PEL Ltd

PAK ELEKTRON LTD

CMSATS

INSTITUTE OF INFORMATION AND TECHNOLOGY

PAK ELEKTRON LTD14 Kilometers Feroz Pur Road,

LAHORE

COMSATS INSTITUTE OF INFORMATION AND TECHNOLOGY

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PAK ELEKTRON LTD

ACKNOWLEDGEMENT

I am really pleased here to acknowledge the sheer efforts and extreme of

numerous people, those who have provided me their relentless service in the

completion of my Internship report on the “Financial Practices at

PAK ELEKTRON LTD (PEL)”. I am also thankful to all the officials of this

Organization for helping me in achieving my internship targets in while being

internee at PEL.

FAHAD ARSHAD JAMIL

PART 1 PART 3


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PAK ELEKTRON LTD

Introduction And Overview PEL’s Financial Data & My Observation

1. Executive Summary 4 14. PEL’s Banlance Sheet 2005 47

2. Introduction Of Pak Elektron Ltd 5 15. Profit & Loss Statement 2004 49

3. Pak Elektron's Profile 5 16. Profit & Loss Statement 2005 51

4 PEL's Organizational Chart 18 17. Categories of Share Holders 52

5. PEL's Organizational Chart Briefing 19 18. Key Operational Statement 53 6. PEL’s Director Report 24 19. Ratio Analysis 2004 54

7. ISO 9001 26 20. R&A Conclusion, Recommendations 55

8. PEL’s Marketing Strategy & Objectives 27 21. PEL's Sales & Share Analysis 57

22. Dimensions Wise Share Analysis 58

23. Brand Wise Sales Analysis 58

PART 2 PART 4 Intern’s Experience in PEL PEL’s SWOT Analysis

9. Assigned Duties 28 24.1 PEL’s Strengths 59

10. Learnings in PEL 36 24.2 PEL’s Weaknesses 61

11. Problems Encountered in PEL 37 24.3 Opportunities for PEL 63

12. Experience & its Impact Over Career 38 24.4 Threats for PEL 64

13. MicroWaves Open Market Survey 39


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PAK ELEKTRON LTD

PART 5 New Visions & Directions for PEL

25. Recommendations 65

26. GLOSSARY 67

27. Biblograpy 691. EXECUTIVE SUMMARYPak 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:

Appliances Division: This Division of PEL consists of home appliances

manufacturing particularly Refrigerators

Power Division: PEL Power Division is one of the major electrical

equipment suppliers to WAPDA & KESC. The company manufactures

transformers, energy meters, switchgears, kiosks, compact stations and

shunt capacitor banks

Other than this, the company has developed a very good repute in the world of

credit due to which most of the Financial Institutions like National Bank, Faysal

Bank, Punjab Modarba have provided especial credit limits to the Company in

order to support its operational activities.

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.

In 1956, the Saigol Group of Companies purchased major shares of PAK

Elektron Limited. At this junction, the company was only manufacturing


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PAK ELEKTRON LTD

transformers and switchgears. With the Saigols in management, PEL expanded

into Refrigerators & Air Conditioner manufacturing and now it has become a

Giant in the World of Appliances.

2. INTRODUCTION:

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. PEL has been continuously adding new products to its range.

As a result, PEL has registered a significant increase in its sales volume, during

the last ten years.

3. PEL PROFILE:

Pak Elektron Limited (PEL) is the pioneer manufacturer of electrical goods in

Pakistan. It was established in 1956 in technical collaboration with M/s AEG of

Germany. In October 1978, the Saigol Group of Companies bought the company.

Since its inception, the company has always been contributing towards the

advancement and development of the engineering sector in Pakistan by

introducing a range of quality home appliances and by producing hundreds of

engineers, skilled workers and technicians through its apprenticeship schemes

and training programs.

The company comprises of two divisions:

Appliances Division

Power Division


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PAK ELEKTRON LTD

APPLIANCES DIVISION:

PEL’s Appliances Division is the flag carrier of the Saigol Group. This Division of

PEL consists of home appliances manufacturing particularly refrigerators.

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 and

today PEL holds approximately 45% of air conditioners market share.

PEL REFRIGRATORS:

The manufacturing of refrigerators started in 1986-87 in technical collaboration

with M/s IAR-SILTAL 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.

POWER DIVISION

PEL Power Division manufactures energy meters, transformers, switchgears,

Kiosks, compact stations, shunt capacitor banks etc. All these electrical goods

are assembled 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 companies working in Pakistan. Over the

years, PEL electrical equipment has had been used in numerous power projects

of national importance within Pakistan. PEL has the privilege of getting its

equipment approved and certified from well-reputed international consultants

such as:


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PAK ELEKTRON LTD

Preece, Cardew and Rider, England

Harza Engineering Company, USA

Snam Progeti, Italy

Societe Dumezm, France

Miner & Miner International Inc. USA

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 partnerships with Copeland, Danfoss, Samsung

and others 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.

GROUP PROFILE

In 1948, the Saigols migrated from Calcutta and initiated their business in

Lyallpur (later named Faisalabad), the textile city of Pakistan, under the banner

of Kohinoor Industries Limited.

KOHINOOR TEXTILE MILLS:

The Saigols set up the first major textile unit- The Kohinoor Textile Mill under the

umbrella of Kohinoor Industries Limited. The Kohinoor Textile Mill has state-of-

the-art quality control from raw material to finished product manufacturing. Its

laboratory is rated among the best laboratories in Pakistan for testing of raw

materials, other inputs and yarn.

PEL (Pak Elektron Limited):

In 1956, the Saigol Group of Companies purchased major shares of PAK

Elektron Limited. At this junction, the company was only manufacturing


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PAK ELEKTRON LTD

transformers and switchgears. With the Saigols in management, PEL expanded

into Air Conditioner manufacturing.

THE PEL GROUP COMPRISES OF TWO DIVISIONS:

Appliances Division

Power Division

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 1981 in technical

collaboration with General Corporation of Japan. Today, PEL Air Conditioners

hold approximately 45% market share.

In 1986-87, the company started manufacturing in technical collaboration with

M/s IARSILAT of Italy.

In 1987, PEL deep freezers were also introduced in technical collaboration with

M/s Ariston of Italy.

In 1993, with technical collaboration of NECCHI of Italy, the company started

assembly and manufacturing of compressors for refrigerators and deep freezers.

Today, PEL has become a household name. At the Gadoon Amazai industrial

estate, an export-processing zone in Pakistan, air conditioners and deep freezers

under the banner of PEL Appliances Limited are manufactured.

POWER DIVISION:

PEL Power Division is one of the major electrical equipment suppliers to WAPDA

& KESC. The company manufactures transformers, energy meters, switchgears,

kiosks, compact stations and shunt capacitor banks. PEL also has had the


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PAK ELEKTRON LTD

privilege of getting its equipment approved and certified from well-reputed

international consultants such as:

Preece, Cardew and Rider, England

Harza Engineering Company, USA

Snam Progeti, Italy

Societe Dumezm, France

Miner & Miner International Inc. USA

Ensa, France

SARITOW SPINNING MILL & AZAM TEXTILE MILLS:

In 1987, the Saritow Spinning Mills and Azam Textile Mills emerged under the

banner of Saigol Group of Companies. Saritow Spinning Mills is a spinning unit

with 18420 spindles capacity. Facilitated with the most modern and efficient

Japanese and European machinery, its knitted yarn is renowned in the Far East

and Europe for its fine quality. While Azam Textile Mills is reputed for its carded

and combed yarn, which is quite popular for premier knitting and weaving.

KOHINOOR POWER COMPANY LTD:

In 1991, the first power unit to commission in Pakistan was Kohinoor Power

Company Limited initiated with two Nigatta engines of 5 MW; the company

increased its plant capacity to 15 MW within a span of three years.

KOHINOOR ENERGY LTD:

1995, another power unit, Kohinoor Energy Limited, was established. Kohinoor

Power Limited is a 120 MW power plant located on the outskirts of the city of

Lahore. This project has an annual turnover of $40 million.

SAIGOLS COMPUTERS PRIVATE LTD:

In early Eighties, the Saigols initiated with the sole distribution for Wang


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PAK ELEKTRON LTD

Laboratories Inc., which was followed by the dealership of Radio Shack Line of

computers manufactured by Tandy Corporation. Resellers rights from Tricord

Systems Inc. USA and Tulip Computers of Netherlands were obtained along with

a line of RISC based multiprocessor capable of providing workstation solutions

from Sun Micro Systems Inc., USA.

KOHINOOR MOTOR WORKS LTD:

The Saigol Group also entered a joint venture with CHINA QINGQI under the

banner of Kohinoor Motor Works Limited. This joint venture enabled

manufacturing of an affordable and durable motorbike for the masses in

Pakistan.

HOME APPLIANCES:

Products PEL is dealing in under the head of Home Appliances.

REFRIGRATOR:

PEL has launched its Crystal Classic Series - a new range of

Refrigerators with great storage capacity and impressive

outlook. PEL as always has introduced more efficient and

technologically advanced product that promises to take

care of your refrigeration needs and guarantees freshness of

food when you rely on us.

