report final 2016 2

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TABLE OF CONTENTS

DEDICATION...................................................................................................................................9

ACKNOWLEDGEMENT..................................................................................................................10

PREFACE.......................................................................................................................................11

PART 1: INTRODUCTION OF THE ORGANIZATION........................................................................13

GROUP PROFILE....................................................................................................................... 13

COMPANY INFORMATION........................................................................................................14

COMPANY CODE OF CONDUCT................................................................................................16

HISTORY................................................................................................................................... 21

PRESENT BUSINESS.................................................................................................................. 22

BUSINESS OVERVIEW............................................................................................................22

SHOE BOX............................................................................................................................. 23

TYRE & TUBE AND RUBBER...................................................................................................23

OBJECTIVES / VISION AND MISSION.........................................................................................24

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FUTURE OUTLOOK....................................................................................................................25

COMPLIANCE............................................................................................................................25

CORPORATE SOCIAL RESPONSIBILITY.......................................................................................26

CORPORATE PHILANTHROPY................................................................................................27

COMMUNITY INVESTMENT..................................................................................................28

OTHER AREAS....................................................................................................................... 29

PART TWO: COMPANY MANAGEMENT SYSTEM..........................................................................31

ORGANIZATIONAL CHART........................................................................................................31

ORGANIZATIONAL HIERARCHIES..............................................................................................32

POLICY FORMULATION PROCESS-MEETINGS, HOW FREQUENT..............................................34

PERSONNEL POLICIES...............................................................................................................35

SALARIES OF WORKING FORCE.............................................................................................35

PROCUREMENT POLICIES.....................................................................................................36

ADVERTISING POLICIES.........................................................................................................36

DESIGNATIONS AND NUMBER..............................................................................................37

JOB ASSIGNMENTS/DESCRIPTION, QUALIFICATION AND MATCHING BENEFITS..................37

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CAREER LADDER................................................................................................................... 39

JOB ASSESMENT METHODS..................................................................................................39

JOB SATISFACTION OF EACH SECTION’S EMPLOYEE.............................................................40

PART THREE: ADMINISTRATIVE OR MANAGEMENT STYLES........................................................41

MANAGEMENT BY OBJECTIVES................................................................................................42

IMPACT OF DIFFERENT STYLES ON THE MORALE AND EFFICIENCY OF WORKERS...................42

AUTOCRATIC.........................................................................................................................42

PATERNALISTIC.....................................................................................................................43

DEMOCRATIC........................................................................................................................43

PART 4: PRODUCTION FACILITIES................................................................................................44

INTRODUCTION........................................................................................................................44

PRODUCTION FACILITIES..........................................................................................................44

DETERMINANTS OF PRODUCTION FACILITIES..........................................................................44

FACTORS INVOLVED IN FACILITIES...........................................................................................44

TYPES OF PRODUCTION SYSTEMS............................................................................................47

INTERMITTENT PRODUCTION SYSTEM.................................................................................47

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PRODUCTION PLANNING.........................................................................................................47

METHODS OF PRODUCTION.....................................................................................................48

JOB METHOD........................................................................................................................49

BATCH METHOD...................................................................................................................49

FLOW METHODS...................................................................................................................50

DEVELOPMENT PROCESS.........................................................................................................53

COSTING PROCESS................................................................................................................... 54

PROCUREMENT PROCESS.........................................................................................................55

PRODUCTION PROCESS & DISPATCHING..................................................................................55

CRITIQUE..................................................................................................................................55

LEAN MANUFACTURING.......................................................................................................58

CAPACITY UTILIZATION IN SIL GUJRAT FACTORY......................................................................59

CAPACITY UTILIZATION IN SIL MURIDKE FACTORY...................................................................59

QUALITY CONTROL & ASSURANCE...........................................................................................60

PART 5: COMPANY MARKETING MIX...........................................................................................61

TYRE DIVISION..........................................................................................................................61

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PRODUCT: (TUBES)...................................................................................................................61

PRICING STRATEGY:..................................................................................................................61

PLACE:...................................................................................................................................... 62

PROMOTION: 360 CAMPAIGNS DIFFERENT TYPES OF MEDIUM ARE USED TO TARGET AUDIENCE.............................................................................64

FOOT WEAR..............................................................................................................................64

ANALYSIS OF COMPANY MARKETING/ SALES PROCEDURES....................................................69

MARKET PROFITABILITY........................................................................................................71

PORTER’S FIVE FORCES MODEL............................................................................................72

SUCCESS FACTORS................................................................................................................73

SWOT ANALYSIS....................................................................................................................74

PRICING....................................................................................................................................77

PRICING METHODS...................................................................................................................77

COST-BASED PRICING...........................................................................................................78

COST-PLUS PRICING..............................................................................................................78

DEMAND-BASED PRICING.....................................................................................................79

COMPETITION-BASED PRICING.............................................................................................79

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OTHER PRICING METHODS.......................................................................................................80

DISTRIBUTION.......................................................................................................................... 80

DISTRIBUTION METHODS.....................................................................................................80

DIRECT SELLING........................................................................................................................80

WHOLESALE............................................................................................................................. 81

MAIL ORDER.............................................................................................................................81

DISTRIBUTION STRATEGIES...................................................................................................82

PROMOTIONAL POLICIES......................................................................................................... 84

ADVERTISING POLICIES.........................................................................................................87

DEALINGS WITH CLIENTS..........................................................................................................94

DEVELOPMENT OF THE PRODUCT:...........................................................................................95

PART SIX: COMPANY ACCOUNTING/ FINANCE SYSTEM...............................................................96

ACCOUNTING DEPARTMENT....................................................................................................96

STATEMENT OF VALUE ADDITION AND ITS DISTRIBUTION......................................................98

SIX YEARS AT A GLANCE (RATIO ANALYSIS)............................................................................100

LIQUIDITY RATIOS...............................................................................................................100

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LEVERAGE RATIOS.............................................................................................................. 102

COVERAGE RATIO...............................................................................................................103

ACTIVITY RATIOS.................................................................................................................104

PROFITABILITY RATIOS........................................................................................................110

MARKET RATIOS................................................................................................................. 114

HORIZONTAL AND VERTICAL ANALYSIS..................................................................................119

BALANCE SHEET ANALYSIS..................................................................................................119

PROFIT AND LOSS ACCOUNT..............................................................................................120

BUSINESS REVIEW..................................................................................................................123

APPROPRIATIONS FOR THE YEAR 2015..................................................................................124

BALANCE SHEET..................................................................................................................... 134

PROFIT AND LOSS ACCOUNT..................................................................................................137

STATEMENT OF COMPREHENSIVE INCOME...........................................................................138

CASH FLOW STATEMENT........................................................................................................139

STATEMENT OF CHANGES IN EQUITY.....................................................................................141

PART SEVEN: TRAINING PROGRAM...........................................................................................153

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1ST WEEK.................................................................................................................................153

2ND WEEK................................................................................................................................ 155

3RD WEEK................................................................................................................................ 157

4TH WEEK................................................................................................................................ 159

QUESTIONNAIRE.................................................................................................................159

WEEK 5...................................................................................................................................164

WEEK 6...................................................................................................................................164

DIFFICULTIES FACED IN GETTING DATA.................................................................................165

PART EIGHT: CONCLUSION & RECOMMENDATION...................................................................165

SOLUTONS..............................................................................................................................165

RECOMMENDATIONS.............................................................................................................166

REFERENCES...............................................................................................................................168

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DEDICATION

I dedicated all my efforts and struggles of the educational life

to my dear parents; without them I’m meaningless. Also I

devote the work of this internship report to respectable and

honorable teachers who taught and supported me in

developing my personality as a competent professional

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ACKNOWLEDGEMENT

First of all I thank Allah, who is the holder of my breaths, without his

order nothing is possible. I am highly thankful to my respectable

teachers and friends and family members who were my supporter

throughout my educational career, further I thank all the

employees of the Service Industries Limited, where I have done my 6

weeks internship.

I have set light, an ever-burning flame of gratitude and deep sense of

obligation to my honorable teachers for their valuable guidance,

constructive criticism and inspiring attitude during my studies. I

appreciate and thanks to all the member of the SIL.

Besides, this internship program makes me realize the value of working

together as a team and as a new experience in working

environment, which challenges us every minute. Special Thanks to Sir

AYAZ JAMIL (Head of Operations & Sales) that helped me to write

internship report on SIL from time to time during the project. The whole

program really brought us together to appreciate the true value of

friendship and respect of each other. Last words are lacking to express

my feelings and indebtedness to my affectionate Family and Friends for

their love, appreciations, which always stand by me mentally and

spiritually during all years of my study.

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PREFACE

The purpose of this report is to fulfill internship requirement for the Bachelor

of Business Administration degree. The internship is an integral part of BBA

program, provides the opportunity of peeping into real professional life of the

industry. It enables us to evaluate and understand the practical applications of

all terms and techniques that we have studied during our coursework.

It was assigned to complete my internship comprising practical work of six

weeks, at Shoe Box a retail project of Servis Industries Limited. In this report I

tried my best efforts to explain each and every significant aspect of my

training.

The methodology adopted for the report included collection of both

qualitative and quantitative data. The report will comment on the prospects of

the company and make recommendations that would improve Power

production and Quality test methods. These observations do have limitations

which will be noted. This report also explains the financial analysis of the

company.

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EXECUTIVE SUMMARY

The story of the ‘Servis’ begins with a group of friends - young, energetic, fresh

from college-who established Service Industries in 1953, the Company went

public in 1959. Servis industries limited are a tyre, tube and shoe

manufacturing company. The company started in 1941 but on small scale .The

Company completely recognized in 1959. Service Industries Limited (SIL) is a

public limited company listed on the stock exchanges of Pakistan. Now the

company has tyre & tube division, local rubber manufacturing, export and

import department and retail of shoes from the name of shoe box.

In six weeks internship program I worked in the sales, operations and

marketing department. I worked as a mystery shopper. Made questionnaire to

check the customer’s response and try to know about the company’s

marketing mix, management styles and production methods.

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PART 1: INTRODUCTION OF THE ORGANIZATION

GROUP PROFILE

Servis industries limited are a tyre, tube and shoe manufacturing company. The company started in

1941 but on small scale .The Company completely recognized in 1959. Service Industries Limited (SIL) is

a public limited company listed on the stock exchanges of Pakistan.

It has annual revenues of about PKR 15 billion ($150 Million) and is the largest manufacturer of

footwear, tyres & tubes for two-wheelers, and has been the largest footwear exporter of the

country for the last 10 years. The company employs more than 8,600 people in its facilities

located in Gujrat and Muridke and exports its products in many destinations around the world.

With a strong emphasis on product quality and innovation, SIL has built both domestic and

international recognition of company's products.

Footwear

Our in house manufacturing covers all aspects of shoe manufacturing value chain from model

designing, cutting, stitching to lasting (injection) & finishing and downstream activities such as

marketing. And now we enter in retail of shoes from Feb 2016 and currently we have 7 outlets

in 4 cities of Pakistan

Tyre & Tube

Service Industries Ltd is the pioneer in tyre & tube manufacturing in Pakistan since 1970.

Specialized in manufacturing and marketing products for the masses, our main business activity

is producing tyres & tubes for Motorcycle / Bicycle and footwear of different kinds. Service

Industries Limited has been dealing in bicycle tyre & tube business since 1970. Manufacturing

of motorcycle tyres & tubes was started in 1990. Our high quality products are swiftly and

efficiently distributed through a vast distribution network are a testament to their own success.

This makes us undisputed market leader in bicycle market and a holder of majority share in

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motorcycle tyre & tube market. We are a major supplier of tyres & tubes to Japanese

motorcycles manufacturers like HONDA, YAMAHA and other local motorcycle assemblers in

Pakistan. Service Industries Limited is listed as registered Company on all major stock

exchanges of the country. With a work force of above 2,200 employees and approximately $67

million dollars per annum turnover, we are a low cost producer selling and growing profitably,

doubling our sales every three years, and earning a fair profit for the shareholders.

COMPANY INFORMATION

Board of Directors

Chaudhry Ahmed Javed

Chairman

Mr. Omar Saeed

Chief Executive

Mr. M Ijaz Butt

Mr. Arif Saeed

Mr. Hassan Javed

Mr. Riaz Ahmed

Mr. Shaukat Ellahi Shaikh

Mr. Muhammad Amin

Mr. Manzoor Ahmed*

(NIT Nomine)

Advisor

Ch. Ahmad Saeed

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Chief Financial Officer

Mr. Jawwad Faisal**

Company Secretary

Mr. Waheed Ashraf

Audit Committee

Mr. Manzoor Ahmed*

Chairman

Mr. Riaz Ahmed

Member

Mr. Muhammad Amin

Member

Human Resource & Remuneration Committee

Mr. Riaz Ahmed Chairman

Mr. Arif Saeed Member

Mr. Muhammad Amin Member

Web Presence

www.servisgroup.com

Bankers

Habib Bank Limited

United Bank Limited

MCB Bank Limited

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Allied Bank Limited

Faysal Bank Limited

SAMBA Bank Limited

Standard

Chartered Bank (Pakistan)

Alfalah Bank Limited

Meezan Bank Limited

Askari Bank Limited

Dubai Islamic Bank (Pakistan) Limited

Auditors

M/s. S. M. Masood & Co. Chartered Accountants

Legal Advisor

M/s. Bokhari Aziz & Karim 2-A, block-G, Gulberg-II, Lahore.

Shares Registrar

M/s. Hameed Majeed Associates (Pvt.) Limited 1st

Floor, H.M. House, 7-Bank Square, The Mall, Lahore.

Tel: 042-37235081-2

Fax: 042-37358817

Pakistan Stock Exchange

Limited Stock Exchange

Symbol SRVI

Company Code of Conduct

Scope

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Policy shall be applicable to the management and non management staff of Service Industries

Limited at head office, plant sites and any other company establishment.

Objective

To ensure compliance to all legal requirements in letter and spirit

Child Labor Prohibition

At Service Industries Limited, we strongly believe in the compliance of national and

international laws for elimination of child labor. No one under the age of eighteen (18) years

shall be considered for employment.

Equal Employment Opportunity

The company strongly believes in providing Equal Employment Opportunity (EEO) without any

exception ensuring that everyone has fair and equitable access to job assignment, employment

conditions, training, and career development.

Discrimination

The Company strongly believes that all employees should be treated equally without any

discrimination on the basis of;

Religion

Sex

Race (including nationality, colour)

Marital status

Disability

In case any employee is aggrieved of any discrimination, he / she will have the right to make a

complaint to the competent authority through his Department Head who upon its receipt shall

investigate the same and in the event of any veracity further action including disciplinary

measure as the case may be initiated or taken in the circumstances of the case.

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Harassment

It is the policy of the company to ensure that none of its employees is harassed including

sexual harassment or pressurized to achieve any desired objectives during the course of their

employment.

In case of any complaint in this connection shall be viewed seriously by the management and

necessary disciplinary action or remedial measures shall be taken accordingly without

exception.

Teamwork

It is the policy of company to ensure harmony and coordination amongst team members. New

team members are warmly welcomed and highly facilitated in order to get them up in existing

teams. Old team members are also highly respected as they have proved to be role models and

act as facilitators for new ones to understand the culture.

Information and Communication

We believe in open communication while maintaining the confidentiality wherever deemed

necessary. The information flows are smooth and no hindrances as regards to bureaucracy of

position/designation can disturb the flow except where considered necessary under

confidentiality matters.

Smoking

The company strictly discourages smoking inside the premises. We encourage our team

members to quit smoking. However, in order to facilitate employees, smoking corners have

been established. This is also meant for avoiding any potential hazard because of presence of

flammable materials within the premises.

Fraud and Corruption

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These two activities are highly unacceptable. Anyone found involved in any such activity like

theft, embezzlement, fake attendance etc shall be dealt with strict disciplinary action. Company

shall proceed with appropriate procedure for recovery of financial loss. Any such case may be

prosecuted in court of law, wherever deemed necessary.

Work Timings

All employees must follow the office timings according to the location.

Minimum Wage

No employee shall be paid less than the minimum wage fixed by the government.

Forced Labor

The management firmly believes in upholding the rule of law and would not indulge in any

forced or bonded labor.

Drug-Free Workplace

The management strictly believes in maintaining a drug-free workplace. If an employee is

convicted of violating a criminal drug statute, management reserves the right to take strict

disciplinary action against the defaulter.

The distribution, dispensation, possession, use or presence in the body system of controlled

substances and illegal drugs is prohibited at any time during working hours on company

premises including company’s residential areas.

Possession of Arms

The Company within its premises prohibits the possession of explosives, ammunition, firearms

or any other weapon or devises used to inflict injury. However, security staff is authorized to

keep weapons which have been licensed and issued by the competent authority.

Health and Safety Guidelines

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The company is responsible for meeting Federal as well as local health and safety standards and

for establishing and implementing necessary measures to minimize its employees’ risk of injury

or illness.

Health and safety guidelines shall be strictly followed i.e. use of Personal Protective Equipments

(PPEs) wherever and whenever required. Health and safety procedures shall be developed and

implemented in order to ensure complete adherence to the safety rules and regulations.

Human Resource Department will ensure that all EHS policies and procedures are

communicated at all levels of Company employees.

