Germany and is the oldest composite electrical equipment-

manufacturing unit in Pakistan.

In October 1978, the company was taken over by the SAIGOL GROUP, which

is one of the leading industrial and commercial groups of Pakistan. The

products manufactured by PEL have always been of a high standard and the

name “PEL is synonymous with quality all over Pakistan.” PEL, since its

inception, has been acting as an institution working for the advancement and

development of engineering and modern technology in Pakistan

Since its inception, the company has been working for the advancement and

development of engineering know-how in Pakistan. The company has produced

hundreds of engineers and skilled workers and technicians through its

apprenticeship schemes & training programs.

PEL has been continuously adding new products to its range. As a result, PEL

has registered a significant increase in its sales volume, during the last ten

years

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Electron Limited. At that juncture, the company was only manufacturing


expanding its product range by entering into Air Conditioner manufacturing

In 1981, PEL window type air conditioners were introduced in technical

collaboration with General Corporation of Japan.

In 1986-87, the company started manufacturing of refrigerators in technical

collaboration with M/s IAR-SILTAL of Italy.

In 1987, PEL deep freezers were also introduced in technical collaboration with

M/s Ariston of Italy.

In 2006, the Company has started manufacturing of split type air conditioners of

various capacities as the customer choice has shifted from window type to split

type. The product has been well received in the market. This encourages the

company to multiply its production in the coming year.

Today, PEL has become a household name. Its products are not only in great

demand in the local market but the Company has started exporting its

appliances division products.

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Company Information

Company information

Board of directors

Mr. Naseem Saigol Chairman /Chief ExecutiveMr. Azam SaigolMr. Murad SaigolMr. Muhammad Rafi KhanMr. Haroon Ahmed Khan Managing DirectorMr. Homaeer WaheedMr. Gul Nawaz NIT NomineeMr. Masood Karim Sheikh NBP Nominee u/s 182 of the OrdinanceMr. Tajammal H.Bokharee NBP Nominee u/s 182 of the OrdinanceMr. Wajahat A. Baqai NBP Nominee u/s 182 of the Ordinance

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Audit Committee

Mr. Azam Saigol Chairman / MemberMr. Haroon A. Khan MemberMr. Tajammal H. Bokharee MemberMr. Gul Nawaz Member

Company Secretary

Sheikh Muhammad Shakeel FCA

Chief Financial Officer

Syed Manzar Hassan FCA

Auditors

M/s Yousaf Adil Saleem & Co. Chartered Accountant

Legal Advisor

M/s Hassan and Hassan Advocates

Bankers

Bank of Punjab

First Punjab Modaraba

Bank Alfalah Limited

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Faysal Bank Limited

National Bank of Pakistan

NDLC-IFIC Bank Limited

PICIC Commercial Bank Limited

Saudi Pak Commercial Bank

Union Bank Limited

Registered Office Work Site17-Aziz Avenue Canal Bank, 14-Ferozepur Road,Gulberg-V, Lahore. Lahore.Tel 042-5718274-5, 5717364-5 Tel 042-5811951-7 (7 Lines)Fax 042-5715105 Website www.pel.com.pkE-mail [email protected]

ISLAMABAD KARACHIRoom # 1404, 14th Floor Kohinoor BuildingGreen Trust Tower, Blue Area 25-West Wharf RoadTel 051-2273858 Tel 021-2200951-4Fax 042-2273858 Fax 021-2310330

CHINA AFGHANISTAN910, No. 1007, Zhong Shan Naun Er Road Flat # 103, 1st Floor, Block AShanghai, china Qaiser Market, Kolola, Pushta,Tel 86-21-64567533 KabulFax 86-21-54109971 Tel 0093-79826293

Objectives

The objectives and mission for which the company is established are as

following

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http://www.pel.com.pk/

mailto:[email protected]


To carry on the business or businesses of manufacturing, selling,

installing, maintaining designing and dealing in all kinds of electrical

equipment.

To carry on any business whether manufacturing or otherwise which

maybe found convenient to undertake in connection with or in

addition to any of these objectives mentioned above?

To do all such things that is incidental for the attainment of the above

objectives or any of them.

To produce high quality and standard products.

To produce equipment to be used in numerous projects of national

importance.

To secure a high share / quota of WAPDA’s demand for power

products.

To produce skilled workers and technicians through its

apprenticeship schemes and training programs for engineers and

technicians.

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“To Excel in Providing Engineering Goods and

Services through Continuous Improvement.”

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To provide quality products & services

for complete customer satisfaction and to

maximize returns for all stakeholders

through optimal use of resources

To focus on personal development of

our employees to meet future challenges.

To promote good governance,

corporate values and a safe working

environment with a strong sense of social

responsibility.

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The company comprises of two divisions

Appliances Division

Power Division

APPLIANCES DIVISIONPEL’s Appliances Division is the flag carrier of the Saigol Group involved in

home appliances manufacturing.