PEL Crystal Classic is a step ahead towards the achievement of our goal of

satisfying customers today and in time to come.

PEL SPLIT AIR CONDITIONERS:

1

SPLITS QUALITIES & FEATURES

Low power consumption

·2 Low Voltage startup


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http://pel.com.pk/refrigerators.htm

http://pel.com.pk/ac.htm

PAK ELEKTRON LTD

·3 Hydrophilic Aluminum Fins

·4 3-bend heat exchanger

·5 Scientific Louver Rotation (SLR)

·6 Independent de-humidification function

·7 Anti-bacterial and anti-dust filters

PEL recently launched its Cool life Split air-conditioner which is a technologically

advanced model specially designed for Pakistan market. This masterpiece from

PEL provides maximum cooling even at very high temperatures while minimizing

your electricity consumption. Its salient features include:

PEL Air Conditioners have been specially designed for countries, having climatic

conditions similar to Pakistan. The Air Conditioners have excellent cooling

capabilities at extreme temperatures at varying levels of humidity; high air dust

and uneven local power supply conditions.

PEL MICROWAVE OWEN:

PEL the trustful company name in home appliances all

over the country now introduced all new models of "PEL

Power Wave" Microwave Ovens. Now PEL customers

can have four models of PEL Power Wave in which they

can enjoy the grilling feature as well. PEL Microwave

Ovens are available in different sizes, inner cavities (steel & painted) and

features.

PEL TELEVISION:

PEL introduced Color Television under the brand name of

"PEL DIGITAL LIFE". PEL has introduced four models (flat &

semi flat). Now PEL customers can enjoy a Multi System, Multi

Sound, DVD Input, AV In/Out, Clock, Timer and Auto Degauss


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http://pel.com.pk/oven.htm

http://pel.com.pk/tv.htm

PAK ELEKTRON LTD

Technology all in PEL Digital Life Color Television. PEL provides strong back up

of customer services all over Pakistan with 5 years picture tube and 1 year parts

warranty.

POWER DIVISION & PRODUCTS:

This division was established in 1956, the name PEL has always been

synonymous with quality and backed by the organizational expertise of Saigols

Group, one of the leading industrial and commercial groups in Pakistan. PEL is

now surging ahead of its competitors in the field of Power and Distribution

equipment. The manufacturing facilities are equipped with state-of-the-art

technology and are serving a large base of customers. A team of highly qualified

and experienced engineers supervises all stages of design, production and

quality control. A part from meeting individual customer requirement for Power &

Distribution Transformers, MV & LV Switchgear, Energy Meters and Instrument

Transformers.

QUALITY CONTROL:

Strict quality control is maintained throughout the manufacturing process by our

inspection and quality control department. All PEL made equipment undergoes

stage-wise inspection and its complete routine testing is performed as per

IEC/customer's specifications. A complete set of factory test reports is prepared

before the dispatch of the equipment.

POWER AND DISTRIBUTION TRANSFORMER:

PEL has vast experience in design and manufacturing of standard and special

purpose transformers up to 33kV and up to 6000kVA ratings.

PEL make oil immersed transformers with natural cooling are suitable for both

indoor and outdoor installations. These are manufactured according to BSS-171,

IEC-76 or VDE-0532 and tropicalized to meet adverse environmental conditions.

All our transformers are offered with tabular tank, having a conservator and


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PAK ELEKTRON LTD

breather. However, hermetically sealed transformers are also manufactured up to

1000kVA ratings.

PEL transformers are available for various applications:

Distribution transformers (pole mounted or pad mounted design)

Auto transformers

Furnace transformers

Welding transformers

Chokes for furnace transformers

Any other special requirement

PEL's transformers have been successfully type tested for Impulse voltage and

short circuit tests at KEMA, (Holland), HV&SC Lab, Rawat (Pakistan), NIP

(Pakistan) and UET (Pakistan).

INSTRUMENT TRANSFORMERS:

We offer a diverse range of our indigenously

developed CTs and VTs for various applications of metering and protection.

These transformers are type tested for impulse voltage short circuit and

temperature rise tests as per IEC-60044 & 186. Low voltage CTs are available

both in PVC cover or MS cover, in round or square shape, while CTs for MV

application up to 12KV ratings are casted in epoxy resin. These CTs conform to

IEC-60044. Single Pole epoxy resin VTs for protection and metering conforming

to IEC-186 are produced for system voltage up to 12KV

PEL SINGLE PHASE ENERGY METERS:


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PAK ELEKTRON LTD

PEL manufactures Electro-mechanical Energy Meters under license from ABB-

USA. The quality of PEL meters has been certified by KEMA Laboratories

(Holland) and conforms to

IEC 521, SGS Yarsley,

U.K., has certified PEL

Energy Meter plant for ISO

9002. PEL type MC8 is a

direct connection single-

phase meter. The design and constructional features include overload

compensation and temperature compensation, thus providing maintenance-free

operation over a long period and accurate measurement of electrical energy. The

frame is sturdy in construction and the covers are available in unbreakable

polycarbonate plastic material.

PEL POLY PHASE ENERGY METERS:

PEL type TBL is a direct connection poly-phase meter having improved load

performance and precision accuracy over a wide load range. All meter parts are

corrosion protected

for long-term

reliability. It has a

magnetic bearing

system that is self-

cleaning, non-aging

and tamper resistant. This ensures virtually frictionless operation of the rotor

while withstanding abuse from surges and magnetic tampering. The meter is

available with one-piece high impact polycarbonate cover. The terminal cover is

extended type that completely shrouds the service cable.


Ratings Voltage 220-240V

Current (Nominal) 10, 20, 40 A

Current (Maximum) 40, 60, 80, 100A

Ratings Voltage 3x200/400V (3-ph, 4-wire)

Current (Nominal) 15A

Current (Maximum) 90A

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PAK ELEKTRON LTD

SWITCHGEARS:

MV & LV Switchgear being one of the major power products of PEL is produced

for indoor installations company with the latest international standards, i.e. IEC,

BSS or VDE PEL's Switchboards are steel sheet fabricated, totally enclosed,

floor mounting and vermin & dust proof. These are supplied with factory fitted

relevant components and copper bus bars, internal wiring, terminal blocks etc.

The cubicle housing and doors are fabricated from 2-3mm thick sheet steel,

welded together to form a robust and self-supporting structure. Painting

procedure includes through cleaning, pre-treatment, anti-rust coating and final

finishing in standard RAL colours.

4. ORGANIZATIONAL CHART OF PAK ELEKTRON:


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ORGANIZATIONAL CHART

APPLIANCE DIVISION

MKT. APPLIANCES

AFTER SALES SERVICES

PRODUCTION. AD

CONSUMER MARKETING

MATERIAL PLAN

R & D

PACKAGINGTRADING

POWER DIVISION

MKT. POWERPRODUCTION. SG

PRODUCTION. TR

PRODUCTION. EM

FINANCE

ACCOUNTS

HRMCAREERS

PAK ELEKTRON LTD

5. PAK ELEKTRON ORGANIZATIONAL CHART’S BRIEFING:

PAK Elektron as being the most famous corporation of Pakistan deals in two

types of goods one is entirely related with home Appliances particularly

Refrigerators and other one is entirely related with the power goods such as

Transformers, Electric Meters, and Switchgears.

Due to difference in the products Nature it has established two different Strategic

Business Units that work and act as independent and separate entities under the

names of PAK Elektron. Each unit has its own Marketing, Production and other

specific departments.

In PEL these two units are known as:

APPLIANCES DIVISION

POWER DIVISION

1. APPLIANCES DIVISION:


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PAK ELEKTRON LTD

PAK Elektron Refrigerators always have always been famous among every

home due its superior quality and reliability. In Pakistan there are so many

National and International Companies who are sharing the demand of

refrigerators but all of them are considered to be minor market shareholders in

front of Pak Elektron’s share. Strength of Pak Elektron’s share has always been

its remarkable Appliances Division due to its latest equipments and talented men

power.

This Appliance Division is comprised of following departments.

Marketing Appliance Division

Production Appliance Division

After Sales Services Department

Consumer Marketing Department

1.1 Marketing Appliance Division:

Talking about marketing department, it always been and still it is considered to

be a backbone of the Appliances business unit. This department is having most

hardworking and talented staff that remain busy in searching new markets for its

products and always initiates different production programs to satisfy its

customer needs and preferences. This Marketing department has un-beatable

marketing forces that on regular basis conduct market surveys in order to look

into Competitors position, customer’s taste, retailers and wholesalers needs

under the supervision of four professional marketing managers plus General and

Senior Marketing Managers.

At time when the forces feel a change in customer preferences they immediately

undertake distinctive steps and make new sales plans. Such plans are forwarded

to each respective department by the marketing department in order to get their

requirements to make the plan successful.

1.2 Production Department:


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PAK ELEKTRON LTD

PEL’s production department has its own distinctive qualities from one end to last

end. At this department every worker has got very special in job training from the

seniors and remains committed in order to accomplish the given tasks

successfully either he is a part of assembling or a part of finishing section. When

Research and development designs any new feature or product, production

department provides required men power estimates to the company’s human

resource department.