Compliance of Policies

If preliminary investigation of any reported case of non-conformance to the above policy point

towards infringement of the provisions of this policy, Human Resource Manager/ Inquiry Officer

will conduct detailed, confidential and impartial inquiry and report the matter to the top

management.

If an inquiry reveals that any provisions of the policy have been violated, Human Resource

Department will take appropriate disciplinary action against the defaulters, in accordance with

laws / management practices relevant to the situation.

Guidelines for Human Resource Department

Human Resource Manager will ensure that all executives / managers are fully conversant with

the provisions of this company policy.

Head of Departments will also be responsible for ensuring compliance to these policy

guidelines and any deviation of above policy guidelines shall not be acceptable.

PERMISSIBLE BUSINESS ACTIVITIES

The principal activities of the company are purchase, manufacture and sale of footwear, tyres

and tubes and technical rubber products.

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COMPANY REGISTRATION NO:

0000864

NATION AL TAX NO:

0222346-5

REGISTERED OFFICE

Servis House 2-Main Gulberg , Lahore

FACTORIES

G.T Road Gujrat

Muridke -Sheikhupura Road. Muridke

HISTORY

The story of the ‘Servis’ begins with a group of friends - young, energetic, fresh from college-

who established Service Industries in 1953, the Company went public in 1959. These young

men, named Ch. Nazar Muhammad (Late), Ch. Muhammad Hussain (Late) - both from Gujrat

district and Ch. Muhammad Saeed (Late) from Gujranwala District, started business in 1941 on

a small scale in Lahore. At that time, they were only manufacturing handbags and some other

sports goods. Within years their business flourished remarkably and they were supplying their

products to every corner of India at the time of Partition. In 1954, they installed a shoe

manufacturing plant at industrial area in Gulberg, Lahore. They started production in the same

year. The industry started manufacturing various types of shoes. Later management shifted the

factory from Lahore to Gujrat. Humility, fairness and respect were the values close to the heart

of these founders and it were these values that led to phenomenal success of the Group over

the years. Today, the production side of the company has flourished into Service Industries

Limited (SIL) which has worldclass shoes, tyres, tubes and rubber production facilities in Gujrat

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and Muridke. SIL is also the leading exporter of footwear. A humble venture of friends has

grown into a Group that makes a difference in the lives of millions of people every day.

PRESENT BUSINESS

BUSINESS OVERVIEW

Despite the adverse economic conditions, the Company’s sale revenues rose to a record level of Sales

6.36% Rs. 17.54 billion (2014: Rs. 16.49 billion). This growth was achieved in the domestic as well as

export markets and was result of growth in all our product line.

Sales of Tyre & Tube Division also registered a healthy increase. The sales increased to Rs.611.33

Million as against Rs.526.49 Million in the previous year, an increase of 16.12%. Tyre and Tube Division

will soon be certified for ISO 9002. The company has taken various new marketing initiatives in this

field. We are continuing our efforts to improve the distribution system ensuring better a availability of

our products in the market.

There is a steady growth in the sales of our rubber based technical items to our Defense Forces. We

also successfully started the export of rubber based technical/safety products.

Export sales of footwear were recorded at Rs.585.36 Million, showing an increase an increase of

16.38% over the previous year. The increase was especially satisfying as it was achieved despite the

difficult situation arising out of Afghan crisis. We are thankful to our foreign customers for showing

their loyalty by continuing to honor their commitments. On our side, despite the drop in the value of

U.S.Dollar and other European currencies, we fulfilled our obligations in order to sustain the

confidence of our customers. The unprecedented appreciation in Pak Rupee in the last quarter of the

year affected our profitability and competitiveness adversely.

Profit increased by 22.32% Rs. 945.85 million (2014: Rs. 773.25 million)

Equity 21.56% Rs. 3,603 million (2014: Rs. 2,964 million)

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FIXED ASSETS Rs.3,383 million (2014: Rs. 2,985 million)

Earnings per Share 78.63 Rs. (2014: Rs. 64.28)

BREAK UP VALUE increased by 21.56% per share Rs. 299.54 (2014: Rs. 246.40)

Dividend 375% (2014: 250%)

SHOE BOX

The

retailing in shoe box business has been started in Feb 2016. And currently there are 7 outlets of Shoe

Box where 4 in Lahore, 1 in Gujrat 1 in MandiBaha ud din and 1 in Faisalabad.

Tyre & tube and Rubber

Sales of tyre division - net Export June 30, 2016 June 30,2015

Export 328,653 256,074

Local 4,371,707 3,779,242

4,700,360 4,035,316

Sales of technical rubber products - net

Local 6,645 (138)

Sales - net June 30, 2016 June 30,2015

Sales of footwear – net

Export 2,035,375 2,287,287

Local 2,832,019 2,825,245

4,867,394 5,112,532

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OBJECTIVES / VISION AND MISSION

Objectives

Our products should meet the customer expectations.

Our basic concern is to satisfy customer.

Our aim is to provide good job opportunities and satisfaction to people.

We should respect our competitors.

Employees are as important as external customers.

Teamwork and cooperation area more important than individual action.

Never be satisfied with the level of quality, always strive for continuous improvement.

No compromise on quality.

Our Vision

To become a Global, World class and Diversified Company that leverages its brands and its people

Our Mission

To be a result oriented and profitable Company by consistently improving market share quality,

diversity, availability, presentation, reliability and customer acceptance

To emerge as a growth oriented ensuring optimum return and value addition to its

shareholders

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To ensure cost consciousness in decision making and operations without compromising the

commitment to quality

To create an efficient resource management and conducive business environment. Evolving an

effective leadership by creating a highly professional and motivated management team fully

equipped to meet any challenge

To keep abreast with modern technology and designs to optimize production and enhance

brand image to attain international recognition for the Company’s product

To set up highly ethical business standards and be a good corporate citizen, contributing

towards the development of the national economy and assisting charitable causes

To adopt appropriate safety rules and environment friendly policies

FUTURE OUTLOOK

Steps taken by the Government to reduce the interest rates will help to reduce the burden due to

current situation. However, the increase in the cost of utilities is a matter of serious concern. The

Government of Pakistan is obliged to reduce the tariff rates including those for finished products in line

with WTO Regulation. Import of cheap shoes from China and Far East has already started. The

Government needs to take steps to ensure the competitiveness of domestic manufactures by

controlling the cost of utilities to the level prevailing in the neighboring and competing countries.

Further reduction in number of levies, taxes and regulations of Trade & Industry is required to make

the environment more business friendly.

Our company is continuing its efforts for improvement in its products. We are constantly reviewing and

improving our management practices to ensure the steady growth of our business. We are

implementing the investment plans made for our Footwear as well as Tyre & Tube Division.

COMPLIANCE

We are an ISO 9001, certified company

Member of Satra, so we follow Satra guidelines for quality check of shoes

We are BSCI compliant facility

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Also audited by our European customers for their compliance standards

STATISTICS

With customers spread across the Globe it gives us unique insight into worldwide Fashion

trends. Our in house designers work closely with customers to keep a well upto date product

line.

Major chunk of its sales being contributed by overseas sales to 21 countries.We have been

supplying to customers with bulk volumes as well as to clients with specialized products.

We are mainly focused to European market and now also expanding in US, Australia,

Middle East. We are Pakistan largest Footwear Exporter, contributing to 30% of the total

footwear Export out of Pakistan.

CORPORATE SOCIAL RESPONSIBILITY

Year after year we re-examine the relevance of our corporate values and the guidance it offers. At

Service Industries Limited our code of conduct is an integral part of our corporate principles. We then

question our values and seek answers related to how we can better serve our communities, customers,

employees, shareholders and our environment.

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Service Industries Limited strives to be a good corporate. Our Corporate Social Responsibility (CSR) is

classified into the following categories;

Corporate Philanthropy

Community Investment

Other areas environmental protection, industrial relation etc.

Corporate Philanthropy

Apart from progressing in the various aspects of our own field, we are making incessant efforts for

improving the health and education sector of the country. To ensure development in these areas, our

company is involved in five projects;

a) Chaudhry Nazar Muhammad, Muhammad Hussain Memorial Society Hospital

This project features an eight bed comprehensive and well equipped hospital in Gandhra, Gujrat. It also

includes fully functional facilities like;

Operation Theatre

X ray

Laboratory

Ultrasound

Approximately 25,458 patients were treated in the year 2015 in this hospital which offers free surgical

care to the patients residing in Gandhra and its neighboring villages.

b) Service Free dispensary

Located in Gujrat this dispensary has been set up especially for patients with low incomes. The patients

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can get free medicines and consultation through this dispensary. This dispensary also includes fully

functional and free facilities like;

Ultrasound

X RAY

Laboratory

c) Dar-ul-Kafala

Located in Lahore, this exclusive multi-residence housing facility aims to provide shelter to the

homeless senior citizens of the city and its suburbs. This cohesive projects provides;

Recreational activities

Events and gatherings

Health care

Meals

d) Service High School for Boys

Established in Gujrat this school serves as an educational institute for the

underprivileged students in the area. A total of 230 students are enrolled in this school.

e) Bagh-e-Rehmat

Set up in Lahore, this educational institute offers both primary and secondary education options for

underprivileged boys and girls. More than 377 students are receiving education from this institute.

Community Investment

a. Shalamar Hospital

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This hospital was established in 1982 in Lahore, with the help of the contribution made by the founders

of our company, Chaudhry Nazar Muhammad and Chaudhry Muhammad Hussain. It is owned by the

Businessman Hospital Trust (BHT) which strives to provide health care services to patients belonging to

varying income groups with special emphasis to those who belong to lower and middle income groups.

In 2015 a donation of PKR 27.8 m was made by Service Industries Limited to this medical facility.

Service Industries Limited also donates PKR 14.9 m to other organizations, entities and NGOs, like

SERVIS charitable trust

Progressive education network

Foreman Christian College

Pakistan Society for the rehabilitation of the disabled

Care foundation

PEN- Progressive Education Network

Service Industries limited sponsors Ten schools in Gujrat that are managed by PEN.

Other Areas

a) Industrial Relations

The personal productivity of our employees is the key asset to

our organization. With a family of more than 9800 employees working in different areas, we are proud

to be the source of earning for them and their families. The excellent mentoring of our managers and

their work relationship with the subordinates has enabled us to perfect efficient management at

workplace; a vital ingredient for the success of any organization.

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b) Employment of females and Special Persons

We are an equal opportunity employer and encourage employment of women and people with special

needs in our work environment many of whom are working at the different departments of the

company. Moreover, a separate production line in Gujrat factory is managed by females and new line

for females has been started in Muridke

c) Occupational Safety and Health

Our procedures have been gauged to provide a safe, clean, injury and illness-free environment to our

employees. Also the staff is provided with the genuine and most modern protective gear, which is

required to be worn as mandatory when performing any such job responsibility.

d) Business Ethics and Anti-Corruption Measures

We are known for adhering to the highest principles of business ethics. We have a

commitment of conducting our business with honesty and integrity and in full compliance with

applicable laws and regulations. These principles are inculcated into our work philosophy so that every

employee can associate with it at which ever positions they are serving. This is the reason each year all

the employees and directors of the company sign a Statement of Ethics & Business Practices, which

explains that “It is the Company’s policy to conduct its operations in accordance with the highest

business ethical considerations, to comply with all statutory regulations and to conform to the best

accepted standards of good corporate citizenship.”

e) Consumer Protection Measures

We remain committed to producing quality products and excelling the varying requirements of our

ever growing customer community. To us, customer satisfaction is the foremost concern and we cater

to it by offering quality products at competitive rates which are backed by solid warranties.

f) Contribution to National Exchequer

During the year 2015 the company contributed PKR 958 million towards national

exchequer on account of taxes, duties and levies.

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PART TWO: COMPANY MANAGEMENT SYSTEM

ORGANIZATIONAL CHART

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ORGANIZATIONAL HIERARCHIES

of 168DirectorCEODirector

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POLICY FORMULATION PROCESS-MEETINGS, HOW FREQUENT

The policy formulation meetings conducted on quarterly basis. The HR manager, CFO and other head

of departments involved in the meeting. All people presented their reports regarding the policy and

also suggest policies, whichever seems best presented to CEO who then finalize this for implication.

Sometimes HOD and CFO finalize the policy.

Policy FormulationPolicy ApprovalPolicy evaluation

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PERSONNEL POLICIES

Personnel policies are taken to be serious for any organization what so ever they do, they

should do for the betterment of the enterprise. However, it should not be at the cost of the

benefits, which are being given to staff. The importance of employee’s motivation is of much

more importance.

SALARIES OF WORKING FORCE

Fixed Salary

Fixed salary is given to the workers and apprentice staff/managers during their first six months

of training period.

Fixed Salary and Overtime

All the workers who have passed the test and the factory managers who have completed six

months training are paid according to this plan.

BONUS

After the completion of two years of service, staff and workers are entitled to bonus (if any) to

be paid at the end of each year.

PROVIDENT FUND

After completion of one year's Service, a Manager will be entitled to become the member of

Provident Fund.

The Manager will deposit every month 6% of his actual pay to his P.F.

After five years of continuous contribution by the manager, he will be entitled for 100%

of company's contribution.

ANNUAL LEAVES

An employee after completion of one year of service will be entitled to the following leaves:

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Casual Leaves 10 days with pay

Sick Leaves 10 days with pay

Privilege Leave 14 days with pay

PROMOTION

The manager on transfer from one factory to another will be entitled to the following

allowances:

Actual transport fare for him, his family.

One-day daily allowance for him.

Average salary for the period in between handing over and taking over of the charge.

PROCUREMENT POLICIES

These policies deal with the decision that whether to manufacture or purchase a product for

the customer. There are many points that an organization has to ponder while deciding about

the procurement policies. The major point is the cost of producing it vs. the cost of buying it.

ADVERTISING POLICIES

"The activities involved in presenting a paid, sponsor identified, non personal message about an

organization or its products, services and ideas" are known as advertising.

Responsibility of advertising activities in Service is divided between SIL's own agency ‘Exhibit’

and Service Sales Corporation. Service group has established this advertising agency (Exhibit)

which has only task to make advertisements for Service Industries and Service Sales

Corporation. However, SIL has also some contracts with other famous advertisers, e.g.; Uzma

Geelani's Blazon is on the top of list.

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DESIGNATIONS AND NUMBER

DESIGNATIONS NUMBER

CEO 1

DIRECTOR (Tyre & TUBE and SHOES) 2

Country Manager marketing 1

Head Of Department (Finance, Sales & Operations,

Export)

3

General manager (marketing export, domestic sales,

production unit 1,production unit 2, production unit 3)

5

Senior Manager (Marketing & Finance) 2

Manager (Marketing, HR, Finance, Export) 4

Sales Executives (2 in each department) 8

JOB ASSIGNMENTS/DESCRIPTION, QUALIFICATION AND MATCHING BENEFITS

Job Description: Marketing Manager

Qualification

MBA in marketing with 3 to 4 years experience

Daily tasks and duties will depend on the company size, structure and industry sector but may

include:

monitoring and analyzing market trends

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studying competitors' products and services

exploring ways of improving existing products and services, and increasing profitability

Identifying target markets and developing strategies to communicate with them.

Salaries can range from around Rs. 2, 50,000 a year for someone new to the role, to Rs .4,

00,000 or more for a senior manager.

A marketing manager should:

have knowledge of a wide range of marketing techniques and concepts

be an excellent communicator

be able to respond well to pressure

think creatively

be interested in what motivates people

Hours and environment

Most marketing managers work 37 hours a week, between the hours of 8:30 am and 5:30pm.

As with many jobs with tight deadlines, they may be expected to work additional hours at

certain times to ensure that targets are met.

Most of the work is desk-based and offices tend to be modern and well-lit. Marketing managers

may be expected to attend a lot of meetings and make regular presentations. Some positions

may require a lot of travel, particularly when working for an international company. A driving

license is useful.

Job specifications for this role can vary widely and so can the salaries available. Additional

benefits may include car allowances, private healthcare insurance, company pension schemes

and share options. Some companies may offer bonuses linked to performance.

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CAREER LADDER

JOB ASSESMENT METHODS

NEW OR PROSPECTIVE EMPLOYEES

CV and Application form

Ability tests

Personality questionnaires

Situational judgment tests

Interviews

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According to the qualification, experience and skills incentives has been given to the selected

employees.

PERFORMANCE APPRAISALS

The promotions and incentives given to the employees are totally on the basis of yearly performance

admired by the head of the department.

JOB SATISFACTION OF EACH SECTION’S EMPLOYEE

Basically there are some factors which give us an understanding about the satisfaction of the

employees in their respective sections. And these are:

Salary

Bonus

Incentives

Health benefits

Insurance

Work done

Appreciation & motivation

Marketing department

The employees there are satisfied with the job. They are happy with their work load and also with

salary packages and bonus.

Finance department

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A lot of work has to be performed by them. It seems that their salaries are not enough as compared to

their work. They are not as much satisfied as marketing people.

PART THREE: Administrative or Management Styles

There are many administrative/management styles and these are:

Autocratic

Democratic

Laissez-faire

Chaotic

Persuasive

Marketing Department

At the upper level management the democratic, chaotic and laissez- faire style has been incorporated

but at the bottom or middle level mostly paternalistic and sometimes democratic style can be seen.

Finance Department

Autocratic and paternalistic has been used.

Human Resource Department

Mostly paternalistic or consultative style used by management for the better functioning of the system.

