INTERNSHIP REPORT SUZUKI ISLAMABAD MOTORS, I-9, ISLAMABAD

Mohammad Farhan Akram

Submitted in Partial fulfillment of the requirementsFor the degree of Masters of Business Administration

At

National University of Modern Languages Islamabad, PakistanAugust, 2010

Copyright by Mohammad Farhan Akram, 2010

NATIONAL UNIVERSITY OF MODERN LANGUAGES, ISLAMABADFaculty of Management Sciences

DECLARATION

It is hereby certifies that the report has been thoroughly and carefully read and recommended to the Faculty of Management Sciences for acceptance of Final Internship Report by Mohammad Farhan Akram, 9559, session August 2008-May 2010 Morning, in partial fulfillment of the requirements for the degree of Masters of Business Administration of National University of Modern Languages Islamabad.

Dated:

Supervisor Name: _______________________ Supervisor Signature: _______________________

Panel Member Name: _______________________

Panel Member Signature: _______________________

Head of Department: ______________________

ACKNOLEDGEMENT

All praises for Allah Almighty, the most Merciful, Who guides me in lacerate and congenial circumstances, without His help one cannot reach at his destination.

My sincere gratitude to Mr. Nayyer Iftikhar (Managing Director, Suzuki Islamabad Motors) who provided me with the opportunity to work with the company for a period of eight weeks as an internee.

Then I would like to thank Mr. Faid Gul, Mr. Adnan Satti, Mr. Abdur Rehman (NUML, Islamabad) they guided me at every step and provided me with their valuable advice whenever I needed that I am very grateful for their encouragement, which enabled me to write this report.

In the end I would like to thank all the staff members of Suzuki Islamabad Motors. They have provided me with valuable information which helped me a lot in the completion of this report.

Thank You to all.

EXECUTIVE SUMMARY

Internship is like The First Flight for a young business graduate who is to enter his professional life very soon. It provides a gateway to youngsters and an insight of corporate world.The main objective of the internship is to analyze that how the theoretical framework differs from practical realities. Its main scope is that we get through the detailed study of Suzuki motors. The analysis is done about the performance of the Suzuki motors and its departments. The report begins with the introduction of the automobile industry in Pakistan and its main contributors. Heading forward specifically to the Suzuki motors who owns the major share of the Pakistans automobile industry, the detailed explanation is given about its products and services. More detailed analysis is done through financial analysis statement and its performance is analyzed on the financial side that how company is incurring profits and what is its financial position in the market.Last but not the least internship experience is being explained with the description of activities performed, problem faced by the company and recommendations are given to improve its status.The conclusion is drawn that Suzuki motors are working efficiently but they have to arrange training sessions for their employees, reward system should be introduced in order to increase the employee satisfaction and loyalty to the organization and also an up gradation of computer systems are required in this way they can excel more in the market

TABLE OF CONTENTS

Ch No:CHAPTERSPage #

01

02

03

04

INDUSTRYIndustry IntroductionBeginning of Pakistan Automobile IndustryPresent Situation of Pakistan Automobile IndustryPak Suzuki Motor Company LimitedIslamabad Auto IndustryCompetitors in Automobile IndustryFuture Outlook of Industry

SUZUKI ISLAMABAD MOTORSCompanys IntroductionVision StatementMission StatementOrganizational StructureOrganizational DepartmentsProductsServicesSuzuki Islamabad Motors Competitors

FINANCIAL SECTION3 Year Income Statement3 Year Balance SheetFinancial Ratios AnalysisVertical AnalysisHorizontal AnalysisSwot Analysis

INTERNSHIP EXPERIENCES Duties and ResponsibilitiesMajor Responsibilities in Accounts DepartmentSkills GainedChallenges ProblemsConclusionRecommendationsReferences0607080910121215

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484950525556596063

CHAPTER 1

INDUSTRYINTRODUCTION

INDUSTRY INTRODUCTION:

The automotive industry rightly prides itself on being recognized as the mother of all industries. In its folds it carries many different kinds of vehicles to provide mobility to people and goods. While they may appear to be simple machines, their design and manufacturing have much deeper roots in all the known technologies. In-depth knowledge and skillful application of mechanical, electrical, electronics, chemical and a host of other technologies culminate in achievement and improvement of the manufacturing base of a country, by focusing on a single product the automobile. This then provides an opportunity to produce a large number of goods and services for consumption of the entire community. Use of the word mother for automotive industry is therefore the most appropriate description to define the nature and importance of the industry.

In recent years, we have witnessed that the industrialization of South East Asian countries greatly depend on the development of their automotive industry. Similarly, automotive industry acted as a catalyst in the overall growth of the industry in Japan and Korea and the consequent well being of their citizens.

In the world trade, Auto Sector is one of the largest segments. It is the major driver of economic growth and business activities. It puts multiplier impacts on the economy. Day-in, day-out around 200,000 vehicles roll off the worlds assembly lines with car as the dominant segment of the industry.

THE BEGINNING OF THE PAKISTAN AUTOMOBILE INDUSTRY:

Pakistan is basically an agrarian economy since its independence. In 1947, agriculture contributed more than 62% towards GDP whereas contribution of manufacturing sector toward GDP was only 7%. Pakistan inherited only 5% of the large scale industrial facilities of British India.

