Pel

Pak Elektron Limited
PREFACE
It is important to adjust in the working environment of the professional organization for the MBA
students to do at least six weeks internshipo in any concern and to get familiarized with the ways
to live in the organizational environment which is dramatically different from the educational
environment. During this period students were attached with different departments to get the
understanding of the business of the organization. I have also been assigned to do internship of six
weeks period in Consumer Financing Division of Pak Elektron Limited in Lahore.
It has enabled me to understand the practical scenario and sharpen our decision
making power and utilizing the resources in an effective manner, so that our resources
generate maximum profit.
In preparing this report, I have put all of my best efforts and tried my level best to give
maximum knowledge. Despite of my all the coherent efforts, I do believe that there
will always be a room for improvement in the efforts of learner like me.
Ali Abid Taqi
Executive Summary
The Pak Electronic Limited is Public Limited Company with the objective of initially producing
transformers, switchgears and electric motors. After the conclusion of Joint Venture Agreement
with AEG the majority of share holding was acquired by Saigol Group.
The designing and production of the equipment was carried out jointly by AEG experts and PEL
personnel.
During my stay at PEL, I found it a very thriving and up going institution in all ways, especially
in Appliances. Last year its pure Profit of PEL was 582 which is 131% of last year profit. This is
result of un-tired hardships of management and revolutionary steps taken by top management.
During my stay I learnt a lot about practical marketing. For this I am really thankful to my
immediate bosses, managers at PEL, I learnt how to deal with clients, colleagues, how to perform
tasks given by my boss. My daily obligations were preparation of daily sales, collection, stock,
dispatch report, Filing of documents according to their respective folders, checking emails and
replying them, preparation of reports regarding different issues. Although PEL is doing very well
in each and every sector/department, but there is also some options of betterment in existing
system, so there are some recommendations for department after looking deep inside.
I have gone through the detailed investigation of the financial analysis of the same organization
and I have analyzed that company is stable regarding profitability and liquidity.
At the end, if I have to talk about SWOT analysis of PEL then the organization is enjoying more
strengths over the weaknesses and more opportunities as compare to threats. The bottom line is
that organization is going up in a rising tone.
INTRODUCTION TO ELECTRONICS INDUSTRY

The first and the second World Wars gave a considerable boost to the way the electronics science
has advanced. Governments of rival countries invested a lot of money in the technology of
military industry. On other hand, they wanted quick solution and were looking for long-range
developments. The first half of the 20th century was the era of the vacuum tubes in electronics.
Using the tube permitted the development of radio, long-distance telephony, television and even
the first computers. Therefore, the varieties of vacuumed electron tubes were the central device in
the electronics system of that time.
Actually, electronics have won our hearts. We wake up with the ring of electronic clock, drink
coffee from an electronic coffee machine, work with computers, learn by using video conferences,
and listen to the music from a sound system and go to sleep while adjusting our electronic watch
for tomorrow morning. It is hard even to think that only a hundred years ago our world seemed
different at all from this point of view. But how did the electronics revolution begin? Which
research and discovery was the basis for this modification? Why was it so fast, relatively to other
developments in history?
Recently we have witnessed the biggest event in the history of electronics the invention of the
semiconductor devices. It made a real revolution in the world of electronics.
The semiconductors are small, accurate and low cost devices. Transistors and diodes are made of
crystalline solid materials, which have electrical properties that is capable of variations, an
extremely wide range, by the addition of little quantities of other elements like resistors,
inductors.
Since 1960, transistors have quickly supplanted vacuum tubes. Electronic system became more
complex and smart. This fact, together with the need for compact, lightweight electronic missile
guidance systems, led to the invention of the integrated circuit (IC). This invention was the result
of Early ICs contained about 10 individual semiconductor elements but their number rapidly
increased during next ten years.

Government of Pakistan has included the electronics sector in its Medium Term Development
Framework (MTDF). The government has planned to help develop an international quality
indigenous supply chain and to raise the share of electronics in the output of the manufacturing
sector from under 3% at present to 10% in 2010 & to 20% in 2020.
Pak Elektron
Pakistan Cables
Pak Telephone
Siemens Pak
Singer Pak
INTRODUCTION TO SAIGOL GROUP

The Saigol Group is located in Lahore, Punjab, Pakistan. This group is owned by the Saigol
family of Pakistan, and owns a number of domestic automobile and textile plants.
Saigol group headed by Nasim Saigol is perhaps Pakistan's biggest group in engineering goods
industry with projects on the anvil for a car assembly plant with Daewoo and motorcycle
assembly plant with Qingqi group of China. It is also the biggest manufacturer of air conditioners,
deep freezers and electric good supplied to WAPDA.
List of companies of Saigol Group
Kohinoor Textile Mills

Pak Elektron Ltd. (PEL)
Kohinoor Power Company
Kohinoor Energy
Saigol Computers (Private) Limited
Kohinoor Motor Works Limited
INTRODUCTION OF PAK ELEKTRON LIMITED PEL

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On the engineering side, PEL Group is the flag carrier of the Saigol Group. Products
manufactured by PEL have always been of a high standard and the name PEL is synonymous with
QUALITY all over the Pakistan. The products of PEL are known for their high standard,
Consumer and Power products it was in early 70s that PEL became known in overseas markets
due to its quality and the company started its exports to countries like Saudi Arabia, Dubai, Qatar
etc. Later on PEL supplied electrical equipment to various other countries in Middle East, Far
East and Africa with great success. At the same time within Pakistan, PEL equipment was chosen
for such vital projects as Mangla Power Station, Tarbela Power Station and Combine cycle Kot
Addu Power Station, PEL for the first time in Pakistan, developed Dry Type Power Transformers
up to 750 KVA rating, meeting high safety and design standards.
Subsequently PEL developed portable Generating Sets and specialized D.C. Motors etc of various
capacities for Army use and entered in the phase of manufacturing equipment meeting strict Army
standards.
In 1981, PEL window type air conditioners were introduced in technical collaboration with
General Corporation of Japan.
In 1986-87, the company started manufacturing of refrigerators in technical collaboration with
M/s IAR-SILTAL of Italy.
In 1987, PEL deep freezers were also introduced in technical collaboration with M/s Ariston of
Italy
In 2006, the Company has started manufacturing of split type air conditioners of various
capacities as the customer choice has shifted from window type to split type. The product has
been well received in the market. This encourages the company to multiply its production in the
coming year.