Solution

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Management by objectives is the process of defining specific objectives within an organization

that management can convey to organization members, then deciding on how to achieve each

objective in sequence. This process allows management to take work that needs to be done one step

at a time to allow for a calm, yet productive work environment. This process also helps organization

members to see their accomplishments as they achieve each objective, which reinforces a positive

work environment and a sense of achievement. An important part of MBO is the measurement and

comparison of the employee's actual performance with the standards set. Ideally, when employees

themselves have been involved with the goal setting and choosing the course of action to be followed

by them, they are more likely to fulfill their responsibilities

IMPACT OF DIFFERENT STYLES ON THE MORALE AND EFFICIENCY OF WORKERS

From my experience, I have found that proper management styles contribute to the

organization’s continued growth. They help solve organizational problems, enhance employee

satisfaction and loyalty and increase productivity. Eventually, an organization benefits from its

satisfied customers and higher returns on investment.

On the other hand, if an organization adopts an incorrect management structure, it may lead

to tensions between employees and their managers, resulting in lower employee morale and

depleting productivity. This will cost an organization direction in reaching its goals.

Therefore, an organization must exercise caution while adopting a management style or a

blend of them. It is clear that no single management style can suit all situations. So, by making

a calculated shift in a company’s management style, an employee can become an effective

manager and help the company achieve its intended dividends.

Having said that, let us discuss a few management styles.

Autocratic: Here, managers decide and enforce their decision on their employees. They

neither have a two-way communication with employees, nor do they invest any trust in their

employees. This can be demotivating to employees. However, it suits situations where

https://en.wikipedia.org/wiki/Performance_management

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organizations have to take quick decisions and control a large number of employees without

requisite expertise.

Paternalistic: Paternalistic managers pay attention to the employees’ social and recreational

needs while making decisions. They give directions to employees, making the information flow

from top to bottom. Here, they take employee feedback.

This management style is very effective in keeping up employee morale. It can be deployed to

regain employee loyalty when it is endangered because of autocratic enforcements. However,

it does not empower employees to work independently, but makes them dependent on the

manager.

Democratic: In this management style, everyone is involved in the decision making process.

Communication flows in a two-way direction, thereby improving job satisfaction and

productivity. Employees feel they are part of the process and are motivated to live up to the

company’s expectations. However, this process slows down decision-making since a consensus

is usually taken from all employees. At times, therefore, managers may not be able to

implement the best decisions. Therefore, as managers, one needs to have a judicious mixture

of these strategies for better results.

Employees start observing a manager’s management style the moment they step in to the

office. They learn the organizational culture and observe the relations between employees and

managers and among employees. They also take note of company policies.

All these impact their understanding of the company and its management style. This

understanding can either motivate them to play a proactive role in the organization’s

advancement or make them develop a reactive attitude where they do only as they are

directed to.

http://www.commlabindia.com/keeping-employees-motivated-and-engaged/

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PART 4: PRODUCTION FACILITIES

INTRODUCTION

Production Facilities and Systems are the important aspects of the production management.

Production Facilities allows the smooth transformation of the inputs into the outputs i.e.

manufacturing process with all the required machinery tools manpower etc.

While Production Systems ensures that there is the proper methods, arrangements, procedure

is adopted to produce different types of goods or services

PRODUCTION FACILITIES

Before starting of any production process the organization has to decide about the facilities to

produce the same. Facilities has to be installed on the basis of the requirement and the

availability of the resources to the organization

DETERMINANTS OF PRODUCTION FACILITIES

Types of product

Production quantity

MARKET

Product Demand

Competitors for the product

Location

Product variety

FACTORS INVOLVED IN FACILITIES

Operating personnel

Process details

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Inspection aid Technology

Tools

Machines and equipments

Production volume

PLANT LOCATION

The main aim of any business (manufacturing or services) is to maximize the profits and to minimize

the cost (efficiency). The location selected should be such that it enables the business to achieve its

objectives efficiently

FACTORS

Nearness to related and ancillary industries

Transportation

Land and labor cost

Nearness to the raw material

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SILG (GUJRAT FACTORY)

In this factory the production is for local customers or domestic customers but 20% for exports

SIL FactoriesSIL GujratSportsSlippersSandals20% exportSIL Muridke

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SILM (MURIDKE FACTORY)

The factory produce expensive shoes 80% of export quality and 20% domestically

TYPES OF PRODUCTION SYSTEMS

Continuous production system

Intermittent production system

INTERMITTENT PRODUCTION SYSTEM

The flow of production is intermittent (irregular).Intermittent means something that starts

(initiates) and stops (halts) at irregular (unfixed) intervals (time gaps).

In the intermittent production system, goods are produced based on customer's orders. These

goods are produced on a small scale.

PRODUCTION PLANNING

INDUSTRIAL ENGINEERING

SIL’s Industrial Engineering division is vital in executing things in a better, faster, economical and safe

manner. By adhering to ISO Standards, improving quality, increasing efficiencies and implementing JIT,

we ensure that all the processes from start to the finish of the product till delivery, are done flawlessly.

OPERATIONS

SIL’s Operations division oversees design and control of the product process as well as redesign

of business operations, in the production of goods or services. The division is vital in increasing

value of the business, securing income and satisfying clients with quality products.

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At every stage of the manufacturing process of tyres starting from the raw material processing,

compounding and mixing, component preparation through calendaring, extrusion and bead

building, assembling all the components for tyre building (TBM) in a fully automated

environment and curing for final shaping of the product, the Operations division vigilantly

monitors each and every process in order to ensure a perfect finish.

After the curing process, the tyre goes through the Uniformity Measurement Test that indicates

the tyre is automatically mounted on wheel halves, inflated, run against a simulated road

surface and measured for force variation. Tyre balance measurement is also tested during

which the tyre is automatically placed on wheel halves, rotated at a high speed and measured

for imbalance.

METHODS OF PRODUCTION

The various methods of production are not associated with a particular volume of production.

Similarly, several methods used by SIL at different stages of the overall production process.

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Job Method

With Job production, the complete task is handled by a single worker or group of workers.

Jobs can be small-scale/low technology as well as complex/high technology.

LOW TECHNOLOGY JOBS

The organization of production is extremely simply, with the required skills and equipment

easily obtainable. This method enables customer's specific requirements to be included, often

as the job progresses.

HIGH TECHNOLOGY JOBS

High technology jobs involve much greater complexity - and therefore present greater

management challenge. The important ingredient in high-technology job production is project

management, or project control. The essential features of good project control for a job are:

- Clear definitions of objectives - how should the job progress (milestones, dates, stages)

- Decision-making process - how are decisions taking about the needs of each process in the

job, labor and other resources

BATCH METHOD

As businesses grow and production volumes increase, it is not unusual to see the production

process organized so that "Batch methods" can be used.

Batch methods require that the work for any task is divided into parts or operations. Each

operation is completed through the whole batch before the next operation is performed. By

using the batch method, it is possible to achieve specialization of labor. Capital expenditure can

also be kept lower although careful planning is required to ensure that production equipment is

not idle. The main aims of the batch method are, therefore, to:

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- Concentrate skills (specialization)

- Achieve high equipment utilization

CRITIQUE

Batch methods are not without their problems.

There is a high probability of poor work flow, particularly if the batches are not of the

optimal size or if there is a significant difference in productivity by each operation in the

process

Batch methods often result in the buildup of significant "work in progress" or stocks (i.e.

completed batches waiting for their turn to be worked on in the next operation)

FLOW METHODS

Flow methods are similar to batch methods - except that the problem of rest/idle

production/batch queuing is eliminated.

Flow has been defined as a "method of production organization where the task is worked on

continuously or where the processing of material is continuous and progressive,"

The aims of flow methods are:

- Improved work & material flow

- Reduced need for labor skills

- Added value / completed work faster

Flow methods mean that as work on a task at a particular stage is complete, it must be passed

directly to the next stage for processing without waiting for the remaining tasks in the "batch".

When it arrives at the next stage, work must start immediately on the next process. In order for

the flow to be smooth, the times that each task requires on each stage must be of equal length

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and there should be no movement off the flow production line. In theory, therefore, any fault

or error at a particular stage

In order that flow methods can work well, several requirements must be met:

(1) There must be substantially constant demand

If demand is unpredictable or irregular, then the flow production line can lead to a substantial

build up of stocks and possibility storage difficulties. Many businesses using flow methods get

round this problem by "building for stock" - i.e. keeping the flow line working during quiet

periods of demand so that output can be produced efficiently.

(2) The product and/or production tasks must be standardized

Flow methods are inflexible - they cannot deal effectively with variations in the product

(although some "variety" can be accomplished through applying different finishes, decorations

etc at the end of the production line).

(3) Materials used in production must be to specification and delivered on time

Since the flow production line is working continuously, it is not a good idea to use materials that

vary in style, form or quality. Similarly, if the required materials are not available, then the

whole production line will come to a close - with potentially serious cost consequences.

(4) Each operation in the production flow must be carefully defined - and recorded in detail

(5) The output from each stage of the flow must conform to quality standards

Since the output from each stage moves forward continuously, there is no room for sub-

standard output to be "re-worked" (compare this with job or batch production where it is

possible to compensate for a lack of quality by doing some extra work on the job or the batch

before it is completed).

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The achievement of a successful production flow line requires considerable planning,

particularly in ensuring that the correct production materials are delivered on time and that

operations in the flow are of equal duration.

Common examples where flow methods are used are the manufacture of motor cars,

chocolates and televisions.

There are well defined SOP’s for methods of production. There are various stages of production

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DEVELOPMENT PROCESS

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COSTING PROCESS

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PROCUREMENT PROCESS

PRODUCTION PROCESS & DISPATCHING

After all the planning and designing the production process started and after that dispatching

has been done.

CRITIQUE

The major critique is 5S METHODOLOGY

5S was developed in Japan and was identified as one of the techniques that enabled Just in

Time manufacturing. The 5S methodology is a simple and universal approach that works in

companies all over the world. It is essentially a support to such other manufacturing

improvements as just-in-time (JIT) production, cellular manufacturing, total quality

management (TQM), or six sigma initiatives, and is also a great contributor to making the

https://en.wikipedia.org/wiki/Just_in_time_(business)

https://en.wikipedia.org/wiki/Just_in_time_(business)

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workplace a better place to spend time. There are five 5S phases: They can be translated from

the Japanese as "sort", "set in order", "shine", "standardize", and "sustain". Other translations

are possible.

SORT

Remove unnecessary items and dispose of them properly.

Make work easier by eliminating obstacles.

Reduce chances of being disturbed with unnecessary items.

Prevent accumulation of unnecessary items.

Evaluate necessary items with regard to cost or other factors.

Remove all parts or tools that are not in use.

Segregate unwanted material from the workplace.

Need fully skilled supervisor for checking on a regular basis.

Don't put unnecessary items at the workplace & define a red-tagged area to keep those

unnecessary items.

Waste removal.

SET IN ORDER

Arrange all necessary items so that they can be easily selected for use

Prevent loss and waste of time by arranging work station in such a way that all tooling /

equipment is in close proximity

Make it easy to find and pick up necessary items

Ensure first-in-first-out FIFO basis

Make workflow smooth and easy

All of the above work should be done on a regular basis

Maintain safety

SHINE

Clean your workplace completely.

https://en.wikipedia.org/wiki/Workflow

https://en.wikipedia.org/wiki/FIFO_and_LIFO_accounting

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Use cleaning as inspection.

Prevent machinery and equipment deterioration.

Keep workplace safe and easy to work.

Keep workplace clean and pleasing to work in.

When in place, anyone not familiar to the environment must be able to detect any

problems within 50 feet in 5 secs.

STANDARDIZE

Standardize the best practices in the work area

Maintain high standards in workplace organization at all times

Maintain orderliness. Maintain everything in order and according to its standard

Everything in its right place

Every process has a standard

Sustain

Not harmful to anyone

Also translates as "do without being told”

Perform regular audits

Training and discipline

Training is goal-oriented process. Its resulting feedback is necessary monthly

self discipline

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LEAN MANUFACTURING

Lean manufacturing or lean production, often simply "lean", is a systematic method for the

elimination of waste ("Muda") within a manufacturing system. Lean also takes into account

waste created through overburden ("Muri") and waste created through unevenness in

workloads ("Mura"). Working from the perspective of the client who consumes a product or

service, "value" is any action or process that a customer would be willing to pay for.

https://en.wikipedia.org/wiki/Mura_(Japanese_term)

https://en.wikipedia.org/wiki/Muri_(Japanese_term)

https://en.wikipedia.org/wiki/Muda_(Japanese_term)

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CAPACITY UTILIZATION IN SIL GUJRAT FACTORY

CAPACITY UTILIZATION IN SIL MURIDKE FACTORY

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QUALITY CONTROL & ASSURANCE

Having a no compromise attitude towards quality of the product produced by SIL, the Quality

Assurance team of professional visual inspectors and automated inspection machines detect

the slightest defect on the final product. The quality test laboratories at SIL are structured to

ensure quality of the manufactured products.

Our laboratories are equipped with state of the art quality test equipment for assurance of

product quality. Inspection does not just stop at the surface and is done at an internal level too.

Tyres are also inspected from the production line and laser technology to detect any hidden

weaknesses or internal failures.

In addition, quality control engineers regularly perform cut sections and study details of

the tyre construction that affects performance, ride or safety.

Every finished tyre comes with unique barcodes through which the company can perform

backward tracing along every step of the manufacturing process for quick response and

accordingly provide precise solutions when an issue is spotted.

Tyres are also inspected by X-ray machines that can penetrate the rubber to analyze the steel

cord structure. In the final step, tyres are inspected by human eyes for numerous visual defects

such as incomplete mold fill, exposed cords, blisters, blemishes and others.

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PART 5: COMPANY MARKETING MIX

PROUCTS: Products include tyres and Footwear

TYRE DIVISION

Bicycle tyre

Rickshaw tyres

Motorcycle tyres

Product: (Tubes)

Motorcycle tubes

Bicycle tubes

Rickshaw tubes

Trolley tubes

ULT tubs

The SIL deals with 2 wheelers and 3 wheelers and the company soon increases its product ranges. The

company recently introduces new brands in motorcycle tyres

Winner

Vigo

Champ

Cruiser

And also change its packaging because of the demand of customers (distributors)

Pricing strategy:

The pricing strategy used by SIL is confidential and done by company’s top management

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PLACE:

There are 3 types of market done by SIL

OEM (Original Equipment Manufacturer)

More than 50% share in market in bike tyres

Honda is the market leader ( 60% market )

Replacement market

Old tyres are replaced by new tyres

In this market SIL is the market leader

The distribution network deals with this type of market

21 distributors all over Pakistan

SUPPLY CHAIN

Manufacturers

Whole salers

Retailers

Consumers

OEM

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EXPORT MARKET:

Exporting of SERVIS material gives great business to the market

Major countries where the SIL material exported:

Afghanistan

Turkey

Dubai

UAE

Nigeria

Tanzania

Brazil

Bangladesh

Srilanka

India

Gulf countries

Product competitors:

Panther tyres

Diamond tyres

General tyres

Ghauri tyres

SIL MARKET SHARE:

Tyres 48%

Tubes 42%

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Promotion:

360 campaigns Different types

of medium are used to target audience

ATL –above the line e.g. mass media (TV, radio, internet)

BTL- below the line (other media),target limited audience

FOOT WEAR

Products

YO : kids (Boys & Girls)

Ace: Sports (ladies & Gents)

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Caprice ( Ladies)

This is an international brand but the products of Caprice produced and sold by SIL Shoe Box.

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Drill (Men)

Ekisha : Ladies

Kinetix : Men

This is an international brand but the retail procedure has been done through SIL Shoe Box

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Klara: Men and ladies

L&F: Men

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Mavri: Men Foral

Nike: Men & Ladies (Sports)

Shoe box have the licensing to sell this international brand

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ANALYSIS OF COMPANY MARKETING/ SALES PROCEDURES

Company is doing SWOT analysis to understand the market dynamics. They also take into

account the porter five forces model. The Company also includes many dimensions for the

market analysis and these dimensions are:

Market size (current and future)

Market trends

Market growth rate

Market profitability

Industry cost structure

Distribution channels

Key success factors

Key success details

Market size

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The market size is defined through the market volume and the market potential. Market size

depends on the target market.

In tyres category the target market includes people of pakistan using motorcycles,

bicycles and rickshaws and also some export market

In shoes category the target market includes kids, ladies and men

The market volume exhibits the totality of all realized sales volume of a special market. The

volume is therefore dependent on the quantity of consumers and their ordinary demand.

Furthermore, the market volume is either measured in quantities or qualities. The quantities

can be given in technical terms, like GW for power capacities, or in numbers of items.

Qualitative measuring mostly uses the sales turnover as an indicator. That means that the

market price and the quantity are taken into account. Besides the market volume, the market

potential is of equal importance. It defines the upper limit of the total demand and takes

potential clients into consideration. Company is increasing their market size and catering

demand and need and behind to compete desire

Market Trends

Market trends are the upward or downward movement of a market, during a period of time.

The market size is more difficult to estimate if one is starting with something completely new.