First serious effort by government to develop the industry and engineering sector in particularly was observed in 1950 when a six-year plan (First Development Plan) was drafted to guide government investment in developing the infrastructure for auto industry, to overcome the initial difficulties, the government, besides developing infrastructural facilities established the Pakistan Industrial Development Corporation (PIDC) in 1950. The main objective of PIDC was to play the pioneering role of establishing such industries which the private enterprise was unable to undertake either because they were technologically complex, needed large capital or were less profitable. These steps results in growth of the industrial sector resulting 56.62 % growth of the manufacturing sector from 1949-1955. Investment in the automobile industry in Pakistan started in the mid-50 when Kandawalla Industries established its units for assembling buses and trucks, the company's name was later changed to Naya Daur Motors.

National Motors took the indigenization when it came out in the 60's and was said to have reached above 80% deletion of the Bedford lorries and trucks before it closed down.Kandawalla Motors on its part came up with Nishan, a jeep copied on the pattern of Willeys Jeep of USA by the Pakistan Army, it was said that the project was successful but was killed before the commercial production could begin.

PRESENT SITUATION OF AUTOMOBILE INDUSTRY IN PAKISTAN

It is indeed heartening that the mother has once again smiled at Pakistan. Fortunately the last 3 years have witnessed phenomenal growth in the industry in terms of technological advancements and production/sales volumes with the local contents rising as high as 90%. The industry is already employing 120,000 people, contributing more than 12 billion Rupees to GDP, contributing more than Rs. 30 billion to the national exchequer in terms of duties and taxes, attracted investment worth Rs. 52 billion including a substantial foreign investment.

Today the customers have choice to pick from a wide range of products including motorcycles, trucks, buses and cars of premier Japanese and Korean brands at internationally competitive prices which has only become possible due to local contents and availability of highly productive and inexpensive human resources. In Pakistan the automobile components manufacturing industry consists of mainly units producing original components for assembly and units produce reconditioned and original components for local use.

There are more than 800 vendors in the country with a total investment of over eight billion rupees; they are engaged in the manufacturing of original components for the assembly operation as well as producing reconditioned and original components for sale in the local market.

They manufacture and supply the local car assemblers with auto parts such as pistons, engine valves, gaskets, camshafts, shock-absorbers, struts, steering mechanism, cylinder head, wheel hubs, brake drums, wheels, bumpers, instruments and instrument panels, gears of all types, radiators, cylinder liners, blinkers, lights, doors and door locks as well as auto air conditioners.

PAK SUZUKI MOTOR COMPANY LIMITED-PSMCIn Year 2009 the demand for automobile was sluggish .The industry for cars and light commercial vehicles experienced 29% decline in the sales volume. The industry sold 107,768 units during the year against 151,517 units last year. The demand has depressed during the year due to cost push inflation resulting from depreciation of Pak rupee, limited financing by banks/leasing companies and general economics recession. Suzuki product remain popular .Despite sluggish market demand for automobile, Pak Suzuki remain market leader with 48% market share. The company launched new 1300cc car (SWIFT) in January 2010. This has been well accepted by the customers. Imported used cars do not really pose any threats to Suzuki products. Availability of spare parts at economics prices and reliable after sales service are the strength of Suzuki products. The export of Suzuki Ravi pickup to Bangladesh and exports of sheet metal parts of Suzuki Cultus to Europe going well.

As we can see in the chart above the year 2009 revenues decreased like 20 % of the previous years but the projected revenue of the year 2010 in exceeding all previous years. Despite of the sluggish demand the projected revenues of the company depict the high hopes of the management.

The Pak Suzuki Motors Companys major revenues are collective from the Authorized dealerships across the country. So if the PSMC (Pak Suzuki Motors Company Limited) continues to meet the customers requirements it will also enable the dealerships to work in profitability because the dealerships profitability (Suzuki Islamabad Motors, I-9 Islamabad) is directly related with the production of PSMC (Pak Suzuki Motors Company Limited) as per customer and societal demands.

