Pel Final Report

Pak Elektron Limited i
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INSTITUTE OF MANAGEMENT SCIENCES, B.Z.U. MULTAN

Pak Elektron Limited ii
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Institute of Management Sciences

Bahuddin Zakriya University Multan
Submitted To:
Madam Amina Naqvi
Submitted By:
Faheem Zeeshan
MBC-09-02
PAK ELEKTRON LTD

14 Kilometers Ferozpur Road,
LAHOR

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DEDCATION
DEDICATED TO M Y
MOTHER
W HO ALWAYS C ARE M E

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PREFACE
As per requirement to complete MBA (Finance) at IMS (Institute of Management

Sciences) I completed my Internship Program at “Pak Elektron Limited (PEL). This
was 6 weeks internship program which prepared me to better understand the
practicality of different tools of finance and accounts.
At the end of training program, it is required to submit an Internship report in

university. The Internship report has been completed, which is a result of one’s time
taking efforts. I prepared this report as what I observed and what so ever I learnt here
in PEL. I also got the help of company’s published material. For instance,
introductory part of this report is mostly taken from “Company Profile”, all raw
financial figures from “Annual Report” of PEL and knowledge of finance from
Finance department.
Major portion of this report has been devoted to Company’s introduction and
particularly to its management system. Efforts were to explore their hierarchies and to
identify the channels of workflow here in PEL. Financial analysis is conducted to
oversee company’s financial position. Finally, I drew conclusions and suggestions for
the betterment of company’s performance. At the end of report I added appendixes to
cover those areas, which were required for further details.

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ACKNOWLEDGEMENT
By the grace of Allah Almighty I have been able to complete my work. I would like
to thank PAK ELEKTRON LIMITED (PEL) for giving me the opportunity and
providing me with a platform to prove my mettle.
I would particularly like to thank to Sir S. M. Aamir for those efforts I get the
internship in PEL. I am also thankful to Muhammad Arshad (Manager Accounts),
Nadeem u din (Manager Finance) Mr. Muhammad Hamayun Atta, Muhammad Afzal,
Muhammad Umer Waqas, Mr. Naveed, Ghulam Dastgeer and Mr. Zahid (Accounts
Officers) who guide me and whose suggestions and cooperation enables me to
compose my efforts and learning and who have patiently guided me in completing
this hard task. Their collateral assistance helped me realize and achieve what I
initially aimed at.
Finally, I would specially like to thank my internship advisor, Miss Amina Naqvi who
was always there when I needed her. This report would not have been possible
without her.
Faheem Zeeshan

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TABLE OF CONTENTS
PREFACE..................................................................................................... iv
ACKNOWLEDGEMENT..................................................................................v
TABLE OF CONTENTS..................................................................................vi
EXECUTIVE SUMMARY..................................................................................1
I worked in the Accounts, Finance and Import department of the Pak
elektron ltd. In the Accounts department I work in inventory, accounts
payable, import, book keeping, and costing section. .................................1
Introduction.................................................................................................2
VISION STATEMENT.....................................................................................3
MISSION STATEMENT...................................................................................3
OBJECTIVES................................................................................................. 4
History......................................................................................................... 5
LOCATION AND FACILITIES.......................................................................7
Business volume..........................................................................................7
Unique Features of the Company................................................................9
BUSINESS DIVISIONS.................................................................................11
Product Hierarchy:.....................................................................................12
APPLIANCES DIVISION.............................................................................13
POWER DIVISION....................................................................................13
Major Competitors..................................................................................14
Organizational structure ...........................................................................15
MANAGEMENT PROFILE.............................................................................16
Organization Hierarchy chart.....................................................................18
Introduction of Departments.....................................................................19
Finance Department..................................................................................19
Budgeting Section..................................................................................21
Guarantees Section................................................................................21
Material Planning Section.......................................................................21
Leasing Section......................................................................................21
IMPORT SECTION/FP DEPARTMENT............................................................32
PRE-SHIPMENT ACTIVITIES......................................................................33

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POST-SHIPMENT ACTIVITIES...................................................................34
PROCUREMENT..........................................................................................35
LOCAL PROCURMENT.............................................................................35
FOREIGN PROCUREMENT.......................................................................36
Application of the Class Room Learning....................................................36
Marketing Strategy.................................................................................36
Product:..................................................................................................36
Price:...................................................................................................... 36
Place:......................................................................................................36
Promotion...............................................................................................37
Competitive Strategy.............................................................................37
MY LEARNINGS IN PAK ELEKTRON.............................................................43
SWOT ANALYSIS........................................................................................60
STRENGTHS............................................................................................60
WEAKNESSES.........................................................................................61
OPPORTUNITIES......................................................................................61
THREATS................................................................................................ 62
Suggestions...............................................................................................63
CONCLUSION.............................................................................................65
Appendix................................................................................................... 66

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EXECUTIVE SUMMARY
Pak Elektron Limited (PEL) is the flag bearer of the Saigol Group of Companies. The
products manufactured by PEL have always been of high standard and the name 'PEL'
is synonymous with QUALITY all over Pakistan. Since its inception, the company
has been working for the advancement and development of engineering know-how in
Pakistan. The company has produced hundreds of engineers, skilled workers and
technicians through its apprenticeship schemes & training programs.
The company comprises of two divisions; 1st is Appliances Division: This

Division of PEL consists of home appliances manufacturing particularly
Refrigerators. 2nd is Power Division: PEL Power Division is one of the major
electrical equipment suppliers to WAPDA & KESC. The company manufactures
transformers, energy meters, switchgears, compact stations.
I worked in the Accounts, Finance and Import department of the Pak elektron ltd. In
the Accounts department I work in inventory, accounts payable, import, book
keeping, and costing section.
In the finance department i spend major time in the treasury and pledge section
In the import department the basic thing is how to find the supplier, how to negotiate
with them and how to open the letter of credit.
In the procurement or commercial department where the local purchases are made I
learned the whole system of purchasing, recording and how the goods reaches to the
store.
While working with PAK ELEKTRON LTD, I got very broader visions about
company financial and marketing activities more than those that I had learned during
my MBA program.
Finally I have provided recommendations to the company regarding their

management functions and other business plans.

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Introduction
Pak Electron Limited (PEL) is the well renowned company in home appliances sector.
It is the journey of years to reach this position. PEL was established in 1956 with the
technical collaboration of M/s AEG Germany with object of initially producing
transformers, switchgears and electric motors. AEG experts and PEL personnel
carried out the designing and production of these equipments jointly. It is the oldest
composite electrical equipment-manufacturing unit of Pakistan producing power and
consumer products.
The present range of power products includes Transformers up to 33KV 5MVA

capacity, Switchgears up to 33KV, Cage Induction Motors up to 40HP, Single Phase
Energy Meters, Small Generators, Shunt Capacitor, Banks and Recloser etc.
In the year 1980 the company expanded into consumer products with the introduction
of Window Type Air Conditioners and today also manufactures Split Air
Conditioners, Refrigerators, Microwave ovens, Deep Freezers and Compressors etc.
PEL products right from the beginning have been of a high standard and the name
PEL is synonymous with QUALITY all over Pakistan. Since its inception, the
company has been acting as an institution working for the advancement and
development of engineering know how in Pakistan. The company has produced
hundreds of engineers, skilled workers and technicians through its apprenticeship
schemes and training programs.
In October 1978, the company was taken over by the SAIGOL GROUP, which is one
of the leading industrial groups in PAKISTAN, having diversified business activities.

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VISION AND MISSION OF PEL
VISION STATEMENT
“To excel in providing engineering goods and services through continuous

improvement”
MISSION STATEMENT
To provide quality products & services to the complete satisfaction of our customers
and maximize returns for all stakeholders through optimal use of resources
To focus on personal development of our employees to meet future challenges
To promote good governance, corporate values and a safe working environment

with a strong sense of social responsibility

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OBJECTIVES
The Objectives and Missions for which the company is established are as following:
• The purchase and acquire from Messrs. Malik Brother Limited on Ferozepur Road
(Near Walton) in the district of Lahore under the name of Pak Elektron and all
plant, machinery, goodwill and all the subsisting contracts in respect thereof with
right, privileges and obligations relating to the sold properties and with a view there
of to enter into the agreement and to carry the same into effect with or without
modifications.
• To carry on the business or business of manufacturing, selling, installing,

maintaining designing and dealing in all kinds of electrical equipment.
• To carryon 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 are incidental or conductive for the attainment of the
above objectives or any of them.
• To produce high quality and standard products.
• To produce equipment to be used in numerous projects of national importance.
• To secure a high share / quota of WAPDA’s demand for power products.
To produce skilled workers and technicians through its apprenticeship schemes and
training programmed for engineers and technicians.