Today, PEL has become a household name. Its products are not only in great demand in the local
market but the Company has started exporting its appliances division products.
The company comprises of two divisions:
Appliances Division
Power Division
APPLIANCES DIVISION
This Division of PEL consists of appliances manufacturing.
PEL Air Conditioners
PEL window-type air conditioners were introduced in 1981 in technical collaboration with
General Corporation of Japan. Ever since their launch, PEL air conditioners have a leading
position in the market. PEL air conditioners cooling performance has been tested and approved by
Copeland and ITS USA. With the shift of users preference from window type to split type air
conditioners, PEL has started manufacturing split type air conditioners.
PEL Refrigerators
The manufacturing of refrigerators started in 1986-87 in technical collaboration with M/s IARSILTAL of Italy. Like the air conditioner, PEL's refrigerators are also in great demand. Today,
PEL Crystal has 30% market share. Its cooling performance is tested and approved by Danfoss,
Germany and its manufacturing facility is ISO 9002 certified by SGS Switzerland.
PEL Deep Freezers
PEL deep freezers were introduced in 1987 in technical collaboration with M/s Ariston of Italy.
Because of durability and high quality, PEL deep freezers are the preferred choice of companies
like Unilever.
POWER DIVISION
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PEL Power Division manufactures energy meters, transformers, switchgears, Kiosks, compact
stations, shunt capacitor banks etc. All these electrical goods are manufactured under strict quality
control and in accordance with international standards.
PEL is one of the major electrical equipment suppliers to Water and Power Development
Authority (WAPDA) and Karachi Electrical Supply Corporation (KESC), which are the largest
power utilities in Pakistan.
In spite of stiff competition from emerging local and multinational brands, PEL Group's
appliances and electrical equipments have remained in the spotlight due to constant innovation.
Strategic partnership with multinationals of repute have enabled the PEL Group to incorporate
new technologies into existing product ranges, thus giving the Pakistani market access to
innovative, affordable and quality products.
VISION
To Excel in Providing Engineering Goods and Services through Continuous
Improvement
MISSION
To provide quality products & services for complete customer satisfaction and to
maximize returns for all stakeholders through optimal use of resources
To focus on personal development of our employees to meet future challenges.
To promote good governance, corporate values and a safe working environment with
a strong sense of social responsibility
OBJECTIVES OF THE ORGANIZAION
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The objectives and mission for which the company is established are as following:
To carry on the business or businesses of manufacturing, selling, installing,
maintaining designing and dealing in all kinds of electrical equipment.
To carry on any business whether manufacturing or otherwise which maybe found
convenient to undertake in connection with or in addition to any of these objectives
mentioned above?
To do all such things that is incidental for the attainment of the above objectives or
any of them.
To produce high quality and standard products.
To produce equipment to be used in numerous projects of national importance.
To secure a high share / quota of WAPDAs demand for power products.
To produce skilled workers and technicians through its apprenticeship schemes and
training programs for engineers and technicians.
Organizational structure
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DEPARTMENTS
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Human Resource Department

Appliances Division
Power Division
Finance Department
Accounts Department
i. Payroll Section
ii. Purchase Section
iii. Sales Section
iv. Costing Department
v. Book Keeping
Consumer Marketing & Credit Control Department
Industrial Relations and Administrations (IR & A)
Department of Information Technology
Import and Commercial FP
Human Resource Department

Manage the people at work is called human resource management The Human Resource
Department basic function is selection and recruitment Performance appraisal and setting the
goals are also the function of this department. This department is deals with the executive but the
IR&A deals with the workers
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Structure of HR Department:
Functions of HR
There are following functions performed by HR
1. Recruitment and selection
2. Performance appraisal
3. Hiring and firing
The recruitment and selection team consist three teams
Manager HR Recruitment and Selection
Officer HR Recruitment and Selection
Officer HR Recruitment and Selection
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The basic purpose of team (Recruitment and Selection) is to provide talented pool of candidates
who can be an asset for the company.
EMPLOYEE PERFORMANCE EVALUTION POLICY

The performance appraisal program designed to give you and your manager the opportunity to
discuss your performance.
Evaluating employee performance
Working at pel means knowing what your job is, setting performance objectives discussing, what
your manager how well your job is done and how you can improve, and being rewarded
according to your performance. Performance appraisal and pay for performance are to process
designed to foster the relationship between supervisor and employees and to encourage
continuant improvement within the groups
Performance appraisal
a)
Performance appraisal is intended to enhance communication between employee and his
or her supervisor.
b) All employees should be apprised at least annually and their appraisal discussion should
include at least these elements:
1) Review job responsibilities, performance criteria and objectives.

2) Review of performance accomplishments, included the method used. Assignment of a
performance designation.
3) Review of planned development action.

a) Annul appraisal results are reviewed by two levels of management above the employee.
b) Performance feed back of probation period will be done for payment employee by his/her
supervisor at the end of the probation period in order to determine employee suitability.
Pay for performance
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salary progress during an employee career with pel is a function of performance over time.
Better performance is important higher pay. Performance is also key factor in consideration for
promotion.
Performance designation
performance designations are defined as follows.
A) Outstanding:
individuals performance consistently exceeds performance criteria in virtually all major
responsibility areas and objectives:
b) very good:
individual performance consistently exceeds performance criteria in some major
responsibility areas and objectives and achieves criteria in all others. Response to unplanned
circumstances meets or exceeds what would be expected.
B) Good:
individuals performance fully meets performance criteria in all major
responsibilities areas. Performance is that of an employee who is competent,
knowledge, and capable of consistently achieving quality results on increasing
demanding objectives. Unplanned circumstances did not prevent the meeting
object.
d) Satisfactory:
individuals performance meets performance criteria in most areas but not up to required
criteria and work accomplished:
improvement needed
a) Individuals performance does not fully meet performance criteria in
at
least
one
major
responsibilities area. Performance meets most criteria, but further process required for the
achievement of all major responsibilities.
Performance level warrants continuation incurrent assignment and it is expected that this
individual will fully meet all major responsibilities within a reasonable period
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b) when improvement is needed, the and supervisor need to work together to meet the job
performance criteria. Within a reasonable time, which will vary job and individual, an individual
is expected to fully meet all major responsibilities.
c) Sometimes when employees are new in an assignment or receive additional responsibilities, we
expect that they may need some time to develop to meet the requirements. We cannot, however,
lower our performance criteria solely because new people on the job.
e) The other reason needing for improvement is when employees who have been in a job for same
time, that in their performance, it is critical for them to know that improvements is needed, and to
work toward that improvement.
f) Performance criteria and expectations continuously rigorous. Corporations which fail to
improve over time have not, and will not remain in business. Pels groups only opportunity to be
successful in future lies in our ability to continuously improve.
Medical/Hospitalization Expenses
Medical services and hospitalization for themselves and their eligible family members, the will
reimburse 100% of the employees actual expenses. The employee will be reimbursed for the
expenses on presentation of doctors prescription and receipts.
Medical expenses (purchase of medicines) etc. for up to or less than Rs.500 (five hundred only)
will be exempted from presentation of doctors prescription.
Uniform and Locker facility
Company gives two uniforms in a year to its workers and also provides lockers to them for the
safety of their personal things.
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Conveyance Allowance
Company pays Rs.3 per kilometer for car & Rs.1 per kilometer for motorcycle
Loans
Loan is given to the employees from the provident fund; car loans are also given to the executives
level officers.
Organizational Development and Performance