ISLAMABAD AUTO INDUSTRY:Islamabad the capital of Pakistan has millions of auto vehicles running on its roads each day and night. For meeting the requirements of people of Pakistan, the major players of the Pakistani Automobile Industry (Suzuki, Toyota, Nissan, Mitsubishi, and Daihatsu etc) have developed and established their dealerships with the local businessmen. The industry has provided the showrooms with their vehicles in various sectors of Islamabad. Most of them are located in the Industrial Area of Sector I-9, Islamabad. As Islamabad is considered to be a city of rich people so the industry players are putting their special efforts on the availability of their vehicles to the customers. They also interact with their customers through their authorized dealerships located at various places in the city. COMPETITIORS IN AUTOMOBILE INDUSTRYThe Automobile industry has been an active and growing field in Pakistan for a long time, however not as much established to figure in the prominent list of the top automotive industries. Despite significant production volumes, transfer or technology remains low. Most cars in the country have dual fuel options and run on CNG (Compressed Natural Gas) which is more affordable than petrol in the country.There are only three major passenger car assemblers in the market; Pak Suzuki Motor Company, Indus Motors and Atlas Honda. Paksuzuki has an almost complete monopoly in the small car segment as it faces almost no competition other than the single odd Daihatsu Cuore produced by Indus Motors. In the Subcompact Sedan segment Toyota Corolla, Honda Civic, Honda City, and the Nissan Sunny are currently the only cars in production. There are still no locally made SUV (Support Utility Vehicle) , Mid or Full sized sedans available.As of 2010, Pakistan has not adopted any automotive emission or safety standards. Therefore, most cars manufactured and sold in the country are still carburettor based and do not meet any international emission standards. Many locally made cars such as Suzuki Mehran, Suzuki Cultus, Suzuki Ravi, Suzuki Bolan, Daihatsu Cuore, etc are globally obsolete cars from the 1970s or 1980s which are no longer produced or sold in any country other than Pakistan.List of currently assembled passenger vehicles:-1. Suzuki Mehran2. Suzuki Alto3. Suzuki Cultus4. Suzuki Ravi5. Suzuki Bolan6. Suzuki Liana7. Toyota Corolla8. Honda Civic9. Honda City10. Nissan Sunny11. Daihatsu CuoreAUTOMOBILE ASSEMBLERS IN PAKISTANThe following are the automobile assemblers in Pakistan Adam Motors Al-Ghazi Tractors Atlas Honda Audi Dewan Farooque Motors (including BMW Pakistan) Dongfeng Motor Corporation Ghani Automobile Industries Ghandhara Industries Ghandhara Nissan Hinopak Motors Hyundai Motors Indus Motors Company Master Motors Millat Tractors Pak Suzuki Sigma Motors S.N. Kawasaki Volvo Pakistan Limited (VPL Limited) TCM AutomobilesFUTURE OUTLOOK AUTOMOBILE INDUSTRY IN PAKISTANThe Automobile industry has been an active and growing field in Pakistan for a long time, however not as much established to figure in the prominent list of the top automotive industries.Surprisingly, despite its large size in terms of production volume, only a few car models are assembled in the country and customers have a very small variety of vehicles to choose from. The lack of competition in the auto industry due to the dominance of a few players, and restrictions on imports in the form of heavy duties has resulted in very high prices of Cars in the country.Most cars in the country have dual fuel options and run on CNG (Compressed Natural Gas) which is more affordable than petrol in the country. Despite deteriorating air quality in various Pakistani cities reaching dangerous levels, Most cars produced in Pakistan still utilize decades old carburetor based engines which have been phased out the world over for quite some time. While the world is now focusing on implementing Euro V emission standards, Pakistan has failed to adopt even Euro II emission standards as of December 2009. It has missed the earlier deadline, which was July 1, 2008 for Euro-II compliance in the case of petrol and a new deadline was set on July 1, 2009, which has yet been missed again.

But on the other hand Pakistan has the right target market and potential to match new product development, innovation and global strategies of the world automakers for Asian markets. The need in Pakistan is to take a positive step towards creating a long-term industry friendly policy to encourage local production. Joint ventures are taking place between Pakistani, Korean and Singaporean companies to undertake urban planning and handle traffic problems. The government approach in the construction of a network of highways will provide an impetus to local production.

CHAPTER 2

SUZUKI MOTORS ISLAMABAD

COMPANYS INTRODUCTION:

Suzuki Islamabad Motors, which is located in I-9 Industrial Area of Islamabad, is the authorized dealer of Pakistan Suzuki Motor Company owned by Mr.Iftikhar Nayyer and his son Mr. Nayyer Iftikhar who is a well known business man of a the city Islamabad. Mr. Nayyer Iftikhar is working on the post of Managing Director (M.D.) for the company and his father Mr Iftikhar Nayyer owns the post of Chairman of the Suzuki Islamabad Motors. The dealership was acquired from Pakistan Suzuki Motors in year 2006 and from that year the business is running successfully and providing the products of PSMC (Pak Suzuki Motors Company Limited) to its customers here in the region of Islamabad.MAP:

VISION STATEMENT

To be excellent all around

MISSION STATEMENT

To provide our principals products to their customers in Islamabad region, and act as an efficient agent between the industry and the ultimate consumer.

ORGANIZATIONAL STRUCTURE

The Chairman Managing Director FinanceServiceSales and MarketingBody ShopFinance ManagerService ManagerSales ManagerBody Shop ManagerS U P P O R T I N G S T A F F

The flow of information starts from The Chairman Mr. Iftikhar Nayyer which then reaches The Manager Director Mr. Nayyer Iftikhar. The Managing Director of the controls the company as a head of all 4 departments of the organization. The information then floats down to the concerned departments i.e., Finance, Service, Sales and Body Shop.

ORGANIZATIONAL DEPARTMENTS:FINANCE DEPARTMENT:The Finance Department is headed by Mr. Nayyer Iftikhar who is holding dual position in the organization i.e., The Managing Director and the head of Finance Department. He looks after the financial matters of the company as the head of finance and looks after the smooth running of the business as the Managing Director. His supporting staff in finance department includes Mr. Mohammad Khan & Ms. Beenish. The head of Finance department reports to the Chairman.

SERVICE DEPARTMENT:The service department is managed by Mr. Basharat Hussain. He is working with the organization for more than 2 years now. Service department of the organization includes all the maintenance services that are being provided to the customers. The supporting staff of the Mr. Basharat Hussain includes a foreman, service advisor, warranty advisor and labors. The Service Manager, reports to the Managing Director.

SALES & MARKETING DEPARTMENT:Sales & Marketing department of the organization is headed by Mr. Kazafi. His service for the organization comprises of 4 years. The supporting staff includes Mr. Tayyab Abbasi, Mr. Junaid Zia & Ms. Sumera Sarwar. This department is responsible for developing the business and increasing the sales of the organization. The department has also hired agents to work on behalf as B.D.O. (Business Development Officer).

