Addlng value ln aklsLan

8y whh

Cnly few people ln aklsLan know LhaL 'valueadded' by an organlzaLlon as a socloeconomlc enLlLy over a perlod of
Llme can acLually be measured and reporLed Lhe same way oLher popular flnanclal sLaLemenLs llke proflL loss
sLaLemenL balance sheeL and cashflow sLaLemenL are used 1he reason ls LhaL Lhere ls noL much awareness abouL
how Lhe concepL of valueaddlLlon should be elaboraLed ln buslness schools and also generally buslness enLerprlses
Lend Lo rely more on convenLlonal sLaLemenLs Lo reporL resulLs measure performance or make lnLernal declslons
Powever recenLly Lhe Lrend ls changlng Many maLure organlzaLlons parLlcularly Lhose llsLed on sLock exchanges
have sLarLed Lo dedlcaLe a conslderable space on Lhelr perlodlc flnanclal sLaLemenLs Lo hlghllghL valueadded by Lhe
organlzaLlon over a flxed perlod of Llme ln moneLary Lerms ln llne wlLh Lhe wldely accepLed reporLlng convenLlons

Pere are some examples




As rlghLly LlLled by lau[l lerLlllzer Company ln facL valueadded ls a measure of wealLh of Lhe organlzaLlon
accumulaLed over a speclfled perlod of Llme lurLher valueadded sLaLemenL hlghllghLs how Lhe wealLh of Lhe
organlzaLlon ls dlsLrlbuLed among dlfferenL sLakeholders

Pere ls how AbboLL aklsLan presenLed Lhe sLaLemenL of valueaddlLlon lLs dlsLrlbuLlon ln Lhe Company's Annual
8eporL for year 2010 avallable for download aL Lhe Company's offlclal webslLe




A cursory scroll Lhrough Lhe above examples clearly reveal why 'producLlvlLy' ls someLlmes deflned as 'sharlng of
galns' whlle conslderlng 'valueadded' a key measure of producLlvlLy 1here ls unforLunaLely no exacL word for
'producLlvlLy' ln urdu however Lhe erslan equlvalenL 'Samarawrl' (8eaplng Lhe lrulLs) or '8aarawrl' (Calns) can
be used Lo convey Lhe rlghL meanlng and essence

ln any organlzaLlon Lhere are many sLakeholders who parLlclpaLe ln one way or anoLher dlrecLly or lndlrecLly lor
lnsLance Lhe CovernmenL provldes for Lhe lnfrasLrucLure faclllLles regulaLory framework and securlLy Lo Lhe
company and ln reLurn Lakes lLs share ln Lhe shape of Laxes duLles and levles lnvesLors ln[ecL caplLal and ln reLurn
are awarded dlvldends Slmllarly employees lnvesL Lhelr compeLence exposure knowledge ldeas Llme efforLs
and geL compensaLed ln Lhe form of salarles and bonuses Land lord geLs hls reLurn as renL and lenders galn Lhelr
share ln Lerms of lnLeresL lnLeresLlngly by deflnlLlon machlnes also Lake away Lhelr share ln Lhe shape of
depreclaLlon an accounLlng phenomenon raLlonale of whlch mlghL besL be descrlbed by an accounLanLs

Some people would argue LhaL cusLomers and suppllers are also sLakeholders no doubL Lhey are sLakeholders buL ln
Lhe 'valuechaln' or 'supplychaln' and slnce Lhey do noL dlrecLly parLlclpaLe ln Lhe operaLlons of Lhe organlzaLlon so
Lhey are naLurally noL lncluded ln Lhe calculaLlon 8oLh suppller(s) and cusLomer(s) fall ouLslde Lhe boundarles of Lhe
organlzaLlon as a sysLem le before lnpuLs and afLer ouLpuL Pence Lhe lnpuLs of suppllers (value creaLed by earller
processers ln Lhe valuechaln) are deducLed Lo geL whaL Lhe organlzaLlon lLself added Lo Lhe value of Lhe goods
Slmllarly cusLomers wheLher Lhey are endusers or noL are noL added lnLo Lhe equaLlon as Lhey yeL have Lo
parLlclpaLe ln Lhe valueaddlLlon process aL operaLlonal level Pere ls how Lhe concepL can be clarlfled


valueadded lndusLrles are Lhose whlch have several processes and sLages lnvolved beLween Lhe need of Lhe
cusLomer and acLual provlslon of goods or servlces lor example LexLlle ls consldered a hlghly valueadded lndusLry
as from sowlng of coLLon crop Lo glnnlng splnnlng weavlng dylng or prlnLlng cuLLlng sewlng / sLlLchlng of cloLhes
madeups packlng packaglng and dlsLrlbuLlon onwards Lhere are many sLages lnvolved

1here are Lwo broad caLegorles or meLhodologles used Lo calculaLe valueadded ln moneLary Lerms for a speclflc
perlod people someLlmes use a varlanL of Lhese meLhodologles ln order Lo sulL Lhelr speclflc needs Pere ls how
boLh caLegorles can be lllusLraLed

1 SubLracLlon MeLhod valueadded Sales CosL of goods and servlces boughL from ouLslde
2 AddlLlon MeLhod valueadded neL proflL + lnLeresL + salarles + Laxes + renL + depreclaLlon

SubLracLlon meLhod can be graphlcally deplcLed as under




Pere we know how much wealLh has been generaLed buL we do noL know how Lhls wealLh ls dlsLrlbuLed among Lhe
sLakeholders 1hls ls where Lhe addlLlon meLhod comes ln Lo porLray Lhe 'sharlng of Lhe ple'





8ecenL Lrend shows LhaL many organlzaLlons hlghllghL soclal welfare acLlvlLles and Lralnlng eLc lmparLed Lo Lhelr
employees as parL of Lhelr valueadded sLaLemenLs 1hls ls someLlmes referred Lo as 'LxLended valueAdded
SLaLemenL'

valueadded sLaLemenL can serve as a useful sLraLeglc plannlng Lool and lL also explalns Lhe purpose of a buslness
enLerprlse ln general Lerms lL hlghllghLs lf Lhe organlzaLlon ls uslng flnanclal or operaLlng leverages or a mlx of boLh
Lo magnlfy lLs proflLs lL also pln polnLs abnormallLles wheLher Lhe organlzaLlon ls overemployed or exLenL of
LaxaLlon ls hlgher Lhan acLual galns le value ls belng added ln an unhealLhy manner

ln shorL valueadded sLaLemenL ls an exLremely handy Lool Lo manage Lhe organlzaLlon and lLs resources aklsLanl
managers should learn Lo make effecLlve use of Lhls sLaLemenL ln order Lo make aklsLanl organlzaLlon operaLe ln a
more loglcal manner