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History
PAK ELEKTRON LIMITED was set up in 1956 as a joint venture with one of the
largest and renowned manufacturers of electrical equipment Messrs. AEG of West
Germany for manufacturing Transformers, Switchgears and Electric Motors etc. The
entire job of machinery requirements and layout of the factory building was planned
and implemented by AEG who produced very well balanced facility for the design
and manufacture of the above equipment and the commercial production was
commenced on 22 November 1956.
Up to 1962, when AEG finally phased out, the designing and manufacturing of all
equipment was carried out jointly by AEG experts and PEL personnel. PEL staff, in
the meantime, had received specialized training in USA and West Germany which
enabled PEL to establish itself as the leading manufacturers of electrical equipment in
the country with an excellent reputation for high quality and thus PEL came to be
known as "THE QUALITY CONSCIOUS COMPANY".
After conclusion of agreement with AEG, total share holding of AEG was purchased
by the then sponsors - Malik Brothers. The production continued with AEG designs
with much greater emphasis on the quality and reliability of the products which
earned unique distinction of supplying electrical equipment to projects of paramount
national importance like Mangla Dam and Tarbela Dam Projects. PEL equipment was
approved by consultants of international repute including Preece Cardew & Rider
(England), Binnie & Partners (England), Harza Engineering International (USA) and
Miner & Miner International Inc. (USA).
The majority shares were acquired from Malik Brothers by Saigol Group on 11
October 1978 and immediately on takeover the new management chalked out both
long term and short term plans to put the company back on the path of progress. As a
part of first phase of its BMR Programmer the new management injected the
additional working capital of Rupees 8.98 million and Bridge Loan of Rupees 7.50
million (against the public issue of its shares) was provided by the ICP-led

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Consortium. As a part of long term plans, the manufacturing of window type Air
conditioners was taken up in 1981 and was immediately established for quality.
The company launched the second phase of its BMR and expansion of the existing
product line in the year 1987 and imported machinery for the manufacture of
Refrigerators and Deep-freezers for a total value of Rupees 22.11 million. For the
project National Bank of Pakistan - the leading bank of the company provided the
financing. Like Air conditioners these products have also been well received by the
local market which speaks highly of the confidence the consumer has developed in
the quality products manufactured by the company.
During the year 1990 the company had signed an agreement with Messrs HITACHI
of Japan for the manufacture of Vacuum Circuit Breakers.
The company has entered into an agreement with Pakistan Industrial Credit and
Investment Corporation (PICIC) for a foreign currency as well as local currency loan
of Rupees 25 million for the expansion, balancing, modernization and replacement of
the existing plant. The machinery has come into operation in October 1991 and with
the balancing, modernization and replacement of machinery, the production capacity
of Refrigerator Section will reach a level of 252,450 cubic feet.
The management of the Company decided to further expand its operation by

establishing a plant for the manufacture of compressors for refrigerators and deep
freezers. The technical know-how agreement has been signed with M/S NECCHI
Compressors, Italy for the assembly and progressive manufacturing of compressors
for refrigerators and deep freezers.
Pak Electron Limited is known for its continuous research and development and
transfer of technology from abroad. The Company commissioned its plant for the
manufacture of Electricity Meters in Pakistan in June 1994 with the technical
collaboration and under license from M/S Asea Brown Boveri United State of
America (A.B.B. USA). The plant consists of most modern and latest numerically
controlled electronic machines with robotics technology and is capable to produce
960,000 single phase electricity meters per annum in accordance with the
international standards and specifications using the latest and most modern techniques
available in the world.

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LOCATION AND FACILITIES

The head office is in Gulberg Lahore and the production unit is situated at 14-k.m.
Ferozepur Road, Lahore, and is spread over an area of 242 kanals and 15 Marlas of
leasehold land in industrial area of Kot Lakhpat, Lahore, and presently the total
covered area comes to 232,883 square feet. Factory is located on the main road where
public transport is available round the clock helping in easy access to the labor and
customers.
Business volume
The “SAIGOL GROUP” is one of the leading industrial groups in Pakistan. The
Saigol Group belongs to the Saigol Family, which is an old business family and has
contributed a lot towards Pakistan’s industrial development. Saigol Group remains a
leading and forward-looking group and believes in continuous development and
growth. The result is a global business activity monitored through various offices
worldwide. They are serving nation in diversified business activities in the fields of:
• Textiles.
• Engineering.
• Banking and Finance.
• Fuel and Energy.
• Trading.
• Automobiles.

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SAIGOL GROUP OF COMPANIES
Textile
• Azam Textile Mills Ltd. 06-Egerton Road, Lahore
• Saritow Spinning Mills Ltd. 06-Egerton Road, Lahore
Fuel & Energy
• Kohinoor Power Co. Ltd. Kohinoor Nagar, Faisalabad
• Kohinoor Energy Ltd. 06-Egerton Road, Lahore
Engineering
• Pak Elektron Ltd.1 14km, Ferozepur Road, Lahore
• PEL 2 21 km, ferozepur road Qasoor
Banking & Finance
• Union Bank Ltd. 06-Egerton Road, Lahore
• Union Leasing Ltd. 07-Egerton Road, Lahore
Trading
• Saritow Pakistan Ltd. 06-Egerton Road, Lahore
• Saigol Computer Ltd. 162-Shadman Colony, Lahore
Automobiles
• Kohinoor Motor Works Ltd. 07-Egerton Road, Lahore

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Unique Features of the Company
 Low Price product
 Reliable
 Modern
 Environment Friendly
 High Quality Product
 Consistent Quality
 ISO 9001 Certified
PEL power division has the following features
 Lower Losses
 Low Partial Discharge
 Low Noise Level
 Higher overloading Capacity
 Higher Reliability
 Maintenance- Free Warranty

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ISO 9001
PEL was 16th Company in Pakistan, which got ISO 9001 Certification in 1997, since,
and then PEL Management is applying this International Standard Practices for
Effectively Managing Quality of Products and Services that Company Offers. The
International Standard Practices in PEL have been upgraded as per the Revised ISO
9001 Standards and its Scope of Application is expanding ever since and Top
Management is committed to make PEL a Total Quality Management (TQM)
Company.
In PEL Quality is the Subject of Management at all Levels. IT focus on continuous
improvement in its Systems thus establishing Good Management Practices that
ensure Product and Services Standards, it is committed to and making continuous
efforts in developing and strengthening its internal and external customers and
suppliers, employees training and development and their participation are the KEY
forces which are Increasing the Organization's Capabilities thus making it more
competitive and fast growing Company. Top management is not only tremendously
improving the Working Environment but also investing in improving internal
Communication Network for better Teamwork.
Continuous Up-gradation in production facility equipment thus going for State-of-
the-art production facility reflects management Vision and commitment for
Quality. Having around Fifty years of manufacturing experience with cooperative
and dedicated employees and now coupled with efficiency monitoring processes and
Data Analysis enable management to take Preventive Actions before things really go
wrong.
Elimination of wasteful activities, practices, processes, norms and behavior are the top
management's priorities that need to be managed so that the philosophy of ZERO
DEFECT can be taken on board. Benchmarking with National and International
repute Organizations will be in our road to manufacturing excellence to prove PEL as
a World Class Manufacturer.

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Nature of the organization
PEL is an engineering nature of company which has two business divisions.
BUSINESS DIVISIONS
PEL is organized in two business divisions:

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Product Hierarchy:

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APPLIANCES DIVISION
PEL’s Appliances Division is the flag carrier of the Saigol Group. This Division of
PEL consists of home appliances manufacturing. In 1981, PEL window type air
conditioners were introduced in technical collaboration with Fujitsu 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.
POWER DIVISION
PEL Power Division manufactures Transformers, Switchgear, Electric Motors,

Energy Meters, Kiosks, Compact Stations, Shunt Capacitor Banks, etc. of highest
quality and of latest 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
Companies in Pakistan.
PEL equipment has been used in numerous power projects of Nation importance
within Pakistan over the years and PEL has had the privilege of getting its equipment
approved and certified from well-reputed international consultants.

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Major Competitors
Appliances Division Power Division
Dawlance Seimens
Waves Climax
Haier Transfab
Mitsubishi J&P
Orient AB Ampere
Singer Ahmad & companies
Panasonic Feco
Areva
Fico
Pempam
Tariq Electric
Syed Bhais
Microtech
Escort
SB Electronic
Creative Electric

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Organizational structure
The structure of the Pak Elektron Limited is Hybrid. Because the organization
combines the characteristics of functional and divisional structure in its organizational
structure. As the organization has grown large and have several products and markets
so it is organized into self contained divisions of some type. Functions that are
important to each product and market are decentralized to the self contained units.
However, some functions that are relatively stable and required economies of scale
and in depth specialization are centralized at the management level. The functions of
Accounting, Finance, Human resources, Industry relations, R&D and Information
technology are same for the both divisions but each division has its own separate
functions of sales, production and marketing.