In this case, you will have to derive the figures from the number of potential customers, or

customer segments. Company is using these techniques to measure market effectiveness

Customer analysis

Competitor analysis

Product research

Advertising

Choice modeling

Risk analysis

Market growth rate

https://en.wikipedia.org/wiki/Market_trend

https://en.wikipedia.org/wiki/Demand

https://en.wikipedia.org/wiki/Market_size

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A simple means of forecasting the market growth rate is to extrapolate historical data into the

future. While this method may provide a first-order estimate, it does not predict

important turning points. A better method is to study market trends and sales growth in

complementary products. Such drivers serve as leading indicators that are more accurate than

simply extrapolating historical data.

Market profitability

While different organizations in a market will have different levels of profitability, they are all

similar to different market conditions. Michael Porter devised a useful framework for evaluating

the attractiveness of an industry or market. This framework, known as Porter five forces

analysis, identifies five factors that influence the market profitability:

Buyer power

Supplier power

Barriers to entry

Threat of substitute products

Rivalry among firms in the industry

https://en.wikipedia.org/wiki/Competition_(economics)

https://en.wikipedia.org/wiki/Substitute_product

https://en.wikipedia.org/wiki/Market_entry

https://en.wikipedia.org/wiki/Buying_power

https://en.wikipedia.org/wiki/Porter_five_forces_analysis

https://en.wikipedia.org/wiki/Porter_five_forces_analysis

https://en.wikipedia.org/wiki/Michael_Porter

https://en.wikipedia.org/wiki/Profitability

https://en.wikipedia.org/wiki/Market_trends

https://en.wikipedia.org/wiki/Turning_point

https://en.wikipedia.org/wiki/Extrapolate

https://en.wikipedia.org/wiki/Market_growth

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PORTER’S FIVE FORCES MODEL

Competitive rivalry

In The Ladies Footwear Industry, The Level of Rivalry is high. There are Several Competitors

such as METRO, ECS, BORJAN and STARLET. The Competition Between These Companies is so

intense because they are dealing with SHORTLIFE CYCLE Products Target market is almost same

for all competitors that results in almost same strategies so; competitors in this industry do not

face hard time reading each other’s (competitors) intentions accurately. The Growth the Ladies

Footwear Industry has experienced over the past few years is beginning to Stabilize. This Forces

Firms to differentiate using Marketing, Advertising, Fashion and Technology to steal market

share away from their Competitors. Competitive Rivalry for Shoe Box is high.

Bargaining power of supplier

Too many suppliers are there in market. The suppliers are spread specifically in the city of

Lahore and Karachi. The suppliers are quite large in number as compared to the buyers who

order them. This large ratio of suppliers leaves the choice on buyers. The buyers have the

complete power to work with as many suppliers as they want and to reject the suppliers when

their orders are made. Bargaining Power of supplier is low.

Bargaining power of customer

Products are homogenous. Shoes in ladies fashion industry are not much different in terms of

design and quality as almost all the firms have same designer. Buyers are very strong as they

have too many options available without any switching cost involved. If they face any issues

regarding price, quality etc. they would easily switch to other brands as they can find the same

designs with a slight difference. Bargaining power of customer is high.

Threat of new entrants

http://image.slidesharecdn.com/styloshoes-140212151534-phpapp02/95/stylo-company-15-638.jpg?cb=1392218213



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Established or growing market as companies’ exhibit solid earnings and revenue figures which

means industry is showing signs that it is in its growth stage. No technicality involved. Supply

chain is very easy to manage in this industry as not much technology is involved in

manufacturing of the shoes and as a matter of fact outsourcing lowers the risk of failure in

production. New entrants need to differentiate by spending on advertising, customer services

and to some extent product differentiation keeping the current situation of industry. Threat of

new entrants is high.

Threat of substitute

Machine made shoes are substitute products as handmade shoes are being produced currently

in the market. Life of fashion shoes is very short i.e. fashion trends change at a fast pace which

makes it difficult for the substitutes to follow rapid changes, so threat of substitute is pretty low

Threats of Substitute are low.

DISTRIBUTION CHANNELS

Existing distribution channels are in the main markets of Lahore, Gujrat, Faisalabad, Islamabad,

and Karachi. In Lahore, these are in Karim market, Model town link road, wapda town, and in

emporium mall Lahore.

SUCCESS FACTORS

The key success factors are those elements that are necessary in order for the firm to achieve

its marketing objectives. The success factors of SERVIS are:

Access to essential unique resources

Ability to achieve economies of scale

Access to distribution channels

Technological progress

https://en.wikipedia.org/wiki/Economies_of_scale

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SWOT ANALYSIS

STRENGTHS

Versatility and innovation

Strong management

More than 1000 employees

Online trade

Strong Service provider

WEAKNESSES

No international presence

Less effective pricing and promotional strategy

Designs are easily copied by local manufacturers

THREATS

Bad economy

Political instability

Intense competition

Constantly changing fashion

OPPORTUNITIES

Expansion in whole Pakistan

Expansion in international markets

Make Strong brand name

SALES PROCEEDURES

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Sales Process:

WholesaleDealershipDistributionshipDealers

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PRICING

Pricing of products are according to market norms. The margins are confidential but on an average

company operate on an average 50% margin.

PRICING OBJECTIVES

The objectives are:

Profit maximization

Revenue maximization

Price stabilization

Estimate the demand curve

There is a relationship between price and quantity demanded. It is important to understand the

impact of pricing on sales by estimating the demand curve for the product and after that cost

calculation has been done

PRICING METHODS

To achieve the pricing objectives, managers use these pricing methods

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The company uses these strategies:

COST-BASED PRICING

Cost-based pricing refers to a pricing method in which some percentage of desired profit

margins is added to the cost of the product to obtain the final price. In other words, cost-based

pricing can be defined as a pricing method in which a certain percentage of the total cost of

production is added to the cost of the product to determine its selling price. Cost-based pricing

can be of two types, namely, cost-plus pricing and markup pricing.

These two types of cost-based pricing are as follows:

COST-PLUS PRICING

In cost-plus pricing method, a fixed percentage, also called mark-up percentage, of the total

cost (as a profit) is added to the total cost to set the price. Cost-plus pricing is also known as

average cost pricing. This is the most commonly used method in manufacturing organizations.

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DEMAND-BASED PRICING

Demand-based pricing refers to a pricing method in which the price of a product is finalized

according to its demand. If the demand of a product is more, an organization prefers to set high

prices for products to gain profit; whereas, if the demand of a product is less, the low prices are

charged to attract the customers.

The success of demand-based pricing depends on the ability of marketers to analyze the

demand. This type of pricing can be seen in the hospitality and travel industries. For instance,

airlines during the period of low demand charge fewer rates as compared to the period of high

demand. Demand-based pricing helps the organization to earn more profit if the customers

accept the product at the price more than its cost.

COMPETITION-BASED PRICING

Competition-based pricing refers to a method in which an organization considers the prices of

competitors’ products to set the prices of its own products. The organization may charge higher, lower,

or equal prices as compared to the prices of its competitors. They react according to market norms.

Major competitors

On the basis of business size & volume, major competitors of SIL SHOE BOX are SERVIS, BATA,

BORJAN, STYLO and METRO. Others include Mille, Starlet, Hush Puppies, English Shoes, Roots

but they are considered to be small scale. And the competitors of SIL Tyres are Diamond,

Panther etc

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OTHER PRICING METHODS

Value Pricing:

The company tries to win loyal customers by charging low prices for their high- quality

products. The organization aims to become a low cost producer without sacrificing the quality.

It can deliver high- quality products at low prices by improving its research and development

process. Value pricing is also called value-optimized pricing.

Target Return Pricing:

Pricing set according to the required rate of return on investment done for a product. In other

words, the price of a product is fixed on the basis of expected profit.

DISTRIBUTION

Distribution channels include:

retailing direct to the public through a store or outlet

selling goods via wholesalers

retailing online

using distributors, consultants or agents to sell your product

DISTRIBUTION METHODS

Direct Selling

Many businesses choose the direct-sales channel, because you have access to the customer and

keep all revenue under the control of the company. Direct sales let you do your market

research and choose your own customers while setting the selling price. The downside is that it

takes a lot of time and focus away from your main preoccupation: the production of high-

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quality goods. Direct selling is a good match for a marketing plan that has identified, researched

and segmented the final customers.

Wholesale

When you have difficulties establishing who your retail customers will be and don't have time

to go out and sell, your marketing plan can focus on wholesale distribution. This choice is

especially valid if your potential customers are widely dispersed or located far from your

facilities. Wholesale distribution leaves the selling to wholesalers and retailers specialized in

retail sales. Because they have the sales costs, you may receive only a portion of the final sales

price, but you can focus on manufacturing the best product at the lowest cost.

Mail Order

Mail order is a low-cost distribution channel that is convenient for the customer. You can use

mail order by buying mailing lists or placing ads in a suitable publication. If you send out

material to a mailing list, you need fliers and other materials. The mailing list has to target the

demographic groups that you expect will buy your products, as described in your marketing

plan. With time, you can create your own mailing lists complete with customer profiles and

preferences.

Online

A channel that is disruptive to the traditional ways of marketing and distribution is the online

channel. Harnessing social networks, online ad campaigns and message boards to spread the

word, you can achieve substantial sales volumes quickly. Your marketing plan has to have an

overall strategy, because online sales can suffer from instability and large variations unless

there is a strategic direction to keep potential customers engaged.

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DISTRIBUTION STRATEGIES

Distribution Network

Once the product has been produced, the company always plans out a channel through which it

can take its products to the customers. For this purpose Servis industries has established a

separate company named as Servis Sales Corporation. And now they started another shoes

division with the brand name SHOE BOX. Taking the product from the source to the customers

is called distribution. There are generally three channels of distribution:

Producer buyer

Producer Retailer buyer

Producer wholesaler retailer buyer

Service Industries Ltd. has adopted all the methods of reaching the customers. It has developed

a system of retail shops throughout the country through SSC. The SSC now registered as

separate company and SIL now started Shoe box as retail shops business

It has also given dealerships to the private retailers in the areas where they cannot afford their

own retail outlets. Service Industries (Pvt) Ltd. has employed third channel of distribution too.

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Types of distribution channels

SIL used vertical marketing system in both tyre division and shoes division and also used

horizontal marketing system in shoes division

VERTICAL MARKETING SYSTEM

A vertical marketing system (VMS) is one in which the main members of a distribution channel

- producer, wholesaler, and retailer work together as a unified group in order to meet

consumer needs.

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HORIZONTAL MARKETING SYSTEM

Horizontal Marketing System is a merger of firms on the same level in order to pursue

marketing opportunities. By working together, companies can combine their capital, production

capabilities, or marketing resources to accomplish more than any one company could alone.

Companies might join forces with competitors or non-competitors. They might work with each

other on a temporary or permanent basis, or they may create a separate company.

INTENSITY OF DISTRIBUTION

SELECTIVE DISTRIBUTION

A small number of retail outlets are chosen to distribute the product

INTENSIVE DISTRIBUTION

There is intensive distribution in tyre division

The company used selective & intensive distribution.

PROMOTIONAL POLICIES

SIL used both ATL & BTL for promotions. SIL has well planned promotional strategies. The

company has established its own sister concern which is responsible for the advertising

campaigns of the company. Promotional activities are also the sales appealers, which the

company makes to attract the customers. SIL employs following appeals to attract the

customers

Price

Service

Quality

Style or design

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Reputation of the company

The service to the customers is given in the shape of claims of shoes. These shoes are repaired

at the factories, which are again sold in the market as ‘B’ Pares. Normally these shoes are sold

at half or even less than half of its price. The marketing director on the basis of forecasts

prepared by the company sets the advertising budget.

The company is also employing the personal selling in its operations. The company

representatives go to the different organizations for the acquisition of the contracts. These

organizations may be private or state owned.

New designs are introduced from time to time. These are made especially at the Eids. Special

discounts are offered to the customers. There are also special exhibitions of the products in the

trade shows.

Publicity also plays an important role in the promotion of a product. SIL through its sister

company, which is for advertising purpose, performs publicity of the products by conducting

conferences, and seminar.

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Advertising – a mass media approach to promotion

Outdoor

Business directories

Magazines / newspaper

Radio

TV

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ADVERTISING POLICIES

"The activities involved in presenting a paid, sponsor identified, non personal message about an

organization or its products, services and ideas" are known as advertising.

Responsibility of advertising activities in Service is divided between SIL's own agency ‘Exhibit’

and Service Sales Corporation. Service group has established this advertising agency (Exhibit)

which has only task to make advertisements for Service Industries and Service Sales

Corporation. However, SIL has also some contracts with other famous advertisers, e.g.; Uzma

Geelani's Blazon is on the top of list.

TYPES OF ADVERTISING

These are two basic types of advertising which are given below:

PRODUCT ADVERTISING

In product advertising, advertisers are informing or stimulating the market about their products

and services.

This type of advertising is often adopted by Service Industries Ltd. on various occasions. For

instance, it is done when SIL introduces a new article in the market to promote sales for some

specific or seasonal articles.

INSTITUTIONAL ADVERTISING

It is designed either to present information about the advertiser's business or to create a good

attitude or to build goodwill toward the organization.

This type of advertising is mostly adopted by Service Industries Limited. Service Industries

conveys its messages congratulations to the Pakistani people (general consumers of SIL) on

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various special events. For example: Eid days, freedom day etc. SIL Congratulates the people

through different Medias and, thus, it creates a good organizational attitude and builds

goodwill.

ADVERTISING OBJECTIVES

Basically, the only purpose of advertising is to sell something such as a product, a service or an

idea. This may be stated as the real goal of advertising. This objective is achieved only through

effective communication. This ultimately modifies the attitude and behavior of the receiver of

the message.

This goal of advertising is better approached by setting some specific objectives. Of course,

specific objectives will be determined by the company's overall marketing strategies - especially

the strategies related to the firm's promotional program.

Some general objects of the company which are considered seriously while allocating the

resources towards advertising are as:

To create an image of the product among consumers

To boost up and enhance the sales through persuasion process

To maximize the profit

To meet the competition effectively

To increase the market share

However, we cannot stress that these are the only objectives, which are emphasized by the

management while planning about the advertising. But one thing is certain which management

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also considers seriously that advertising should put the customer from a state of unawareness

to awareness:

COMPETITOR'S ACTIVITIES

Despite the numerous local manufacturers, SIL considers BATA & SERVIS as its major

competitor. To defend market position, SIL has to cover its competitor's activities through a

comprehensive advertising and other promotional campaigns. And this promotional program

including advertisements requires a handsome package of money.

SEASONAL

Pakistan is an underdeveloped country where the income per capita is very low. This shows the

low buying power of the people, so they cannot spend more on luxurious things. Only on

special occasions like Eid days, people buy with very excitement. During such special days and

festivals, advertising campaigns of different companies go on peak. Service group also

advertises its products and organization on such events. Similarly on seasonal change and

reopening of educational institution, a heavy advertising campaign is emphasized.

MEDIA SELECTION

Three levels of decision making are required in the selection of advertising media. First,

management determines what general type of media to use. Will newspapers, T.V, or

magazines be used? Second, if magazines are to be used, will they be of the special interest

type or of the general interest type. Finally, the specific medium is chosen. Some of the factors

to consider in making media selection are as follows:

Objective of the advertisement

Cost of media

Requirement of the message

SIL is using following Medias for its advertising campaigns.

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BROADCAST MEDIA

Radio

TELECAST MEDIA

Television

Satellite Antennas

PRINT MEDIA

Newspapers

Magazines

Posters

SIGN BOARDS

Neon Signs

Cross boards

Face boards

MEDIA OF DIRECT ADVERTISING

RADIO

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With the rapid development of the country, people are making their attention more toward

television as compared to radio. Even then a large number of people especially of lower and

middle class, listen radio regularly, SIL, however, spends a small amount in radio

advertisements.

TELEVISION

Television is one of the greatest inventions of science that ha revolutionized the human life.

Nowadays, TV has become an important part of the lives. Above all, television is the major

source of entertainment in our country. As televisions present both audio and video

impressions, it provides a complete physical awareness of a product during advertising.

The main source of advertising for SIL is television. Advertising for Servis Shoes are not only

presented at local stations but at country wise net work, too. Especially on Eid days are

presented with repeated intervals.

DAILY NEWSPAPERS

Life has become so fast that every one cannot spare time to watch T.V., or to listen radio

regularly. For such type of people daily newspaper is an important media which service has

adopted.

MAGAZINES

Service presents its beautiful damsel models wearing Service shoes, on well reputed weekly or

monthly magazines. These magazines include both general and special types. Special types

mean fashion magazines, business magazines etc.

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POSTERS

Service Industries has published numerous posters of different styles and with different models.

These attractive posters are pasted at Servis shops and W/S depots. These posters are also

given to dealers, non-dealers and agents etc.

SIGN BOARDS

Signboards are also an effective media of advertising. This category includes:

Neon Signs

Cross-boards

Face boards

Servis Industries display these types of boards at their own retail shops and depots.

The neon signs are decorated with beautiful colors and famous models.

This is a very useful technique. This results in getting attraction of the consumers, as it is very

necessary for any business organization to attract the consumers. The other ways of attracting

the customers are as under:

WINDOW DISPLAY

The most important feature of the store exterior from the sales point of view is window display.

Shoes are arranged in such a manner which attracts the customers very sharply. The function of

window display is very similar to salesmanship. 75% of the sales of retail shops depend upon

the window display.