Refrigerator

Deep freezers

Television

Microwave oven

Washing machine

Generators

Air condition

PAK Elektron Refrigerators always have always been famous among every homedue its superior quality and reliability. In Pakista International Companies who are sharing the demand of refrigerators but all of

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them are considered to be minor market shareholders in front of Pak Elektron’sshare. Strength of Pak Elektron’s share has always been its remarkableAppliances Division due to its latest equipments and talented men power. n there are so many National andThis Appliance Division is comprised of following departmentsMarketing Appliance DivisionProduction Appliance DivisionAfter Sales Services DepartmentConsumer Marketing Department

1.1 Marketing Appliance DivisionTalking about marketing department, it always been a a backbone of the Appliances business unit. This department is having mosthardworking and talented staff that remain busy in searching new markets for itsproducts and always initiates different production programs to satisfy its nd still it is considered to be

customer needs and preferences. This Marketing department has un-beatablemarketing forces that on regular basis conduct market surveys in order to lookinto Competitors position, customer’s taste, retailers and wholesalers needsunder the supervision of four professional marketing managers plus General andSenior Marketing Managers.At time when the forces feel a change in customer preferences they immediately undertake distinctive steps and make new sales plans. Such plans are forwarded to each respective department by the marketing department in order to get their requirements to make the plan successful.

Production Department PEL’s production department has its own distinctive qualities from one end to lastend. At this department every worker has got very special in job training from the

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Market Appliance

ConsumerMarketing

Production AD

AfterSales

Servies


seniors and remains committed in order to accomplish the given taskssuccessfully either he is a part of assembling or a part of finishing section. WhenResearch and development designs any new feature or product, productiondepartment provides required men power estimates to the company’s humanresource department.After Sales Services

After Sales Services is another active department of PEL’s Appliances division,

which gives a sense of care to its customer when ever it feel things are going

wrong or against its desire. This department has their own technicians available

for the services in the company as well as having after sales centers out side

the

company at different places in the cities. This department assures 100 percent

parts replacement of appliances if complains fall in the warranty

Consumer Marketing Department

A door-to-door marketing system introduced by PAK Elektron in the shape of

this

department. Consumer marketing department is the only department that has

special sales forces for its appliances and deals the customer needs and

complains directly without the intervention of any retailers and wholesalers

POWER DIVISIONPEL Power Division manufactures energy meters,

Transformers

Switchgears

Kiosks

Compact stations

Shunt capacitor banks

Energy meters

Generators

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All these electrical goods are manufactured under strict quality control and in

accordance with international standards.

PEL is one of the major electrical equipment suppliers to Water and Power

Development Authority (WAPDA) and Karachi Electrical Supply Corporation

(KESC), which are the largest power utilities in Pakistan.

Over the years, PEL electrical equipment has had been used in numerous

power projects of national importance within Pakistan.

In spite of stiff competition from emerging local and multinational brands, PEL

Group's appliances and electrical equipments have remained in the spotlight

due to constant innovation. Strategic partnership with multinationals of repute

have enabled the PEL Group to incorporate new technologies into existing

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product ranges, thus giving the Pakistani market access to innovative,

affordable and quality products.

The second but the most powerful revenue generating business unit of PAK

Elektron, produces Transformers, Switchgears and Energy Meters for the public

sector such as KESC Karachi Electric Supply Corporation, LESCO Lahore

Electric Supply Corporation, IESCO Islamabad Electric Supply Corporation,

PESCO Peshawar Electric Supply Corporation, etc and for public sector as

well.

This division is comprised for four departments

Marketing Power Division

Production Transformers

Production Switchgears

Production Energy Meters

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Market power

Production EM

Production SC

ProductionTR


2.1 Marketing Power Division

Marketing department of power division consists of most professional engineers

who market all the power products, seeks new customers and supervise all

these three departments to ensure best quality and reliable products every time.

2.2 Production Transformers

PEL has vast experience in design and manufacturing of standard and special

purpose transformers up to 33kV and up to 6000kVA ratings. This department

make oil immersed transformers with natural cooling are suitable for both indoor

and outdoor installations. These are manufactured according to BSS-171, IEC-

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or VDE-0532 and tropicalized to meet adverse environmental conditions. All

transformers are offered with tabular tank, having a conservator and breather.

This department manufactures following types of transform

•

Distribution transformers (pole mounted or pad mounted design) • Auto transformers • Furnace transformers • Welding transformers • Chokes for furnace transformers • Any other special requirement

PEL's transformers have been successfully type tested for Impulse voltage and

short circuit tests at KEMA, (Holland), HV&SC Lab, Rawat (Pakistan), NIP

(Pakistan) and UET (Pakistan).

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2.3 Production Energy Meters

Another successful and most powerful department of power division is its energy meter production department that manufactures Electro-mechanical Energy Meters under license from ABB-USA. The quality of PEL meters has been certified by KEMA Laboratories (Holland) and conforms to IEC 521, SGS Yarsley, and U.K, has certified PEL Energy Meter plant for ISO 9002.