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MANAGEMENT PROFILE
A committed team of highly qualified, experienced professionals, financially sound
and reputed sponsors manages the Company. Through sheer dedication, diligence and
the Almighty’s Beneficence the management team at Pak Elektron Limited have
earned reputation for excellence in manufacturing of electrical as well as home
appliances and their marketing.
CHIEF EXECUTIVE
• Mr. Mian Naseem Saigol
BOARD OF DIRECTORS
• Mr. M. Azam Saigol
• Mr. Shahid Sethi
• Mr. Haroon Ahmad Khan (Managing Director)
• Mr. M. Murad Saigol
• Mr. Homaeer Waheed
• Mr. Gull Nawaz (NIT Nominee)
• Mr. Masood Karim Sheikh (NBP Nominee U/S 182 of Ordinance)
• Mr. Tajammal H. Bukharee (NBP Nominee U/S 182 of Ordinance)
• Mr. Wajahat A. Baqi (NBP Nominee U/S 182of Ordinance)
CHIEF FINANCIAL OFFICER
• Sayad Manzar Hassan
COMPANY SECRETARY
• Sheikh Muhammad Shakeel, FCA
AUDIT COMMITTEE
• Mr. Azam Saigol (Chairman/Member)

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• Mr. Haroon A. Khan (Member)
• Mr. Tajammal H. Bukharee (Member)
REGISTERED HEAD OFFICE
17-Aziz Avenue, Canal Bank, Gulberg-V, Lahore
Office -14 Km, Ferozepur Road. Lahore-54760
GP.D. Box No. 1614, Lahore - Pakistan.
Tel: (+92 42) 5811951-59 (9 Lines
Facsimile: (+92 42) 5810156, 5822682
E-mail: shares@saigols.com
Website Address: www.pel.com.pk
BANKERS
National Bank of Pakistan Bank Alfalah Limited
The Bank of Punjab KASB Bank Limited
Faysal Bank Limited Deutche Bank Limited
Meezan Bank Limited Royal Bank of Scotland
NIB Bank Limited Bank of Khyber
My Bank Limited Dawood Islamic Bank
Soneri Bank Limited
SILK Bank Limited

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Organization Hierarchy chart

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Introduction of Departments
Finance Department
Finance manager works under General Manager Finance. His span of management
contains three finance officers. Major function of this department, obviously, is to
arrange funds for company and also allocate funds. These officers perform significant
role at their stead.
General Manager Finance
His duty is to take major financial decisions.
Manager Finance
• Rate negotiations
• Handling cash in & out
• Bank relations
• Handling short term and long term funds requirements

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Assistant Manager Finance
• Reports to manager finance
• Arranging funds for production
• Preparation of Budget
Senior Finance Officer (General)
Fund arrangement is a major responsibility of this officer, including leasing,

mudaraba, and secured and unsecured loan arrangements. He keeps check on
inventory in Bond houses against which company finances. He is responsible to
release raw material from bond houses for production and sales purpose.
Check on working capital of the company is another task that falls in his job
description. What are the receipts and due payments for a day is also a matter of
concern. Moreover, he also coordinates with other departments.
Generally, most senior person is entitled for this job. Three assistant accountants work
under his supervision while the “senior finance officer” (General) himself reports to
Manager Finance
Finance officer (Leasing & budgeting)
It is job title assigns a group of activities concerning leasing, mudaraba and other
finance arrangements. His job is to formulate and conduct analysis on present status
of company financing, particularly, repayments and restructuring of installments.
Certainly, budgeting is also a part of his responsibilities.
Finance Officer (Treasury Finances)
National Bank of Pakistan (NBP) facilitates the company in Bond financing,

discounting bills, opening L.C’s. Bank also acts as guarantor in particular cases.
Financial officer (Treasury finances) deals with all corresponding processing in this
regard .Nation Bank of Pakistan (NBP) is the bank by whom the company deals with.
Bank is performing duties regarding secured financing, discounting bills and opening

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L.C’s. Bank developed a chain in such and manner that all financial activities
interrelate with each other’s.
Company acquires finance against the pledged stock; Pledging stock includes
imported raw material, components of air conditioner and refrigerator, transformers,
energy meters, refrigerators etc. These stocks will be pledged in bond housed that
situated in company’s premises, which is under-control of ban authorities. Bank opens
an account in the name of company, said as “Cash finance account”. But as per
requirement stock will have to be released for production purpose or sales purpose.
Bank sets limits in this regard, so each replacement requires bank permission. The
difference between borrowed money and pledged stock would have to adjust either by
pledging more stock or by making payments equivalent to the value of released stock.
In PEL Finance department is working under the supervision of four managers and
one General Manager. This department is comprised of four sections, namely
Budgeting Section
Guarantees Section
Material Planning Section
Leasing Section
Budgeting Section
Starting with Budgeting Department that forecasts Annual Sales, Expenditures and
Costs for the company after getting production estimates and Sales plans from the
marketing and than tell the amount to be arranged for production in order to finance
either power division’s production or Appliances division’s production.
Guarantees Section
Secret behind PEL’s success and increasing market share is its guarantees section that
actively works to get every order either for appliances or for power of the company by
speedily participating for the contract with the help of Tender Bonds of Guarantees.

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Leasing Section
This section works in order to fulfill the corporate production, personnel and
operational needs such as Machineries, Auto Mobiles and office equipments. It enters
into the Buying Contracts always with the one who offers best terms and conditions as
well as the best Internal Rate of Return to the Company.
OBJECTIVE OF FINANCE DEPARTMENT
Finance people concentrate on following points for accomplishment of their tasks
• Try to raise maximum funds
• Make arrangement for allocation of funds appropriately
• Doing above mentioned activities by controlling cost
FINANCE SECTION
There are different modes of financing are used.
CASH FINANCE FACIALITY
Loans can be taken from any commercial bank.
WORKING CAPITAL
Use to meet day-to-day routine finance
RUNNING FINANCE
A fix limit is assigned by bank and Co. can use within that limit
HOW THEY MAKE PLANS
Planning is an important aspect for achieving objectives ahead. So while making

plans manager foresee the situations in advance and take decisions. It is true in case of
finance department. Finance department have to do advance Planning for different
tasks about production and utilization of loans appropriately In advance

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HOW THEY TAKE DECISIONS
The only thing that is considered at the time of taking decisions regarding fund raising
is lower markup rates down because this is what makes loans feasible or otherwise.
PROCEDURAL ASPECTS
WORKING CAPITAL FINANCE
This type of loan is secured against;
• Pledge
PLEDGE
It may be constructive or actual. Constructive pledge is that in which goods are not
taken by bank rather keep them in company's good own under its own security.
In case of actual pledge, bank holds the possession of goods.
HOW PLEDGE IS CREATED?
Only pledge latter is required to make it effective.
HOW IR IS DISCHARGED?
Only by paying the amount of loan and issuing o D/O delivery order to discharge that
amount of goods under possession.
PROCEDURE FOR SHORT TERM LOAN
In PEL Industries following procedure is applied for short-term loans.

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OFFERING LETTERS
Each bank issues an offering letter that mentions the following things
• Amount sanctioned
• Markup rate
• Charge over assets (pledge)
• Period
• Other conditions
ACCEPTANCE
If PEL agrees on the conditions given by the bank it sends the following Documents.
In case the conditions are not acceptable then negotiations are made to bring the
conditions to point where there are acceptable to both the parties.
• Board of directors to open the account
• List of directors
• Form 29 (details of Original limit documents
• Copy of resolution Directors)
• Signature cards of Directors to open the current account
• Memorandum and Articles of association
CREATION OF CHARGE
To create charge, following documents are sent:
• Form 10
• Affidavit
• Letter of pledge

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LETTER OF CONTINUITY
When PEL wants a renewal to the existing line after expiry date, it submits a letter of
continuity.
PROMISSORY NOTE
It is promise of company to pay to the bank the amount of loan plus markup.
LONG TERM LOANS
PEL acquired a long-term loan to finance the import of machinery. Recently PEL has
purchased some machinery from China for Digital Energy Meters.
The process for long-term loan is explained in following.
PREPARATION OF FISIBILITY REPORT
Following points are considered while preparing the feasibility report.
FINANCIAL STATEMENTS
• Cost of the project. This includes operating assets (land, building, Vehicles,
furniture, capital expenditure and means of finance)
• Project profit and loss account
• Projected statement of changes in financial position. It gives sources of
• Finance and the application
• Projected balance sheet
ASSUMPTIONS
• Production schedule
• Dues and chemical assumption

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SCHEDULES
• Sales forecast statement
• Total production cost.
• Working capital
• Loan repayment schedule
BANK FISIBILITY REPORT
Bank studies the feasibility report and prepare report and prepare its own feasibility
report to see where it would be feasible to sanctioned loan to company or not.
OFFERING THE LETTER
The bank, if it is satisfied with the feasibility report then send offering letter. It has,
• Amount sanctioned
• Mark up rate
• Charge over fixed assets
• Tenor
• Installment period
• Interest payment period
• Acceptance
• If company accepts the terms, it must respond with this period.
NEGOTIATION
Negotiation between bank and company takes place to change certain conditions of
offer letter and it acceptable for both parties. A second draft of the offer letter is
prepared with changes and signs of bank and CEO OF PAK ELEKTRON LIMITED.