BODY SHOP:The body shop department is headed by Mr. Rameez Khan. His service for the organization comprises of 3 and a half years. The major responsibility of this department is to provide body parts installation and delivery of the vehicle to the customers. This department comprises of a foreman and various laboring individuals.

PRODUCTS

Suzuki Islamabad Motors sales following vehicle products of Paksuzuki Motor Company Limited-PSMC:Swift (1300cc) Price: Rs. 1,049,000/-

The European inspired exterior givesSwift a distinctive look. A uniquestylish and design that turns a headwhere you go. The spirited engine makesfor exhilarating drive and gives you ultimate freedom where the road takes you.Colors:Pearl Red, Graphite Grey, Solid white,Indigo, Silky Silver, Aqua Blue, Eminent Blue

Liana (1300 &1600cc)Price: Rs. 1,230,000/-

The Suzuki Liana available in 1300 cc manual transmission and 1600cc automatic transmissiontakes you out of ordinary and into the realm. Liana is entirely different car, its style; dimension and comfort will inspire you to see every day as an open door to a new age.

Cultus (1000cc)Price: Rs. 897,000/-

Cultus is the blend of space and craft.Its trim body Conceals ample space &flexblity for both passenger and storage.Cultus ensures everyone, exceptionalValue and quality.

Colors:Pearl Red, Graphite Grey, Solid white,Indigo, Silky Silver, Aqua Blue, Eminent Blue

Mehran (800cc)Price: Rs. 514,000

Unrivalled in its class, Mehran is Pakistans largest selling car. More smart features like head turning lamp, matching front grill and a two spoke steering wheel gives it the tidy look. Functional economy, peak performance or unmatched fuel efficiency, Mehran VXR is the leader.Colors:Pearl Red, Graphite Grey, Solid white, Silky Silver, Eminent Blue

APV (1500cc)Price: Rs. 1,775,000APV 1500 cc (Imported) The New APV givesyou everything you ever wanted in your vehicle. Spacious interior for comfort, tough engine to carry large loads and plenty of room for passengers to enjoy a comfortable day long ride.Colors:Pearl Red, Graphite Grey, Solid white,Indigo, Silky Silver, Aqua Blue, Eminent Blue

Bolan VanPrice: Rs. 609,000The Suzuki Bolan Hi-roof gives you everythingyou ever wanted in a van. Spacious interior forcomfort, tough engine to carry large loads andplenty of room for passengers to enjoy a comfort-able day long ride. Air-conditioned model

Ravi (800cc)Price: Rs. 489,000RAVI Pick Up 800cc Suzuki Ravi is the veritable cargo vehicle with an amazing capacity for load bearing and durability. Undoubtedly, the unrivalled commercial vehicle in its class, Ravi is the bread winner for millions in Pakistan. This light commercial vehicle referred to as the mini revolution, replaced the animal-drawn vehicles in Pakistan.Colors:Pearl Red, Solid white, Silky Silver

Jimmy (1300cc)Price: Rs. 1,850,000

Jimmy 4x4 Jeep 1300cc imported steady, sturdy and smart with new white tread brings you the ultimate pleasure of a real 4-wheel drive.

Alto 1000 ccPrice: Rs. 680,000 /-

Smooth-riding comfort. Functional and easy to use. Sharp looks. Offering maximum efficiency and powered by a 1.0-litre engine delivering peppy acceleration and responsive performance, the Alto fully responds to todays driving needs in smart and stylish fashion. An exciting set of new features now make the Alto even more stylish, more convenient and more comfortable.

LUBRICANTSShell Automobile Lubricant:Price Ranging from: Rs. 600 - 3000

Caltex Automobile Lubricant:Price Ranging from: Rs. 800 - 3000

PSO Auto Lubricants:Price Ranging from: Rs. 600 5000

Attock Petroleum Auto Lubricants:Price Ranging from: Rs. 800 4000

SERVICESDenting

Painting

Maintenance

SUZUKI MOTORS ISLAMABAD COMPETITORS

SUZUKI FEDERAL MOTORS:Plot No. 8-Khayaban-e-Suharwardhy, Sector G-6-1/1, Islamabad.

SUZUKI AZIM MOTORS:94-B, Street No. 7, I-10/3, Islamabad

CHAPTER 3

FINANCIAL SECTION

3 YEAR INCOME STATEMENT

ITEM200820092010

REVENUE:Commission from saleFrom Labor ServicesFrom LubricantsFrom Used CarsRs.8,850,0004,880,0001,050,0007,470,000Rs.5,500,0004,220,000770,6506,885,357Rs.7,575,340 5,360,2221,185,9675,540,657

Total Revenue22,250,00017,376,00719,662,186

Less: Cost of Sales12,390,0009,350,00010,520,666

Gross Profit9,860,0008,026,0079,141,520

Less:SalariesAdmin ExpensesGeneral ExpensesFreight ExpenseDepreciation UtilitiesTotal Expenses:1,112,000550,320532,4911,536,689322,000804,0003,857,5001,210,000520,900490,5561,480,058322,000915,4304,938,9441,150,000510,963390,3651,658,657306,6401,005,5625,022,187

EBT6,002,5003,087,0634,119,333

Less: Taxes @ 35 %2,100,8751,080,4721,441,766

Net Profit3,901,6252,006,5912,677,567

3 YEAR BALANCE SHEET OF THE COMPANY:

ITEM200820092010

ASSETS:

CURRENT ASSETS:Cash/BankAccounts Receivable Prepaid ExpensesAutomobiles Inventory Current Assets

FIXED ASSETS:LandBuilding (Less: Depreciation)Furniture Fixtures & Computers (Less: Depreciation)Tools and EquipmentFixed AssetsRs.