This department also manufactures MC8 type a direct connection single-phasemeter, which is commonly used for each home. Its design and constructionalfeatures include overload compensation and temperature compensation, thusproviding maintenance-free operation over a long period and accuratemeasurement of electrical energy. The frame is sturdy in construction and thecovers are available in unbreakable polycarbonate plastic material.

2.4 Production Switchgears

MV & LV Switchgear being one of the major power products of PEL is produced for indoor installations company with the latest international standards by this department, i.e. IEC, BSS or VDE PEL's Switchboards are steel sheet fabricated,totally enclosed, floor mounting and vermin & dust proof. These are supplied withfactory fitted relevant components and copper bus bars, internal wiring, terminalblocks etc.The cubicle housing and doors are fabricated from 2-3mm thick sheet steel,welded together to form a robust and self-supporting structure. Paintingprocedure includes through cleaning, pre-treatment, anti-rust coating and finalfinishing in standard RAL colors.

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Human Resource department

Finance Department

Accounts Department

Internal Audit Department

Appliances Division

Marketing Appliances Division

Production Appliances Division

Buying Appliances Division

Power Division

Marketing Power Division

Production Power Division

Buying Power Division

Consumer Marketing Division

Distribution and Credit Control Department

Customer Service Department

Information Technology Department

Industrial Relations and Administration Department

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Human Resource Department is the most important and key department of

every organization. It not only deals with the employees of the organization

but also helps in managing the affairs of the company.

PEL has a full fledge HR Department. The GM is the top executive in the

HR department and there is one manager of HR to facilitate the work of

G.M.

HR Department’s activities are spread over the whole organization. HR

department is divided into

Recruitment & Selection

Training And Development

Performance Management System

Recruitment & Selection

Recruitment and selection team consists of 5 members and

one manager. The basic purpose of this team is

To give advertisement for the vacant job.

To receive C.V’s.

Screening the C.V’s

To conduct interview and test of screened applicants.

After completing this procedure final selection is made.

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Training and Development

Training and development team is also consists of 5 members

(3 A.M. & 2 executives). The function of this team is to trained and

develops new employees about the traditions of organizations as well as

sharing new aspects with existing employees.

Performance Management System

Performance management team consists of 3 members.

Orientation Program

HR department is also starting orientation program for new

employees. This program will be completed in 5 modules.

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I have the honor to be an internee in the most reputed organization (PEL) in the

electronics industry. During my stay at PEL of 4 weeks (form 23 th july, 2010 to

19th Aug, 2010) in FP-AD. of PEL, I tried to leave no stone unturned in getting

the best experience & practice of ground realities regarding financial matters

and maintaining accounts relating to sales and credit control. It is a pleasure for

me during my stay in the PEL; I take the practical exposure about the

Accounting and Finance under the well experienced and educated managers.

This is the result of their un-tired efforts that now I have known the use of

different financial softwares used by the Organization. If I talk actually about this

internship experience, I would like to say that my B.COM(HONS) is incomplete

without practical knowledge which was provided me by PEL.

During my internship period I performed my assigned duties on time and

under the prescribed instructions of my immediate boss. I hope that this

practice experience will create glorious opportunities in future.

Inter-department dealing are also very important duty of mine, the major

activities are with Accounts, Finance, Sales, Dealership and , Store Mkt. A.D,

Receiving, Production, IT, Commercial, H.R, Customer Service Dept. (CSD),

Admin & Industrial Relationship (A & IR), Purchase Department.

I feel very comfortable as the concern officers are all very helping and

courteous, it obviously helped me a lot in gaining my confidence and learnt new

things to develop official attitudes. Each department is connected with other, so

there is a team oriented working relationships among departments. The

success story of PEL is also depended upon so loyal team of employees with

admirable motivational package from owners.

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Department of FP-ADIMPORT/EXPORT

FP-AD (IMPORT/EXPORT) is one of the important divisions of Pak

Elektron Limited. This department was established in 1962. The purpose of this

department was to enhance the business of the organization that remains

successful every year up till now. The basic function of the department is to

provide the Home Appliances goods to the consumers under the instilment

business.

FP-AD (IMPORT/EXPORT) fulfill basic need of factory by providing the raw

material for abroad which is not available in local market.

FP-AD (IMPORT/EXPORT) is conducting this business with the Bank Alfalah

Limited.

Department of Credit Control

Credit Control Department is engaged in marinating the complete record of

customers in financial data base software named as “Consumer Marketing

Division with Accounts Receivable”. This department is also engaged in

recovering the amount from customers and creating the debtors.

The basic purpose of D&C.C is engaged

To maintain the complete records of customers applications.

To record the total financing by the bank.

To keep record about loan application.

To maintain the record about processing fee.