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SEASONAL SALES

Great efforts are made at the beginning of a season to popularize the articles specially prepared

and meant for the season. The preparations for a season are started long before and the

designs are selected and advertised. Special campaigns are prepared and the customers are

told the salient features of the products. Seasonal estimates are fixed for the depots and shops

and special bonuses are provided for achievements above standard.

FREE GIVEAWAYS

Free giveaways are distributed among special classes of customers to build reputation for the

company and thus promote sales. Key rings, purses, balloons, exercise books and calendars are

usually given free. On these articles the trademarks and designs of some of the Shoes are

displayed. A large amount is spent on such gifts every year.

PRICE REDUCTIONS

Sometimes the prices of certain brands are reduced to boost the sale of the Head Office and all

the Depot Managers and Shop Managers are informed of such changes. but these reductions

are for the short period

OTHERS

The Company provides various incentives to the Depot Managers and Shop Managers and

special commissions are given on performances above standards.

SALES PROMOTION - price / money related communication

Coupons

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Discounts

Competitions

Loyalty incentive

PUBLIC RELATIONS

Press launches

PR events

Press releases

PERSONAL SELLING

Salesmen

Dealer or showroom sales activities

Exhibitions

Trade shows

DIGITAL MARKETING – new channels are emerging constantly

Social media applications such as Facebook or Twitter

Blogging

Mobile phone promotions using technology such as Bluetooth

YouTube

E-commerce

DEALINGS WITH CLIENTS

For the Clients

SIL take initiatives and managed the things which are not possible easily by others like the heavy

machinery, time management etc. And the risk is at the SIL’s side. In Tyre SIL clients are distributors. An

annual foreign tour has been arranged for them. All living, food and travelling expenses bear by SIL. SIL

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deals with many clients in footwear. The major Clients are SSC, NIKE and Caprice. There is a contract

between SSC and SIL shoe Box.

Development of the product:

The product planning has been done by SIL and there is separate research and development

department to cater with these things.

Quality Assurance:

There is also a quality assurance department who has some measuring techniques to test the quality

and material used in the product.

Warehousing:

The products were developed and stocked in SIL warehouses. All the warehousing needs fulfilled by

SIL.

For Foreign Clients

The whole tour has been managed by SIL. The foreigners have been given the special treatment by SIL.

There are special guest houses for them. SIL provide them ease of travelling and arranged special

dinners and domestic lifestyle for them. In this way they feel comfortable.

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PART SIX: COMPANY ACCOUNTING/ FINANCE SySTEM

ACCOUNTING DEPARTMENT

Hierarchy of Accounts Department

Chief Accountant

Accountants

Assistant Accountants

Account Assistant

CLERK COMPUTER OPERATOR RECORD KEEPER

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Chief Accountant at SIL heads accounts department. To control the accounts of an organization

is most crucial. The accounting procedures employed in a company reveal the overall condition

of the company management. Accounting the simple words is the counting of incomings and

out goings of an organization. For this purpose all the companies hold record of every

transaction in their books through the accounts. The books employed for this purpose are

called ledgers.

Service Industries Ltd has employed very tight accounting procedures. The head office receives

vouchers regarding the happenings at their factories daily. Service Industries Ltd maintains the

following statements or vouchers in its accounting procedures at the factory.

Daily Sale Reports

It is the statement in which the daily sales made to servis sales corporation or any other party

are recorded. It is given in pairs as well as in amount. Their are four copies of this voucher, two

sent to the Companies head office, one is sent to the district manager of that particular area,

and one is kept at the accounting department of the factory. The Chief Accountant is

responsible to prepare the fortnightly report because he has to send this to the office after

every fourteen day

Received and Dispatched Accounts

This is a statement in which the total receipts from the company and total dispatchments of

shoes to the company are given on the fortnightly basis.

Salary Statement

This is a statement in which the salaries of the total staff present at that particular factory are

given. This statement also gives the total attendance, fix salaries, wages, and different

allowances.

Remittance Voucher

The details are given already in previous pages. This statement gives the total remittance to SIL

during the previous fortnight.

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Sales of tyre division - net Export June 30, 2016 June 30,2015

Export 328,653 256,074

Local 4,371,707 3,779,242

4,700,360 4,035,316

Sales of technical rubber products - net

Local 6,645 (138) 6,645 (138)

9,574,399 9,147,710

STATEMENT OF VALUE ADDITION AND ITS DISTRIBUTION

YEARS

2015 2014

AMOUNT PERCENTAGE AMOUNT PERCENTAGE

Wealth Generated

Sales 17,544,736 16,495,123

Less: Purchased Materials

and Services

(12,814,771) (12,509,390)

Other Income Wealth

Created

Wealth Distributed

246,158

4,976,123

117,461

4,103,194

Sales - net June 30, 2016 June 30,2015

Sales of footwear – net

Export 2,035,375 2,287,287

Local 2,832,019 2,825,245

4,867,394 5,112,532

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Employee Remuneration, Benefits

and facilities

3,001,587 60.32 2,501,643 60.97

To Government

Taxation 321,160 6.45 171,196 4.17

Workers Welfare Fund 25,857 0.52 19,276 0

To Society

Donation 42,708 0.86 64,780 1.58

To Lenders of Capital

Dividend 330,792 6.65 240,576 5.86

Finance Cost 316,416 6.36 331,581 8.08

Retained in Business

Depreciation 315,910 6.35 233,039 5.68

Amortization 6,638 0.13 8,427 0.21

Retained profit 615,055 12.36 532,676 12.98

937,603 18.84 774,142 18.87

4,976,123 100.00 4,103,194 100.00

SIX YEARS AT A GLANCE (RATIO ANALYSIS)

Following are the main types of ratios that we are going to calculate in this assignment,

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1. Liquidity Ratios

2. Leverage Ratios

3. Coverage Ratio

4. Activity Ratios

5. Profitability Ratios

LIQUIDITY RATIOS

Liquidity ratios are used to measure a firm’s ability & solvency of the firm to meet short-term

obligations. They compare short-term obligations to short-term resources available to meet these

obligations. It consists of two ratios current & acid test ratio. Let us calculate these for Service

Industries.

CURRENT RATIO

Current ratio is the relationship between current assets and current liabilities. This Ratio is also known

as working Capital ratio. It is calculated as

Current ratio or Net working capital = Current Assets/ Current Liabilities

Years 2015 2014 2013 2012 2011 2010

Current

Ratio

1.20 1.22 1.29 1.26 1.26 1.31

INTERPRETATION

Current ratio shows company’s ability to meet its short term liabilities as they fall due. There is a minor

decrease as compared to last year which shows that company will pay off its creditors. The ratio of 1.2

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is sufficient. The company is running smoothly. But the current ratio does not account for the timing of

cash flows.

QUICK ACID TEST RATIO

Quick or Acid Test Ratio is the ratio of liquid assets to current Liabilities. True liquidity refers to the

ability of a firm to pay its short-term obligations as when they become due. A more stringent liquidity

test that indicates if a firm has enough short-term assets (without selling inventory) to cover its

immediate liabilities. Quick Ratio is equal to

Quick or Acid test ratio = Current Assets- Inventories/ Current liabilities

= 4723/5160 =0.91 (2015)

Interpretation:

It analyze a company in similar way as Current ratio does, but it provides better overview regarding

company’s liquidity because it does not include inventory which has poor liquidity. SIL quick ratio is

0.91.The quick ratio reflects the ability of the firm to meet its liabilities with the most liquid assets. A

ratio of 1:1 means that a social enterprise can pay its bills without having to sell inventory. Moreover,

inventory which is the less liquid asset is subtracted from the current assets .The decrease in quick

ratio shows that the ability of the firm to meet its liabilities with the most liquid assets.

LEVERAGE RATIOS

“Ratios that show the extent to which the firm is financed by the debts”

DEBT TO EQUITY RATIO: -

Debt to equity ratio indicates the relationship between the external equities or outsider finds

and the internal equities or shareholder fund. It is calculated to assess the extent to which the

firm is using borrowed money. Debt to equity is simply calculated as

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Debt to equity ratio = Total Debts / Shareholders equity

= 23/77 =0.29

YEARS 2015 2014 2013 2012 2011

Debt to

equity

ratio

23/77

=0.29

27:73

=0.36

20:80

= 0.25

19:81

=0.23

14:86

=0.16

Whereas:

Total debts = current liabilities + long-term debts

INTERPRETATION

The more equity there is, the more likely a lender will be repaid. Most lenders impose limits on the

debt/equity ratio, commonly 2:1 for small business loans. Too much debt can put your business at risk,

but too little debt may limit your potential. SIL debt to equity ratio decreases.

DEBTS TO TOTAL ASSETS RATIO: -

The Debts to total assets Ratio tells us how much portion of assets is a debt. This ratio serves a similar

purpose to debts to equity ratio. It highlights relative importance of debt financing to the firm by

showing the percentage of the firm’s that is supported by debts financing. This ratio is calculated as

Debts to Total Assets ratio = Total Debts / Total Assets

=23/1024=0.02

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COVERAGE RATIO

“The Ratio that relate the financial charges of a firm to its ability to serve, or cover them”

INTEREST COVERAGE RATIO

Interest Coverage ratio is designed to relate the financial charges of a firm to its ability to pay/cover

them from its earning. Interest Coverage ratio is calculated as

Interest Coverage Ratio = Earnings before Interest & Tax / Financial charges

Years 2015 2014 2013 2012 2011 2010

Interest

Coverage

ratio

5.00 3.85 3.44 1.60 3.25 3.75

2009 2010 2011 2012 2013 2014 2015 20160

1

2

3

4

5

6

Interest Coverage ratio

ACTIVITY RATIOS

RECEIVABLE TURNOVER RATIO

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Debtor turnover ratio indicates the velocity of debts collection of a firm. In simple words it

indicates the number of times average debts are turned over during a year. Higher the value of

debts turnover, more efficient is the management of debts or more liquid the debtors are and

vice versa. Receivable turnover ratio is calculated as

Receivable/debtors turnover ratio = Annual credit sale / Trade debtors

=17544/1527= 11.48

INTERPRETATION

Receivable turnover ratio for SIL has slightly increased. It may not affect that much to company

financial position but it should keep a check on it. The receivable turnover shows that 11.48

times average debts are turned over during a year.

AVERAGE COLLECTION PERIOD

Debtor turnover ratio when calculated in term of days is known as receivable turnover in days. It

represents the average number of days for which a firm has to wait before its debtors are converted in

cash. This comparison is used to evaluate how long customers are taking to pay a company. A low

figure is considered best, since it means that a business is locking up less of its funds in accounts

receivable, and so can use the funds for other purposes

It is calculated as

A.C.P = No. of days in year / Receivable turnover ratio

= 365/11.48 =31.79

INTERPRETATION

It shows its credit management is improving over the period of time. A high receivables turnover ratio

implies either that the company operates on a cash basis or that its extension of credit and collection

of accounts receivable are efficient. Also, a high ratio reflects a short lapse of time between sales and

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the collection of cash, while a low number indicates that collection takes longer. The lower the ratio is

the longer receivables are being held and the risk of no collection increases.

PAYABLE TURNOVER RATIO:

This ratio is against to Debtors turnover ratio. It compares the creditors with the total credit purchase.

It signifies the credit period enjoyed by the firm in paying off debts. In payable turnover ratio less the

results better for the company. The number of times trade payables turn over during the year. It is

calculated as

Payable Turnover ratio = Annual Credit Purchase / Creditors OR Cost of Sales / Average Accounts

Payable

= 14528/3223 =4.50

= 13783/2123 =6.4

Years 2015 2014

Payable turnover ratio 4.50 6.4

INTERPRETATION

The payable turnover ratio decreases which shows that the firm has to pay now in lesser time

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1 22010

2012

2014

2016

2018

2020

2022

Payable turnover ratioYears

AVERAGE PAYMENT PERIOD

It is also a managerial ratio, which signifies the credit period, which is enjoyed by the organization in

paying credit. Higher the number of days betters the ratio and efficiency. More the days allowed to pay

off its debts more the working capital for the organization. It is calculated as

Average Payment period = No. of days in a year / Payable turnover

= 365/4.50 = 81.11

=365/6.4= 57.03

INTERPRETATION

The ratio is increasing which shows the better position for an organization. The organization has more

time to pay off its debts.

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INVENTORY TURNOVER RATIO

Inventory Turnover ratio, also known as Stock Turnover, is the relationship between Cost of Goods Sold

during the period and average inventories. It measures the velocity of conversion of stock into sales.

Usually higher inventory turnover, stock velocity, indicates efficient management because more

frequently stocks are sold lesser the amount of money required to finance the inventory. It is

calculated as

Inventory Turnover = Cost of Goods Sold / Average Inventory

Years 2015 2014 2013 2012 2011

Inventory

turnover ratio

5.24 5.35 5.27 4.98 5.81

INTERPRETATION

Higher inventory turnover, stock velocity, indicates efficient management because more frequently

stocks are sold lesser the amount of money required to finance the inventory. There is a slight

decrease in inventory turnover which does not affect the company.

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2010.5 2011 2011.5 2012 2012.5 2013 2013.5 2014 2014.5 2015 2015.54.4

4.6

4.8

5

5.2

5.4

5.6

5.8

6

Inventory turnover ratio

INVENTORY TURNOVER IN DAYS

This ratio is also a managerial ratio, which measures the number of days the inventory is held before it

is turned into accounts receivables through cash. Usually lesser the number of days inventory held

before it is turned into accounts receivable though sale is better for the company. Inventory turnover

is calculated as

Inventory turnover in days = No. Of days in a year / Inventory turnover ratio

Years 2015 2014 2013 2012 2011

Inventory

turnover in

days

365/5.24

=69.65

365/5.35

=68.22=69.25

365/4.98

=73.29

365/5.81

=62.82

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2010.5 2011 2011.5 2012 2012.5 2013 2013.5 2014 2014.5 2015 2015.556

58

60

62

64

66

68

70

72

74

76

Inventory turnover in days

PROFITABILITY RATIOS

Profitability ratios are of tow types --- those showing profitability in relation to sale and those showing

profitability in relation to investment. To gather these ratios indicate the overall effectiveness of

operation

RETURN ON INVESTMENT

Return on investment is one of the most important ratios considered by the proprietors and investors.

It compares the net profit after tax with Total Assets. Investors are much concerned about this ratio.

Higher the ratios of ROI more secure the place considered for making investment.

It is calculated as

Return on Investment = Net profit after tax / Total Assets x 100

YEARS 2015 2014

Return on investment 946/10243 =

0.098*100

773/8866

=0.08*100

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= 9.23% =8.71%

INTERPRETATION ROI shows how well company is investing in assets, as it has increased for SIL so it is

a good sign. It was 8.71% in 2014 and was increased to 9.23% in 2015.

YEARS 2015 20140

0.02

0.04

0.06

0.08

0.1

Series12011#REF!

GROSS PROFIT IN RELATION TO SALE

Gross profit ratio, which is also called Profitability in relation to sales, is the ratio of gross profit to new

sales expressed as a percentage. This ratio tells us the profit of the firm relative to sales after we

deduct the cost of producing the goods. It is a measure of the efficiency of the firm operation. Higher

the gross profit ratio better it is.

It is calculated as

Gross Profit Margin = Gross Profit / Net Sales*100

YEARS 2015 2014

Gross Profit Margin 0.18% 16.43%

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INTERPRETATION:

The gross profit margin decreases badly compared to 2014.which is not a good sign for the company.

2013.82014

2014.2

2014.4

2014.6

2014.82015

2015.20.00%2.00%4.00%6.00%8.00%

10.00%12.00%14.00%16.00%18.00%

Gross Profit Margin

Gross Profit Margin

RETURN ON EQUITY

YEARS 2015 2014 2013 2012 2011 2010

R.O.E -After Tax (%) 26.25 26.09 25.31 6.30 21.53 19.30

Return on equity is another measure of overall firm’s performance. It compares net profit after tax to

the equity that share holders have invested in firm. This ratio tells the earning power on shareholder’s

book value. High the return on equity often reflects the firm’s acceptance of strong investment

opportunities and effective expense management.

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It is calculated as Return on Equity = Net profit After Tax / Shareholders Equity x100

INTERPRETATION

There is a slight increase in return on equity which reflects the firm’s acceptance of strong investment

opportunities and effective expense management

1 2 3 4 5 60

500

1000

1500

2000

2500

YEARSR.O.E -After Tax (%)

TOTAL ASSET TURNOVER

Total Asset turn over shows the sale revenue per dollar of assets invested. This total asset turnover

ratio tells us the relative efficiency with which firm utilizes its total assets to generate sale. It is

calculated as

Total Asset Turnover = Net Sales / Total Assets x 100 =

1.71 (2015)

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INTERPRETATION

This is how efficiently your business generates sales on each dollar of assets. On $1 of assets 1.71%

sales has been generated.

MARKET RATIOS

Earnings per Share:

Earnings per share (EPS) are the portion of a company's profit that is allocated to each

outstanding share of common stock, serving as an indicator of the company's profitability.

Earnings per Share =earnings available for common stock /No. of Shares of common stock

Years 2015 2014

Earnings per share 78.63 64.28

2013.8 2014 2014.2 2014.4 2014.6 2014.8 2015 2015.20

102030405060708090

Earnings per share

Earnings per share

As the SIL has gained more profit this year so the earning per share has also improved. Higher earnings

per share is always better than a lower ratio because this means the company is more profitable and

the company has more profits to distribute to its shareholders .Although many investors don't pay

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much attention to the EPS, a higher earnings per share ratio often makes the stock price of a company

rise. Since so many things can manipulate this ratio, investors tend to look at it but don't let it influence

their decisions drastically.