1.3 After Sales Services:

After Sales Services is another active department of PEL’s Appliances division,

which gives a sense of care to its customer when ever it feel things are going

wrong or against its desire. This department has their own technicians available

for the services in the company as well as having after sales centers out side the

company at different places in the cities. This department assures 100 percent

parts replacement of appliances if complains fall in the warranty time period.

1.4 Consumer Marketing Department:

A door-to-door marketing system introduced by PAK Elektron in the shape of this

department. Consumer marketing department is the only department that has

special sales forces for its appliances and deals the customer needs and

complains directly without the intervention of any retailers and wholesalers.

2. POWER DIVISION:

The second but the most powerful revenue generating business unit of PAK

Elektron, produces Transformers, Switchgears and Energy Meters for the public

sector such as KESC Karachi Electric Supply Corporation, LESCO Lahore

Electric Supply Corporation, IESCO Islamabad Electric Supply Corporation,

PESCO Peshawar Electric Supply Corporation, etc and for public sector as well.

This division is comprised for four departments.

Marketing Power Division

Production Transformers


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PAK ELEKTRON LTD

Production Switchgears

Production Energy Meters

2.1 Marketing Power Division:

Marketing department of power division consists of most professional engineers

who market all the power products, seeks new customers and supervise all these

three departments to ensure best quality and reliable products every time.

2.2 Production Transformers:

PEL has vast experience in design and manufacturing of standard and special

purpose transformers up to 33kV and up to 6000kVA ratings. This department

make oil immersed transformers with natural cooling are suitable for both indoor

and outdoor installations. These are manufactured according to BSS-171, IEC-76

or VDE-0532 and tropicalized to meet adverse environmental conditions. All

transformers are offered with tabular tank, having a conservator and breather.

This department manufactures following types of transformers.

Distribution transformers (pole mounted or pad mounted design)

Auto transformers

Furnace transformers

Welding transformers

Chokes for furnace transformers

Any other special requirement

PEL's transformers have been successfully type tested for Impulse voltage and

short circuit tests at KEMA, (Holland), HV&SC Lab, Rawat (Pakistan), NIP

(Pakistan) and UET (Pakistan).


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PAK ELEKTRON LTD

2.3 Production Energy Meters:

Another successful and most powerful department of power division is its energy

meter production department that manufactures Electro-mechanical Energy Meters

under license from ABB-USA. The quality of PEL meters has been certified by

KEMA Laboratories (Holland) and conforms to IEC 521, SGS Yarsley, and U.K,

has certified PEL Energy Meter plant for ISO 9002.

This department also manufactures MC8 type a direct connection single-phase

meter, which is commonly used for each home. Its design and constructional

features include overload compensation and temperature compensation, thus

providing maintenance-free operation over a long period and accurate

measurement of electrical energy. The frame is sturdy in construction and the

covers are available in unbreakable polycarbonate plastic material.

2.4 Production Switchgears:

MV & LV Switchgear being one of the major power products of PEL is produced

for indoor installations company with the latest international standards by this

department, i.e. IEC, BSS or VDE PEL's Switchboards are steel sheet fabricated,

totally enclosed, floor mounting and vermin & dust proof. These are supplied with

factory fitted relevant components and copper bus bars, internal wiring, terminal

blocks etc.

The cubicle housing and doors are fabricated from 2-3mm thick sheet steel,

welded together to form a robust and self-supporting structure. Painting

procedure includes through cleaning, pre-treatment, anti-rust coating and final

finishing in standard RAL colors.

3. COMMON DEPARTMENTS:


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PAK ELEKTRON LTD

Other than those particular and specific departments there are some

departments that deal directly with these two divisions and following are the

names of those departments.

Human Resource Department

Accounts Department

Finance Department

Packaging Department

Careers Department

Trading Department

Research and Development Department

Material Planning Department

3.1 Human Resource Department:

Workers at PEL always feel free in expressing their needs, desires and problems

and this right and freedom has been given to them by the personnel of Human

Resource Department that always look forward to serve every one in the

company. This department is handling the personnel of both power and

appliances division. When ever it gets any new plan either from power or from

appliances it starts searching the best talent to be hired for the respective need

and prepares salaries estimates statement. Similarly it also actively participates

in hiring employees for other departments and settling down all issues related

with employee’s needs, wants and hurdles.

3.2 Accounts Department:

Pak Elektron has a big accounts department that records daily transactions of

both appliances and power division that prepares financial statements such as

Balance sheets, Income Statements, Cash Flow Statements, etc, etc.

3.3 Finance Department:


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PAK ELEKTRON LTD

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

3.3-a 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.

3.3-b 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.

3.3-c 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.

3.3-d Material Planning Section:


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PAK ELEKTRON LTD

In finance department, this is the only section that is engaged in facilitating rather

entertaining the material department’s needs by arranging finances from different

financial institutions after getting material planning purchasing plans.

3.4 Packaging Department:

In PEL there are two different packaging departments one for the Appliances

such as Refrigerators and other one for the power products such as

Transformers, switchgears and energy meters.

Both of the departments take care of all safety requirements for the best delivery

of goods to the customer and always do the final audit of the finalized goods

before distribution.

3.5 Careers Department:

PEL does not only take care of the internal talent rather always keep on

struggling in order to chalk out and hire the best available human resources all

around Pakistan by the help of its Career Department, which can be called a part

of Human Resource Department but has its own separate entity in the

organization.

3.6 Trading Department:

As trading restriction are relaxed by most of the Asian Countries, Pakistan And

China have started sharing most their production surplus with each other,

similarly providing each other a facility to share their production technology.

As Labor and power is cheaply available in China, Pak Elektron has started

importing Splits, Microwaves and Televisions from China in order to get

competitive edge over the competitors due to its price and cost effectiveness.

3.7 Researches and Development Department:

A department of active and professional people, having distinctive

characteristics, that always remains engaged in designing goods better than

before. This department experts fully co ordinate with the marketing department


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PAK ELEKTRON LTD

and very efficiently and effectively interprets their findings for introducing new

features in the same products or designing and launching new products into the

markets. After interpreting plans and getting approvals it forwards the design and

procedure to the production department.

3.8 Material Planning Department:

This is the department that assures superior quality and world finest material to

the customer in PEL’s products. Its teams always take care of the customer

preferences and keep an eagle eye over the newly invented and best material in

the market to be used in production after getting Research and Development

plans. This department than plan and arrange required material for the

production department with the help of Finance Department.

6. PEL’S DIRECTORS REPORT:

The Directors feel pleasure in presenting their Report along with the audited

financial statements and a review of the performance of the Company for the

year ended June 30, 2004.


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PAK ELEKTRON LTD

OPERATING RESULTS:

In the year under review gross turnover reached at Rs. 6,077 million, which

is higher by Rs. 2,094 over the last year showing an increase of 53%. The

net profit reflects an increase of Rs. 136 million (96%) on the comparative

financial results.

Financial Results (Rs. in Million) 2004 2003

Gross Sales 6,077 3,983

Gross Profit 1,070 827

Operating Profit 627 527

Profit Before Tax 280 184

Profit After Tax 277 141

Earning per share Rs. 11.70 5.96

DIVIDENDS AND RIGHT SHARES:

The board has recommended a cash dividend of 10% and stock dividend (Bonus

shares) of 30% of the paid up capital of the company. At the same time the board

has approved the issuance of 50% right shares at an issue price of Rs. 35 per

share including a premium of Rs. 25 per share. Bonus shares to be issued as

above shall also qualify for rights offering. The funds generated through right

shares would amount to Rs. 538.8 million. The right issue is aimed at

strengthening PEL's equity base and enabling the company to finance its growth

requirements.


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PAK ELEKTRON LTD

The company has chalked out a comprehensive financing plan aimed at

strengthening the company's equity base and enabling PEL to finance its growth

requirements. For this purpose Preference shares of up to Rs. 625 million are in

process of being privately placed. These will be listed, cumulative, non-voting

convertible, preference shares, carrying fixed dividend @ 9.5% p.a. The

company is seeking the approval for the issue from the members in the

upcoming Extraordinary General Meeting.

AUDITORS AND THEIR REPORTS:

The present auditors Messrs Yousuf Adil Saleem & Co. Chartered Accountants

retire and being eligible, offer themselves for re-appointment.

The company is negotiating with Daewoo Electronics Korea for meeting the loss

incurred by PDEL. At the same time company is considering a revival plan based

on the marketing and production strategies keeping in view the growing market of

television.

EARNING PER SHARE:

Based on the net profit for the year earning per share is Rs. 11.70 where as Last

year’s was Rs. 5.96.

7. ISO 9001:

PEL was 16th Company in Pakistan, which got ISO 9002 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


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PAK ELEKTRON LTD

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.