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CREATION OF CHARGES
A charge is created in favor of the bank to secure its loan with following documents
affidavit. It is an undertaking by the company that will follow all conditions.
• Form 10. It contains the particulars of assets against which charge is created.
• Memorandum of constructive deposit of little deeds. It tells about the

conditions that the company will follow along with the details of property under
charge.
All the above documents are submitted with registrar against whom a Certificate of
Registration of Mortgage is issued.
LOAN PREPAYMENT SCHEDULE
This schedule is prepared to show the mark up principal and total installment value
for whole tenure.

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ACCOUNTS DEPARTMENT
All matters, starting from “Book keeping” to formulation of financial statements are
supervised by “Account manager”. Accounts manager directly reports to General
finance manager. He has divided his staff into five-section I). Cost section, ii). Import
section, iii). Inventory section, iv). Salary section and v). Accounts Payable section.
On the basis of these bookkeeping activities financial statements and relevant
statements are prepared, which necessitate in decision making at corporate level.
Functions
This particular department has the responsibility to prepare and keep an up to date
record of following:
• Financial keep of daily, including the income statement and balance sheet.
• Book keeping of daily monetary transactions.

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• Production maintenance reports
• Cost data on labor, materials and overheads.
• Remittances and loans
• Expense reimbursement
• Tax statement
• Financial deals with the banks, leasing companies, mudaraba companies, and
other government agencies through Finance Center.
The finance department maintains record of all its expenses through vouchers.
Generally the following types of vouchers are used for this purpose.
• Cash payment vouchers for cash transactions recording.
• Purchase vouchers
• Bank payment vouchers
• Journal vouchers for general expenses.
PAYMENTS TO SUPPLIERS
How does Accounts Department make payments to the company’s suppliers?
Supplier sends “Commercial Invoice” to buying department for the purpose of

recovery. Buying department put it forward to Accounts department. Purchase section
officer checks Commercial Invoice against the computer report (store) to see what
material have been received that either supplier has valid right of title or not. After
confirmation, cheque is drawn in favor of supplier. Bank payment voucher is used for
the internal records against the drawn cheques.
COMMERCIAL DEPARTMENT
Commercial Department deals with sales tax custom, and excise matters. This
department has been divided further on the basis of these above-mentioned activities.

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Commercial department is headed by “Commercial manager”, who supervises

commercial staff.
SALES TAX
Basically, it deals with sales tax matters of the company. Sales tax section annexes
the area of input-sales tax and output- sales tax as well. Input-sales tax, which is
levied on purchasing items, while output sales tax, which is levied on selling items,
are kept in record here in this section.
On monthly bases, sales tax section submits “Return file” to CBR, wherein it gives
net balance, output- sales tax minus input- sales tax. Finally, company claims
refunding amount or makes payment, of balancing figure, to CBR *.
SALES TAX STAFF
Total staff of sales tax section is consisted of four people. Normally, two commercial
assistant officers do job concerning with output-sales tax, one commercial officer
engages in input-sales tax matters, and senior commercial officer supervise all of
them.
SALES TAX AND EXCISE TAX
“Sales tax is levied on all retail. The variations in sales tax have not the directional
effects.”
“Excise tax is livable on goods, includes goods manufactured or produced in non-

tariff area and brought for consumption to tariff area.” Ministry of finance announces
sales tax and excise tax’s rates in its annual budget. For the time being, 16% sales tax

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is imposed on registered buyer and unregistered buyers are liable to pay. PEL pay 1%
S.E.D (special excise duty) on transformers.
Recording of Input sale tax & Output sales tax
Input sales tax is levied on raw material. Payments regarding input sales taxes are
recorded in “Purchase register”. At the end of each month total paid amount is
calculated.
Output sales tax is levied on selling item, which buyer pays. Company makes
commercial invoice, wherein selling amount is mentioned along with imposed sales
tax. Concerning data is kept in “Supply Register”. Finally, total receiving sales tax
amount is sum up on monthly bases.
Submission of Return File to CBR
Monthly, section is responsible to submit its return file. Wherein total output sales
taxes are subtracted by total input sales tax. If output sales tax exceeds company
makes payment for balancing, otherwise, government charges 5% per month. On the
other hand, when input sales tax greater than output sales tax then company has two
options, either company refunds the additional amount or carried it forward to the
next month.

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IMPORT SECTION/FP DEPARTMENT

PEL is an engineering concerns company introducing Deep freezer, Air-conditioner,
Refrigerator, Energy meters, Transformer and Switchgears. Not even any one product
is entirely manufactured in PEL by locally available raw material. But practice is that,
company imports a large portion of raw material from foreign suppliers.
Import section plays an integral role in achieving cooperate goals, as it is responsible

for all imports concerned matters. Usually, this department imports:
• Raw-material
• Parts
• Equipment
• Machinery
Import activities are started from marketing- plan, in general. This plan is forwarded
in systematic way and finally import plan is formulated. On the bases of import plan,
import section allocates their activities.
IMPORT PLAN WORKFLOW
Marketing Plan
Marketing department estimates future demands for company’s products on yearly

bases and monthly bases as well. “Sales planning” process reflects not only previous

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sales figure but environmental conditions, too. That‘s why sales plan is also
maintained on rolling bases.
Production Plan
Production department takes it critically against the crucial maters of plant capacity,
manpower and time constrains. With mutual consent of sales department, Finance
department and by the approval of higher authority, Production department formulates
“production plan” with month-wise breakup.
Import Plan
After deciding “how much units have to be produced” and confirm that “what
material would required” material planning department would carry forward this
process by checking inventory level and by deciding that what, when, and how much
quantity of material would be ordered to foreign supplier. That final requirement of
material for import is forward in documentary form of “Import plan” to commercial
department. Import section staff performs two types of activities and these activities
are needed to correlate with each other. It is a big task to deal with. Under the heads
of “Pre-shipment activities” and “Post-shipment activities”, the import activities are
grouped.
PRE-SHIPMENT ACTIVITIES
Pre-qualification of supplier(s)
Before submitting “request for quotation” import officer assess supplier(s) either they
fulfill criteria for pre-qualification or not. Supplier should be certified by ISO 9000 or
should have consistent performance regarding,
• Competitive price.
• Adherence to agreed shipment schedule.
• Documentation without discrepancies.

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• Backup for technical assistance (if required.)
Request for quotation
After list out the pre-qualified suppliers, commercial manager asks for their
quotation.
Bid Analysis
Each bidder is analyzed and selected lowest bidder, but quality matter is also taken
into account. After selection, Commercial manager negotiates with the acceptable
bidder to finalize all terms and conditions.
Import purchase order
After selection of most appropriate supplier, order is placed. Incharge import receives
a Performa invoice/ sales contract from supplier.
Opening letter of credit
On the month of basis schedule for L.C. is prepared with reference to annual material
plan. Company mostly engages with National Bank of Pakistan in respect of opening
L.C. When bank opens L.C, commercial department faxes or mails it to supplier.
Follow up the shipment schedule
In case of delayed shipment, L.C is required to extend further. Import officer is also
responsible for that.
POST-SHIPMENT ACTIVITIES
Movement of consignment from Karachi
After opening L.C supplier sends four types document to company through fax or
mail such as:
• Commercial Invoice.
• Packing list.
• Bill of lading.

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• Certificate of origin.
These documents are treated as non-negotiable documents. Company receives original

shipping documents through Bank.
Custom clearance
Custom clearing agent of the company submits “Bill of entry” to custom authority,
and clears the consignment.
Receipt of consignment at receipt store of the company
After custom clearance the consignment is free. Now consignment is received at

receipt store of the company. Receipt store officers assure quantity and quality of the
consignment. Otherwise company claims for damage.
PROCUREMENT
PEL has state of the art methods of production and they also outsource the products
and raw material not only from Pakistan but also from Asia, America, Europe, and
Africa.
So for this purpose PEL has two different departments for procurement, which are:
• Local Procurement
• Foreign Procurement
LOCAL PROCURMENT
Local Procurement department is responsible for all the raw materials that are
required for making various products in the factory. It includes from nails to large
metal sheets. At the start of each financial year they receive a major plan from the
management, which highlights all the raw material required for each product. Dates
and maximum time limit for raw material requirement is also mention in this major
plan.