DIVIDEND PER SHARE

Dividend per Share = Dividend/No. of Shares

Years 2015 in millions 2014 in millions

DIVIDEND per SHARE 300.4/ 5,000,000=0.6 180.4/5,000,000=0.36

INTERPRETATION

Dividend per ratio increases which is a good sign for the shareholders because of the increase in profits

and earnings per share.

2015 in millions 2014 in millions0

0.1

0.2

0.3

0.4

0.5

0.6

DIVIDEND per SHARE

DIVIDEND per SHARE

Dividend Payout Ratio:

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The dividend payout ratio measures the percentage of net income that is distributed to shareholders in

the form of dividends during the year. In other words, this ratio shows the portion of profits the

company decides to keep to fund operations and the portion of profits that is given to its shareholders

Dividend Payout Ratio =Dividend per Share/Earning per Shares x 100

Years 2015 2014

Dividend payout ratio 0.6/78.63=0.007 0.36/64.28=0.005

INTERPRETATION

The dividend payout shows that the rate slightly increases than last year.

1 20

500

1000

1500

2000

2500

YearsDividend payout ratio

Rupees in million

Description 2015 2014 2013 2012 2011 2010

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Sales Gross 17,545 16,495 14,686 12,167 11,549 9,421

profit 3,016 2,712 2,367 1,546 1,569 1,293

Profit before tax 1,267 944 747 192 535 488

Profit after tax 946 773 619 127 433 328

Share capital

Share holder's equity 3,603 2,964 2,447 2,020 2,013 1,700

Property, plant &

equipment

3,383 2,985 1,901 1,649 1,612 1,425

Total assets 10,243 8,866 6,992 6,422 5,639 4,543

Net current assets 1,061 998 1,093 974 827 727

Market Value Per Share(Rs.) 850 975 545 167 167 240

Dividend %

Cash -Interim

Cash - Final

125 100 75 25 -

Profitability (%)

Gross Profit 17.19 16.44 16.12 12.71 13.59 13.72

Profit Before Tax 7.22 5.73 5.09 1.58 4.63 5.18

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Profit After Tax 5.39 4.69 4.21 1.05 3.75 3.48

Return to Shareholders

R.O.E -Before Tax (%) 35.16 31.86 30.54 9.53 26.56 28.71

R.O.E -After Tax (%) 26.25 26.09 25.31 6.30 21.53 19.30

E.P.S-After Tax (Rs.) 78.63 64.28 51.49 10.59 36.03 27.28

Price Earnings Ratio 10.81 15.16 10.58 15.78 5.41 8.80

Activity (Times)

Sales To Total Assets 1.71 1.86 2.10 1.89 2.05 2.07

Sales To Fixed Assets 5.19 5.53 7.72 7.38 7.16 6.61

Inventory Turnover Ratio 5.24 5.35 5.27 4.98 5.81 6.04

Interest Coverage Ratio 5.00 3.85 3.44 1.60 3.25 3.75

Liquidity/Leverage

Current Ratio 1.20 1.22 1.29 1.26 1.26 1.31

Break-up Value per Share 299.54 246.40 203.44 167.34 167.34 141.30

Total Liabilities To Equity 1.84 1.99 1.86 2.18 1.80 1.67

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Debt Equity Ratio 23:77 27:73 20:80 19:81 14:86 16:84

HORIZONTAL AND VERTICAL ANALYSIS

BALANCE SHEET ANALYSIS

DESCRIPTION 2015 2014 2013 2012 2011 2010

HORIZONTAL ANALYSIS

Equity and Liabilities Equity

Share Capital & Reserve 21.56% 21.12% 21.48% 0.35% 18.42% 11.67%

Non-Current Liabilities -4.63% 66.31% 20.28% 41.56% 3.41% 40.75%

Current Liabilities 17.29% 22.38% 0.18% 18.51% 33.64% 32.19%

Total Equity and Liabilities 15.53% 26.81% 8.88% 13.87 24.14% 24.42%

Assets

Non-current Assets 15.86% 52.87% 26.39% 2.92% 13.71% 39.19%

Current Assets 15.34% 15.40% 2.65% 18.35% 28.97% 18.58%

Total Assets % 15.53% 26.81% 8.88% 13.87% 24.14% 24.42%

VERTICAL ANALYSIS

Equity and Liabilities Equity

Share Capital & Reserve 35.17% 33.43% 35.00% 31.46% 35.70% 37.42%

Non-Current Liabilities 12.00% 14.53% 11.08% 9.94% 8.00% 10.28%

Current Liabilities 52.83% 52.04% 53.92% 58.60% 56.30% 52.30%

Total Equity and Liabilities 100.00% 100.00% 100.00% 100.00% 100.00% 100.00%

Assets

Non-current Assets36.82% 36.71% 30.45% 26.23% 29.02% 31.69%

Current Assets 63.18% 63.29% 69.55% 73.77% 70.98% 68.31%

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Total Assets % 100.00% 100.00% 100.00% 100.00% 100.00% 100.00%

HORIZONTAL AND VERTICAL ANALYSIS

PROFIT AND LOSS ACCOUNT

YEARS

Description 2015 2014 2013 2012 2011 2010

Horizontal

Sales 6.36% 12.32% 20.70% 5.35% 22.58% 22.67%

Cost of Sales 5.41% 11.89% 15.98% 6.42% 22.78% 33.54%

Gross Profit 11.23% 14.57% 53.05% -1.45% 21.32% -18.84%

Distribution Cost 0.52% 19.48% 10.58% 69.01% 19.75% 50.31%

Admin & Other Expenses 14.69% 8.32% 41.16% 5.76% 36.21% 12.42%

Finance Cost -4.57% 8.24% -4.90 35.53% 33.74% 10.79%

Other Income 109.57% 101.03% 0.73% 42.98% 106.48% 7.73%

Total Expenses -1.03% 9.12% 19.61% 30.87% 28.44% 22.48%

Net Profit Before Taxation 34.155 26.36% 288.30% -64.01% 9.57% -47.87%

Provision for Taxation 87.60% 33.66% 96.80% -35.72% -36.65% -41.92%

Net Profit After Tax 22.32% 24.85% 386.35% -70.62% 32.08% -50.35%

DESCRIPTION 2015 2014 2013 2012 2011 2010

VERTICAL

Sales 100.00% 100.00% 100.00% 100.00% 100.00% 100.00%

Cost of Sales 82.81% 83.56% 83.88% 87.29% 86.41% 86.27%

Gross Profit 17.19%

16.44% 16.12% 12.71% 13.59% 13.73%

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Distribution Cost 4.13% 4.37% 4.11% 4.48% 2.79% 2.86%

Admin & Other Expenses 4.50% 5.05% 5.23%

4.47% 4.46% 4.01%

Finance Cost 0.94% 2.01% 2.08% 2.65% 2.06% 1.89%

Other Income 1.40% 0.71 -0.40% -0.48% -0.35% 0.21%

Total Expenses 9.97% 10.71% 11.03% 11.13% 8.96% 8.55%

Net Profit Before Taxation 7.22% 5.73% 5.09% 1.58% 4.63% 5.18%

Provision for Taxation 1.83% 1.04% 0.87% 0.53% 0.88% 1.70%

Net Profit After Tax 5.39% 4.69% 4.22% 1.05% 3.75% 3.4%

DIRECTOR’S REPORT TO SHAREHOLDER’S

The Board of Directors is pleased to present its Annual Report along with the audited financial

statements of the Company for the year ended December 31, 2015.

The Economy

In 2015, global economic activity remained subdued and annual growth rate remained at around

3.0%, well below its long term average. Growth in emerging markets and developing economies

accounts for over 70% of global growth declined for the fifth consecutive year, while a modest

recovery continued in advanced economies.

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Pakistan’s economic growth for financial year 2015 was 4.1% against 3.7% during last year, led

by services as growth in manufacturing slowed down.

Industrial growth was hobbled by a slowdown in large-scale manufacturing to 3.3% owing to

weaker external demand.

However, the resilience of small-scale manufacturing and construction sustained industrial

growth at 3.6%.

Inflation remained under control throughout the year and was recorded at 4.1% in December

2015, attributable mainly due to steep fall in prices of oil and other commodities.

BUSINESS REVIEW During the year, your company managed to achieve both top line and bottom line growth in all

business segments. Financial performance of the company is as follows:

2015 2014 VARIANCE

(Rs. in millions) (Rs. in millions)

Sales (Net) 17,545 16,495 6%

Gross Margin 3,016 2,712 11%

Profit before taxation 1,267 944 34%

Profit after taxation 946 773 22%

Earnings per share (Rs.) 78.63 64.28 22%

Footwear Division:

Footwear division’s revenue increased from Rs. 9.2 billion to Rs. 9.3 billion during the year,

representing a marginal growth of 1.3%.

Growth in footwear was hampered mainly in export business which was adversely impacted

due to the unprecedented weakness of the Euro.

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Gross margins in footwear business decreased from 14.4% to 12.5% mainly due to Euro decline

while part of downward pressure was offset by decrease in input material costs.

Tyre Division:

Tyre division continued to grow during the year at a reasonable rate. Sales grew from Rs 7.3

billion to Rs 8.2 billion, an increase of 13.3% year on year.

Considerable emphasis was placed on product quality and marketing efforts, areas that

continue to contribute towards much improved perception of our brands in the market.

Future Outlook:

The management has increased its efforts to expand both footwear and tyre businesses in the coming

years. Your company is continuously investing in product and sales channel development, capacity

expansion and modernization of machinery. Additionally, the management is pursuing a diversification

plan in the current year.

Safety and Environment:

All efforts are made to make all processes environment friendly, safe and efficient. The Company

complies with the standards of safety rules and regulations.

APPROPRIATIONS FOR THE YEAR 2015 Based on the performance of the Company, the Board of Directors is pleased to recommend a final

cash dividend of Rs. 25 per share (250%), in addition to the interim cash dividend of Rs. 12.50 per share

(125%).

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Rs. in million

Un-appropriated profit brought forward 1161.5

Final dividend @ Rs. 15 per share 2014 (180.4)

Interim dividend @ Rs.12.50 per share

2015

(150.4)

Net profit after tax for the year 2015 945.8

Other comprehensive income gain/ (loss) 24.1

Total available for appropriation 1,800.6

Appropriation

Final dividend @

Rs. 25 per share 2015

(300.7)

Transfer to reserve -

Un-appropriated profit carried forward 1499.9

Audit Committee

The Board of Directors in compliance with the Code of Corporate Governance has established an Audit

Committee. During the year four meetings of the Audit Committee were held.

Human Resources and Remuneration Committee

The Board of Directors of the Company in compliance with the Code of Corporate Governance has

established the Human Resource & Remuneration Committee. Majority of the members of the

Committee are non- executive Directors. One meeting of the Human Resource & Remuneration

Committee was held during the year.

Compliance with Code of Corporate Governance

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The Board of Directors is committed to ensuring that the requirements of Corporate Governance set by

Securities and Exchange Commission of Pakistan are fully met. The Company has adopted good

Corporate Governance practices and the Directors are pleased to report the following statement;

Statement on Corporate and Financial Reporting Framework

Management of the Company presents fairly its state of affairs, the results of its operations,

cash flows and changes in equity.

Proper books of accounts of the company maintained

The system of internal control is sound in design and has been effectively implemented and

monitored

There are no significant doubts upon the company’s ability to continue as a going concern

The key operating and financial data for the last six years is annexed

Appropriate accounting policies have been consistently applied in preparation of financial

statements

Auditors

The Auditors, M/s. S.M. MASOOD & CO., Chartered Accountants retire and offer themselves for re-

appointment. The Directors, on the recommendation of the Audit Committee propose M/s. S.M.

MASOOD & CO., Chartered Accountants, Lahore as auditors for the financial year 2016.

Pattern of Shareholding

A statement of the pattern of shareholding of the Company and additional information as at December

31, 2015 is included in the report. The Board has determined threshold under clause xvi (l) of CCG-2012

in respect of trading of Company’s shares by executives and employees who are of the cadre of

Management Team Member or above. Corporate Social Responsibilities Disclosure as required by

Corporate Social Responsibility General Order, 2009 is annexed and forms part of this report.

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Acknowledgment

On behalf of the Board of directors and employees, we express our gratitude and appreciation to all

our valued customers, distributors, dealers, financial institutions and shareholders for the trust and

confidence shown in the Company. The directors would like to express their sincere appreciation for

the hard work and dedication shown by the management and employees of the company throughout

the year. In the end may Allah bestow his blessings on our country, our Company and all our

staff/workers so that we continue to prosper and achieve good business results

For and on behalf of the Board

Omar Saeed

Lahore Chief Executive

Statement of Compliance with the Code of Corporate Governance

This statement is being presented to comply with the Code of Corporate Governance (CCG) contained

in the listing regulations of Pakistan Stock Exchange Limited for the purpose of establishing a

framework of good governance, whereby a listed company is managed in compliance with the best

practices of corporate governance.

The Company has applied the principles contained in the CCG in the following manner:

1. The Company encourages representation of independent non-executive directors and directors

representing minority interests on its Board of Directors. At present the Board includes:

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Category Names:

Independent Director

Mr. Manzoor Ahmed (Resigned on March 15, 2016)

Executive Directors

Mr. Omar Saeed

Mr. Arif Saeed

Mr. Hassan Javed

Non-Executive Directors

Chaudhry Ahmed Javed

Mr. M. Ijaz Butt

Mr. Shaukat Ellahi

Shaikh Mr. Riaz Ahmed

Mr. Muhammad Amin

(The independent director meets the criteria of independence under clause i (b) of the CCG).

2. The directors have confirmed that none of them is serving as a director on more than seven

listed companies, including this company.

3. All the resident directors of the Company are registered as taxpayers and none of them has

defaulted in payment of any loan to a banking company, a DFI or an NBFI or, being a member of

a stock exchange, has been declared as a defaulter by that stock exchange.

4. No casual vacancy occurred on the Board during the year.

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5. The company has prepared a “Code of Conduct” and has ensured that appropriate steps have

been taken to disseminate it throughout the company along with its supporting policies and

procedures.

6. The Board has developed a vision & mission statement, overall corporate strategy and

significant policies of the Company. A complete record of particulars of significant policies along

with the dates on which they were approved or amended has been maintained.

7. All the powers of the Board have been duly exercised and decisions on material transactions,

including appointment and determination of remuneration and terms and conditions of

employment of the CEO, other executive and non-executive directors, have been taken by the

Board.

8. The meetings of the Board were presided over by the Chairman and, in his absence, by a

director elected by the Board for this purpose and the Board met at least once in every quarter.

Written notices of the Board meetings, along with agenda and working papers, were circulated

at least seven days before the meetings. The minutes of the meetings were appropriately

recorded and circulated.

9. All the directors on the Board are fully conversant with their duties and responsibilities as

directors of corporate bodies. The directors were apprised of their duties and responsibilities

through orientation courses. Four directors Mr. Hassan Javed, Mr. Manzoor Ahmed, Mr. Riaz

Ahmed and Mr. Shaukat Ellahi Shaikh have completed the Directors’ Training Program. Three

directors meet the criteria of minimum 14 years of education and 15 years of experience on the

Board of a listed company.

10. There were no new appointments of Chief Financial Officer (CFO), Company Secretary and Head

of Internal Audit during the year.

11. The Directors’ Report for this year has been prepared in compliance with the requirements of

the CCG and fully describes the salient matters required to be disclosed.

12. The financial statements of the Company were duly endorsed by CEO and CFO before approval

of the Board.

13. The directors, CEO and executives do not hold any interest in the shares of the Company other

than that disclosed in the pattern of shareholding.

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14. The Company has complied with all the corporate and financial reporting requirements of the

CCG.

15. The Board has formed an Audit Committee. It comprises three members, of whom two are

non-executive directors and one is independent director. The Chairman of the committee is an

Independent director.

16. The meetings of the Audit Committee were held at least once every quarter prior to approval

of interim and final results of the Company and as required by the CCG. The terms of reference

of the committee have been formed and advised to the committee for compliance.

17. The Board has formed a Human Resource and Remuneration Committee. It comprises three

members, of whom two are non-executive directors. The Chairman of the committee is a non-

executive director.

18. The Board has set up an effective Internal Audit Function which is considered suitably qualified

and experienced for the purpose and is conversant with the policies and procedures of the

Company.

19. The statutory auditors of the Company have confirmed that they have been given a satisfactory

rating under the quality control review program of the Institute of Chartered Accountants of

Pakistan (ICAP), that they or any of the partners of the firm, their spouses and minor children

do not hold shares of the Company and that the firm and all its partners are in compliance with

International Federation of Accountants (IFAC) guidelines on code of ethics as adopted by the

Institute of Chartered Accountants of Pakistan (ICAP).

20. The statutory auditors or the persons associated with them have not been appointed to

provide other services except in accordance with the listing regulations and the auditors have

confirmed that they have observed IFAC guidelines in this regard.

21. The ‘closed period’, prior to the announcement of interim / final results, and business

decisions, which may materially affect the market price of company’s securities, was

determined and intimated to the directors, employees and stock exchanges.