5,000,0002,500,000500,00014,000,000___180,00022,180,000

8,000,0004,885,000

685,000

_2,400,00015,970,000Rs.

6,500,0002,153,000350,0009,000,000___380,00018,383,000

8,000,0004,770,000

670,000

_2,208,00015,648,000Rs.

5,200,0002,300,000375,00018,450,000___420,00026,745,000

8,000,0004,655,000

655,000

_2,031,36015,341,360

TOTAL ASSETS38,150,00034,031,00042,086,360

LIABILITIES:

CURRENT LIABILITES:Notes PayableAccounts PayableOther short term liabilitiesCurrent Liability

CAPITAL: Owners EquityAdd: Retained Earnings

7,000,0004,500,00012,500,00024,000,000

10,248,3753,901,62514,150,000

5,900,0003,200,00011,000,00020,100,000

11,924,4092,006,59113,931,000

6,350,0003,800,000_3,000,00023,150,000

16,268,793_2,677,56718,936,360

TOTAL LIABILITIES 38,150,00034,031,00042,086,360

FINANCIAL RATIOS & TREND ANALYSIS:LIQUIDITY RATIOSCURRENT RATIO:Current Assets / Current LiabilitiesYEARRATIO

20080.92

20090.91

20101.15

INTERPRETATION: An indication of a company's ability to meet short-term debt obligations; the higher the ratio, the more liquid the company is. Here in Year 2008 the ratio was 0.92 : 1 which means the company has Rs. 0.92 to pay off their short term liabilities of Rs. 1. In year 2009 it reduced 0.1 but in year 2010 it increased to 1.15, this means the company has Rs. 1.15 assets to pay off their short term liabilities of Rs. 1QUICK RATIO:Quick Assets / Current LiabilitiesYEARRATIO

20080.89

20090.87

20101.12

ACKNOWLEDGEMENT

Quick Assets = Current Assets (Inventory + Prepaid Expenses)

INTERPRETATION: The Quick Assets are those which can be converted into cash with in the period of 90 days. This ratio also means that the company has quick assets in order to pay off their liabilities. The situation here is the same, in the first two years i.e., 2008 and 2009 the company has Rs. 0.89 and 0.87 quick assets to pay off their short term liabilities but in year 2010 the ratio increased to 1.12 means now the company has Rs. 1.12 quick assets to pay off their short term liabilities of Rs. 1

PROFITABILITY RATIONET PROFIT MARGIN:Net Profit / Sales*100YEARRATIO

200817 %

200911.54 %

201013.61 %

INTERPRETATION: Net Profit Margin Ratio tells us about the percentage of Net Profit in the amount of Sales.In this case in year 2008 the N.P Margin was 17 % that means it was the percentage of Net Profit in the amount of Sale. In the next year it reduced to 11.54 % and in third year it went to 13.61 %

GROSS PROFIT MARGIN: Gross Profit / Sales * 100YEARRATIO

200844.31 %

200946.19 %

201046.58 %

INTERPRETATION: Gross Profit Margin Ratio tells us about the percentage of Gross Profit in amount of Sales. In this case in year 2008 the G.P Margin was 44.31 % that means it was the percentage of Gross Profit in the amount of Revenue. In the next year it increased to 46.19 % and in year 2010 it goes 3 year high at 46.58 %.

ACTIVITY ANALYSIS RATIOS:ASSETS TURNOVER RATIO:Sales / Total AssetsYEARRATIO

20080.58 times

20090.51 Times

20100.46 Times

INTERPRETATION: The asset turnover ratio calculates the totalrevenuefor every dollar of assets a company owns.Here in this case, in year 2008 the ratio was 0.58 : 1 which means that by utilizing Rs. 1 Assets the company generates Rs. 0.58 in year 2009 it reduced to Rs. 0.51 and in year 2010 it reduced to Rs. 0.46

ACCOUNTS RECEIVABLE TURNOVER:Sales / Av. Accounts Receivable YEARRATIO

20097 Times

20108 Times

INTERPRETATION: By maintaining accounts receivable, firms are indirectly extending interest-free loans to their clients. This is the ratio of the number of times that accounts receivable amount is collected throughout the year. A highaccounts receivable turnover ratioindicates a tight credit policy. A low or decliningaccounts receivable turnover ratioindicates a collection problem, part of which may be due to bad debts. Here in this case, in year 2009 the accounts receivable were collected 7 times and in year 2010 the company collected them 8 times

RETURN ON ASSETS: Net income / Sales x Sales / Average Total Assets YEARRATIO

20095.5 %

20107 %

INTERPRETATION: An indicator of how profitable a company is relative to its total assets.ROA gives an ideaas to how efficientmanagement isat using its assets to generate earnings. So in year 2009 the return on the assets were 5.5 % and in year 2010 it increase to 7%

RATIO ANALYSIS:

RATIO200720082009

Current Ratio0.920.911.15

Quick Ratio0.890.871.12

N.P Margin17%11.54%13.61%

G.P Margin44.31%46.19%46.58%

Assets T/O0.580.510.46

A/R T/O-78

R.O.A-5.5%7%

VERTICAL ANALYSISVertical analysisis the procedure of preparing and presentingcommon size statements.Common size statementis one that shows the items appearing on it in percentage form.