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FOREIGN PROCUREMENT
Responsibilities and duties are same as Local procurement but they vary in the
dimension that, they have to arrange the raw material from abroad. They also receive
same plan as local procurement for the whole financial year and develop milestones to
carry out the plan execution properly.
The skill of this department is to purchase the raw material in the optimum cost that
best satisfy the need of production department and also to finance department in
quality as well as in monetary terms respectively.
Application of the Class Room Learning
Marketing Strategy
Marketing strategy of PEL is that it focuses mostly on middle class people. The other
competitors like LG, Samsung, and Dawlance etc have higher process of their
products. PEL products have comparatively lower prices.
Now we will discuss the 4 Ps of PEL
Product:
PEL has a wide range of products catering to different needs of the society. Like it has
appliances division and power division. The PEL products are of high quality. They
have innovative designs. The product detail is discussed above.
Price:
The prices of the PEL products are affordable and less as comparative to its
competitors. It keeps its prices low especially for the appliances division, because it
focuses on the middle class people.
Place:
PEL has a strong dealer’s network. PEL products are easily available throughout
Pakistan. PEL products are also available in the newly opened mega stores like
mackro, hyper star etc.
DISTRIBUTION CHANNELS

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Producer Agent Wholesaler Retailer Customer
Promotion
PEL mostly advertise its products through electronic media like for example through
TV channels. No doubt the TV advertisements of PEL are less frequent as compared
to its competitors. But still it has great brand awareness among people. PEL also uses
print media for its advertisements.
Competitive Strategy
• The competitive strategy of PEL is that it has a wide range of products and at
low prices.
• PEL focuses on cost leadership strategy in its power division appliances. i.e.
the prices of its power division appliances are high but they are of very high
quality. PEL has a competitive advantage of its brand name.
PEL has high quality products both in appliances and power division because most of
the raw materials are imported from different countries and these raw materials are of
very high quality.
INDUSTRIAL ANALYSIS
Transformers
PEL has vast experience in design and manufacturing of standard and special purpose
transformers. New technical designs for improved efficiency and quality against
special orders of non-standard transformers are continuously being explored. These
transformers are available for various applications.
- Distribution Transformers
- Auto Transformers
- Furnace Transformers
- Welding Transformers
PEL transformers have been successfully type tested for impulse voltage and short
circuit tests by KEMA Laboratories of Holland. Customized transformers, in
accordance with domestic and international client’s specifications have also been
manufactured for use within and outside Pakistan. Transformers are normally
supplied in a period of 3 – 4 months after the receipt of orders from respective
distribution companies of WAPDA and varied supply time for private customers. The
Company provides one year after sales service warranty to WAPDA, KESC and
private sector customers.

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Major Customers,
- WAPDA & KESC
- Accounts for over 90% of the total transformer sales
Major Suppliers,
- ThyssenKrupp Electrical Steel GmbH of Germany which supplies

Silicon Steel Sheet
- International Industries Limited – Pakistan
Energy Meters
PEL manufactures three types of energy meters; Single Phase and Poly Phase. The
electro-mechanical energy meters are manufactured under license from ABB of USA.
The quality of PEL meters has been certified by KEMA Laboratories of Holland. PEL
meters are superior than others due to their ability to lower revenue losses through
accurate & precise operation and reduction of maintenance expenses.
Single Phase energy meters provide maintenance-free operations over a long period
and accurate measurement of electrical energy.
Poly Phase energy meters improve load performance and precision accuracy. The
meters require minimum maintenance and can withstand abuse from surges and
magnetic tampering.
Three phase digital electronic meter with dual tariff capability recently launched and
supplies to WAPDA has begun this year.

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Energy meter orders from WAPDA are received annually and their supply period is 9
-10 months. Energy meters to KESC are supplied in a period of 3 - 4 months. The
Company provides one year after sales service warranty to WAPDA, KESC and
Others.
Major Customers,
- WAPDA & KESC
- Accounts for almost 100% of the total energy meter sales
Major Suppliers,
- Zhejiang Holley Imp. & Exp.Co. Ltd of China and ABB INC
Electricity Metering of USA supplies energy meter parts for
Single phase meters
- Mitsubishi Corporation of Singapore provides poly
Carbonate resins

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Switchgears
Switchgears are one of the highly technical and specialized power products of PEL.
They are produced for indoor and outdoor installations complying with international
installation standards. A major customer for this product is WAPDA. The Company
provides one year after sales service warranty to WAPDA, KESC and other
customers.
Major Customers,
- WAPDA
- Accounts for over 63% of the total Switchgears sales
Major Suppliers,
- Hyundai Heavy Industries, South Korea
- Pelka Elektrik Malzemeleri of Turkey

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Refrigerators
PEL Refrigerators were introduced in 1987 with features such as VCM (Vinyl Coated
Metal) coating; stylish finishing and auto drain systems. PEL refrigerators carry
compressor made by Danfoss of Germany.
The low noise compressor is extremely silent and keeps the refrigerator running
smoothly. Furthermore, the compressor is resilient to fluctuations in voltage level,
thereby proving to be a more durable product.
The refrigerators market has experienced growth in previous years due to availability
of refrigerators at lower prices, economic growth and the upward trend of consumers,
financing at lower interest rates. PEL is actively involved in the manufacturing and
trading of refrigerators, which is a major source of consistent growth. The
refrigerators business contributes to 48% of the Company’s sales and this trend is
expected continue in the coming years.
Major Suppliers,
- Danfoss Compressors GmbH of Germany provides Compressors
- Team Spezialgerate-vertriebs GmbH of Germany provides Polystyrene
- Danfoss A/S of Denmark provides Thermostat
- BASF Aktiengesellschaft of Singapore provides Plastic
Moulding Compound

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Air Conditioners
PEL is a market leader in the domestic air conditioning market. PEL started
manufacturing window air conditioners for the first time in Pakistan in technical
collaboration with General of Japan. The air conditioners were specifically designed
to meet the extreme climatic conditions of Pakistan. PEL’s air conditioners have
excellent cooling capabilities at high temperatures, varying levels of humidity, high
air dust and uneven voltage power supply conditions.
The air conditioners market in Pakistan comprises of window air conditioners and
split air conditioners. Although the air conditioners market has been growing over the
years, however, the growth seems to have come primarily through increase in the split
air conditioners market with the window air conditioner market shrinking
dramatically.
The split air conditioners market demonstrated a growth of 90% in 2009 as compared
to the previous year and keeping in view this trend PEL starts
Major Suppliers,
- Mitsubishi, Japan and Thailand provides rotary type compressors
- Copeland, USA provides reciprocating compressors

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MY LEARNINGS IN PAK ELEKTRON
While working with PAK ELEKTRON LTD, I got very broader visions about
company financial and marketing activities more than those that I had learned during
my MBA program. What were those experiences? I would like to share them in this
report.
I worked in finance and accounts department for about 6 weeks and the detail of my
activities performed there were as follows
 I verified all the purchase invoices regarding the three main sectors applied
appliances, powers and electric.
 All the invoices were verified in terms of the net amount after the tax, before
tax, sales tax value, vendor verification and debit invoice. Debit invoice is a
mode to settle the amount differences of the invoices.
 After my due verification then I have to report to my supervisor the Accounts

payable head and after this the entries are recorded in the PEL electronic
software.
 With this responsibility I was assigned to take and handle all the calls of
vendors and from whole the company departments.
 After the entries are made then final cheques were made by the authorized
individuals and handled over to the concerned department.
 Reconciliation of the vouchers with different organizations relating to it.
 Reconciliation of the Raaziq international accounts with the account ledgers of

finance department.
 Check how to code the finish goods inventory.
 The two major costing methods used by the Pak elektron limited are the job
order costing and process costing. But the major use is job order costing.
 Check what types of insurance risks are handled there.

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 Employees form NG to Manager Level is given some facilities e.g. medical,

traveling and mobile postpaid etc. the recording of such expenditure.
 Manage the records of the company.
 I have learned about the inland letter of credit. The more preferable mode of
finance. In which the company request the party against the order.
 I have also learned that in order to get an order, a company has to follow a
participation procedure and this procedure starts from TENDER BONDS or
Guarantees given through banks to the buying party in order to assure that
certain company has a legal entity, has an ability to fulfill the desired order
within specified date and incase if the company dissolves bank will stand
liable for the fulfillment of the order.
 Similarly another important thing which I had learned over there was the
Buying procedure through leasing agreements like writing a purchase order,
asking for quotations, making comparisons of the offered features and Internal
Rate of Return and lastly the best institutional selection in order to avail
leasing facility.