Management:
Employees grading:
Managing
M6
M5
E1
M4
M3
M2
E3
E2
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M1

JE
S1
S2
S3
C1
NG
Employees Information:
MANAGERS
STAFF
WORKERS
TEMPORARY 130 (APPRENTICESHIP)
250
1636
5347
130
Staff of IR & A
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93 staff members and 285 workers.
Staff of CMD
5 workers and 84 staff members in which 34 are in the head office area.
FINANCE DEPARTMENT
Functions of this department
Deal with banks, investment firms, Moradabad, government departments of Appliance and
power division calculate and keep employees salaries record.
Carry out final auditing of financial records prepared by Accounts department of
Appliances and power division.
Perform as a workstation and as an integrated circuit amongst all department of the
company.
Arrange monetary resources / funds at favorable prices and at proper time.
Allocate resources / funds throughout the organization
SECTIONS IN FINANCE DEPARTMENT:

Budgeting Section
Corporate Section
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Pledge Release Section
Account Receivable Section
Accounts cell
Accounts Payable Section:
PEL always make the payment to the supplier through their current account at Walton branch
of NBP. Payment always made through the GRN.
For every supplier provision account is created in his name in PEL computer data. Single
provision also maintained for all supplier but PEL maintained different accounts for different
suppliers.
They make entries at each stage as follows:

When the purchased material arrives at store entry is made against GRN (goods receipt note)
as following.
Purchased Material
Provision Account (party)
When bill received in account department then entry made as:
Provision Account (party)
Account payable
When payment made the entry made as:
Account Payable
Bank/Cash
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BOOK KEEPING SECTION
The record of internal expenses related to the employees is maintained in the book keeping
section. The incharge of the section first approve expense by checking the evidence. The
expense incurred is paid in the factory-by-factory accountant.
Different types of voucher are prepared in this section.
Cash payment Voucher:
Bank payment Voucher:
Cash Receipt Voucher:
Bank Receipt Voucher:
Journal Voucher:
SALARIES AND WAGES PAYABLE SYSTEM:

PEL has established salaries and wages payable system very efficient. Cashier pays
salaries to the permanent employees after the job time. During the work time it is
intended not to waste the work time.
Wages to the workers are paid at working place. They continue their work while receiving
the wages. It is the responsibility of the cashier to pay wages to the employees at their
working position.
COSTING SECTION
1
INTRODUCTION
Pak Elektron limited (PEL) production is divided into two divisions i.e. Power Division and
Appliances Division. So they assign different codes to every product raw material and job. For
their conveyance they use fabrication for this purpose.
22

For every fabrication numbers are allotted according to the pre-defined procedure. PEL producing
the following products:
The product codes with their codes and nature of the jobs will be used as prefix to the
individual job (FB#) numbers consisting of four digits starting from 0001 to 9
2. SYSTEM FLOW CHART/ JOB ORDER COSTING

JOB ORDER COSTING
Purchase Department:
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DEPARTMETN OF INFORMATION TECHNOLOGY

IT departments key responsibilities are as follows:
Right protection and issuance.
Troubleshooting and problems facing in computers.
Developed and maintain internal network.
Hardware and all software issues.
Create and enhance internal softwares running currently.
Developed and maintain domain of each person
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IT Department is engaged in controlling the overall computer system of the organization. Every
department of the organization uses more than one software.
Company also use outside
technology. This department has 40 members.

IT Department of PEL has two main divisions:
1. Development Team
2. Support Team
Server Side
Network Problem
Development Team:
Development team is engaged in developing the new softwares for the internal customers.
Softwares are developed according to the concerned department needs. After the managers
permission and detailed enquiry, software is developed.
Languages used in preparing softwares:
Fox Pro
Dot Net
Support Team:
Support team is engaged in two activities:
1. Server Side
This team is engaged in solving the problems relating to main server.
2. Network Problem:
This team is engaged in solving the problems relating to Network
Consumer Marketing Department

Consumer Marketing Division is one of the important divisions of Pak Elektron Limited. This
department was established in 2002. The purpose of this department was to enhance the business
of the organization that remains successful every year up till now.
The basic function of the department is to provide the Home Appliances goods to the consumers
under the instilment business.
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Consumer financing is the new trend that has broken all barriers. The gap between the high and
low-income group is eradicated. Now, through consumer finance, the customer has not only the
knowledge but also the resources to afford all daily use products, which may be postponed by
households due to paucity of funds.
Consumer Marketing Division provides the appliances to consumers under the special
agreement named as Memorandum of Understanding (MOU).
PEL has managed to design and develop a simple procedure for flexible term financing for 12, 18,
24 and 36 monthly installments with Bank of Punjab (BOP). Product pricing and installment plan
is based on PELs ex-factory Price i.e. without including any commission or profit of our dealers,
while mark up charged by banks is also very nominal. PEL and the banks have developed a
simple application form and processing procedure jointly. The scheme has been offered to PELs
own employees as well as the others and very well received by them. The applicant shall select
the appliance, pick up a plan most suited to his/ her repayment capability, coupled with ease of
documentation and the rest shall be taken care by PEL for its own and employees and the others
institutes for their employees. Under such procedure it is a one-window operation and people
shall not queue up outside the banks for hours awaiting disbursement and for depositing money
against repayment of monthly installment. This scheme is regarded as the very best and most
convenient among any other scheme floating around.
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Consumer Marketing Division Schemes:
PEL has introduced new scheme in 2007-08 named as:
PEL EZ LIFE SCHEME
PEL AWAMI SCHEME
EZ LIFE SCHEME
PEL EZ LIFE SCHEME is only for those organizations that have MOU agreement with
PEL.
1. Police
2. Army
3. Hospitals
4. Govt. Schools, universities.
The terms and conditions of this new offer is as under
No of Installments
Rate of Interest
12
0%
18
13.5%
24
18%
Documents consist of:

CNIC of applicants
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CNIC of guarantor
Salary Slip
Advance checks
Bank legal documents
Promissory note
Pictures
Distribution and Credit Control Department

Department of Credit Control
Credit Control Department is engaged in maintaining the complete record of customers in
financial data base software named as Consumer Marketing Division with Accounts
Receivable. This department is also engaged in recovering the amount from customers and
creating the debtors.
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The basic purpose of D&C.C is engaged:

To maintain the record of customers installments.
To record the delivery orders.
To maintain the record of installments.
To maintain the product assessment record.
To maintain the complete records of customers applications.
To record the total financing by the bank.

To keep record about loan application.
To maintain the record about processing fee.
PRODUCT PORTFOLIO
Window type air conditioners PEL.
PEL Split Air Conditioners
Refrigerators (Direct Cool)
Floor Standing Air Conditioner
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Microwave Ovens
Washing Machines
Diesel Generator
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MY WORKIGN EXPERIENCE IN PEL

I am feeling sense of proud of being a part of the great institution in market regarding electronics,
PEL. During my stay of 6 weeks (form 28 May, 2008 to 08 July, 2008) in Consumer Marketing
Division (C.M.D) of PEL, I really experience the practice of ground realities regarding marketing
and sales job. It is a pleasure of mine to say that my bosses actually trained with there sincere
efforts. This is the result of their un-tired efforts that I am now an update personal with latest
marketing and sales techniques as well conceptual knowledge of working on new software. If I
talked originally about this internship experience, I would like to say that my M.B.A is
incomplete without practical knowledge which was provided by this worthy activity.
The daily assignments included preparation of daily sales, collection and dispatch report,
correspondence with ad agencies like RED, Ad-viewer, Astrontech, etc, then filing of documents
for regarding areas they belong, after that the record keeping of sales bills with shop board tax
concerns, dealing with parties who offer the space for new trends and strategies of Pel, Marketing
Accountants and Area Executives are directly responsible for this activity.
Inter-department dealing are also very important duty of mine, the major activities are with
Accounts, Finance, Sales, Dealership and Collection (D & C), Store Mkt. A.D, Receiving,
Production, IT, Commercial, H.R, Customer Service Dept. (CSD), Admin & Industrial
Relationship (A & IR), Purchase Dept.. I feel very comfortable as the concern officers are all
very helping and courteous, it obviously helped me a lot in gaining my confidence and learnt new
things to develop official attitudes. Each department is connected with other, so there is a team
oriented working relationships among departments. The success story of PEL is also depended
upon so loyal team of employees with admirable motivational package from owners.
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I observed healthy activities at PEL regarding punctuality and timekeeping. These habits help me
in my personality grooming and also feel the real difference in a manager and subordinate. The
administration policies make all employees so formal and well mannered that it becomes one of
the bench marks for industry. Now a day the managers are trying to reduce the repetition of work
and work load distribution, building a strong functional structure and so any others to boost up the
image of PEL as a market leader in all aspects.
I also discover the myths of serving a client, how to handle queries, what are the parameters to
adept the current campaign, how keep an eye on competitor activities, how to deal with govt.
bodies, settlement of disputes regarding marketing, choice of media, feel the responsibility of job
assigned, how much important documents are? And some non-verbal and verbal attitudes, these
are the truly very new to me, it is totally different from the student life, and I also learnt the lesson
of hardships for success because there is no short-cut of success. It is my big dream comes true
of being a part of PEL. I am really thankful to all friendly personnel at PEL
Foreign Procurement and Commercial

This department relates to import and export of raw material and other products.
Import:
Raw material
Component
Finishing product
After the enquiry purchase order is places to import the material. All the purchase transactions are
done through letter of credit.
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Steps in import transaction:
Enquiry
Preparation of different quotation
Preparation of comparative statements
Negotiations
Purchase order
Preparation of letter of credit
Shipment
Shipping documents
Commercial invoice
Packing list
Bill of lending
Custom clearance
Marketing Department
Marketing department is main nerve of any organization as far as PEL is concerned; PEL has two
different marketing departments i.e. separate for the two divisions:
1. Appliance Division.
2. Power Division.
1. Appliance Division
The products marketed and managed in Appliance Division are as follows:
Refrigerators
Microwave ovens
Split and window Air Conditioners
Televisions
The primary duty of marketing department is to make an overall marketing plan for each product
and also analyze the current market situations by monitoring the competitors separately and
constructing strategies accordingly.
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It includes the development of daily sales report region wise, location wise and to compare it with
the annual sales plan and in case of fluctuation take corrective actions and make necessary
arrangements.
Allocation of advertising budget for the whole year and to develop promotional plans for retailers,
wholesalers, and end consumers within limited financial budget.
Beside these activities this department is also responsible for check and balance of dealers. This
department not only motivates the dealers but also check their activities. It also checks their credit
limit because dealers have awarded different credit limits according to their potential of sales.
Whenever any dealers credit crosses its limits they stop the supply and first they try to motivate
dealer to clear his credit then they restart his supply. These all things happed because much of
PELs sale is on credit.
Marketing department is a blend of following departments:
Customer Service Department
Credit Control Department
Dispatch
Customer Service Department (CSD)
CSD is a customer service department under the Marketing Head. Where the after sale service is
provided to satisfy customers having problem in their appliances. PEL is well known for their
customer care service.
Credit Control Department (DNC)
DNC is a credit control department under the Marketing Head. A responsibility of this department
is to maintain record for all the credit transactions.
Dispatch
Dispatch is another department under the Marketing Head. In this department all the things are
maintained which are send out of the factory or to dealers
Industrial Relations and Administrations