22. Material / price sensitive information has been disseminated among all market participants at

once through the stock exchanges.

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Review Report to the Members on

Statement of Compliance with the Code of Corporate Governance

We have reviewed the Statement of Compliance with the best practices contained in the Code of

Corporate Governance prepared by the Board of Directors of SERVICE INDUSTRIES LIMITED (“the

Company”) for the year ended December 31, 2015, to comply with the requirements of Listing

Regulations of Pakistan Stock Exchange Limited, where the Company is listed.

The responsibility for compliance with the Code of Corporate Governance is that of the Board of

Directors of the Company. Our responsibility is to review, to the extent where such compliance can be

objectively verified, whether the Statement of Compliance reflects the status of the Company’s

compliance with the provisions of the Code of Corporate Governance and report if it does not and to

highlight any non- compliance with the requirements of the Code of Corporate Governance. A review is

limited primarily to inquiries of the Company’s personnel and review of various documents prepared

by the Company to comply with the Code.

As part of our audit of financial statements we are required to obtain an understanding of the

accounting and internal control systems sufficient to plan the audit and develop an effective audit

approach. We are not required to consider whether the Board of Directors’ statement on internal

control covers all risks and controls or to form an opinion on the effectiveness of such internal controls,

the Company’s corporate governance procedures and risks.

The Code requires the Company to place before the Audit Committee, and upon recommendation of

the Audit Committee, place before the Board of Directors for their review and approval of its related

party transactions distinguishing between transactions carried out on terms equivalent to those that

prevail

in arm’s length transactions and transactions which are not executed at arm’s length price and

recording proper justification for using such alternative pricing mechanism. We are only required and

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have ensured compliance of this requirement to the extent of the approval of the related party

transactions by the Board of Directors upon recommendation of the Audit Committee. We have not

carried out any procedures to determine whether the related party transactions were undertaken at

arm’s length price or not.

Based on our review, nothing has come to our attention which causes us to believe that the Statement

of Compliance does not appropriately reflect the Company’s compliance, in all material respects, with

the best practices contained in the Code of Corporate Governance as applicable to the Company for

the year ended December 31, 2015.

March 25, 2016

S. M. MASOOD & CO. Lahore

Chartered Accountants

Audit Engagement Partner

Muhammad Danish Kamal

Auditor’s Report to the Members

We have audited the annexed balance sheet of SERVICE INDUSTRIES LIMITED (“the Company”) as at

December 31, 2015 and the related profit & loss account, statement of comprehensive income, cash

flow statement and statement of changes in equity together with the notes forming part thereof, for

the year then ended and we state that we have obtained all the information and explanations which,

to the best of our knowledge and belief, were necessary for the purposes of our audit.

It is the responsibility of the Company’s management to establish and maintain a system of internal

control, and prepare and present the above said statements in conformity with the approved

accounting standards and the requirements of the Companies Ordinance, 1984. Our responsibility is to

express an opinion on these statements based on our audit.

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We conducted our audit in accordance with the auditing standards as applicable in Pakistan. These

standards require that we plan and perform the audit to obtain reasonable assurance about whether

the above said statements are free of any material misstatement. An audit includes examining, on a

test basis, evidence supporting the amounts and disclosures in the above said statements. An audit

also includes assessing the accounting policies and significant estimates made by management, as well

as, evaluating the overall presentation of the above said statements. We believe that our audit

provides a reasonable basis for our opinion and, after due verification, we report that:

A. in our opinion,

Proper books of account have been kept by the Company as required by the Companies Ordinance,

1984;

B. in our opinion:

I. the balance sheet and profit & loss account together with the notes thereon have been

drawn up in conformity with the Companies Ordinance, 1984, and are in agreement

with the books of account and are further in accordance with accounting policies

consistently applied;

II. the expenditure incurred during the year was for the purpose of the Company’s

business; and

III. the business conducted, investments made and the expenditure incurred during the

year were in accordance with the objects of the Company;

C. in our opinion and to the best of our information and according to the explanations given to us,

the balance sheet, profit & loss account, statement of comprehensive income, cash flow

statement and statement of changes in equity together with the notes forming part thereof

conform with approved accounting standards as applicable in Pakistan, and, give the

information required by the Companies Ordinance, 1984, in the manner so required and

respectively give a true and fair view of the state of the Company’s affairs as at December 31,

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2015 and of the profit, total comprehensive income, its cash flows and changes in equity for the

year then ended; and

D. In our opinion, Zakat deductible at source under the ZAKAT and USHER Ordinance was

deducted by the Company and deposited in the Central Zakat Fund established under section 7

of that Ordinance.

Date: March 25, 2016

S. M. MASOOD & co

Lahore Chartered Accountants

Audit Engagement Partner

Muhammad Danish Kamal

BALANCE SHEET

Condensed Interim Balance Sheet (Unaudited)

As at June 30, 2016

NOTE (Unaudited)

Jun 30, 2016

(Audited)

Dec 31, 2015

EQUITY AND LIABILITIES

Share capital and reserves

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Authorized share capital

20,000,000 (2014: 20,000,000)

ordinary shares of Rs. 10/- each:

200,000 200,000

Paid up share capital 120,288 120,288

Reserves 3,906,682 3,482,781

4,026,970 3,603,069

Non-current liabilities

Long term financing 612,979 881,850

Long term deposits 5,268 3,665

Deffered liabilities 352,402 343,331

Current liabilities 970,649 1,228,846

Trade and other payables 9 3,993,855 3,223,831

Interest and mark-up accrued 48,966 52,986

Short term borrowings 2,558,832 1,662,360

Current portion of long term financing 218,019 221,170

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Provision for taxation

6,819,672 5,160,347

Contingencies and commitments 10

11,817,291 9,992,262

The annexed notes from 1 to 46 form an integral part of these financial statements.

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ASSETS NOTE Unaudited

2016

Audited

2015

Non-current assets

Property, plant and equipment 4,533,187 3,382,700

Intangible assets 3,511 5,640

Long term investments 302,466 323,520

Long term loans 10,586 7,083

Long term deposits 3,254,802 73,253 52,152

4,923,003 3,771,095

Current assets

Stores, spares and loose tools 114,002 114,570

Stock in trade 2,762,022 2,719,856

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Trade debts 2,162,076 1,527,479

Loans and advances 279,700 233,671

Trade deposits and prepayments 86,686 76,719

Other receivables 96,576 58,126

Short term investments 245,500 -

Tax refunds due from government 516,994 1,281,956

Taxation - net 568,704 524,724

Cash and bank balances 62,028 459,846

6,894,288 6,221,167

11,817,291 9,992,262

PROFIT AND LOSS ACCOUNT

For the year ended December 31, 2015

NOTE 2015

Amount

2014

Amount

Sales – net 27 17,544,736 16,495,123

Cost of sales

28 14,528,670 13,783,455

Gross profit 3,16,66 2,711,668

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Operating expenses

Distribution cost 29 724,425 720,683

Administrative expenses 30 789,608 688,478

Other operating expenses 31 164,768 143,939

1,678,801 1,553,100

Operating profit before other income 1,337,265 1,158,568

Other income 32 246,158 117,461

Operating profit 1,583,423 1,276,029

Finance cost 33 316,416 331,581

Profit before taxation 1,267,007 944,448

Taxation 34 321,160 171,196

Profit after taxation 945,847 773,252

Earnings per share - basic and diluted

(Rupees) 35 78.63 64.28


STATEMENT OF COMPREHENSIVE INCOME


NOTE 2015 Amount 2014 Amount

Profit after taxation 945,847 773,252

Other comprehensive income

Items that may reclassify to profit and

Loss account

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(Loss) / gain on Investments - net of tax (8,800) -

- Items that may not reclassify to profit and loss

account

Actuarial gain / (loss) on defined

benefit plans - net of tax

32,865 (15,813)

24,065 (15,813)

Total comprehensive income for the year

969,912 757,439

The annexed notes from 1 to 46 form an integral part of these financial statements

CASH FLOW STATEMENT


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Note 2015

Amount

2014

Amount

Cash flow from operating Activities

Cash generated from operations 37 2,835,970 1,012,201

Finance cost paid (351,318) (294,818)

Ijarah rentals paid (71,839) (51,604)

Income tax paid (313,991) (131,839)

Staff retirement benefits paid (15,256) (11,988)

W.P.P.F and W.W.F paid (52,000) (68,597)

Net cash generated from operating activities 2,031,566 453,355

Cash flow from investing Proceeds from sale

Dividend from associated Company 18 65,706 27,139

Other investment - Equity (107,724) -

Capital expenditure (733,625) (1,327,934)

property, plant and equipment 14,227 6,119

Investment in associated company (28,541) -

Long term loans – net (361) (1,616)

Long term deposits – net (961) (21,354)

Net cash used in investing activities (791,279) () (1,317,646)

Cash flow from Cash and cash equivalents

at the end of the year

Short term borrowings – net (442,992) 591,063

Long term financing (29,660) 504,302

Long term deposits - 10

Net cash generated from / (used in) financing activities (798,883) 858,327

Net (decrease) / increase in cash and cash equivalents 441,404 (5,964)

Cash and cash equivalents at the beginning

of the year

18,442 24,406

Cash and cash equivalents at the end of the 26 459,846 18442

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Year


Statement of Changes in Equity For the year ended December 31, 2015

Capital Reserves Revenue Reserves

Paid up

share capital

Capital

gain

Share

premium

General

reserve

Unappro-

priated

TOTAL

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profit

Balance

as at December

31, 2013 120,288 102,730 21,217 1,558,208 644,643 2,447,086

Final dividend

for the year ended

December

31, 2013

@ Rs. 10 per

share

- - -

-

(120,288) (120,288)

Interim dividend

for the year ended

December 31, 2014

@ Rs. 10 per

Share

(120,288) (120,288)

Total comprehensive

income for

the year

757,439 757,439

Balance as at

December 31, 2014

120,288 102,730 21,217 1,558,20 1,161,506 2,963,949

Final dividend for

the year ended

December 31, 2014 @ Rs.

15 per share

- - (180,432) (180,432)

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Interim dividend for the

year ended December 31,

2015 @ Rs. 12.50 per

share (150,360) (150,360)

Total comprehensive

income

for the year

8 969,912 969,912

Balance as at

December 31, 2015 120,288 102,730 21,217 1,558,208 1,800,626 3,603,069

Notes to the Financial Statements


Legal status and operations Service Industries Limited (the Company) was incorporated as a private

limited company on March 20, 1957 in Pakistan under the Companies Act, 1913 (now Companies

Ordinance, 1984), was converted into a public limited company on September 23, 1959 and got listed

on June 27, 1970. The shares of the Company are quoted on the Pakistan Stock Exchange.

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The registered office of the Company is located at 2-Main Gulberg, Lahore. The principal activities of

the Company are purchase, manufacture and sale of footwear, tyres and tubes and technical rubber

products. These financial statements pertain to Service Industries Limited as an individual entity.

Statement of compliance

These financial statements have been prepared in accordance with approved accounting standards as

applicable in Pakistan. Approved accounting standards comprise of such International Financial

Reporting Standards (IFRS) issued by the International Accounting Standards Board and Islamic

Financial Accounting Standards (IFAS) issued by the Institute of Chartered Accountants of Pakistan

(ICAP) as are notified under the Companies Ordinance, 1984, provisions of and directives issued under

the Companies Ordinance, 1984. In case requirements differ, the provisions or directives of the

Companies Ordinance, 1984 shall prevail.

Use of estimates and judgments

The preparation of these financial statements in conformity with the approved accounting standards

require management of the Company to make judgments, estimates and assumptions that affect the

application of policies and reported amounts of assets and liabilities, income and expenses.

The estimates and associated assumptions are based on historical experience and various other

factors that are believed to be reasonable under the circumstances. Actual results may differ

from these estimates.

The estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to

accounting estimates are recognized in the period in which the estimates are revised if the

revision affects only that period, or in the period of the revision and future periods if the

revision affects both the current and future periods.

There are no significant judgements or estimates, which if inaccurate or wrong could materially

affect the current financial statements or the next years financial statements.

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Application of new and revised International Financial Reporting Standards (IFRS)

IFRS & amendments effective for the current year IAS 19 - Defined Benefit Plans: Employee

Contributions. IFRS 10, 12 & IAS 27 - Consolidated financial statements; Interest in other

entities; Separate financial statements. IFRS 13 - Fair Value Measurements - effective first time

in Pakistan.

IFRS & amendments not yet effective & not applied Standards, amendments and

interpretations to existing standards that are not yet effective and have not been early

adopted by the Company: IFRS 1 - First-time Adoption of International Financial Reporting

Standards IFRS 9 - Financial Instruments IFRS 14 - Regulatory Deferral Accounts IFRS 15 -

Revenue from Contracts with Customers; IFRS 11 - Accounting for Acquisitions of Interests in

Joint Operations. IAS 1 - Disclosure Initiative. IAS 16 & 38 - Clarification of Acceptable Methods

of Depreciation and Amortization. IAS 16 & 41 - Agriculture: Bearer Plants IFRS 10 & IAS 28 -

Sale or Contribution of Assets between an Investor and its Associate or Joint Venture IFRS 10,

12 & IAS 28 - Investment Entities: Applying the Consolidation Exception Annual improvements

- 2012-2014 cycle The above mentioned standards & improvements, when effective, are not

expected to have a significant impact on the Company’s financial statements.

Basis of preparation

Accounting convention These financial statements have been prepared under the historical

cost convention except where stated otherwise in specific notes to the related items.

Functional and presentation currency The financial statements are presented in Pak Rupees,

which is the Company’s functional and presentation currency.

Summary of significant accounting policies

Employees’ retirement benefits

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Contributory provident fund Obligations for contributions to the provident fund are expensed

as the related service is provided. Prepaid contributions are recognised as an asset to the

extent that a cash refund or a reduction in future payments is available.

Defined benefit plans The Company operates a funded gratuity scheme as a defined benefit

plan for its permanent employees other than those who participate in the provident fund

scheme. The managerial staff is entitled to participate in both the provident fund trust and

gratuity fund scheme. The Company also operates a funded pension scheme as a defined

benefit plan for employees who are not members of the employees’ old-age benefit scheme

under the rules applicable before July 01, 1986.

The company’s net obligation in respect of defined benefit plans is calculated separately for each plan

by estimating the amount of future benefit that employees have earned in the current and prior

periods, discounting that amount and deducting the fair value of any plan assets. The calculation of

defined benefit obligations is performed annually by a qualified actuary using the projected unit credit

method. When the calculation results in a potential asset for the Company, the recognised asset is

limited to the present value of economic benefits available in the form of any future refunds from the

plan or reductions in future contributions to the plan. To calculate the present value of economic

benefits, consideration is given to any applicable minimum funding requirements.

Remeasurements of the net defined benefit liability, which comprise actuarial gains and losses, the

return on plan assets (excluding interest) and the effect of the asset ceiling (if any, excluding interest),

are recognised immediately in other comprehensive income. The Company determines the net interest

expense (income) on the net defined benefit liability (asset) for the period by applying the discount

rate used to measure the defined benefit obligation at the beginning of the annual period to the then

net defined benefit liability (asset), taking into account any changes in the net defined benefit liability

(asset) during the period as a result of contributions and benefit payments. Net interest expense and

other expenses related to defined benefit plans are recognised in profit or loss.

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When the benefits of a plan are changed or when a plan is curtailed, the resulting change in benefit

that relates to past service or the gain or loss on curtailment is recognised immediately in profit or loss.

The Company recognises gains and losses on the settlement of a defined benefit plan when the

settlement occurs.

Compensated absences

The Company accounts for compensated absences on the basis of each employee’s un-availed earned

leave balance at the end of the year.

Taxation Income tax expense represents the sum of the current and deferred taxes & is

recognized in profit or loss except to the extent that it relates to items recognised directly in

equity or in other comprehensive income.

i) Current tax

The provision for current taxation is based on the applicable tax regimes, tax rates, credits & rebates,

in accord with the income tax laws of Pakistan.

ii) Deferred tax

Deferred tax is recognized in respect of temporary differences between the carrying amounts of assets

and liabilities for financial reporting purposes and the amounts used for taxation purposes. Deferred

tax assets are recognized for unused tax losses, unused tax credits and deductible temporary

differences to the extent that it is probable that future taxable profits will be available against which

they can be used. Deferred tax assets are reviewed at each reporting date and are reduced to the

extent that it is no longer probable that the related tax benefit will be realized; such reductions are

reversed when the probability of future taxable profits improves.

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Unrecognized deferred tax assets are reassessed at each reporting date and recognised to the extent

that it has become probable that future taxable profits will be available against which they can be

used.

Deferred tax is measured at the tax rates that are expected to be applied to temporary differences

when they reverse, using tax rates enacted or substantively enacted at the reporting date.

The measurement of deferred tax reflects the tax consequences that would follow from the manner in

which the Company expects, at the reporting date, to recover or settle the carrying amount of its

assets and liabilities.

Deferred tax is charged or credited in the profit and loss account, except in the case of items credited

or charged to equity in which case they are included in equity. Deferred tax assets and liabilities are

offset only if certain criteria are met.

Foreign currency transactions and translation Transactions in foreign currencies are translated

into the functional currency at the exchange rates at the dates of the transactions. Monetary

assets and liabilities denominated in foreign currencies are translated into the functional

currency at the exchange rate at the reporting date.