To maintain the record of customer’s installments.

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To record the delivery orders.

To maintain the record of installments.

To maintain the product assessment record.

FP-AD (IMPORT/EXPORT) HIRARCY

General Manager FP-AD (IMPORT/EXPORT)

Numan Khlid Butt

Management level M2

Perveez Malik

Kashif Manzoor Sherezi

Management level M1

Imran Kaazmi

Management level E1

Ghulam Mohayudin

Management level E2

Shariq Hussain

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Management level E3

Waqar Hussain

Mohsin Ali

FP-AD (IMPORT/EXPORT) TEAM

Head of department

Ghulam Mohyudin

Accountants

Rashid Haneef

Noor-Ul Khan

Ghulam Abbas

Muhammad Naveed

Ali Raza Butt

Ahmad Baig

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NEW SOFTWARE USED BY FP-AD

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Swot analysis consists of analysis of internal and external environment of

an organization.

Internal environment

The company should evaluate strengths and weaknesses analysis

periodically. Company should review financial, marketing, manufacturing,

human resources and organization competences.

So PEL also use its strengths to avail the opportunity.

Strengths

PEL has the following strengths

Brand loyalty

Strong Dealer Network

Quality Products

After Sales services

Challenger position

Technological differential advantage

Strong Management control

Power division

Distribution of authority

Brand loyalty

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PEL has created a strong brand image in the mind of the customers

through higher quality and low prices. The customers of PEL always prefer its

home appliances like Window AC, split AC and refrigerators, during the time of

purchase. PEL is a popular company in Pakistan and every one knows about

the PEL products and its brand name.

Strong Dealer Network

It is also the plus point for PEL that it has developed a strong dealer

network in the market. The dealers always try to sell the PEL products to the

customers because, the company for its products, gives them a high margin.

The management of PEL also provides more incentives to their dealers than

their competitors. Dealers are very conscious about the PEL products and

always guide the customer in buying the PEL products.

Quality Products

PEL is also in a strong position because it provides superior quality

products to customers. So it gives an edge to company over its competitors.

Due to best quality, guarantee of products of PEL is more than its competitors.

After Sales Services

PEL provides the after sale service to customers which increases the

customers satisfaction. The biggest strength of services department is that it

handles a complaint within 24 hours in any part of the country, which helps in

increasing the satisfaction level of customers.

Strong Management control

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It is another plus point that PEL has a strong management. Its

employees are competent, efficient, skilled and knowledgeable. They always

cooperate with the top management in achieving of goals that are assigned to

them. Employees are well aware about the company objectives and are

committed to the development of company.

Power division

Power division is the unique strength for PEL. Most of electronics

companies deal in only home appliances but PEL is the only company which

deals in home appliances and power appliances

Technological differential advantage

Strength for PEL is the advancement in the technology. The company

uses imported danfoss compressor in refrigerators, air conditioners and it is

also a differential advantage for the company because no any company has this

advantage.

Distribution of Authority

Top management of PEL delegates the power to the subordinates for

achieving the marketing objectives in a specified time period. So every manager

has an authority to take decisions to achieve the goals of company. In this way

they save the time and react quickly.

Weaknesses

Along with its strengths PEL has also some weaknesses which needs to

eliminate in future. If PEL overcomes these weaknesses then it can become a

market leader in home appliances.

PEL looses some competitive edge in the following areas

Financial Problems

Lack of advertisement

System variations

Lack of Product range

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Less Utilization of capacity

price setting

Financial problems

Sometimes PEL faces the financial problems because its stocks are so

much piled up in the stores that creates problem of cash inflow and outflow and

cause a problem in production process due to short raw material.

System variations

It is also the main weakness of PEL that there is a rapid change in

polices of selling the products. That creates problems for the selling team to sell

the products to the dealers.

Lack of Product Range

PEL has introduced more products of consumer items but there are more

needs to develop new consumer items.

Less utilization of capacity

Due to lack of finance a company cannot utilize all its resources on its full

capacity. It increases the cost of products per unit that decreases the profit

margin of each consumer item. As the production capacity and actual

production of different products is given below (2005)

Production capacity Actual

production

Refrigerators 3500000 2924905

Energy meters 1200000 986085

Transformers 2000 1356

Air conditioners 36250 6560

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Price setting

Price setting is also a main problem for PEL because it sets its prices on

the bases of competition and this strategy reduces its profit margin.

External environment

It consists of opportunity and threats

Market opportunity

It is an area of buyer need in which a company can perform profitably.

Market threat

It is a challenge due to an unfavorable trend of development or decline in

sales or profits in absence of defensive marketing action

The strengths, weaknesses, opportunities and threats of PEL are discussed

below

Opportunities

For PEL, there are more opportunities for expansion in business. Following are

the opportunities for the PEL.