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Industrial relations and administration department deals with employees but the human resource
department deals with managers.
Dispensary
Telephone
Gate security
PEL security
Photo copier
Canteen all the department are controlled by IR&A.
Key responsibilities are:

Maintenance of Attendance
Maintenance of Stores
Check the material in & out from the factory
Maintenance of factory
Provide assistance to all departments regarding material
To maintain the record about internees.
Attendance of all these departments is recorded by the IR & A department. All the functions
expect the basic function of account department performed by IR & A department. T/D allowance,
medical bill, telephone bill and utility bills are also paid by the IR & A. Capital expenditure above
Rs. 5,000 pay by IR & A.
Financial Ratio
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It is a percentage that expresses a relationship between two pieces of financial information.
Or financial ratios are formed from two or more numbers taken from the financial
statements of businesses. The numbers may be taken from the Balance sheet, the Income
statement, or the Cash flow statement and combined in any number of combinations.
Tools for Financial Analysis:

1. Ratio Analysis
2. Horizontal Ratio Analysis
3. Vertical Ratio Analysis
Types of Financial Ratios

1.
2.
3.
4.
5.
Liquidity Ratios or Liquidity of Short Term Assets

Activity Ratios
Analysis for Long Term Debt Paying Ability
Profitability Ratios
Ratios for Investors or Market Ratios
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Ratio
Analysis
Analyzing Liquidity
The liquidity position of a business firm is measured by its ability to satisfy
its short-term financial obligations as they come due. Liquidity refers to solvency
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of the firms overall financial position, the ease with witch it can pay its bills.
Following are the ratios used to determine the liquidity of the firm:
Current Ratio:It is a measure of liquidity position of the organization calculated by

dividing the firms current assets by its current liabilities. The formula:
For the year 2007
Current Ratio =
Current Assets
Current Liabilities
6870890000
5178286000
1.32: 1
Quick (Acid-Test) Ratio:It is a measure of liquidity calculated by dividing the firms (current asset
minus inventory) by current liabilities. The formula is
For the year 2007
Quick Ratio =
Current asset - inventory

Current liabilities
4363211000
5178286000
0.84: 1
Net Working Capital:It is a measure of liquidity calculated by subtracting the firms current liabilities
from current assets. The formula is
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For the year 2007
Net Working Capital = Current assets Current liabilities
= 6870890000-5178286000
= Rs.1692604000
Analyzing Activity
The activity analysis of a firm measures the speed with which various
accounts are converted into sales or cash by the firm either inflow or outflow.
Following are the ratios used to determine the activity position of the firm:
Inventory Turnover:It measures the activity, or liquidity of a firms inventory. The formula
is
For the year 2007
Inventory Turnover
= C.G.S
Inventory
= 9283623000
2507619000
= 3.70 times
Average collection Period:39
It measures the average amount of time required by the firm to collect its
accounts receivable. It is useful in evaluating credit and collection policies. And
the formula is:
For the year 2007
Avg. Collection Period = Account Receivable

Average sales per day
= 2947646000
32815242
= 90 days
Average Payment Period:It measures the average amount of time required by the firm to pay its
accounts payable. The formula is
For the year 2007
Avg. Payment Period =
Accounts Payable
Average Purchases Per day
1572732000
20255567
78 days
Fixed Assets Turnover:40

It measures the efficiency with which the firm has been using its fixed or
earning assets to generate sales. It is calculated as under:
For the year 2007
Fixed Assets Turnover
Sales
Net Fixed Assets
11813487000
4675889000
2.52 times
Total Assets Turnover:It indicates the efficiency with which the firm uses all its assets to generate
sales. The formula is:
For the year 2007
Total Assets Turnover
Sales
Total Assets
11813487000
11546779000
1.02 times
41

Analyzing Debt
It measures the debt position of the firm & indicates the amount of other
people
money being used in attempting to generate profits.

Following are the ratios used to determine the debt position of the firm:
Debt Ratio:It measures the proportion of total assets finance by the firm creditors. The formula
is
For the year 2007
Debt Ratio = Total Liabilities
Total Assets
= 7482164000
11546779000
= 64%
Time Interest Earned:

It Measures the firms ability to make contractual interest payments.
It measures the firms ability to meet its interest payments. The formula is
For the Year 2007:
42

Earning Before Interest
& Tax
Time Inetert Earned
=
Interest
1584327000
=
937109000
1.69 times
Analyzing Profitability
In analyzing profitability, we measure the profit earning position of the firm with
respect to equity and assets. These ratios are used by the firm to attract outside capital.
Gross profit Margin:It measures the percentage of each sale dollar remaining after the firm has paid for
its goods. Its formula is:
For the year 2007

Gross Profit Margin = Sales-C.G.S
Sales
43

= 11813487000-9283623000
11813487000
=
21%
Operating profit Margin:It measures the percentage of each sales dollar remaining after all costs and
expenses other than interest and taxes are deducted. The pure profits earned on each sales
dollar. Its formula is:
For the year 2007
Operating profit margin = Operating profits
Sales
= 1584327000
11813487000
= 13%
Net profit Margin:It measures the percentage of each sales dollar remaining after all costs and
expenses including interests and taxes have been deducted. Its formula is
For the year 2007
44

Net profit margin = Net profits after taxes
Sales
=
442142000
9408018000
= 4.6%
Return on total assets:It measures the overall effectiveness of management in generating profits with its
available assets. Also called return on investment (ROI). Its formula is
For the year 2007
Return on total Assets =
Net profits after taxes

Total assets
582244000
11546779000
5%
Return on equity:It measures the return earned on the owners (both preferred and common stock
holders) investment in the firm. Its formula is
For the year 2007
45

Return on equity = Net profit after taxes
Stock holders equity
=
582244000
3241274000
= 17%
Earnings per share (EPS)

The earning per share represents the number of dollar earned on behalf of each
outstanding shares of common stock. Its formula is
Earning per share (EPS)
(2007)
= Earning available for common stockholders

Number of shares of common stock outstanding
Profit for the year- preferred stock dividend@0.95 p/s

Number of shares of common stock outstanding
582244000-59375000
7 6,359,170
6.87 per share
Analyzing Marketability
46