Borrowing costs Borrowing cost related to the financing of major projects is capitalized until

substantially all the activities to complete the project for its intended use / operation are

completed. All other borrowing costs are charged to profit and loss account as incurred.

Property, plant and equipment

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Owned Property, plant and equipment, except freehold land, are stated at cost less

accumulated depreciation and impairment loss, if any. Freehold land is stated at cost. Cost

includes purchase cost and any incidental expenses of acquisition.

Property, plant and equipment are depreciated over their estimated useful lives at the rates

specified in Note 16.1 to the financial statements using the reducing balance method.

Subsequent expenditure is capitalized only if it is probable that the future economic benefits

associated with the expenditure will flow to the Company.

The Company reviews the useful life and residual value of property, plant and equipment on a

regular basis. Any change in estimates in future years might affect the carrying amounts of the

respective items of property, plant and equipment with a corresponding effect on depreciation

charge.

Intangible assets

Expenditure incurred to acquire computer software programs are capitalized as intangible

assets which are stated at cost less accumulated amortization and any identified impairment

loss. Intangible assets are amortized at the rates specified in Note 17.1 to the financial

statements using the straight line method. Amortization on additions to intangible assets is

charged from the month in which an asset is acquired or capitalized while no amortization is

charged for the month in which the asset is disposed off.

Interests in equity-accounted investees Interests in associates are accounted for, using the

equity method. They are initially recognised at cost. Subsequent to initial recognition, the

financial statements include the Company’s share of the profit or loss and other comprehensive

income of equity-accounted investees, until the date on which significant influence ceases.

Capital work in progress Capital work in progress is stated at cost less any identified impairment

loss.

Ijarah assets

The Company recognizes ijarah payments under an Ijarah agreement as an expense in the profit

and loss account on a straight line basis over the Ijarah term.

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Impairment of assets

Non-financial assets

Assets are tested for impairment, whenever circumstances indicate that the carrying amount

may not be recoverable. An impairment loss is recognised for the amount by which the asset’s

carrying amount exceeds its recoverable amount. The recoverable amount is the higher of an

asset’s fair value less costs of disposal and value in use. Value in use is based on the estimated

future cash flows, discounted to their present value using a pre-tax discount rate that reflects

current market assessments of the time value of money and the risks specific to the assets. For

the purposes of assessing impairment, assets are grouped at the lowest levels for which there

are separately identifiable cash inflows which are largely independent of the cash inflows from

other assets or groups of assets (cash-generating units). Assets other than goodwill that

suffered impairment are reviewed for possible reversal of the impairment at the end of each

reporting period.

Financial Assets

Financial asset are considered impaired only if there is objective evidence of reduction in their

estimated future cash flows.

Loan and receivables

The loss is measured as the difference between the asset’s carrying amount and the present

value of estimated future cash flows (excluding future credit losses that have not been

incurred) discounted at the original effective interest rate. The loss is recognised in profit or

loss. Similarly, reversals of impairment losses are also dealt in profit and loss.

Equity-accounted investments

Impairment loss is measured by comparing the recoverable amount of the investment with its

carrying amount. The impairment loss is recognised in profit or loss, and is reversed if there has

been a favorable change in the estimates used to determine the recoverable amount.

Inventories

Inventories are measured at the lower of cost and net realizable value. The cost of inventories

is based on the first-in, first-out principle. In the case of manufactured inventories and work in

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progress, cost includes an appropriate share of production overheads based on normal

operating capacity.

Revenue Sales

Revenue is recognized when the goods are dispatched and significant risks and rewards of

ownership are transferred to the customer. Revenue from sale of goods is measured at fair

value of consideration received or receivable, net of returns and trade discounts Dividend

income is recognized when the Company’s right to receive is established.

Financial instruments

Financial instruments are recognized, when the Company becomes a party to the contractual

provisions of the instruments. Financial assets are de-recognized after all the substantial risks

and rewards have been transferred. Financial liabilities are de-recognized when they are

extinguished. Initial measurement is at fair value plus transaction costs. Subsequent

measurement of loans & receivables is at amortized cost less impairment. Financial liabilities

are subsequently measured at amortized cost. For impairments see note 6.7.

Cash and cash equivalents

For the purpose of presentation in the statement of cash flows, cash and cash equivalents

includes cash on hand, deposits held at call with financial institutions, other short-term, highly

liquid investments with original maturities of three months or less that are readily convertible

to known amounts of cash and which are subject to an insignificant risk of changes in value.

Provisions

Provisions are recognized when the Company has a present obligation (legal or constructive) as

a result of past events; it is probable that an outflow of resources embodying economic benefits

will be required to settle the obligation and a reliable estimate can be made of the amount of

obligation.

Provisions are measured at the present value of management’s best estimate of the

expenditure required to settle the present obligation at the end of the reporting period. The

discount rate used to determine the present value is a pre-tax rate that reflects current market

assessments of the time value of money and the risks specific to the liability. The increase in the

provision due to the passage of time is recognised as interest expense.

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PART SEVEN: TRAINING PROGRAM

I worked in Sales and Operations Department in my 6 weeks internship under the supervision of Sir

Ayaz Jamil who is the Head of Operation & Sales. My internship Started from 25th of July 2016 and ends

at 7th of September 2016.

1ST WEEK

On the very first day I attended the store opening of Shoe box at emporium mall

SERVIS TYRES

The next day the introductory session about the SIL then the tyres market brief discussion about their

products, target market and export market and also the marketing techniques and strategies.

VULCANIZER DATA

Basically this is the region wise segregation of shops where the SIL gave material (tyres and

tubes). So here I find how much shops located in particular region and which region gives the

maximum market

Total 2726 shops

Major share: Karachi, Multan and Lahore

TRACKING (PTV and Ten sports)

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I have done tracking of ptv sports and ten sports data deviation according to the data of media bank.

This is about whether the ads that are planned are ON AIR or not. So here we check the deviation i.e.

planned VS actual.

Report on customer survey

I analyze questionnaires of customers and made a report on this. Here I came to know about the

market. What was the response of customers over the advertisements of SIL Tyres and Tubes and

about the packaging of materials and also the POS material and the suggestions and also the

satisfaction of customers with the brand.

Know how of budget plan

How the plan sets?

Firstly, there is recording i.e. planned expenditure and after that there is billing i.e. how much actually

consume and then they form a reconciliation sheet that is planned versus actual

The budget plan gets estimation from previous year

There is an annual budget of 192 million

Presentation in Annual Sales Meeting to Distributors

Study report on annual sales meeting presented to distributors. Here I came to know about the SERVIS

distributors .There are almost 22 distributors of the company and the SIL is highly capital intensive. The

company explained its manufacturing process and about the material they used in the manufacturing

process. So that the distributors know about the quality products of the company

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2ND WEEK

SHOE BOX

The retail market of shoes from the name of Shoe Box has been started from Feb 2016 and now there

are almost 7 outlets of shoe box in four cities of Pakistan

SALES AND OPERATIONS DEPARTMENT

Firstly I worked as a mystery shopper. They provide me some parameters to evaluate the staff services.

I went to the four outlets of SHOE BOX and observe the staff efficiency, the services they provided to

the customers, overall store physical environment, products quality, whether the products display

attract the customers or not. I also visited the competitor’s outlets i.e. Stylo, Metro, Borjan, BATA and

Servis shoes for the comparison. After that I made power point presentation

SHOE BOX BATA SERVIS BORJAN STYLO METRO

PRODUCTS More variety,

good

designs ,economical

prices some

lacking in shoes

quality

Provide

quality

products

but prices

are high,

fewer and

old designs

fewer range

of products,

the products are

not

appealing

and

traditional

old designs

product

quality is

very good,

unique

designs,

trendy and

classy designs but

charge high

prices

fine jewelry

products,

in shoes

also the

designs are

good

and stylo

have great

no of

customers

good designs,

varied products,

jewellry and

bags

prices are high

and shoes

prices

are economical

STORE store layout stores are Store good layout stores are Good

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and fixtures are

excellent

wide but

there are

fake bata

stores also

layout was

ok

wide ,

overall

layout

is good

STAFF well groomed

looked like

fashion

consultants

but not

suggestive

and not

voluntarily

communicable

Staff is not

assistive,

Commni-

cable

do not

bother

about

customers

not well

groomed

as shoe

box store

and bata

store staff

not very much

interactive

well groomed,

assistive,

and

interactive

as well

interactive and

voluntarily

communicable

PACKING

&

PAYMENT PROCESS

Quick &

Efficient

quick Ok Quick quick quick and

efficient

Would you

like to

come

again?

Yes not sure No I think yes because

of designs

yes Yes

Promotional appealsthey are communicablenot much

communicable

communicablejust ok ok Ok

Satisfaction 75% 50% 40% 70% 75% 71%

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3RD WEEK

RECORDED INVENTORY & PHYSICAL INVENTORY

STORE UNITS SOLD REPORTING

INVENTORY

PHYSICAL

INVENTORY

Karim market 6,801 32,347 32347

(Manager Kashif)

Link Road 5,125 33,564 33564

(Manager Abbas)

Wapda Town 4,497 31,567 31567

(Manager Raheem)

Emporium Mall - - -

(Manager Tayyab)

I checked the inventory details of the stores and also acquired the employee’s updated sheet of outlets

and also verify the reporting and physical inventory wherever possible. I acquire these things through

the emails of respective managers

And this is the UPDATED EMPLOYEE SHEET of the outlet

Sr. No Emp ID Emp Name Desgination

1 902660 Muhammad Abbas Shop Manager

2 902632 Qasim Safdar Assistant Manger

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3 902753 Usman Ali Mirza Assistant Manger

4 902637 Adnan Ali Stylist

5 902684 Balaj Waheed Stylist

6 902685 Muhammad Awais Stylist

7 902735 Asim Nogra Stylist

8 902749 Mudassir Rehman Ghauri Stylist

9 902647 Muhammad Shoib Stylist

10 902635 Zeeshan Asim Stylist

11 902715 Muhammasd Azeem Stylist

12 902626 Faisal Akram Stylist

13 902638 Mubina Talib jewelry Sales Girl

14 902693 Hafiz Arshad Stylist

15 902697 Muhammad Rasheed Qadri Stylist

16 902707 Abbas Ali Haidar Stylist

17 902746 Hamza Waheed Stylist

18 902730 Ali Raza Stylist

19 902641 Muhammad Ashraf Stock Boy

20 902687 Ghulam Mustafa Stock Boy

21 902712 Bilal Khan Stock Boy

22 902639 Hassan Hayat Stock Boy

23 902745 ABDUL HAYEE STOCK BOY

24 902744 SHAHID ANWAR BAIG Stock Boy

25 902752 SHAHZAD MASIH SWEEPER

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4TH WEEK

Questionnaire formation

I prepare the questionnaire to identify the behavior of customers towards purchase of sports shoes

and also identifying the customer’s preference. And these questionnaires have been filled by many

sports shops and by people also.

QUESTIONNAIRE

What is your age?

o 10-19

o 20-29

o 30-39

o 40-50

o 50+

Your Monthly household income is approximately between

o Less than Rs. 30000

o Rs. 30000 – Rs 50000

o Rs. 50,000 – Rs 70,000

o Rs. 70,000 – Rs 100,000

o More than Rs. 100,000

How many pairs of sports shoes do you purchase annually?

o 1

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o 2

o 3

o 4

o More than 4

Do you think Seasonal Changes influence the frequency of buying sports shoes? In which season do

you buy?

Do you prefer wearing sports shoes?

o Yes

o NO

Which brand you prefer?

o Bata

o Servis

o Nike

o Adidas

o Xarasoft

o Other

Are you satisfied with the quality of the preferred brand?

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o Yes

o No

Are you satisfied the price range of the preferred brand?

o Yes

o No

o No comments

If the price of your preferred brand increases will you purchase again?

o May be same brand

o May be cheaper brand

o May be any other brand

Will you purchase another brand of same quality with fewer prices?

o Yes

o No

What factors do you consider when purchasing a sports shoe? Choose factors of your choice?

o Color

o Cushion

o Support

o Light weight

o Design

o Price

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o Brand

o Any other factors

How do you consider the importance of sport shoes?

o Comfort

o Price

o Durability

o Use in sport

o Any other

Please rate the following in terms of price of shoes.

Low Price High Price

BATA 1 2 3 4 5

SERVIS 1 2 3 4 5

NIKE 1 2 3 4 5

ADIDAS 1 2 3 4 5

XARASOFT 1 2 3 4 5

OTHER 1 2 3 4 5

Please rate the following in terms of Design of shoes.

Worst Design Best Design

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BATA 1 2 3 4 5

SERVIS 1 2 3 4 5

NIKE 1 2 3 4 5

ADIDAS 1 2 3 4 5

XARASOFT 1 2 3 4 5

OTHER 1 2 3 4 5

Please rate the following in terms of Variety of shoes.

Least varity Most Variety

BATA 1 2 3 4 5

SERVIS 1 2 3 4 5

NIKE 1 2 3 4 5

ADIDAS 1 2 3 4 5

XARASOFT 1 2 3 4 5

OTHER 1 2 3 4 5

Please rate the following in terms of Comfort of shoes.

Least Comfort Most Comfort

BATA 1 2 3 4 5

SERVIS 1 2 3 4 5

NIKE 1 2 3 4 5

ADIDAS 1 2 3 4 5

XARASOFT 1 2 3 4 5

OTHER 1 2 3 4 5

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Please rate the following in terms of Durability of shoes.

Least Durable Most Durable

BATA 1 2 3 4 5

SERVIS 1 2 3 4 5

NIKE 1 2 3 4 5

ADIDAS 1 2 3 4 5

XARASOFT 1 2 3 4 5

OTHER 1 2 3 4 5

CONCLUSION

From the result of questionnaires we can conclude that most of the people like Nike and Adidas

because of the brand image, comfort and durability. Some of the results showed that some people like

these brands but buy bata and servis because Nike and Adidas charge high prices.

WEEK 5

I worked on VISUAL MERCHANDISING i.e. finding inspiration for shop outlets. Window displays of

various top brands so that we can made our outlets look more eye catching. I get an idea from Google

and by visiting the market and after that submitted my report to my supervisor in power point

presentation

WEEK 6

There is an emporium mall launch in this week I suggest some ideas for the launch. After that I

attended the launch on 3rd September 2016. I also worked on the completion of my report by asking

queries.

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DIFFICULTIES FACED IN GETTING DATA

The questionnaire task completion took a lot of time. Finding the right audience for

questionnaire filling was difficult to approach. People attitudes towards questionnaire filling

were another difficult thing

As such the training and getting data was not as difficult because the ofiice environment was

quite friendly and supportive

PART EIGHT: CONCLUSION & RECOMMENDATION

The PROBLEMS I found there were

The week promotional activities

IT department clash with other department due to software

SOLUTONS

WEEK PROMOTIONAL ACTIVITIES

Start massive advertising on all Medias especially in TV and radios. Also give free gifts, coupons and

some surprise gifts. And start some campaign like free feet checkups. Medical camps should be

organized for the checkups. Give the details according to type of feet.

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IT CLASH WITH OTHER DEPARTMENTS DUE TO SOFTWARE

The users should access the software anywhere & any time. They should also have complete software

knowledge.

RECOMMENDATIONS

Conduct surveys to understand the needs and try to find out the niche target markets

Start another section for diabetic patients or patients related to foot diseases

Promote your shoes making process in an inspiring way

To create a product-based retail store whose primary goal is to exceed customer's expectations

More developed R&D department should be organized

Increase number of shoes outlets

There should be a proper praying room for females.

Advance internship program should be planned for management students which will not

only improve the learning of internees but also will help in performance evaluation of

internees.

Internship evaluation form should also be introduced to evaluate the performance of

internees and to judge their experience with the company.

Only reading material is not enough to train the employees; some modern techniques

should also be considered i.e. simulation, team playing, case studies etc.

Suggestion page should also be added to the website of company which will help in

getting innovative ideas. It will also help in determining the experience of customers

with the products of Shoe box and tyres. It will give a channel to customers to share

their views with the company as well as their demands.

There should be a proper system for measuring return on investment for which the

organization can observe the implication of training on the job.

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Whole of human resource system should be transferred to SAP which will make the

work more formalized, planned and easy and will reduce the paper work.

Expand the business all over the world

Should be expanded by focusing those countries which have large portion middle class.

For example: Paraguay has large middle class.

Honda can also consider the use of e-commerce to expand and fasten the business that

will lead to fulfillment of requirements in time.

Recognize the importance of R & D for:

managing R&D for business growth,

accelerating innovation, and

Integrating technology planning with business strategy.

As it is one of the ways to get edge over competitors.

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REFERENCES

www.servisgroup.com

http://www.servisgroup.com/reports/Annual%20Report%202015.pdf

http://www.servisgroup.com/reports/2nd-Quarter%202016%20Ended%2030th%20June

%202016.pdf

http://www.servisgroup.com/reports.php

http://www.servisgroup.com/reports.php

http://www.servisgroup.com/reports/2nd-Quarter%202016%20Ended%2030th%20June%202016.pdf

http://www.servisgroup.com/reports/2nd-Quarter%202016%20Ended%2030th%20June%202016.pdf

http://www.servisgroup.com/reports/Annual%20Report%202015.pdf

http://www.servisgroup.com/

report final 2016 2

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