8. PAK ELEKTRON’S MARKETING STRATEGIES AND OBJECTIVES:

OBJECTIVES:

1. To increase Refrigerators Sales Volume from 255,000 to 330,000 units.

2. To increase over all market share from 33.38 percent to 37 percent.

3. To ensure profitability on the basis of

Improved Model Mix


27

PAK ELEKTRON LTD

Launching New product

Increase Awareness, Image and Positioning of Brands.

Marketing Strategies:

1. Dealer Network Analysis and identify weak share areas.

2. Promote products

3. To undertake a Comprehensive research about demographics, products,

preferences, requirements and behaviors of customers for existing and

new products. Research findings will become norms.

Sales Promotion Objectives:

To ensure that the sales promotion scheme should be designed to

motivate dealers towards providing active and enthusiastic support

in marketing the product and at the same time reduce the

incentives and increase the profitability.

Advertising Objectives:

Advertising budgets should be utilized properly to support

marketing of the products.

Other Objectives:

Sales force Coaching and Interactions.

9. DUTIES ASSIGNED TO ME ON DIFFERENT DATES IN PEL

In PEL, I worked for the Finance department’s Budgeting, Leasing and

Guarantees Sections.

FINANCE DEPARTMENT:

10.1 BUDGETING SECTION:

July 5th , 2005


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PAK ELEKTRON LTD

Getting started from the first day after getting internship letter, MR. Arshad, Asst

Manager Finance (Budgeting Section), PEL assigned task to Mr. Amer Khawaja ,

E2 Same section Finance of my supervision. Mr Amer told me PEL has two

Divisions

1) Power Division, which deals in the manufacturing of

a) Transformers

b) Electric Meters

c) Switch Gears

2) Appliances Division includes production of Refrigerators and Imports of

Micro-wave Ovens, Splits & Window Units from CHINA.

Afterwards, he shown me the budgets of both divisions which are prepared at the

beginning of every year with the help of forecasts and than laterly throughout the

year they compare it with the actual transactions of these two divisions. That day

i did some price and cost calculations of Transformers for him.

July 6th, 2005

Today, i have learned how to prepare GROSS MARGIN BUDGET that shows

every product model's expected profit for the up coming year. I found that 97% of

PEL Sales will be made locally by the distributors and by the Consumer

marketing department where as only 3% will be exported to Afghanistan, Dubai,

etc. Major Portion of these sales constitutes upon Refrigerator. As World is

moving towards Globalization, PEL might suffer hurdles in the near future if it

does not start penetration to get some foreign market space.

Another important thing which i have observed over there is the back biting and

leg pulling trend due to MR Arshad's stubborn personality.

July 7th, 2005

Today, i worked on Transformers Basis Sheet which is required for the

preparation of Budgeted Cash Flows 2006. This sheet includes Materials, Work

in Process and Finished Goods ending inventories which are projected and

calculated with the help of last year's data and Managers use it for the Financial


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PAK ELEKTRON LTD

Planning of year 2006 like, how much Revenue they will be generating and how

much they will be required to borrow from the credit houses.

July 8th, 2005

Today, i learned how to prepare a Lease sheet for the Machineries purchased

by PEL and found that PEL has been paying up to 14% Markup for those

machineries which is not a good signal because if the company pays more to the

Creditors in the shape of markup, PEL Shareholders Earnings will start getting

affected, they might loose their confidence and PEL wouldn't be able to call up

additional Capital from them.

July 9th, 2005

Today all day long we did error rectifications in the selling and cost prices of

Transformers that happened due to the wrong information provided by the

ACCOUNTS Department and similarly helped my supervisor in preparing the

KEY FIGURES STATEMENT of the Refrigerators which states how much has

been Produced, Dispatched, Sold and Remaining as a stock during the day. It

also shows expected and original payments and this statement after completion

is presented to the Directors of the Company.

July 11th 2005

Today we received “Budgeted expenses summary” of all departments prepared

and sent by Maintenance Department and similarly an individual budgeted

expenses summary from each department than we did the comparison and

analysis in order to prepare a final Controllable Cost Statement for each

department. During the comparison we found that Production A.D Budgeted

expenses significantly vary from the one provided by the Maintenance but with

the little effort we chalked out that A.D is expecting High Over time cost for the

production of 370,000 Units of Refrigerator, Maintenance did not consider.

July 12th 2005

Today, I worked on Actualized Statement, which is a kind of Income Statement


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PAK ELEKTRON LTD

prepared on monthly basis. In this statement one takes the actual Revenues,

Expenses, etc. occurred during the month, projects the same for the remaining

time period with the help of last year data as well as with the help of Financial,

Economical and Political factors and compare it with the budgeted figures in

order to see the variances. Finally in the end one tries to figure out the factors

which wasn’t being considered at times of Sales planning such as Inflation,

Government policies, etc. Other than this my immediate boss shared a secret

with me that currently among PEL’s liabilities the huge liability is the amount

borrowed from the National Bank Pakistan. It was an alarming sign because

National Bank now any time can freeze all PEL’s operations due to its in-ability to

pay back the loan.

July 13th 2005

Today I worked on Receivables Budget in which one projects the amount to be

received against Sales during the year from the dealers. Among its top 32

Dealers some of them are expected to make payments in Advance or with in 30,

60, 120 and 180 days based upon their Payment Behaviors. Dealers in Karachi

usually pay after 120 days to the company that really blocks the money from

getting into the circulation and that if received earlier by PEL can help it to boost

its productivity level. It’s another bad indication.

July 14th 2005

Today I again examined and did some calculations for the Receivables Budget

and found that near about 100 Million was stuck for 180 Days last year 2004 –

2005. Similarly, I have examined their borrowing behavior, which is very frequent

from the credit houses and also examined the allocation of those finances

reflecting a ratio of 52:48 in Appliance and Power division.

July 15th 2005

Today while working on leasing I came to know that currently PEL’s lesser are

eight big Institutions namely: Crescent, Grays, Punjab Modarba, Saudi Pak,

Faisal Bank, P.I.C.I.C and Bank of Punjab to whom it’s making millions of markup


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PAK ELEKTRON LTD

payments annually against the purchases of Machineries and Autos. This is

simultaneously reducing PEL’s profitability and further reflects improper planning

and management.

July 16th 2005

Today I was assigned a task to do the verification and rectification of all the

transactions recorded and upgraded on the Network by the Accounts Department

with the help of actual Vouchers. I found that PEL is selling Samsung’s Air

Conditioners in the market through its dealers against a fee under a contract

signed by both parties but important point was that it might affect PEL owns

Sales or its exclusive dealer network.

July 18th 2005

Today I prepared a Leasing Statement of COMUPTER EQUIPEMENTS

purchased by P.E.L through Faisal Bank Leasing Facility worth 2.7 Million at

8.5% Markup Annually and RS 76,170 was the negotiated monthly installment for

three years. Afterwards I calculated the total three years markup and that was

0.4 Million. Similarly than I helped my immediate Boss in preparing actual Sales

Report for the year 2004 – 2005.

July 19th 2005

Today I worked on Transformers Budgets based upon Six scenarios which

reflect expected Political and Economical changes and its impact on PEL’s

Sales. I found that if these factors remained constant almost P.E.L could fulfill

almost 50% of the market demand.

July 20th 2005

Today, I did a comparison between over all Budgeted Sales of P.E.L for the Year

2006 with over all sales of previous year and noticed that P.E.L is expected to

increase its total sales volume by 45% in this year.


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PAK ELEKTRON LTD

July 21st 2005

For the Production material purchases purposes, budgeting and Material

Planning Sections of Finance Department prepare BOQ Statement, which

reflects, what was the last paid cost of material? What are the current prices and

finally how much it varies from the old one either in negative direction or in

positive direction? In case If it falls Company immediately changes its material

planning and Buys more to save additional cost to be paid for the same in future.

July 22nd 2005

Today I worked on MAN POWER budget for the year 2006 and did a comparison

with the same type of budget prepared in prior year. I found that PEL’s workers

strength is expected to be reduced by this year due to the introduction of latest

and much more efficient machineries in both A.D and P.D Divisions due to which

company might go towards right sizing. Other than this I found that last year

P.E.L paid wages for 988706 idle hours to its workers.

July 23rd 2005

Today I did some verification of the accounts transactions and similarly helped

my boss in preparing Switchgears budget where I found a very rapid growth in

comparison with last years growth.

10.2 GURARANTEES AND LEASING SECTION:

JULY 25th 2005

Today I changed the budgeting section and started working for the Guarantees,

Letter of Credit, Leasing, Finance against Merchandise and Cash Financing

Section. Today they just gave me an introduction and shared important points.

JULY 26th 2005


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PAK ELEKTRON LTD

Today I spent my time visiting all the Credit Houses such as FAISAL BANK,

NATIONAL BANK MAIN BRANCH, PICIC etc, in order to collect all the Bank

Statements for the Company along with my immediate boss.

JULY 27th 2005

Companies usually make payment against imported goods through Letter of

Credits involving banks but when the firms become un-able to pay the specific

amount than banks make the payments on their behalf where as take the

possession of the imported goods. Than Banks provide a facility to pay back the

sum at a particular interest rate and get the goods backs with in a particular time

period under an agreement of FINANCE AGAINST MERCHANDISE. Today I

worked on its markup and holding charges statement.