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EQUITY AND LIABILITIES (Rupees in Thousand)

SHARE CAPITAL & RESERVES 2009 2008 2007 2006 2005
Share Capital 1496677 1496677 1368591 1215873 1136194
Reserves 131931 131931 1872683 1467619 301515
un appropriated Profits 2378750 2074013 849356
Total Equity 4007358 3702621 3241274 2683492 2287065
SURPLUS ON REVALUATION 2788311 1940365 823341 464171 497601
OF PROPERTY, PLANT AND
EQUIPMENT
NON CURRENT LIABILITIES
Long-term financing 3493417 2480238 1314219 250365 389172
Liabilities against assets to finance 103367 90206 187027 182487 123092
lease
Deferred Liabilities 2013543 1438405 736309 409155 345996
Deferred Income - grant-in-aid 110207 82996 66323 69814 73488
Total Non Current Liabilities 5720534 4091845 2303878 911821 931748
CURRENT LIABILITIES
Trade and other payables 1506702 2084351 1572732 1599580 836697
Interest / mark-up accrued on loans 337322 220104 213298 226709 140210
and other payables
Short-term borrowings 3946515 3868988 3043650 3795340 2879827
Current portion of long-term
liabilities
Long-term financing 677349 331701 245501 321496 367577
Liabilities against assets subject to 85944 53228 103105 105132 62287
finance lease
Provision for taxation - - 8685
Total Current Liabilities 6553832 6558372 5178286 6048257 4295283
Total Liabilities + O.E 1907003 1629320 1154677 1010774 8018896
5 3 9 1

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(Rupees in Thousands)
2009 2008 2007 2006 2005
NON CURRENT ASSETS
Property, plant and equipment 9720022 6231129 4046378 3144904 2716401
Intangible assets 583512 573617 581705 602465 249880
Long term investments 21771 52945 12474 11227 60711
Long-term deposits 31026 34218 35332 38811 25541
Total NON CURRENT ASSETS 1035633 6891909 4675889 3797407 3052533
1
CURRENT ASSETS
Stores, spares and loose tools 76854 81990 64376 58543 52713
Stock-in-trade 3258607 3571168 2507679 2576026 1956566
Trade debts 3807776 4207741 2947646 2614396 1853889
Loans and advances 686044 542663 315641 225113 218179
Trade deposits and short-term 229415 321574 306775 287034 236489
prepayments
Other receivables 12671 32437 29374 9266 270471
Other financial assets 26107 72295 162825 91022 35596
Sale Tax Refundable 131593 49620
Income tax Refundable 291579 87322
Cash and bank balances 193058 434484 536574 448934 335261
TOTAL CURRENT ASSETS 8713704 9401294 6870890 6310334 4959164
TOTAL ASSETS 1907003 1629320 1154677 1010774 8018896
5 3 9 1

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(Rupees in thousands)
2009 2008 2007 2006 2005
Sales 16,117,5 13,926,5 13,077,6 11,042,1 8,075,3
24 72 70 60 82
Less: Sales-Tax and Discount 1,495,9 1,274,5 1,264,1 1,634,1 1,287,5
12 79 83 42 00
Sales - net 14,621,6 12,651,9 11,813,4 9,408,0 6,787,8
12 93 87 18 82
Cost of goods sold 11,283,7 9,801,8 9,283,6 7,360,3 5,298,4
96 97 23 51 89
Gross Profit 3,337,8 2,850,0 2,529,8 2,047,6 1,489,3
16 96 46 67 93
Other Operating Income 37, 108, 100, 112, 60,0
088 777 458 553 14
3,374,9 1,958,8 2,630,3 2,160,2 1,549,4
04 73 22 20 07
Distribution cost 892, 676, 588, 590, 402,3
068 452 981 412 48
Administrative expenses 609, 543, 356, 262, 230,1
004 636 556 482 49
Other operating expenses 116, 137, 52, 25, 23,6
807 227 429 108 25
Finance cost 1,372,6 972, 937, 742, 450,8
76 618 109 130 88
Share of Profit/ loss of 9, 5, 12, (23,3
associate 248 585 162 37)
Profit before tax 393, 634, 707, 516, 442,3
597 525 409 751 97
Provision for taxation 133, 177, 125, 74, 95,7
051 970 165 609 01
Profit after tax 260, 456, 582, 442, 346,6
546 555 244 142 96

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Balance Sheet

Share Capital 31.73% 31.73% 20.45% 7.01% 100.00%
Reserves -56.24% -56.24% 521.09% 386.75 100.00%
%
un appropriated Profits 180.07% 144.19% - - 100.00%
100.00% 100.00
%
Total Equity 75.22% 61.89% 41.72% 17.33% 100.00%
SURPLUS ON REVALUATION OF 460.35% 289.94% 65.46% -6.72% 100.00%
PROPERTY, PLANT AND
EQUIPMENT
Long-term financing 797.65% 537.31% 237.70% -35.67% 100.00%
Liabilities against assets to finance -16.02% -26.72% 51.94% 48.25% 100.00%
lease
Deferred Liabilities 481.96% 315.73% 112.81% 18.25% 100.00%
Deferred Income - grant-in-aid 49.97% 12.94% -9.75% -5.00% 100.00%
Total Non Current Liabilities 513.96 339.16 147.26 -2.14% 100.00%
% % %
CURRENT LIABILITIES
Trade and other payables 80.08% 149.12% 87.97% 91.18% 100.00%
Interest / mark-up accrued on loans 140.58% 56.98% 52.13% 61.69% 100.00%
and other payables
Short-term borrowings 37.04% 34.35% 5.69% 31.79% 100.00%
Current portion of long-term liabilities
Long-term financing 84.27% -9.76% -33.21% -12.54% 100.00%
Liabilities against assets subject to 37.98% -14.54% 65.53% 68.79% 100.00%
finance lease
Provision for taxation 100.00%
Total Current Liabilities 52.58% 52.69% 20.56% 40.81% 100.00%
Total Liabilities + O.E 137.81 103.19 43.99% 26.05% 100.00%
% %
In the horizontal analysis of the balance sheet it shows that the company share capital
increase in 2005 and 2006 but after this it is constant to the 31.73%. If I see the non
current liabilities of the company which is increase with the passage of time and goes
to 500%. The company current liabilities also increase but with the slow rate. The
overall effect on the liabilities and owner equity side has constant increase up to
137.81%.

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Balance Sheet
2009 2008 2007 2006 2005
NON CURRENT ASSETS
Property, plant and equipment 257.83% 129.39% 48.96% 15.77% 100.00%
Intangible assets 133.52% 129.56% 132.79 141.10 100.00%
% %
Long term investments -64.14% -12.79% -79.45% -81.51% 100.00%
Long-term deposits 21.48% 33.97% 38.33% 51.96% 100.00%
Total NON CURRENT ASSETS 239.27 125.78 53.18% 24.40% 100.00%
% %
CURRENT ASSETS
Stores, spares and loose tools 45.80% 55.54% 22.13% 11.06% 100.00%
Stock-in-trade 66.55% 82.52% 28.17% 31.66% 100.00%
Trade debts 105.39% 126.97% 59.00% 41.02% 100.00%
Loans and advances 214.44% 148.72% 44.67% 3.18% 100.00%
Trade deposits and short-term -2.99% 35.98% 29.72% 21.37% 100.00%
prepayments
Other receivables -95.32% -88.01% -89.14% -96.57% 100.00%
Other financial assets -26.66% 103.10% 357.42 155.71 100.00%
% %
Sale Tax Refundable 165.20% 100.00%
Income tax Refundable 233.91% 100.00%
Cash and bank balances -42.42% 29.60% 60.05% 33.91% 100.00%
TOTAL CURRENT ASSETS 75.71% 89.57% 38.55% 27.25% 100.00%
TOTAL ASSETS 137.81 103.19 43.99% 26.05% 100.00%
% %
In the asset side of the balance sheet shows that he non current asset side investment
is much more than the current side. As the current liabilities of the company are less
the company also meet the fewer amounts of assets. More non current liabilities more
non current assets. The company shows the good position of non current vs. current
asset proportion. The stock in trade up to 2008 increase but in 2009 it decrease. Trade
debtor also decreases in 2009. The total assets of the company increases with the time.