Exploration of market

Increase in product range

Export opportunity

Increase in production capacity

Exploration of market

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PEL has the opportunity to explore the market in all over Pakistan. Even

though PEL has introduced its products in many cities of Pakistan but there are

so many places that are yet to be exploited.

Increase in Product Range

PEL can increase its product range that will be more profitable for the

company. There are more needs to develop new consumer items like PEL

Vacuum cleaners etc.

Export opportunity

PEL has also the opportunity to export their products in other

international countries like UAE, SAUDI ARABIA, and some other countries of

Middle East.

Threats

Following are the main threats for the PEL

Strong competition

Chinese product in the market

supplier’s growing bargaining power

Instability of governments

Tax department

World Trade Organization

Strong competition

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There is very strong competition in the home appliance division. Every

company adopts different strategies for selling of the products. It reduces the

profit margin of each company and increases the bargaining power of the

buyers who will demand higher quality of products at lower cost.

Chinese product

Chinese products are another threat for the Pakistani companies

because these products are cheaper than the Pakistani products. Chinese

products stress the indigenous companies to lower the quality and prices that

will not be profitable in the long run.

Instability of Government

The rapid change in governments has become a threat for the

companies because every government adopts new policies for the industries.

So it increases the uncertainty for the investors who want to invest heavy

amounts in their new projects.

Tax department

Tax department is another major threat for the company that is

restraining the business expansion. There is a most complicated tax procedure

operating in the country that creates hurdle in the production and smooth

functioning of different companies in Pakistan.

World trade organization

World trade organization has allowed from 2005 to any company offering

home appliances to export their products after paying less duties or duty free

products. That will increase the pressures for the local companies to reduce the

prices and increase the quality. It will increase the competition among the

foreign companies and local companies.

Supplier’s growing bargaining power

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The supplier growing power is increasing due to more demand of the

electronic industry due to this phenomena the suppliers of raw material are

charging high prices and it is reducing average profit margin of companies.

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Liquidity Analysis

Current Ratio

Interpretation

The liquidity position of PEL has been satisfactory in the last few years. As the

above analysis table indicates, in 2005 the liquidity position was 1.15 times

which means that in 2005 the firm has Rs. 1.15 to pay a liability of RS. 1 which

is quite well but in 2006 it suddenly reduced to 1.04 times. This change in the

liquidity position is due to higher increased percentage of current liabilities in

the balance sheet of year 2006. But in 2007 PEL has decreased its current

liabilities and is having an improved current ratio of 1.32 times which is much

better in a sense that the company has maintained a well managed level of

assets to pay its liabilities.

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Year 2004-05 2005-06 2006-07

Current Ratio 1.15 1.04 1.32

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Quick Ratio

Interpretation

Secondly, quick ratio is also indicating that in 2006 the higher

increased percentage of liabilities also cause quick ratio to

decrease from 0.70 times to .62 times but in 2007 PEL managed to gain

quick ratio of .84 times by reducing level of stock in trade as well as its

current liabilities portion.

Activity Analysis

Inventory turnover

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Year 2004-05 2005-06 2006-07

Quick Ratio 0.70 0.62 0.84

Year 2007 2006 2005

Inventory Turnover

3.70 2.85 2.69

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Interpretation

The above inventory turnover table and graph shows an increased level of inventory turnover in year 2007, which is a very good indicator that shows higher ability of the firm to utilize its inventory to generate sales during the year 2007.

Total Assets Turnover

Year 2007 2006 2005

Total Assets Turnover 1.02 0.93 0.84

InterpretationFifthly, total asset turnover ratio is also moving upwards which

indicates that the firm’s operations are tending to be more efficient then from previous years. So the overall activity analysis of PEL shows that the firm is performing its business activities effectively and efficiently

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Analyzing Debt

Debt Ratio

Year 2007 2006 2005

Debt Ratio 64% 68% 65%

Interpretation

The above debt analysis table shows that in year 2007, the debt ratio of the

firm has decreased as compared with years 2006 and 2005 which seems to be

a good indicator and it shows that the firm is trying to maximize the utilization

of its own business resources and minimizing the reliability on outside sources

of debt or financing for investment purposes.

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Debt Equity Ratio

Year 2006-07 2005-06 2004-05

Debt Equity Ratio 0% 0% 0%

Interpretation

The above calculated value shows that the firm 0% debt equity ratio which means

that the firm is taking no long term debt and using owner’s equity for investment

purpose. It is a good indicator in a sense that the firm has no long term obligation

as well as the firm does not have to pay interest on long term debts. But on the

other side it might be a drawback for the firm. They can get long term debt and

can increase their investments as well as their profits

Analyzing profitabilityYear 2007 2006 2005

Gross Profit Margin % 21 22 22

Operating profit margin% 13 12 11

Net profit margin % 4.9 4.6 4.2

Return on total assets % 5 4 3

Return on equity % 17 16 12

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Interpretation

The above profitability schedule shows that Gross profit margin ratio of the

firm has decreased in year 2007 due to unexpected increase in cost of good

sold which is not a good indicator but considering the volume of decline and

changing environment of the market it is coverable and the firm might

improve it in near future.