JULY 28th 2005

Today I worked on Cash Financing a credit facility provided by National Bank

Pakistan with a limit of 950 millions to Pak Elektron PVT LTD through which the

company deals with its Vendors, Import bills, and other Debts.

JULY 29th 2005

Today I worked on Issuance of Guarantees, Guarantees which are required to

participate in the Tenders or to get an order in simple words. This involves

intermediaries such as BANKS who charge Commission and maintain a margin

in order to give an assurance to the buying party on the behalf of selling party

that in case if the selling party refuses to sell goods than they will take care.

JULY 30th 2005

Today I collected the details of FANFORD, FANFORD is basically a special type

of voucher that reflects a refundable amount which was deducted from the

DEMAND DRAFT’S value at time of its discounting.

AUGUST 1st 2005

Today I, along with some of the marketing guys, have conducted an open market

survey in order to collect the rates of Microwave Owens produced by different


34

PAK ELEKTRON LTD

Companies of Pakistan such as Dawlence, LG, PEL etc. Reason of conducting

this survey was to make a price, incentive and discount comparison between

these appliances.

AUGUST 2nd 2005

Today again I visited the market in order to collect some information regarding

the different offered features of all those Microwave Owens and similarly have

gathered information about the customer preferences, complains, etc.

AUGUST 3rd 2005

Today I examined the annual leasing details for the year 2003-2004 which

includes Auto financing, Machinery Leasing, other equipments leasing etc. while

examination I found that their major financing contracts took place with Askari

and Faisal Bank.

AUGUST 4th 2005

Today all day long I was busy in collecting the bank statements for FIM, Current

Account and Guarantees from different Banks such as National Bank Main

Branch, P.I.C.I.C etc.

AUGUST 5th 2005

Today I worked on Tender Bond Vouchers and have prepared vouchers for the

last 3 months.

AUGUST 6th 2005

Today my boss asked me for a favor he wanted me to prepare some budgets

slides on Power point for him because he needed that in order to present it in

front of the external auditors so I prepared the presentation slides for him in

power point,

AUGUST 8th 2005

Today I worked on the Performance Guarantees statements, showing how much


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PAK ELEKTRON LTD

amount has been redeemed by the company from the banks up till now after its

establishment.

AUGUST 9th 2005

Today I worked on the vouchers of performance, advance guarantees that further

helps the company in identifying for how much tenders they have participated, for

how much orders the company got approval etc.

AUGUST 10th 2005

Today I did verification and error rectification of the annual 2006 budgeted

expenditures of the company, which was required by the external auditors.

AUGUST 11th 2005

Today I spent my day delivering tender bond guarantees to different banks,

which reflects that the company is willing to serve or to produce switchgears for

WAPDA.

AUGUST 12th 2005

Today I visited Banks in order to collect Bank Statements of the Company’s

Current Account and Letter of credit limit balances.

AUGUST 13th 2005

Last day, the day of good bye they people taught me some key points and I left.

10. 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.

During my education time period, I learnt while entering into

Trading contracts importer always has to open up a letter of credit


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PAK ELEKTRON LTD

in order to assure the exporter that it will make the payment by

certain date through its bank and on maturity Importer becomes

obliged to make payment but I had no idea that importer’s bank

provides certain payment facilities to the importer for making the

trading goods payment for example Importer Bank pays the bill on

the behalf of the importer and takes possession of the goods.

Simultaneously bank enters into a FINANCE AGAINST

MERCHANDISE agreement with the importer and by and by the

importer makes imported goods payment to the bank in the shape

of installments Bank starts releasing the possessed goods for the

company. Banks usually charge Margin and Holding Charges to the

company for providing them such type of facility.

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 with in 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.

I also learnt how to operate an online budgeting system, how to

keep it up to date, where to get the daily information regarding

actual transactions, etc.


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PAK ELEKTRON LTD

11. PROBLEMS ENCOUNTERED IN PEL:

As one says there is no free food in this world, you need to struggle for it similarly

I believe there is no free learning in this world until and unless one encounters

problems.

I too faced large number of problems in PAK Elektron during my internship and

some of them are mentioned below:

While working for the Budgeting section of finance department in PAK

ELEKTRON LTD I found that staff / Executives are not co-operative at all.

Budgeting staff rather than teaching keep the interns engage in printing

the notes, photocopying etc, etc.

Attitude and behaviors of the staff is sick and pathetic they people did not

feel any hesitation in openly abusing others.

Managers at finance department always use to make fun of the intern’s

physical traits and that de-motivates the trainees badly.

12. EXPERIENCES AND IMPACT OVER MY CAREER:

Regardless of the problems encountered by me in PAK Elektron, I believe the

things I have learned in there will help me rather will support my position in the

long run.

I got a very good exposure of Business Budgeting that is directly

related to the forecasting of the Country’s Future Cultural,


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PAK ELEKTRON LTD

Economical and Political transformation and its interpretation. This

budgeting activity is almost done in every play of life and having

knowledge about the procedure ensures a very good position to me

in future.

Similarly paying visits to different Markets and Financial Institutions

have developed very good Public Relation and Analytical skills and

due to this I believe I will be able to tackle most of the problems in

the Services sector in case I get a job in there.

So far as the business planning is concerned, in PEL, I always

acted as a critic and used to identify the existing and hidden flaws,

they were un-able to identify in their plans. Executives over there in

PEL always appreciated these skills and I believe having this ability

will ensure me a bright future in my professional life.

13. MICROWAVES OPEN MARKET SURVEY

In order to see PEL’s microwaves market position some of the internees working

over there in PEL including me decided one day to conduct an open market

microwave survey during the internship program. In the market, we people found

that in total currently there is Eight/8

companies serving all over the Pakistan with


BRAND NAME NO OF MODELS

PEL 5

DAWLENCE 14

WAVES 24

LG 13

ORIENT 6

HAIER 6

FAST 7

SAMSUNG 10

39

PAK ELEKTRON LTD

its products particularly microwaves. Following are the names of the companies

and Number of models of the microwaves.

During the survey we looked into different features offered by those companies in

their microwave Owens where some of the features have significantly increased

the value of those microwaves and some have shattered down the image of the

company. Let’s look into the distinct features.

13.1 Distinct Features:

Following are some of the distinct features found by me during the survey

Tea Maker:

A value added feature introduced by LG in its Microwaves Owens, considered to

be a convenience by the upper class society but an un-attractive facility by the

middle class which is the largest segment all because of the higher prices i.e. 40

percent higher than the similar microwaves offered by other companies.

Up Side Down Doors:

A very special feature designed for the commercial usage such as bakeries,

Snack Bars, Hotels, Restaurants, etc., has its own importance and such

microwaves were first introduced by National Appliances in Pakistan. No doubt

other than businesses, general public show less interest in this feature but

National Appliances all alone has captured the commercial market and enjoying


40

PAK ELEKTRON LTD

the significant return because PEL, LG and others are not under taking any step

to share this opportunity.

Grills:

A Cultural transformation has been rapidly taking place these days due to Mass

Media. People of Pakistan have started preferring rather showing their interest in

western foods. And as this need is arising swiftly most appliances corporations

have started introducing Grills for Baking and other purposes. But still there are

some companies, which are not offering grills along with some of their own

models to the customer, despite its highly demanded like Orient, Hiaer, LG, and

PEL, due to which they are loosing their customer loyalty.

Digital Panels:

Few years back, if we remember microwave Owens were introduced with analog

operational kits but with the passage of time they arrived with attractive digital

kits. This feature if has added a beauty in the microwaves also has created lots

of problems for the customers. Reason being;

o Majority people are un-able to operate because of illiteracy.

o Quality Complaints.

o Parts replacement of microwaves have become expensive and many

more.

Due to this many companies including PEL, have suffered a lot and still suffering

and among them Orient, LG are at top just because of poor quality of digital kits

and continuous customer complaints. Only Dawlence is ensuring high quality and

reliability to its customer.

13.2 COMPETITIVE BUSINESS STRATEGIES:

During conducting the survey our main motive was to identify the distinctive

features and all business strategies of those 8 Giants. Different retailers have

different opinions about all these companies but their emphasis lies around some

of the major issues such as problems with delivery of appliances and after sales


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PAK ELEKTRON LTD

services facility. We heard that few companies are good at one end but lacks at

other only Dawlence being the big crocodile is highly committed with its promises

and is actively participating in after sales services which ensure care to its

customer due to which no one can take its customer away from its products

easily.

PRICE FACTOR:

Price stability always counts a lot. A fluctuation in prices with regular interval of

course does not leave a good impression rather changes the mind of customer

because a customer too have planned its shopping budgets.

During the survey we found that only Dawlence is the company that has

considered this important issue and have entered into the market with stabled

prices comparatively with others. It also declares that if some one like retailers

sells Dawlence products lower than the offered selling prices by the company will

be subjected to a penalty of 100,000Rs. Strategy is to protect its corporate

promising image and keep the customer always closer.