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Profit & Loss.
2009 2008 2007 2006 2005
Sales 99.59% 72.46% 61.94% 36.74% 100.00%
Less: Sales-Tax and Discount 16.19% -1.00% -1.81% 26.92% 100.00%
Sales - net 115.41% 86.39% 74.04% 38.60% 100.00%
Cost of goods sold 112.96% 84.99% 75.21% 38.91% 100.00%
Gross Profit 124.11% 91.36% 69.86% 37.48% 100.00%
Other Operating Income -38.20% 81.25% 67.39% 87.54% 100.00%
117.82% 26.43% 69.76% 39.42% 100.00%
Distribution cost 121.72% 68.13% 46.39% 46.74% 100.00%
Administrative expenses 164.61% 136.21% 54.92% 14.05% 100.00%
Other operating expenses 394.42% 480.86% 121.92% 6.28% 100.00%
Finance cost 204.44% 115.71% 107.84% 64.59% 100.00%
Share of Profit/ loss of -139.63% -123.93% -152.11% 100.00%
associate
Profit before tax -11.03% 43.43% 59.90% 16.81% 100.00%
Provision for taxation 39.03% 85.96% 30.79% -22.04% 100.00%
Profit after tax -24.85% 31.69% 67.94% 27.53% 100.00%
In the horizontal analysis of the Pak elektron limited the company sales increase with
the time up to 115.41%. the cost of goods sold also increase. Sales bring the positive
gross profit which is favorable for every company. Company earns profit up to
124.11%. the expense controlled in 2009 and heavy finance cost pay for which
company suffer loss in operating and net loss up to 24.85% with respect to the base
year comparison. the company earns profit up to 2009 but in 2009 due to the electric
crises and budget shortfall the company suffers loss according to base year. Company
also pays the profit on share which is the reason for loss.

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Balance Sheet

Share Capital 7.85% 9.19% 11.85% 12.03% 14.17%
Reserves 0.69% 0.81% 16.22% 14.52% 3.76%
un appropriated Profits 12.47% 12.73% 0.00% 0.00% 10.59%
Total Equity 21.01% 22.72% 28.07% 26.55% 28.52%
SURPLUS ON REVALUATION OF 14.62% 11.91% 7.13% 4.59% 6.21%
PROPERTY, PLANT AND
EQUIPMENT
Long-term financing 18.32% 15.22% 11.38% 2.48% 4.85%
Liabilities against assets to finance lease 0.54% 0.55% 1.62% 1.81% 1.54%
Deferred Liabilities 10.56% 8.83% 6.38% 4.05% 4.31%
Deferred Income - grant-in-aid 0.58% 0.51% 0.57% 0.69% 0.92%
Total Non Current Liabilities 30.00% 25.11% 19.95% 9.02% 11.62%
CURRENT LIABILITIES
Trade and other payables 7.90% 12.79% 13.62% 15.83% 10.43%
Interest / mark-up accrued on loans 1.77% 1.35% 1.85% 2.24% 1.75%
and other payables
Short-term borrowings 20.69% 23.75% 26.36% 37.55% 35.91%
Current portion of long-term liabilities
Long-term financing 3.55% 2.04% 2.13% 3.18% 4.58%
Liabilities against assets subject to 0.45% 0.33% 0.89% 1.04% 0.78%
finance lease
Provision for taxation 0.11%
Total Current Liabilities 34.37% 40.25% 44.85% 59.84% 53.56%
Total Liabilities + O.E 100.00 100.00 100.00 100.00 100.00%
% % % %
In the vertical analysis of the balance sheet it shows the current liabilities are 34.37%
and non current liabilities are 30%. And the owner’s equity proportion is 34% in

INTERNSHIP REPORT
2009. That shows that the company is debt finance. The company has more debt in
the current position. In the previous years the company has a lot of debt in the current
liabilities. But in 2009 the Pak elektron limited control over the current financing and
reduce up to 34.37%.
2009 2008 2007 2006 2005
NON CURRENT ASSETS
Property, plant and equipment 50.97% 38.24% 35.04% 31.11% 33.87%
Intangible assets 3.06% 3.52% 5.04% 5.96% 3.12%
Long term investments 0.11% 0.32% 0.11% 0.11% 0.76%
Long-term deposits 0.16% 0.21% 0.31% 0.38% 0.32%
Total NON CURRENT ASSETS 54.31% 42.30% 40.50% 37.57% 38.07%
CURRENT ASSETS
Stores, spares and loose tools 0.40% 0.50% 0.56% 0.58% 0.66%
Stock-in-trade 17.09% 21.92% 21.72% 25.49% 24.40%
Trade debts 19.97% 25.83% 25.53% 25.87% 23.12%
Loans and advances 3.60% 3.33% 2.73% 2.23% 2.72%
Trade deposits and short-term 1.20% 1.97% 2.66% 2.84% 2.95%
prepayments
Other receivables 0.07% 0.20% 0.25% 0.09% 3.37%
Other financial assets 0.14% 0.44% 1.41% 0.90% 0.44%
Sale Tax Refundable 0.69% 0.30% 0.00% 0.00% 0.00%
Income tax Refundable 1.53% 0.54% 0.00% 0.00% 0.00%
Cash and bank balances 1.01% 2.67% 4.65% 4.44% 4.18%
TOTAL CURRENT ASSETS 45.69% 57.70% 59.50% 62.43% 61.84%
TOTAL ASSETS 100.00 100.00 100.00 100.00 100.00%
% % % %
In the assets side of the balance sheet it shows that from 2005to 2008 the company
has high current assets than non current assets but the petrel of assets distribution in
2009 is change in 2009 the company have more non current assets than that of the
current assets the proportion is 45.69% current and 51.31%non current. This is better
for the financing and loan. At that point the company current ratio is more than 1
which is favorable.

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Profit & Loss
2009 2008 2007 2006 2005
Sales 100.00% 100.00% 100.00% 100.00% 100.00%
Less: Sales-Tax and Discount 9.28% 9.15% 9.67% 14.80% 15.94%
Sales - net 90.72% 90.85% 90.33% 85.20% 84.06%
Cost of goods sold 70.01% 70.38% 70.99% 66.66% 65.61%
Gross Profit 20.71% 20.47% 19.34% 18.54% 18.44%
Other Operating Income 0.23% 0.78% 0.77% 1.02% 0.74%
20.94% 14.07% 20.11% 19.56% 19.19%
Distribution cost 5.53% 4.86% 4.50% 5.35% 4.98%
Administrative expenses 3.78% 3.90% 2.73% 2.38% 2.85%
Other operating expenses 0.72% 0.99% 0.40% 0.23% 0.29%
Finance cost 8.52% 6.98% 7.17% 6.72% 5.58%
Share of Profit/ loss of 0.06% 0.04% 0.09% -0.21% 0.00%
associate
Profit before tax 2.44% 4.56% 5.41% 4.68% 5.48%
Provision for taxation 0.83% 1.28% 0.96% 0.68% 1.19%
Profit after tax 1.62% 3.28% 4.45% 4.00% 4.29%
In the vertical analysis of the profit and loss account of Pak elektron limited the
company sales increase with the passage of time and company gross profit form 2005
to 2009 increase from 18.44% to 20.71%. the company profit before tax decrease with
time because of increase in the expenses. The profit after tax also decreases because
of high finance cost but company provision of taxation decrease.

INTERNSHIP REPORT
2009 2008 2007 2006 2005

Current Ratio 1.32 1.43 1.32 1.04 1.15
Debt / Equity Ratio 306.30% 287.64% 230.84% 259.37% 228.55%
Asset to Equity Ratio 475.88% 440.05% 356.24% 376.66% 350.62%
Debt Ratio 64.36% 65.37% 64.80% 68.86% 65.18%

Long Term Assets Versus Long term 30.00% 25.11% 19.95% 9.02% 11.62%
Debt
Net Profit Margin 1.78% 3.61% 4.93% 4.70% 5.11%

Operating Income Margin 2.69% 5.02% 5.99% 5.49% 6.52%
Gross Profit Margin 22.83% 22.53% 21.41% 21.77% 21.94%
Return on Total Equity 6.50% 12.33% 17.96% 16.48% 15.16%

Return on Total Assets 1.37% 2.80% 5.04% 4.37% 4.32%
Return on Investment (ROI) 9.82% 17.14% 21.83% 19.26% 19.34%
Accounts Receivable Turnover 3.84 3.01 4.01 3.60 3.66

Inventory Turnover 3.46 2.74 3.70 2.86 2.71
Total Assets Turnover 0.77 0.78 1.02 0.93 0.85

Fixed Assets Turnover 1.41 1.84 2.53 2.48 2.22
The financial ratios of the Pak elektron limited are given above and the interpretation
of the ratios is given with the graphs.