It measures the stock price which reflects the markets expectations for the firm.
This includes expectations of both firms return and risk.
Price earning ratio:It measures the amount of investors are willing to pay for each dollar of the firm
earnings the hire price earning ratio the greater the investor confidence in the firms future.
Its formula is
Price earning ratio (P/E) = Market price per share of common stock
Earning per share
45.25
=
6.87
Rs. 6.58
Book Value for common share:It measures by dividing the common stock holders equity to number of common
stock shares outstanding. Its formula is
Book value for common share =
Share holder equity applicable to Common stock equity
Numbers of common stock outstanding

1368591000
47

=
7 6,359,170
Rs. 17.92
48
Common Size Analysis:
Revenue net
Common Size Analysis (Vertical)

2004
2005
2006
2007
100.00
100.00
100.00
100.00
Cost of sales
Gross profit
Other
%
78.29%
21.71%
0.99%
%
78.06%
21.94%
0.88%
%
78.23%
21.77%
1.20%
%
78.58%
21.42%
0.85%
income
Distribution
5.55%
5.93%
6.28%
4.99%
cost
Administratio
3.44%
3.39%
2.79%
3.02%
n
Other
0.35%
0.35%
0.27%
0.44%
expense
Finance cost
Profit before
7.69%
5.68%
6.64%
6.52%
8.31%
5.49%
7.93%
5.99%
taxation
Provision for
0.06%
1.41%
0.79%
1.06%
taxation
Profit for the
5.62%
5.11%
4.70%
4.93%
operative
operative
year
49

Interpretation:
There is a little bit change in the operating income. Distribution Cost: The plus point of the
company is that distribution cost has been cutting down as shown in analysis. It is 4.99% in 2007
as compared to, 6.28% in 2006, 5.93% in 2005, and 5.55% in 2004. Administration cost increases
to 3.02% of revenue as compared to 2.79% in 2006.The firm has to reduce this cost. These
expenses are also increasing. Only in 2006 they were decreased but before it there were at
increasing trend. The firm has succeeded to reduce finance cost as compared to previous years. It
shows the company is going to cut interest and other expenses. The firms profit before tax
increases to 5.99% in relation to revenues as compared to 2006, but the hasnt succeeded to
achieve at previous % age in 2005. The company has increased its provisions for taxation in
relation to revenues.
50
Profit & Loss Statement
Horizontal Analysis
2004
2005
2006
Revenue net
100.00
137.70
190.85
239.65%
Cost of sales
%
100.00
%
137.30
%
190.73
240.56%
Gross profit
%
100.00
%
139.15
%
191.30
236.35%
Other operative
%
100.00
%
122.98
%
230.65
205.95%
income
Distribution cost
%
100.00
%
147.01
%
215.72
215.20%
Administration
%
100.00
%
135.92
%
155.01
210.57%
Other operative
%
100.00
%
138.46
%
147.15
307.27%
expense
Finance cost
%
100.00
%
118.97
%
206.37
247.26%
Profit before taxation
%
100.00
%
157.94
%
184.50
252.55%
Provision for taxation
%
100.00
%
3325.26
%
2592.39
4349.03
Profit for the year
%
100.00
%
125.06
%
159.49
%
210.03%
51
2007
Interpretation:
There is incensement in revenue at really greater rate as compared to 2004, which is showing a
good sign for the company. Rapid increase in Cost of Sales is not a good sign for the company; it
must be reduced in order to make good profit. Although Cost of sales is increasing but G.P is also
increasing rapidly./Finance cost is increasing which is showing that the firms long term
borrowings are increasing.
The firm has to reduce this cost.A huge incensement in the provisions for taxation is due to the
very low provisions in base year2004.It is also a need for the company to make huge provisions
as profit is increasing. Profits of the company are also increasing as compared to 2004 which is a
good sign.
52
Time Series Analysis
Analyzing Liquidity
Rati
2004
2005
2006
2007
Current
0.94
1.15
1.04
1.33
Ratio
Acid Test
0.54
1.15
0..62
0.84
Ratio
Working
-----
675832000
262077000
1692604000
os
Capital (In
Thousand
s)
T As the above analysis table indicates, in 2005 the liquidity position was 1.15 times
which means that in 2005 the firm has Rs. 1.15 to pay a liability of RS. 1 which is quite
well but in 2006 it suddenly reduced to 1.04 times. This change in the liquidity position is
due to higher increased percentage of current liabilities in the balance sheet of year 2006.
But in 2007 PEL has decreased its current liabilities and is having an improved current
ratio of 1.32 times which is much better in a sense that the company has maintained a
well managed level of assets to pay its liabilities.
53

Secondly, quick ratio is also indicating that in 2006 the higher
increased
percentage
of liabilities also cause quick ratio to decrease from 0.70 times to .62 times but in 2007
PEL managed to gain quick ratio of .84 times by reducing level of stock in trade as well
as its current liabilities portion.
Thirdly, the Net working capital has increased in a marvelous percentage as compared to
years 2006 and 2005 again due to reduced current liabilities in this year. So overall
liquidity position of PEL is quite satisfactory
Ratios
2005
2006
2007
Inventory Turnover (Time)
2.71
2.86
3.70
Average Collection Period
100
101
91
68
97
78
(Days)
Total Assets Turnover
1.01
1.09
1.13
(Times)
Fixed Assets Turnover
2.23
2.47
2.52
(Days)
Average Payment Period
(Times)
54
Turnover Analysis:
Average collection period of firm has also been reduced up to ten days as compared
to year 2006 which is also a good sign of firm performance in a way that they are
collecting their debts in less time as previous.
Thirdly, average payment period shows that firm have enough resources to make its
due payments in less time as previous year but it also might be the case of
underutilization of the amount of resources which is being paid early but it will also
help to improve the image of firm in market. Fixed asst turnover has also been
improving from several years due to proper utilization of its fixed assets to generate
sales over a period of time which is another good indicator to support firms activity
analysis.
55
Ratios
200
200
2007
5
55
6
68
64
Debt Equity Ratio (Times)
1.88
2.59
2.31
Time Interest Earned
1.73
1.57
1.75
Debt Ratio (%)
Ratio (Times)
Debt Ratio:
Interpretation:
The debt ratio of the firm has decreased as compared with years 2006 and 2005 which
seems to be a good indicator and it shows that the firm is trying to maximize the utilization
of its own business resources and minimizing the reliability on outside sources of debt or
financing for investment purposes.
Debt equity means in capital structure how much company has its own investment and how
much from outsiders. In 2006 debt ratio is increased by almost 0.75. time interest earned
has mix behavior.
56
Profitability Ratios:
Rati
os
Gross
Profit (%)
Operating
200
200
200
200
21.7
21.9
21.7
21.4
13.3
13.1
13.3
13.9
Profit (%)
Net Profit
5.62
5.11
4.70
4.93
(%)
EPS (Rs)
6.62
6.58
5.04
6.87
ROA
4.08
4.33
4.37
5.04
Interpretation:
Gross profit ratio in all years. Same behavior is in profit %ages to sales but the variation is
slightly more as compared to G.P %age to ales.Net profit %age showing decreasing trend there is
slightly upward movement in 2007. EPS has increased at really grater rate. ROA is showing a n
increasing trend
57
SWOT ANALYSIS
The strengths, weaknesses, opportunities and threats of PEL are discussed below:
Strengths:
PEL has the following strengths and is in more competitive position in these areas than its
competitors. Following are the main strong points of PEL:
Strong dealer network
Strong quality, sale and service
Market leader in WRAC
Number 2 in refrigerators in Pakistan
Strong grip in home appliances
Strong Management
Distribution of Authority
Strong research and development department
Free customer service
Strong Dealer Network