DEALERS INCENIVE:

Margins either earned by the retailers, whole sellers or by the Companies,

always being a source of motivation. Creating a discrimination in between Major

and Minor distributors creates dissatisfaction. In order to build an exclusive

distribution channel, equal incentives to all counts a lot. A retailer disclosed that

Dawlence, Orient is the one who never discriminates and always ensures us the

same entertainment as it does to the others.

PENETRATION AND CONTRACTS:

A demand for the electronic goods are increasing day by day, we found that

Dawlence struggles more than all the other companies in seeking rather

exploring new markets in order to increase its market share. It has a special

sales force that conducts surveys with continuity and keep the company informed


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PAK ELEKTRON LTD

about the new slots and similarly than Dawlence negotiates and enters into a

fixed sales contracts with those dealers but a good thing was, it also allows or

gives flexibility to them for alternations in the orders and other arrangements.

Where as PEL and other companies usually enter later specifically when we talk

about microwave Owens.

PUBLICITY:

Again Dawlence is going well in comparison with others in increasing its

microwaves awareness in the markets. Its special skilled and talented sales force

is highly involved in spreading word of mouth that is a very effective marketing

strategy rather weapon. Talking about PEL, PEL is not concentrating on this

point rather its just focusing on the dealer ship networks due to which its product

image has never been as good as Dawlence’s image is.

Competitive Price Analysis:

So far as the prices are concerned PEL is charging reasonable prices to its

customer for all of its microwaves comparatively from others. Prices charged by

National, which is a multinational firm, are very higher in comparison with others

because it uses special Japanese parts in its microwaves and ensures high

quality and performance and only rich class shows interest in National Products.

Currently, PEL is not manufacturing Microwaves rather is has under taken an

agreement with a Chinese firm to manufacture Owens for it and PEL is just

supplying material to that firm. According to the retailer’s information, people are

satisfied with the prices charged by PAK Elektron but still their preferences go

along with Dawlence microwaves because of its highly created awareness.

BRAND: ___ORIENT MITSUBISHI_____

MODEL RANGE

Sr.NO MODEL FEATURES PRICE in RS

1 OM-7020-PM MANUAL PAINTED CAVITY 3,499

2 OM-8025-DS-M DIGITAL PANEL, STEEL CAVITY 4,799

3 OM-8025-DGS-M DIGITAL PANEL, STEEL CAVITY,GRILL 5,299


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PAK ELEKTRON LTD

4 OM-8035-DS-M DIGITAL PANEL, STEEL CAVITY 5,599

5 OM-8035-DGS-M DIGITAL PANEL, STEEL CAVITY, GRILL 5,899

6 OM-8052-PG-M DIGITAL PANEL, PAINTED CAVITY 6,999

BRAND:__HAIER MICROWAVEOVEN______

MODEL RANGE


1 HR-570-2D STRAIGHT TYPE MANUAL 3,500

2 HR-750-2D STRAIGHT TYPE MANUAL 4,500

3 MG-2280-EG GRILL AND GRAY COLOR 8,000

4 MK-2280-MG GRILL, DIGITAL AND KNOB 6,000

5 MD-2485-EG STABLE PLATE, GRILL AND AUTOMATIC 8,000

6 HR-7803-SS LARGE DISPLAY, STAINLESS STEEL AND GRILL 9,000

BRAND:__LG MICROWAVE OWENS______

MODEL RANGE


1 MS-202-W INTELLO WAVE MANUAL 4500

2 MS204-W INTELLO WAVE MANUAL 5000

3 MS-2344-B NOT AVAILABLE 6100

4 MS-3443-A NOT AVAILABLE 9900

5 MS-4842-DP NOT AVAILABLE 10900

6 MS-563-XD NOT AVAILABLE 13100

7 MS-604-W DIGITAL, GRILL 17900

8 MS-724-J NOT AVAILABLE 11900

9 MS-C DIGITAL, TEA MAKER

BRAND:__DAWLENCE MICROWAVE OWENS______

MODEL RANGE


1 DW-22-M ALARM, CHILD SAFETY AND 6 POWER LEVEL 4400

2 DW-44-T MANUAL + GRILL 5200

3 DW-66-TG COMBI GRILL, CHILD SAFETY LOCK 6500


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PAK ELEKTRON LTD

4 DW-EC-20 MANUAL + GRILL 4200

5 DW-DS-20 MANUAL + GRILL 4200

6 DW-DS-20-G CONTROL PANEL, SPEEDY COOKING 4700

7 DW-631 TOUCH SYS, AUTO DEFROST AND COCK 5700

8 DW-390-M SAME MANUAL + GRILL 5700

9 DW-390-T SAME MANUAL + GRILL 6200

10 DW-391 NOT AVAILABLE 7200

11 DW-131-G TOUCH SYS, CHILD-SAFETY LOCK, DEFROST, 7400

12 DW-131-A NOT AVAILABLE 8200

13 DW-180 NOT AVAILABLE 8700

14 DW-180-G NOT AVAILABLE 10300

BRAND:__SAMSUNG MICROWAVE OWENS______

MODEL RANGE


1 M1610N AUTOMATIC KITS + GRILL 5900


3 M1733N MANUAL + GRILL 9000


5 M1933N AUTOMATIC KITS + 7 POWER LEVELS 11600

6 MID33 ROTATING PLATE, 7 POWER LEVELS, TIMER 12500

7 MF45 AUTOMATIC KITS + TIMER + POWER LEVELS 13400

8 CE2977 HELP SCREEN, TOUCH PANEL, 8 POWERS 16900

9 MS9796 HELP SCREEN, TOUCH PANEL, TIMER 14600

10 C100 HELP SCREEN, ROTATING PLATE, 8 POWERS 16500

BRAND:__FAST MICROWAVE OWENS______

MODEL RANGE


1 BS-20 MANUAL, GRILL 3900

2 BS-20-M MANUAL, GRILL 4100


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PAK ELEKTRON LTD

3 BS-26 AUTOMATIC, GRILL 5500

4 BS-26-M AUTOMATIC, GRILL 5600

5 BS-36 ROTATING PLATE, GRILL 6800

6 BS-36-D TOUCH PANEL, GRILL 6900

7 BS-465 ALARM, TOUCH PANEL, GRILL 7100

BRAND:__WAVES MICROWAVEOVEN______

MODEL RANGE


1 W-520 NOT AVAILABLE 3500



4 W-520-GDI NOT AVAILABLE 3700

5 W-525-GDG GRILL, TOUCH PANEL 5100

6 W-535-GDG NOT AVAILABLE 5399


8 W-20-DG2 NOT AVAILABLE 3700

9 W-535 DIGITAL, GRILL 5699

10 W-520-MD NOT AVAILABLE 3700


12 W-525-MDG NOT AVAILABLE 5100



15 W-622-MM NOT AVAILABLE 6999

16 W-620-GM NOT AVAILABLE 3500



19 W-740-GD NOT AVAILABLE 6500





46

PAK ELEKTRON LTD

BRAND:__PEL MICROWAVE OWENS______

MODEL RANGE


1 PMO-20 MANUAL 3900

2 PMO-23 MANUAL 5800

3 PMO-36 AUTOMATIC, GRILL 6900

4 PMO-52 AUTOMATIC, GRILL, TIMER 7100

5 PMO-56 AUTOMATIC, GRILL, TOUCH PANEL 7900

PAK ELEKTRON FINANCIAL DATA:

14. BALANCE SHEET

As at MARCH 31st, 2005

EQUITY & LIABILITIES NOTE Mar-05 Jun-04


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PAK ELEKTRON LTD

SHARE CAPITAL & RESERVES

Ordinary Share Capital 4 531,194 236,876

Preference Shares 4 605,000

Reserves, Un-Appropriate profit 1,091,952 563,671

2,228,146 800,547

SURPLUS ON REVALUATION OF

FIXED ASSETS 1,563,810 1,576,346

NON CURRENT LIABILITIES

Long term loans 5 437,372 703,910

Liabilities against assets subject to finance

lease 6 123,542 74,646

Deferred Liabilities 258,980 258,980

DEFERRED INCOME - GRANT IN AID 74,456 77,356

CURRENT LIABILITIES

Short term finances – Secured 2,399,223 1,897,577

Current portion of long term liabilities 516,919 404,744

Creditors, provisions and accrued liabilities 983,361 930,063

Proposed dividend 1,231 23,688

CONTINGENCIES AND COMMITMENTS

8,587,040 6,747,887

ASSETS NOTE Mar-05 Jun-04

NON-CURRENT ASSETS

Operating fixed assets 8 3,761,010 3,594,164

Capital work in progress 95,429 4,641

3,856,439 3,598,805


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PAK ELEKTRON LTD

INVESTMENTS 96,701 96,701

LONG TERM DEPOSITS 25,596 13,073

CURRENT ASSETS

Stores, spares and loose tools 56,037 49,157

Stock in trade 1,793,332 1,309,131

Trade Debts 1,833,068 980,491

Advances, deposits and prepayments 735,035 565,083

Short term investment 27,983 17,530

Cash and bank balances 162,849 117,916

4,608,304 3,039,308

8,587,040 6,747,887

CAPITAL N RESERVES in (000)