INTERNSHIP REPORT
In the graph shows that the current ratio of the PEL is more than 1 in the last five
years which shows the company good performance. Company is highly debt finance
and with the passage of time the debt is going high. In the asset to equity ratio the
assets are much more than the equity which is 4.75.
In the debt ratio against the total assets is going to decline as shown in the graph. In
2006 it is highest about 69%. Which shows the company good position. Long term

INTERNSHIP REPORT
assets are less than the long term liabilities. The long term liabilities increase after the
2006.
PEL is earning the profits in the last five year but the company operating and net
profit decline in 2009 as compare to the previous years. The company gross profit
remains the same in the previous years. Profit decline due to high finance cost and
share of associate.

INTERNSHIP REPORT
The current figure shows that the return on the equity, asset and investment. The
return on investment is high in 2007. And decrease after that year. The return on asset
and equity are high in 2007 but it also decline due to the low sales volume and low
profits.
The inventory and accounts receivable turnover is calculated by the sales divided by
the inventory or debtors. In the 2007 the accounts receivable turnover is high. It may
have two reason high sales or low debtor. And in the inventory turnover the same case
applied that either the sales are high or inventory is low. In 2008 it decline but in 2009
it again goes up.

INTERNSHIP REPORT
Total assets turnover and fixed assets turnover is calculated by the sales divided by
the total asset or fixed asset. As the total assets are more than the fixed assets so the
denominator is high so total asset turnover amount is low and fixed assets turnover is
high. In 2007 the total and fixed asset turnover is higher due to the high amount of
sales or low assets.

INTERNSHIP REPORT
SWOT ANALYSIS
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 brand image
• Strong dealer network
• Strong quality, sale and service
• Number 2 in refrigerators in Pakistan
• Strong grip in home appliances
• Strong Management
• Distribution of Authority
• Strong research and development department
• Free customer service
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.

INTERNSHIP REPORT
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:
• Lack of advertisement
• System variations
• Lack of Product range
• Less Utilization of capacity
• Financial Problems
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

INTERNSHIP REPORT
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
• Strong competition
• China’s product introduction in the market
• Price war
• Slow growth rate in Pakistan
• Instability of government
• Tax department
• World Trade Organization
• Investors

INTERNSHIP REPORT
Suggestions
• Increase Utilization of capacity
 One thing that I observed during my internship that PEL could not
make the freezer as they target. They have enough capacity to
make but the less or lack of utilization of capacity they fail to meet
their targets.
• Lack of advertisement
 Other competitor companies have good marketing and advertising

campaigns as I observed that near the PEL there is a great sign
board of Waves.
• System variations
 PEL should have to adopt the one system. As they are changing the
system to ERP which is very good but they have to train their
employee as well. Training procedure must be change. There
should be the presentation to all workers.
• Lack of Product range
 They should have to increase their product range as their new

competitor SAMSANG in appliances has a lot of product range so
they also have to increase their products.

INTERNSHIP REPORT
• To gain more competitive advantage over their competitors, PEL has

to work on their distribution network
• The company must give more incentives to the dealers so that they
remain loyal to the company and promote the products.
• PEL should open its internship programs on frequent basis so more and
more students can get the chance to work as an internee in such a huge
institute and get their relevant work experience.
• Introduction of seasonal schemes can help to boost sales
• Dressing of officers even at executive level is casual so they

have to implement the executive dressing.
• Too much favoritism in PEL so there should be control and merit

should be followed.
• There is no rotation of job work so one person is limited to his

work.
• PEL more focus should be on electronic media to get

competitive advantage over the competitors. They have to
increase their advertising expenditures.

INTERNSHIP REPORT
CONCLUSION
Concluding, I found that the people while purchasing for a certain item take great
interest in the brand name, quality, and features. A very fine example is that of
Dawlance. Most of the people that I had contacted gave a lot of preference to
Dawlance. People have a strong faith in this brand name, partly due to its high quality
and features and partly due to the brand image that it has created during all these
years. All the other factors like price, advertisement, word of mouth, dealers etc. don’t
have that much importance during the buying process. PEL is not targeting through
advertising, by coordinating their marketing efforts, take advantage of synergy among
various communication tools, and develop more efficient and effective marketing
communication programs.
Even a new technologies and formats create new ways for marketers to reach
consumers, they are affecting the more traditional media Television, Radio,
Magazines and Newspapers are becoming more fragmented and reading smaller and
more selective audience.
PEL is doing some advertising efforts but problem is that there is no creativity in ads.
No doubt PEL is making excellent products, but unfortunately PEL is not realizing
creative advertising is also important part of their Marketing success.

INTERNSHIP REPORT
PEL should improve the environment and space of its finance department so that
internees as well as employees feel ease to perform their duties effectively and
efficiently.
Appendix
PEL Pak Elektron Limited
HS code Harmonize System Code
PEL Pak Electron Limited

C&F Cost and Freight
CIF Cost Insurance and Freight
FOB Free on Board
Ex Work Material Pick from Factory
LME London Mattel Exchange
L\C Letter of credit
PAD Payments against documents
WAPDA Water and Power Development Authority
KESC Karachi Electric Supply Company
FDD Foreign Demand Draft
ETA Estimated Time of Arrival
FOC Free Of Cost
TQM Total Quality Management
ISO International Standard Organization

INTERNSHIP REPORT

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Pak Elektron Limited i

INSTITUTE OF MANAGEMENT SCIENCES, B.Z.U. MULTAN

Institute of Management Sciences

Madam Amina Naqvi

PAK ELEKTRON LTD

INSTITUTE OF MANAGEMENT SCIENCES, B.Z.U. MULTAN

INSTITUTE OF MANAGEMENT SCIENCES, B.Z.U. MULTAN

As per requirement to complete MBA (Finance) at IMS (Institute of Management

At the end of training program, it is required to submit an Internship report in

INSTITUTE OF MANAGEMENT SCIENCES, B.Z.U. MULTAN

INSTITUTE OF MANAGEMENT SCIENCES, B.Z.U. MULTAN

INSTITUTE OF MANAGEMENT SCIENCES, B.Z.U. MULTAN

INSTITUTE OF MANAGEMENT SCIENCES, B.Z.U. MULTAN

The company comprises of two divisions; 1st is Appliances Division: This

Finally I have provided recommendations to the company regarding their

INSTITUTE OF MANAGEMENT SCIENCES, B.Z.U. MULTAN

The present range of power products includes Transformers up to 33KV 5MVA

INSTITUTE OF MANAGEMENT SCIENCES, B.Z.U. MULTAN

VISION AND MISSION OF PEL

“To excel in providing engineering goods and services through continuous

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

To promote good governance, corporate values and a safe working environment

INSTITUTE OF MANAGEMENT SCIENCES, B.Z.U. MULTAN

• To carry on the business or business of manufacturing, selling, installing,

• To carryon any business whether manufacturing or otherwise which maybe found

• To produce high quality and standard products.

• To produce equipment to be used in numerous projects of national importance.

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

INSTITUTE OF MANAGEMENT SCIENCES, B.Z.U. MULTAN

INSTITUTE OF MANAGEMENT SCIENCES, B.Z.U. MULTAN

The management of the Company decided to further expand its operation by

INSTITUTE OF MANAGEMENT SCIENCES, B.Z.U. MULTAN

LOCATION AND FACILITIES

• Banking and Finance.

• Fuel and Energy.

INSTITUTE OF MANAGEMENT SCIENCES, B.Z.U. MULTAN

SAIGOL GROUP OF COMPANIES

• Azam Textile Mills Ltd. 06-Egerton Road, Lahore

• Saritow Spinning Mills Ltd. 06-Egerton Road, Lahore

Fuel & Energy

• Kohinoor Power Co. Ltd. Kohinoor Nagar, Faisalabad

• Kohinoor Energy Ltd. 06-Egerton Road, Lahore

• Pak Elektron Ltd.1 14km, Ferozepur Road, Lahore

• PEL 2 21 km, ferozepur road Qasoor

Banking & Finance

• Union Bank Ltd. 06-Egerton Road, Lahore

• Union Leasing Ltd. 07-Egerton Road, Lahore

• Saritow Pakistan Ltd. 06-Egerton Road, Lahore

• Saigol Computer Ltd. 162-Shadman Colony, Lahore

• Kohinoor Motor Works Ltd. 07-Egerton Road, Lahore

INSTITUTE OF MANAGEMENT SCIENCES, B.Z.U. MULTAN

Unique Features of the Company

 Low Price product

 High Quality Product

 ISO 9001 Certified

PEL power division has the following features

 Low Partial Discharge

 Low Noise Level

 Higher overloading Capacity

 Maintenance- Free Warranty

INSTITUTE OF MANAGEMENT SCIENCES, B.Z.U. MULTAN

INSTITUTE OF MANAGEMENT SCIENCES, B.Z.U. MULTAN

Nature of the organization