It is also the plus point for the PEL that it has also developed the strong dealer network in
the market. The dealers are always trying to sell the PEL appliance to the customers because they
know there are high margin in the PEL products. They can get more money after selling the PEL
products. The management of PEL also provides more incentives to their dealers than their
competitors. Dealers are very conscious about the PEL products and always guide the customer in
buying the PEL appliances and tell them the more qualities of PEL products than others products.
Strong Quality, Sale and Service
PEL is also in a strong position that it provides the superior quality to your customers. It
makes sense in the mind of the customers that PEL products are better in quality than the other
companies products. PEL also provides the after sale service to their customers which delight the
customers satisfaction
58

Market leader in WRAC (Window Room Air Conditioner)
It is another strong point that PEL is a market leader in WRAC. The window room air
conditioner is more demanded by the customers than its competitors air conditioners because it
has more durability in operating systems and cools the room in few minutes. PEL always strives
to provide the innovative features in WRAC. PEL air conditioner is cheaper and has a higher
quality than others WRAC. Thats why customers always purchase the PEL window air
conditioner.
Number 2 in Refrigerators in Pakistan

After the Dawlance refrigerators PEL has a second position in refrigerators market. PEL
always continuously strives to pursue the strategies adopted by the competitors. As a consequence
the price war starts among the companies so each company reduce the prices and try to increase
the sales of its refrigerators. PEL is also making efforts for the quality improvements than its
competitor Dawlance.
Strong Grip in Home Appliance
So PEL is one of the companies, which is having a strong grip in the home appliance i.e.
WRAC, Refrigerators, micro way Owen etc that is a strong point for the company. PEL is
penetrating the market by introducing the new home appliance like Split Air conditioner and
always trying to get the maximum shares in the home appliance market.
Strong Management
It is another plus point that PEL has a strong management. Its employees are more
competent and fully skill and knowledge. They always cooperate the top management in
achieving the goals that are assigned to them. Employees are well aware about the company
objectives and so they are committed to the development of company.
Distribution of Authority
Top management of PEL delegates the power to the subordinates for achieving the
marketing objectives in a specified time period. So every manager has an authority that use in
achieving the Goals. He can easily handle the complaints of customers and try to satisfy them. So
it is a strong point for the PEL because there is decentralization of powers.
59
Strong Research and Development Department

PEL has a strong research and development department that is continuously trying to
develop new features for the products. R&D department spends huge amount of money for the
development of product. R&D makes research for introducing the new product and asks the
customers what they want extra in our products. For this purpose they hire the highly qualified
employees in R&D department. That is another strong position of PEL.
Free Customer Service
PEL provides free customer service for one year to its customers. So the customers always
buy the PEL products due to its free service and it becomes loyal customer for the PEL. PEL
always provides help to their customers for repairing the WRAC, Refrigerators and other items.
PEL always make efforts to satisfy the customers.
Public Limited Company
Although PEL is owned by the SAIGOL GROUP but its shares can be purchased and sold
in stock exchange market. So every one who is interested in purchasing the shares of PEL he can
purchase. It is also called public limited company. So people are more interested in buying the
PEL products.
60
Weaknesses:
Like other companies PEL has some weaknesses in operating the business. If PEL overcome
on these weaknesses then it can become a market leader in the home appliance. PEL loose
some competitive edge in the following points:
Financial Problems
Sometimes PEL faces the financial problems because its stocks are so much piled up in the stores
that create the problem of cash flow because when the stocks are not sold and the
production is in process for 24 hours a day than the company faces such problems. So
company aggressively research the sources of cash and stress the dealers to sell the PELs
products to the end consumers.
System Variations
It is also the main weakness of PEL that there are rapidly a change in polices of selling the
products. Thats creates problems for the selling team how to sell the products to the dealers
because the top management requires the urgent amount of money. So selling team sells the
products sometimes on hard cash that will reduce the prices of products that gives the benefits to
the dealers and creates problems for the management.
Lack of Product Range
PEL has introduced more products of consumer items but there are more needs to develop
new consumer items like PEL washing Machines, Vacuum cleaner and other items. Due to lack of
product Range, Company cannot earn more profit because consumers have high demand of these
products and they say that if company is investing in these products then we can keep all PEL
items and we never need to keep others company products.
61

Less Utilization of Capacity
Due to lack of finance a company cannot utilize all its resources on its full capacity. It
increases the cost of products per unit that decreases the profit margin of each consumer item.
Sometimes company cannot allocate the resources according to the requirements of production
department thats becomes the problem for the complete utilization of resources. For the company
dealers and gives them high margin of profit. Thats why a company is facing the financial
problems and company never pays attention on the alternative resources that will help in reducing
the stocks. That is a customer demand and due to this it is the main weakness of company.
Opportunities:
For the PEL there are more opportunities for expansion the business. If PEL realize that
opportunities then it will be more fruitful and profitable for the company. Even if company does
not take advantage of these opportunities then it will loose its competitive position and high
profit. Its competitors will give PEL tough time to pursuing the opportunities that are adopted by
them. Following are the opportunities for the PEL.
Exploration of market in Pakistan
Increase in product range
Export opportunity
Increase in production capacity
Exploration of Market in Pakistan