Next you can see that the operating profit margin ratio is improving as

compare with last years so it is providing support to some extent to the

profitability of the firm. And while considering net profit margin, it also

indicates an increase in the margin of net profit of the firm in sales which is

also supportive for profitability.

Other profitability ratios are improving as compared with previous years

which show the firm is earning high amount of profits and the assets are

being effectively utilized by the firm to generate profit. And the amount of

earning per share is also increasing which shows that firm is distributing the

earning in its shareholders at a increasing rate which is very much

encouraging for the investors to buy the shares of PEL.

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IN PAKISTAN PEL IS ONLY LISTED COMPANY IN HOME

APPLIANCES INDUSTRY. THE OVERALL POSITION ON THE COMPANY IS

WELL. MARKETING DEPARTMENTS ARE PLAYING IN IMPORTANT ROLE

IN ENHANCING THE SALES OF THE ORGANIZATINS. ESPECIALLY CMD IS

CONTRIBUTING VERY WELL IN GENERATING PROFITS. COMPANY’S

ATMOSPHERE IS VERY COMFROTABLE FOR WORKING. COMPANY’S

OTHER POLICIES REGARDING OPERATIONS, FINANCIALS, HR,

MARKETING ARE ALSO VERY POSITIVE AND SATISFACTORY. MAY

ALLAH PROSPERS THIS ORGANIZATION AND FLOURISHED BY LEAPS

AND BOUNDS.

Internship Report50


In my opinion there are following areas in which management can improve

organization’s performance by giving some special concentration.

Regarding financial positions, Company’s profitability ratios are well. But

its net profit ratio is not quite satisfactory due to increased costs and

expenses & management should try to minimize its cost.

Company should also take measures to improve it return on assets by

properly utilizing its assets to generate sales.

Company’s inventory turnover ratio is also not satisfactory. Management

should try to increase its stock turnover ratio.

Regarding HR department, orientation program should be started for

internees.

Regarding products, company should try to enhance its product range.

There should be pick and drop facility for the employees.

There should be separate flats for outstation employees.

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Skill Acquired

In FP-AD (Import/export) department the skill that I acquired during my internship period is following.

Post shipment The senior commercial office taking the following step for efficiently moving the consignment from Karachi to Lahore dry port for custom clearance etc by road and rail on nature of material.

1) Shipping documenti. Receiving the shipment document courier or bank.ii. SD thoroughly scrutinerized and forward to custom for

clearaning agent. iii. For onward submission to local forwarder for movement

of consignment by road and rail.

2) DestuffingIn case of containerized consignment IO will immediately destuff the consignment at Karachi port, to avoid any mishandling so that we may able to transport it up to LDP.

3) Negotiable Document IO will send a request to concerning bank for release of SD to PEL approved custom clearance agent.

4) InsuranceUpon receipt of SD they also inform the insurance company for arrival of consignment at Pakistan.

Custom clearance For clearance of all consignment, IO will give written instruction to the clearance agent, for filing the Goods Declaration (GD).

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Reception of consignmentsI. After clearance and released the consignment from

custom port, IO will issue an internal memo to the store In.

II. Change with concerning HOD for this information.III. In case of shortage of material, store tell the IL

department .

In Accounts department the skill that I acquired during my internship period is following.

On Receipt of Material in storeFollowing transaction madein account department

1)Raw Material Component Debit

Party Provision Credit

On receipt of Bill in Accounys Department

2)Party Provision Debit Advance Sales Tax Debit Fedral Excise Duty Debit Fright/Process charges Debit

Party Account Credit

On Payment Of Bill

3)Party Account Debit

Bank Account CreditWithholding tax Credit

On Payment Of With Holding Tax

4) Withholding tax Debit Bank Account Credit

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In Receiving Store department the skill that I acquired during my internship period is following.

Incoming store ↓ Supplier deliver Challan ↓ PBL Purchase

↓ LMRP (Local Material Receipt Point)

↓ Quality Verification Physical is responsibility Of RSI(Receiving Store Inventory)

↓

Allotted the Inventory Gate Pass No

↓ QC for inspection

↓

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RSI GRNO Alloted

In Accounts (cost control system) department the skill that I acquired during my internship period is following.