Balance as on 30-06-2004 236,876,000 6,662,000

15. PROFIT AND LOSS STATEMENT

For the Year ended June 30, 2004

Note2004 2003


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PAK ELEKTRON LTD

(Rupees in Thousand)

SALES-GROSS 24 6,077,006 3,983,106

LESS: SALES-TAX, EXCISE DUTY AND

DISCOUNT 24 1,147,510 773,870

SALES-NET 4,929,496 3,209,236

COST OF GOODS SOLD 25 3,859,115 2,382,619

GROSS PROFIT 1,070,381 826,617

OPERATING EXPENSES

Administrative 26169,321

133,822

Selling27

273,692 165,720

443,013 299,542

OPERATING PROFIT 627,368 527,075

FINANCIAL EXPENSES 28 379,001 349,388

OTHER INCOME 29 48,798 16,058

OTHER CHARGES 30 17,063 9,951

PROFIT BEFORE TAXATION 280,102 183,794

TAXATION 31 2,878 42,587

PROFIT AFTER TAXATION 277,224 141,207

Un-APPROPRIATE LOSS BOUGHT

FORWARD204,228 (118,309)

UN-APPROPRIATED PROFIT/(LOSS) 481,450 21,898


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PAK ELEKTRON LTD

TRANSFERRED AND APPROPRIATIONS:

Transfer from surplus on revaluation of fixed assets

Prior year-

136,684

Current year - net of tax 28,184 45,644

PROFIT AVAILABLE FOR

APPROPRIATION509,634 204,226

APPROPRIATION:

Proposed dividend 10% (2003: Nil) 23,688-

UN-APPROPRIATED PROFIT CARRIED

FORWARD485,946 204,226

RupeesRupees

(Restated)

EARNING PER SHARE (Basic & Diluted 33 11.70 5.96


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PAK ELEKTRON LTD

16. PROFIT & LOSS STATEMENT

FOR THE YEAR ENDED 31st March 2005 And 2004

PROFIT AND LOSS STATEMENT

For the Year ended MARCH 31st, 2005 and 2004

Note 2005 2004

(Rupees in Thousand)

SALES-GROSS 9 5,238,702 3,749,404

LESS: SALES-TAX, EXCISE DUTY AND

DISCOUNT 746,939 712,446

SALES-NET 4,491,763 3,036,958

COST OF GOODS SOLD 10 3,506,707 2,321,049

GROSS PROFIT 985,056 715,909

OPERATING EXPENSES

Administrative 116,507 96,438

Selling 259,336 201,089

OPERATING PROFIT 609,213 418,382

FINANCIAL EXPENSES 363,026 297,527

OTHER INCOME 47,442 24,314

PROFIT BEFORE TAXATION 293,629 145,544

PROVISION FOR TAXATION 22,458 15,185

PROFIT AFTER TAXATION 271,171 130,359

EARNING PER SHARE Basic 7.3 3.46


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PAK ELEKTRON LTD

17. CATEGORIES OF SHARE HOLDERS, NO OF SHARE HOLDERS AND

TOTAL SHARES:

Categories of Shareholders

Number of Shareholders Number of

Share HeldPercentage

Associated Companies and Undertakings NILNIL

NIL

Investment Corporation of Pakistan 120,310

0.09

National Investment Trust Limited 1 70,625 0.3

CEO, Directors, Their Spouses etc.

M. Naseem Saigol (CEO & Director) 6,846,945

M. Azam Saigol (Director) 63,762

Muhammad Murad Saigol (Director) 625

Shahid Sethi (Director) 687

Haroon Ahmed Khan (Director) 625

Homaeer Waheed (Director) 625

Mrs. Sehyr Saigol W/o M. Naseem Saigol 236,596

Mrs. Amber Saigol W/o M. Azam Saigol 3,072,155

8 10,222,022 43.15

Executives NIL NIL NIL

Public Sector Companies & Corporations NIL NIL NIL

Joint Stock Companies 70 5,190,953 21.91

Financial Institutions/Insurance Companies

/Modarba/Mutual Funds etc.16 3,584,535 15.05

Foreign Companies/Foreigners 31 46,982 0.2

Others/Individuals 1,839 4,572,164 19.3


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PAK ELEKTRON LTD

1,966 23,687,591 100

18. KEY OPERATIONS

Rs. in Million

Particulars 2004 2003 2002 2001 2000 1999

Sales Gross 6,077 3,983 3,163 2,521 2,295 1,788

Sales-Net 4,929 3,209 2,578 2,129 1,930 1,540

Gross Profit 1,070 827 685 620 638 470

Operating Profit 627 527 402 397 401 268

Financial Charges 379 349 338 370 404 381

Profit/(Loss) after Tax 277 141 130 94 59 -96

LIABILITIES

Share Capital 237 190 185 185 185 185

Reserves 563 329 6 -124 -219 -278

Shareholders' Equity 824 519 191 61 -33 -92

Long Term Liabilities 779 786 778 940 998 1,092

Deferred Liabilities 259 14 4 - - -

Current Liabilities 3,232 2,467 1,901 1,747 1,683 1,328

ASSETS

Fixed Assets 3,599 3,030 2,394 2,375 2,098 2,037

Current Assets 3,039 2,218 2,040 1,936 1,873 1,615

Net Current Assets -193 -249 139 189 190 287

Total Assets 6,748 5,351 4,521 4,498 4,162 3,843


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PAK ELEKTRON LTD

19. PEL RATIO ANALYSIS

AS AT THE YEAR ENDED DEC 31st, 2004

Dividend (%)

2004 2003 2002 2001 2000 1999

Cash Dividend 10% - - - - -

Stock Dividend 30% 25% - - - -

Ratios

Profitability 2004 2003 2002 2001 2000 1999

Gross Profit 22% 26% 27% 29% 33% 31%

Profit/(Loss) after Tax 6% 4% 5% 4% 3% -6%

Return to Shareholders

2004 2003 2002 2001 2000 1999

ROE after Tax 41% 40% 103% 671% -94% 218%

Return on Capital

Employed 5% 3% 3% 2% 1% -3%

EPS after Tax Rs. 11.7 5.96 5.58 4.04 2.53 -4.12

Activity (Times)

2004 2003 2002 2001 2000 1999

Sales to Total Assets 0.73 0.6 0.56 0.47 0.46 0.4

Sales to Fixed Assets 1.37 1.06 1.08 0.9 0.92 0.76

Inventory Turnover 3.5 3.45 3.3 2.61 2.46 2.16

Interest cover ratio 1.74 1.53 1.43 1.29 1.17 0.77

Liquidity/Leverage

In Times 2004 2003 2002 2001 2000 1999


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PAK ELEKTRON LTD

Current Ratio times 0.94 0.9 1.07 1.11 1.11 1.22

Debt to equity 0.49 0.6 0.8 0.94 1.03 1.09

20. RATIO ANALYSIS CONCLUSIONS AND RECOMMENDATION:

As complete information regarding year 2005 is not fully available, I have done

the ratio analysis for the year 2004 in comparison with prior years and now going

to declare the conclusion about the PAK Elektron Financial Activities.

Pak Elektron never declared Cash Dividends as well as Stock Dividend to

the shareholders since last couple of years except year 2003 where it had

declared stock dividend and in year 2004 where it had declared a 10

percent cash dividend of the after tax profit. This reflects that Pak

Elektron’s liabilities have been started reducing now and getting better

position in the markets. Similarly it also seems that Pak Elektron has been

successful in achieving its goals as per planning since last two years.

Talking about Gross profit ratio which reflects a decline comparatively

from last year’s ratio that is year 2003 portrays that its cost of production

has been higher by year 2004 which further reflects that its material

planning was not as good as it had to be but talking about NET PROFT

AFTER TAX RATIO they have achieved 2 percent more of the sales than

prior year and this is due to the un-appropriate brought forward profits by

the company but it sounds good.

Of course Return on Equity has its own importance, the company has

again started earning more in respect with year 2003 returns but still it has

to ensure at least 100 percent return like it did before over the share

holders equity in order to increase its business capital. Similarly I found a

continuous improvement in returns on Capital Employed that reflect that

Company’s internal growth rate has started increasing.


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PAK ELEKTRON LTD

A corporate achievement are highly related with its stock positioning in the

market regardless of it shares the success with the stock holders or not

but it really does effects over its reputation, goodwill and Business Capital

Value. Since there is an increase of nearly 50 percent found in earning per

share, I believe its stock prices must have reached the sky and it’s a very

good sign for the company.

Chances of dissolving and black listed increases when a company sales

does not ensures the coverage of Total assets and Fixed Assets

especially to the shareholders due to which some times other companies

also try to take over the sinking company because when sales are low

profitability is low and shareholders start moving out speedily from the

possession of the firms equity.

For inventory turn over, I recommend that the company should not keep

that much idle inventory rather keep according to needs and keep the idle

money in circulation in order to get rid of the excessive loans and their

highly payable interests.