INCOME STATEMENTITEM200820092010

Net Revenue100 %100 %100 %

Cost of Sales55.6853.8153.51

Gross Profit44.3246.1946.49

Salaries56.965.85

Admin Expenses2.473.002.60

General Expenses2.392.821.99

Freight Expense6.98.528.44

Depreciation 1.441.851.56

Utilities3.615.275.11

EBT2717.7725.54

Taxes 9.446.227.33

Net Profit17.5311.5513.62

An application of the vertical analysis idea is to place all items on the income statement in percentage form in terms of sales. Here we can see that the revenue is kept 100 % in all three years and the percentages of various other items are determined in respect of total revenue. If we see the item Cost of Sales in all three years, in year 2008 it was 55.68 % of sales, in year 2009 it reduced to 53.81% of Revenue and in slightly moved down in year 2010 to 53.51% of sales of the respective years. If we take Gross Profit in year 2008, 2009 and in year 2010 it was 44.32%, 46.19% and 46.49% of Revenue. By subtracting all the operating expenses we come to net profit in year 2008, 2009 and in year 2010 the net profit was 17.53%, 11.55% and 13.62 % of Net Revenue BALANCE SHEET

One application of thevertical analysisidea is to state the separate assets of a company as percentages of total sales.

ITEM200820092010

Current Assets58.1454.0163.54

Non Current Assets41.8645.9936.46

Total Assets100 %100 %100 %

Current Liability62.9059.0655.00

Owners Equity26.8635.0438.65

Retained Earnings 10.245.906.35

Total Liabilities100%100%100%

While working in Balance Sheet with Vertical Analysis we keep Total Assets and Total Liabilities as 100 % and we take out the relative importance of the Current and Non Current Assets in the company financial statements.

YEAR 2008:

In this year the current assets were 58.14 % of Total Assets where as the Non Current Assets of the company were 41.86 % of Total Assets i.e., 100 % The Current Liabilities Owner Equity and Retained Earning were 62.90 %, 26.86% and 10.24% of Total Liabilities.

YEAR 2009:In this year the current assets reduced to 54.01% as compared to Year 2008, Non current assets increased to 45.99 % as compared to Year 2008. And in year 2009 Current assets and Non Current assets were 54.01% and 45.99 %. Current Liability also decreased to 59.06 as compared to year 2008. Owners equity increased and retained earning were reduced as it was mentioned in the introduction that in year 2009 the automobile industry faced some depression hence it reduced the companys retained earnings.

YEAR 2010:In this year we can witness the increasing of Current Assets as compared to previous year and reduction of Non Current Assets. Current Liability also decreased and a slight increase in the owners equity and increase in the retained earning can be seen as the demand for the cars in year 2010 increased.

HORIZONTAL ANALYSISComparison of two or more year's financial data is known ashorizontal analysis. In this analysis we keep one year as base and we examine the changed of the respective items in the next years. ITEM200820092010

Net Revenue100 %(0.22)(0.12)

Cost of Sales100(0.25)(0.15)

Gross Profit100(0.19)(0.07)

Salaries1000.090.03

Admin Expenses100(0.05)(0.07)

General Expenses100(0.08)(0.27)

Freight Expense100(0.04)0.08

Depreciation 1000.00(0.05)

Utilities1000.140.25

EBT100(0.49)(0.31)

Taxes 100(0.49)(0.31)

Net Profit100(0.49)(0.31)

In this analysis year 2008 is being kept as base and we see the relative changed in the next years by keeping it a base. If we assume that the revenue of the year 2008 is 100 % in year 2009 it reduced by -0.22 % and in year 2010 the reduction of Net Revenue as compared to year 2008 is by -12% and same goes for the rest of the items.

BALANCE SHEET

ITEM200820092010

Current Assets100 %(0.17)0.21

Non Current Assets100 (0.02)(0.04)

Total Assets100 (0.11)0.10

Current Liability100(0.16)(0.04)

Owners Equity1000.160.59

Retained Earnings 100(0.49)(0.31)

Total Liabilities100(0.11)0.10

Same concept is being followed here in Balance Sheet, 2008 year was kept as base year and the relative changes are being observed from here. For instance, Current assets were 100 % in year 2008 the reduction in year 2009 was by 17 % and in year 2010 the increase was by 0.21 % of the base year amount and same goes for rest of the items.

SWOT ANALYSIS

STRENGTHS:

Suzuki motors have following strengths over other companies of same industry. Highest Market Share Low Price Vehicles Highly Innovative and deep product link Well Managed and highly competitive staff Easy availability of spare parts Public demand for Suzuki cars.

WEAKNESSES:

Increasing Accounts Receivable

Lack of training of employees

Reflect economic crises

OPPORTUNITIES:

Increasing Demand for Cars Provision of cheap services Opportunity to improve skills

THREATS:

Uncertain economic competition. Political instability. Increase in cost expenditure of car assembling and making Growing global technological advancement. Change in preferences of customers. Suzuki motors can overcome these threats by:

1. Create awareness in the target market with cost effective media promotions.2. Delivering benefits better than any actual or potential customer.

CHAPTER 4

INTERNSHIPEXPERIENCES

I started working in Suzuki Islamabad Motors on 1st June, 2010 on the post of Internee Officer for the period of 8 weeks internship for the completion of my Masters of Business Administrations degree. Mr. Nayyer, Managing Director of the organization conducted my interview on the day prior to my appointment as the Internee Officer and as per my previous work experience and degree field I was posted in the Accounts Department of the organization.