PRODUCTS

Appliance division

Deep freezers 1

Television 2

Microwave oven 3

Washing machine 4

Generators 5

Air condition 6

Refrigerator 7

Power Division

PEL Power Division manufactures energy meters,

Transformers 2

Switchgears 3

Kiosks 4

Compact stations 5

Shunt capacitor banks 6

Energy meters 7

Generators 8

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OTHERS 0

Following number are allotted to No of jobs

A) Manufacturing (0)

B) Repair under warrenty (1)

C) Chargeable repair (2)

D) Development of new design (3)

E) Resale inspection of products (4)

F) Issue of component for sale (5)

G) Auxiliary material and wages (6)

H) Fabrication of component (7)

I) MFG./Issue of capital assets (8)

J) Maintainance and foctory overhead (9)

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Balance Sheetas at December 31, 2009

Note December 31,

2009June 30, 2009

(Rupees in thousand)

EQUITY AND LIABILITIES

SHARE CAPITAL & RESERVES

Authorized capital 5 2,500,000 2,500,000

Issued, subscribed and paid up capital 6 1,593,720 1,496,677

Reserves 7 131,931 131,931

Un-appropriated profits 7 2,461,255 2,378,750

4,186,906 4,007,358

SURPLUS ON REVALUATION OF PROPERTY, PLANT AND

EQUIPMENT8 4,373,769 2,788,311

NON CURRENT LIABILITIES

Long-term financing - secured 9 4,079,149 3,493,417

Liabilities against assets subject to finance lease 10 119,368 103,367

Deferred taxation 11 2,883,631 2,013,543

Deferred income 12 101,108 110,207

7,183,256 5,720,534

CURRENT LIABILITIES

Trade and other payables 13 1,284,080 1,506,702

Interest / mark-up accrued on loans and other payables 14 333,763 337,322

Short-term borrowings 15 4,706,890 3,946,515

Current portion of

- long-term financing 9 783,597 677,349

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- liabilities against assets subject to finance lease 10 82,959 85,944

7,191,289 6,553,832

CONTINGENCIES AND COMMITMENTS 16

22,935,220 19,070,035

Note December 31,

2009June 30, 2009

ASSETS

NON-CURRENT ASSETS

Property, plant and equipment 17 13,457,138 9,720,022

Intangible assets 18 511,134 583,512

13,968,272 10,303,534

Long term investments 19 22,906 21,771

Long-term deposits 20 92,152 80,179

CURRENT ASSETS

Stores, spares and loose tools 21 90,721 76,854

Stock-in-trade 22 3,826,744 3,258,607

Trade debts - unsecured 23 3,227,219 3,807,776

Advances 24 825,807 686,044

Trade deposits and short-term prepayments 25 193,963 180,262

Other receivables 14,952 12,671

Other financial assets 26 27,522 26,107

Sales tax refundable 27 154,374 131,593

Income tax refundable 367,325 291,579

Cash and bank balances 28 123,263 193,058

8,851,890 8,664,551

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22,935,220 19,070,035

The annexed notes 1 to 48 form an integral part of these financial statements.

NASEEM SAIGOLChairman / Chief Executive Officer

HAROON A. KHANManaging Director

Profit & Loss Account / Statement of Coprehensive IncomeFor the Six months period ended December 31, 2009

NoteSix months ended December 31, 2009

Year ended June 30,

2009

(Rupees in Thousand)

Revenue 29 5,203,152 16,117,524

Sales-tax and discount 30 571,721 1,495,912

Revenue - net 4,631,431 14,621,612

Cost of sales 31 3,148,401 11,283,796

Gross profit 1,483,030 3,337,816

Other operating income 32 40,708 37,088

1,523,738 3,374,904

Distribution cost 33 315,170 892,068

Administrative expenses 34 349,450 609,004

Other operating expenses 35 19,751 116,807

Finance cost 36 619,911 1,372,676

Share of profit/(loss) of associate 19.2 2,438 9,248

Profit before taxation 221,894 393,597

Provision for taxation 37 60,643 133,051

Profit for the period / year 161,251 260,546

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Other comprehensive income - -

Total comprehensive income for the period/year 161,251 260,546

Rupees Rupees

Earning per share - -

Basic 401.31 1.97

Diluted 40 1.24 1.94

Cash Flow StatementAnnual Statement ended December 31, 2009

Not

e

Six months ended

Dember 31, 2009

Year

ended

June 30,

2009

(Rupees in Thousand)

CASH FLOWS FROM OPERATING ACTIVITIES


Adjustments for


Amortization of intangible assets 1,925 3,134

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Share of profit of associate (2,438) (9,248)

Provision of impairment in value of investments 1,303 40,422

Finance cost 619,911 1,372,676

Provision for doubtful receivables & advances 52,042 58,539

Impairment loss of goodwill 73,632 -

Provision / (reversal) of provision for obsolete and slow moving stocks 381 (6,637)

Provision for compensated absences 1,157 13,599

Gain/(loss) due to change in the fair value of other financial assets (1,415) 46,188

Loss on sale and lease back 1,864 -

Amortization of grant in aid (1,497) (3,150)

Gain on sale and lease back activities (net of amortization during the year (13,608) (18,408)

(Gain) / loss on disosal of property, plant and equipment (748) 1,026

949,089 1,813,446

Cash generated from operations before working capital changes 1,170,983 2,207,043

Working capital changes 45 (455,667) (10,189)