PEL has the opportunity to explore the market in all over the Pakistan. Even though PEL
introduce its products in all cities of Pakistan but there are so many places that have the capacity
to absorb the PELs products. These places are tribal areas in NWFP and northern areas of Punjab
and NWFP, central area of SIND. If company introduces their products in these areas then it can
get a large amount of profit and increase its market shares.
62

Increase in Product Range
It is the main opportunity for the PEL that it can increase its product range that will be a
more profitable for the company. There are more needs to develop new consumer items like PEL
washing Machines, Vacuum cleaner and other items. Due to lack of product Range, Company
cannot earn more profit because consumers have high demand of these products. If PEL does not
take this opportunity then it will loose high margin of profit and market share. It will reduce the
fixed cost and increase the efficiency of the employees.
Export Opportunity
PEL Company has also the opportunity to export their products in other international
countries like UAE, SAUDI ARABIA, and other Arabic and African countries. It will not only
reduce the dependence on one market but also increase the market shares and profits. It will also
help the company to spread the fixed cost on all of its production that will reduce the total cost
and company will enjoy the high profit.
Increase in Production Line
Company can also increase its production line at the maximum level that will increase the
efficiency of the employees and also will reduce the total cost. Sometimes company cannot
allocate the resources according to the requirements of production department thats becomes the
problem for the complete utilization of resources. Company should look the market conditions
then it will produce their products.
Threats:
PEL Company in such a competitive era has many threats as well. These threats are for the
present situations and future. Company should make its policies and strategies according to these
threats. So following are the main threats for the PEL:
63

Slow Growth Rate in Pakistan
There is also slow growth rate of home appliance in Pakistan that will increase the stocks of the
company. It becomes the burden for the company that how to sell these stocks. Its main reason is
that purchasing power of the buyer is very low and it has no income to buy the expensive the
home appliance. It is also becoming a main threat for all the companies.
Strong Competition
There is very strong competition for the home appliance in the market. So every company tries to
come in the number 1 position for achieving the maximum shares in the market. Every company
adopts different strategies for selling of the products. It reduces the profit margin of each
company and increase the bargaining power of the buyers who will demand higher quality of
products and lower cost. That is the main threat for the PEL Company.
Chinas Product
Chinas products are another threat for the Pakistani companies because these products are
cheaper than the Pakistani products. An even china product not well in quality but it is
comparatively in low prices than the consumers home appliance that are manufactured by the
indigenous company. China products stress the indigenous companies to lower the quality and
prices that will not be profitable in the long run.
World trade Organization
World trade organization will give the permission in 2005 to each company of home appliance to
export their products after paying less duties or duty free products. That will increase the
pressures for the indigenous companies to reduce the prices and increase the quality. It will
increase the competition among the foreign companies and indigenous companies. But our
companies also run under uncertainty conditions. This will decrease the morale of indigenous
companies.
64
Recommendations for the organization:
PEL should define the companys mission and vision statement that can be more helpful
for them in future. Every organization however it is small or large has clear direction
where they want to go. Without direction or knowing the purpose of their existence how
an organization can make progress.
As I found brand name is very important factor in consumer buying behavior, thus it is
advised that PEL should work on the brand image. Although PEL has a strong brand
name, but it has to create much more stronger one, mainly through advertising, to
compete with Dawlance, Waves, and other international brands.
The company should add more features to their products. People are attracted towards a
product with unique features and something that would make the customers feel that they
have got their moneys worth.
The company should take measures to improve the quality of their products by improving
the process. Thus the company is advised to take steps towards improving the quality of
its products, other wise it will lose a lot of potential customers to their competitors.
To gain more competitive advantage over their competitors, PEL has to work on their
distribution network.
PEL more focus should be on electronic media to get competitive advantage over the
competitors. They have to increase their advertising expenditures.
The company must give more incentives to the dealers so that they remain loyal to the
company and promote the products.
Introduction of seasonal schemes can help to boost sales.
The product line of PEL is not good as compared to others like Haier, Waves, Super Asia,
so its good for the company for more success if they work on it.
65
66
PAK ELEKTRON
LIMITED
Page
67

Pel

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Pak Elektron Limited

Ali Abid Taqi

Pak Elektron Limited

Pak Elektron Limited

INTRODUCTION TO ELECTRONICS INDUSTRY

Pak Elektron Limited

Pak Elektron Limited

INTRODUCTION TO SAIGOL GROUP

Kohinoor Textile Mills

INTRODUCTION OF PAK ELEKTRON LIMITED PEL

Pak Elektron Limited

Pak Elektron Limited

Pak Elektron Limited

Pak Elektron Limited

Pak Elektron Limited

To focus on personal development of our employees to meet future challenges.

OBJECTIVES OF THE ORGANIZAION

Pak Elektron Limited

Pak Elektron Limited

Pak Elektron Limited

Human Resource Department

Human Resource Department

Pak Elektron Limited

Pak Elektron Limited

EMPLOYEE PERFORMANCE EVALUTION POLICY

Performance appraisal is intended to enhance communication between employee and his

1) Review job responsibilities, performance criteria and objectives.

3) Review of planned development action.

Pak Elektron Limited

Pak Elektron Limited

Uniform and Locker facility

Pak Elektron Limited

Organizational Development and Performance

Pak Elektron Limited

Pak Elektron Limited

SECTIONS IN FINANCE DEPARTMENT:

Pak Elektron Limited

They make entries at each stage as follows:

Pak Elektron Limited

Cash payment Voucher:

Bank payment Voucher:

Cash Receipt Voucher:

Bank Receipt Voucher:

SALARIES AND WAGES PAYABLE SYSTEM:

Pak Elektron Limited

2. SYSTEM FLOW CHART/ JOB ORDER COSTING

Pak Elektron Limited

DEPARTMETN OF INFORMATION TECHNOLOGY

Pak Elektron Limited

Company also use outside

technology. This department has 40 members.

Languages used in preparing softwares:

Consumer Marketing Department

Pak Elektron Limited

Pak Elektron Limited

Documents consist of:

Pak Elektron Limited

Distribution and Credit Control Department

Pak Elektron Limited

The basic purpose of D&C.C is engaged:

To record the total financing by the bank.

Window type air conditioners PEL.

PEL Split Air Conditioners

Refrigerators (Direct Cool)