DUTIES AND RESPONSIBILITIES

ACCOUNTS DEPARTMENT:I joined the Accounts section of the organization on 1st June, 2009 and worked under supervision of Finance Head Mr. Nayyer and in collaboration with Mr. Mohammad Khan & Ms. Beenish for the period of 8 weeks. I was responsible of recording the accounting entries directly into the software, their posting into the ledger accounts, extracting trial balance and making financial reports. I have worked on the accounting cycle which is very beautifully explained in the following diagram:

For the purpose of completing the accounting cycle, Suzuki Islamabad uses computing software which is named as Sun Solaris Accounting System in which all the accounting functions are built-in.

MAJOR DUTIES IN ACCOUNTS DEPARTMENT:1. Revenues when received in form cash or in cheque they are transferred into separate collection account. All these amounts get credited in the system automatically. For collection company uses 45813 code number, which gets transferred into the Ledger Accounts automatically. Revenue is the main head which comprises of many other revenue accounts like Commission from Sale of Cars, Labor Charges, Revenues from Sale of Lubricants, Revenues from sale of used cars etc. All of these accounts have their own sub-codes. Revenues are recorded in their respective codes.

2. Expenses paid through cash or cheques are posted to the main head of expense account i.e., General Disbursement Account code-45814. Which is comprised of sub-account with their codes Sub-accounts are like Salaries, Commission, Admin Expenses, General Expenses, Freight Expense, Depreciation & Utilities Expenses etc Expenses are charged to their respective codes.

3. Petty cash is also maintained in the accounts section by the system. For this purpose invoices are attached with the petty cash voucher having details of the expense along with the details of payee. Now these expenses will be posted in to the separate petty cash head code number: 92105.

4. At the month end the company obtains the ledger balances of the accounts used in the month.

5. Using these above ledger balances the system automatically generates the income statement and the balance sheets.

6. I was also responsible of filing up the documents in their respective files along with the voucher and attached source documents with the signature of the accounts head.

SKILLS GAINED OFFICE WORKING SKILLS:I had to maintain vouchers, registers, perform some other documentation, as well as work on the system. Thus I learned manual as well as the system office working skills.

TEAM WORK:During my stay in the organization I have learned how to work in a team oriented workplace. Teams work plays an important role in a modern organization. From software engineers who collaborate to write code to the boards of directors who gather to make strategic decisions, teams are increasingly being used worldwide as the foundation of work.

ORGANIZATION NORMS AND VALUES:Norms are the general expectations of a demand character for all role incumbents of a system or subsystem. Values are more generalized ideological justifications for roles and norms, and express the aspirations that allegedly inform the required activities. During my stay in the workplace I have learned how to follow the organizations norms and values by aligning my self with the organizations norms and values. Flexibility in nature is the essence of following norms and values of an organization.

QUALITY OUTPUT AND COMPETITIVENESS:Todays age is full of competition and competitiveness; I have learned that if I want to stay in the organization and make the management happy through my performance I should have to give quality output and stay competitive to compete with my fellow co-workers.

INNOVATION:Innovation is the key to success; I have learned how innovation leads to happiness of management.

ACCOUNTING SOFTWARE:Working in accounting software was totally new for me because previously I have been doing all the accounting work manually. I have learned the ways how to operate the accounting software in this organization.

ACCOUNTANCY SKILLS:I have learned how to use the accountancy skills that I have learned in my study period. That includes the whole accounting cycle. ORGANIZATIONAL BEHAVIOR SKILLS:I have learned how to behave in the organization which I have studied in the subject of my final semester i.e., Organizational Behavior, the skills I have gained during the study period were implemented and went successful.

PRESENTATION SKILLS:Presentation skills I have gained during my study time were used by me in the organization.

COMMUNICATION SKILLS:Communication skills were also gained during my study time which I used in the organization for both upward communication and downward communication.

COMPUTER AND TECHNICAL SKILLS:Computer and technical skills I have gained from my personal experiences were also used by me during my stay in the organization.

SELF-MANAGEMENT SKILLS: Self-management refers to methods, skills, and strategies by which individuals can effectively direct their own activities toward the achievement ofobjectives, and includesgoal setting,decision making,focusing,and planning. I have used the Self Management skills in order to achieve my goals and objectives for the period of my internship.

STRESS MANAGEMENT:Stress Management is a topic which I have studied in my course of Organization Behavior and I have implemented it in my course of work during my internship in the organization. CHALLENGES:

PRACTICAL WORK AND THE BOOKISH KNOWLEDGE:Studies educate student about the theoretical features of practical work this is so students face difficulties in the real life situations of the organization. So being a fresh student I encountered different sorts of problems that were challenging for me.

ADJUSTING WITH THE EMPLOYEES:The organization was completely a diverse one, the employees were from diverse background on the basis of race, color and ethnicity. So I have faced major difficulty in settling with them.

LACK OF KNOWLEDGE ABOUT THE AUTOMATED ACCOUNTING SYSTEM:The organization was using Sun Solaris Accounting System for their accountancy needs, I had almost no knowledge regarding it. It was a biggest challenge for me to understand the working of that system.

PROBLEMS:I have faced the following problems during my stay in the organization:

OFFICE ENVIROMENT:The environment of the company is very political and professional jealousy also exists in the organization.