Cash generated from operations 715,316 2,196,854

Finance cost paid (623,470) (1,255,458)

Compensated absences paid (1,081) (14,198)

Income taxes paid (106,032) (269,471)

(730,583) (1,539,127)

Net cash (used in) / from operating activities (15,267) (657,727)

Cash flows from investing activities

Purchase of property, plant and equipment (1,466,257) (2,394,040)

Proceeds from disposal of property, plant and equipment 3,699 12,984

Proceeds from sale and leaseback activities 55,521 210,769

Long-term deposits made during the period/year (11,400) (11,338)

Net cash used in investing activities (1,418,437) (2,181,625)

Cash flows from financing activities

Repayment of long-term financing (269,292) (744,412)

Proceeds from long-term financing 961,272 2,103,237

Payment of liabilities against assets subject to finance lease (38,452) (103,886)

Proceeds from short-term borrowings 760,375 77,527

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Dividends paid (49,994) (49,994)

Net cash from financing activities 1,363,909 1,282,472

Net decrease in cash and cash equivalents (69,795) (241,426)

Cash and cash equivalents at beginning of the period /year 193,058 434,484

Cash and cash equivalents at end of the period /year 28 123,263 193,058


Statement of Changes in EquityAnnual Statement ended December 31, 2009

(Rupees in thousand)

Share Capital

Capital Reserves Revenue reserves

TotalPremium on

issue of

shares

Reserves for

bonus shares

Unappropriate

profit

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Balance as at July 01,

2008 1,496,677131,931

-2,074,013 3,702,621

Total comprehensive

income for the year ended

June 30, 2009-

- - 260,546 260,546

Final dividend for the year

ended June 30, 2009 @ Rs.

0.95 per preference share-

- - (49,994) (49,994)

Transfer to unappropriated

profits on account of

incremental depreciation

charged during the year net

of deferred taxation

-- - 94,185 94,185

Balance as at June 30,

2009 1,496,677131,931

-2,378,750 4,007,358

Total comprehensive

income for the six months

period ended December 31,

2009-

- - 161,251 161,251

Final Dividend for the year

ended June 30, 2009 @ Rs.

0.95 per preference share-

- - (49,994) (49,994)

Transferred to reserve for

bonus shares-

- 97,043(97,043) -

Issue of bonus shares97,043 - (97,043)

- -

Transfer to unappropriated

profits on account of

incremental depreciation

charged during the period -

net of deferred taxation

- - -68,291 68,291

Balance as at December

31, 20091,593,720 131,931

- 2,461,2554,186,906


NASEEM SAIGOLChairman / Chief Executive Officer

HAROON A. KHANManaging Director

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Key Operating and Financial Data

Directors' Report to the Shareholders

Directors' Report to the ShareholdersThe Directors are pleased to present their Report together with Company’s audited financial statements for six months ended December 31, 2009.

Operating Results & Performance Overview Company achieved sales of Rs. 5.203 billion during six months ended December 31, 2009 which were marginally lower than corresponding period’s sales of Rs. 5.547 billion. Profit after taxation of Rs. 161 million grew more than 16% over previous six months figure of Rs. 138 million. This performance is noteworthy especially in view of

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prevailing non-conducive business conditions. Comparative figures, although, have been reported for the year ended June 30, 2009 but for better understanding figures of corresponding six months have also been reported wherever necessary, in this report.

In order to match the seasonal business cycle with the accounting year, Company has adopted calendar year as its accounting year whereby the year-end will not fall in the peak season. As such these accounts have been prepared for six months ended December 31,2009 after

obtaining necessary approvals from relevant authorities. Summary of the results is as under

Financial Results (Rs. in Million)

6 months ended

December 31,

2009

6 months ended

December 31,

2008

Year ended

June 30, 2009

Gross Sales 5,203 5,547 16,117

Gross Profit 1,483 1,305 3,337

Operating Profit 839 820 1,757

Profit before tax 224 204 394

Profit after tax 160 139 261

Earnings per share (Basic) - Rupees 1.31 1.17 1.97

Earnings per share (Diluted) - Rupees 1.24 1.06 1.94

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BIBLIOGRAPHY

BOOKS

Principle of marketing by Kotler Armstrong

ARTICLE

Monthly article of pak electron limited(PEL)

Quarter report of pak electron limited(PEL)

Semi annually report of pak electron limited(PEL)

Annually report of pak electron limited(PEL)

WEBSITES

www.pel.com.pk

www.secp.com.pk

www.scribed.com.pk

www.kse.com.pk

www.google.com.pk

www.ibp.com.pk

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http://www.ibp.com.pk/

http://www.google.com.pk/

http://www.kse.com.pk/

http://www.scribed.com.pk/

http://www.secp.com.pk/

http://www.pel.com.pk/

pel report final

Documents

public limited company

internship period

internship program

textile plants

textile city of pakistan

major textile unit

spindles capacity

present production capacity