DISTRIBUTION OF WORK:Distribution of work is not proper. Some people are overburdened with work.

OBTAINING THE SOURCE DOCUMENTS & MISAPPROPRIATION OF THE EXPENSES MADE:The problem I have faced most is obtaining of the source documents of the expenses made which was a major responsibility of mine. I was required to file up the expense voucher with the source document in the file.

DELAY IN DECISION MAKING:The company is following a semi centralized structure in the organization it takes days to make a decision because of complex organizational structure.

EMPLOYEE PARTICIPATION IN ACRS:Employees were not given complete knowledge about their ACRs. They were not aware of the basic elements on which the ACRs are based upon. LOW LOYALTY OF EMPLOYEES:The loyalty of employees was low due to lack of confidence over the employees by the management.

LACK OF TRAINING PROGRAM:The organization does not provide proper training to employees of service and body shop department as they are the back bone of the second highest revenue generation head of the company. Company also lacks training programs for their sales staff.

LACK OF HEALTHY ENVIRONMENT:In the office section the organization maintain the healthy environment for the employees but on the other hand the situation in the workshops is opposite of it the labor lack basic kits. First aid kits are not provided either.

OUT DATED COMPUTER SYSTEMS:The computer systems which are in use are mostly out dated, they take lots of time in executing the commands like printing, scanning etc.

UNFRIENDLY ENVIRONMENT OF THE MANAGEMENT:The organization is not keeping a friendly environment with their employees; they often complain about this system with each other, this is also reducing the employee loyalty. LACK OF SECURITY MEASURES:Terrorism problems are increasing with every passing day the premises of the organization lacks security measures.

INCREASING OPERATING EXPENSES:Companys Operating expenses are increasing from year 2008 to year 2010.

LACK OF REWARD SYSTEMS:

Rewards are a mean of increasing the employees loyalty to the organization and the company lacks this system.

CONCLUSION:From the above analysis and my working experiences in Suzuki Islamabad Motors I can easily say that the organization is using modern day techniques in operations & in working. As we know that no such organization in the world is free from problem. It is the responsibility of management to cope with the problems and resolve them for the growth of the organization. The managers realize the problems but they have not given proper opportunity to implement their strategies in their respective departments. The top management also has to realize the prevailing situation in the organization; they have to listen to their employees as they are the major stakeholders of the policies which are being implemented by the organization.

Upon some problems the organization also has some good aspects of it like, beautiful premises, strong customer relations, deep product line of Pak Suzuki Motors Limited is placed in the organizations showroom.

During my internship I have learned many new things in spite of the knowledge gained at university and also came to conclusion that education alone is not enough, practical training in every field is crucial to become a successful manager.

The automobile sector is one of the fastest growing sectors of the country, but the implication of new taxes by the government will surely going to hurt it, which will ultimately reduce the profits of dealership businesses like Suzuki Islamabad Motors.

RECOMMENDATIONS:

Following are the recommendations to the above stated problems:

The problem of obtaining the source documents and misappropriation of expense from can be solved by issuing the expense voucher before making the actual expense by forecasting the expense amount and they should be paid in advance.

The delay in decision making is being caused by the complex centralized structure of the organization. The organization can solve this matter by giving autonomy and liberty to the managers so that they can make timely decisions regarding their department matters.

The biggest problem regarding ACRs is that the employee does not know that which factor contributes most in his ACR, whether its punctuality, output, obeying of orders, general behavior etc. The employees should know about the factor that is contributing in making his ACR so the managers should let the employees know about the contributing factor on which the ACR is based.

The loyalty of the employees was extremely low the reason was they were not being trusted by the management. The management should put their trust on the organizations employees in order to gain the organizational loyalty.

Training polishes the individuals skills and also helps them in obtaining the new skills. For the body shop and the maintenance department the company should appoint a well-trained instructor for the illiterate denters and painters so that he could watch the workers and observe their problems and give proper training to them by arranging training sessions and same should be adopted for rest of the staff.

Environment plays vital role in the productivity of an employee, the organization lacks the proper kits for the workers they should be provided their proper kits with gloves and helmets and they should ensure the safety of the employees by installing fire extinguisher in the premises especially in the work shops.

Most of the clerical work is being done over the computers and most of them were out dated. The organization should scrap the previous computer systems and replace them with new and latest ones, in order to get maximum out of it.

The environment of the organization should be made friendly with the employees by giving them proper time, listening to their problems and solving them in the best way the managers can.

Company is lacking the security measures, walkthrough gates should be installed along with other metal detectors to ensure the safety of the employees as well as the building.

The operating expenses are increasing, most of the employees waste printing papers and other stationary items. There was no proper check and balance over it. Company has to focus her attention towards it by implementing proper check and balance.

The reward systems should be implemented in the organization, intrinsic or extrinsic rewards should be given in order to gain more loyalty of the employees, which could be gained by making a monthly prize of employee of the month award from each department.

Above are the recommendations that I would make to the company. Acting upon them will surely increase their employee satisfaction, loyalty and their interest in work also their productivity which will ultimately increase the companys productivity in means of profits and also in means of the good will.

REFERENCES:

Ghani M.A Advance Accounting 3rd EditionSondhi Fried Analysis of financial statement 3rd EditionBrigham & Houston Fundamental of Financial management 10th EditionBrealey Myers Marcus Fundamental of Corporate Finance 4th EditionUma Sekaran Research Methods for Business 4th EditionFred Luthans Organizational Behavior 11th Edition.

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