With the help of sufficient Net Profits this company is able to pay 100

Percent interests on all borrowed loans. But it is recommended that PEL

should minimize the burden of debts over it in order to increase

shareholders portion of profits rather wealth.

Current ratio from prior year has reached its rite place but in up coming

years it should show the same stability and should not exceed above 1

Times. Where as Long-term debts to equity is also reflecting a very sound

position but in order to attract more investments it should show the same

decline by next and up coming years.


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PAK ELEKTRON LTD

21. COMPETITORS SHARE IN THE MARKET

SALES AND SHARE ANALYSIS

COMPETITORS SHAREBRAND 97-98 98-99 99-00 00-01

Sales % Share Sales % Share Sales % Share Sales % Share

PEL 28,460 22.41% 27,500 14.47% 49,550 20.48% 62,028 23.97%

DAWLANCE 75,000 59.06% 85,000 44.74% 107,000 44.21%

121,700 47.04%

WAVES 12,000 9.45% 20,000 10.53% 25,000 10.33% 25,000 9.66%

PHILIPS 33,000 25.98% 40,000 21.05% 33,000 13.64% 28,000 10.82%

OTHERS 11,540 9.09% 17,500 9.21% 27,450 11.34% 22,000 8.50%

TOTAL 127,000 125.98% 190,000 100.00% 242,000 100.00%

258,728 100.00%

Market Growth - 18.75% 27.37% 6.91%

BRAND 01-02 02-03 03-04 04-05 Sales % Share Sales % Share Sales % Share Sales % Share

PEL 80,023 26.47% 100,288 28.07%

163,000 30.07% 240000 33.38%

DAWLANCE 150,300 49.72%

165,000 46.18%

240,000 44.28% 312000 43.39%

WAVES 40,000 13.23% 45,000 12.59% 95,000 17.53% 120000 16.69%

PHILIPS - 0.00% - 0.00% - 0.00% - 0.00%

OTHERS 32,000 10.58% 47,000 13.15% 44,000 8.12% 47000 6.54%

TOTAL 302,323 100.00%

357,288 100.00%

542,000 100.00%

719,000 100.00%

Market Growth 16.85% 18.18% 51.70% 32.66%


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PAK ELEKTRON LTD

22. MARKET SIZE AND PERCENTAGE COMPETITION:

MARKET SIZE AND %AGE COMPOSITION

REGION AREA MARKET

Dawlance PEL OthersSale 2002-

03

Mkt. Share

Sale 2002-

03Mkt. Share

Sale 2002-

03

Mkt. Share

NORTH

Lahore 70,000 19,500 27.86%

18,375 26.25%

32,125 45.89%

Sahiwal 15,000 9,800 65.33%

3,300 22.00%

1,900 12.67%

Gujranwala 45,000 30,697 68.22%

13,000 28.89%

1,303 2.90%

Rawalpindi 55,000 35,000 63.64%

17,500 31.82%

2,500 4.55%

TOTAL 185,000 94,997 51.35%

52,175 28.20%

37,828 20.45%

SOUTH

Faisalabad 33,000 20,551 62.28%

11,400 34.55%

1,049 3.18%

Multan 28,800 11,689 40.59%

7,800 27.08%

9,311 32.33%

Sukkur 15,000 3,816 25.44%

4,400 29.33%

6,784 45.23%

Hyderabad 25,000 6,600 26.40%

3,500 14.00%

14,900 59.60%

Karachi 65,000 27,700 42.62%

19,500 30.00%

17,800 27.38%

TOTAL 166,800 70,356 42.18%

46,600 27.94%

49,844 29.88%

GRAND TOTAL 351,800

165,353 47.00%

98,775 28.08%

87,672 24.92%

23. BRAND WISE SALES COMPARISON

BRAND 97-98 98-99 99-00 00-01 01-02 02-03 03-04 04-05

PEL 28,460

27,500

49,550

62,028

80,023

100,288 163,000 240,000

Growth -3.37% 80.18% 25.18% 29.01% 25.32% 62.53% 47.24%

DAWLANCE 75,000

85,000

100,000

115,000

128,000

165,000 240,000 312,000

Growth 13.33% 17.65% 15.00% 11.30% 28.91% 45.45% 30.00%

WAVES 12,000

20,000

25,000

25,000

40,000

45,000 95,000 120,000

Growth 66.67% 25.00% 0.00% 60.00% 12.50% 111.11% 26.32%

PHILIPS 33,000

40,000

33,000

28,000 - - - -

Growth 21.21%-

17.50% -15.15% 0.00% 0.00% 0.00% 0.00%

OTHERS 11,540

17,500

27,450

22,000

32,000

47,000 44,000 47,000

Growth 51.65% 56.86% -19.85% 45.45% 46.88% -6.38% 6.82%


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PAK ELEKTRON LTD

TOTAL 127,000

150,000

202,000

224,028

280,023

357,288 542,000 719,000

Market Growth 18.11% 34.67% 10.90% 24.99% 27.59% 51.70% 32.66%

24. PAK ELEKTRON SWOT ANALYSIS:

Working with Pak Elektron was a great exposure for me. As we all know that its

almost 50 years ago that PEL has been serving under the supervision of Saigols

groups and has build a very good repute in the market due to its large number of

finest products in the world. At first glance, no one will be able to identify its

weaknesses and threats.

People might believe that companies like PEL must be having more strengths

than the required ones and is always ready to avail the up coming opportunities

and tackle the threats. But during my internship time period, considering my self

a part of the same society having same image of the company, I found that

regardless of the perceived strengths and qualities to avail opportunities and

tackling powers it too has some weaknesses and will be facing some threats in

the future due to many reasons. And I would like to share those identified

Strengths, Weaknesses, Opportunities and Threats.

PAK ELEKTRON STRENGTHS:

As we all know PEL has been serving since 5 to 6 decades, it has captured

almost 50% of the Appliances demand and near about 70% of the power

products demand with the passage of time. Due to its strong positioning, its

Goodwill has always been a threat for the new business arrivals and for the

small-scale businesses. And PEL holds a great part of the people trust.

Technological improvements in the business environment always play a vital

role for the expansion of the Corporations. PEL has sensed the importance of

technology very earlier and has introduced latest equipments to all of its

departments along with the expertise to increase its staff technological know how

as well as their efficiency level. Now people working in PEL are ready to cope

with any of the internal and external threats easily. This technological


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PAK ELEKTRON LTD

improvement has enhanced company’s productivity comparatively more than 60

percent from past and still the company is struggling for more improvements.

In a competitive environment, where every producer tries to maximize its

market share and profitability, requires a very strong financial backup. Pak

Elektron Appliance division has large number of competitors in the market

including National and International firms and they are continuously trying to

break PEL’s market share but due to strong financial backup from its own

POWER DIVISION, from Top class financial institutions and its exclusive

distribution network all those companies have become un-able to change its

position.

One another Strength would be the environment, PEL ensures a very neat,

clean environment to its staff which keeps them motivated and committed to their

jobs and that’s why they usually resist to jump for external opportunities.

Due to PEL’s reputation and Goodwill many financial institutions have

increased its credit facility limits due to which it has started expanding its

businesses into those areas where access was a bit tough or where it wanted to

participate. Similarly due to this advantage it has started increasing its product’s

National and International Material Supply to achieve production scale as well as

the annual Sales.

Almost 80 percent of the WAPDA, KESC, PESCO, LESCO, IESCO, GESCO,

and AJK ‘s demand specifically TRANSFORMERS, SWITCHGEARS, ENERGY

METERS, etc., is being fulfilled by PAK ELEKTRON due to its finest products

and trust worthiness and Pak Elektron all alone is enjoying high profits by fulfilling

the needs that further helps it in supporting the appliance division.


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PAK ELEKTRON LTD

PAK ELEKTRON WEAKNESSES:

Other than strengths the internal weaknesses of PEL includes low morale of

the employees due to OLD and RIGID ideologies of the top-level staff. Top level

staff at PEL dislike middle or lower level employees participation in the decision

making, exert excessive, un-necessary pressures, work loads and discourage

them a lot, this significantly reduces employees interests in their work and

respect for the Top-level staff.

Another weaknesses of the PAK Elektron lies in its marketing strategy where

its continuously trying to rely on the Distribution Network for its Appliances

specially for its microwaves and splits with out proper Advertisement and

promotions. Due to which people un-awareness remains there as it is and they

bother to go for its products.

Sayings: “if internal customer is satisfied do not worry about the external

satisfaction”

Ensuring speedy growth and handsome packages to the employees does matter

because they keep the employees motivated and committed with their assigned

tasks, especially in Pakistan. In PEL, I saw employees are dissatisfied with their

jobs due to the lack of these two factors and further due to this new talent resists

becoming a part of this organization.

Money acts as a life blood for an organization, while working on the

Receivables Aging Statement I found that near about 100 Million Rupees of

Refrigerator Sales remain stuck in wholesalers and retailers after the delivery till

180 days due to which the production plan of the organization gets disturbed and

to keep the production smoother it usually borrows funds from the financial

institutions and returns back along with high interests. All this portrays that such

steps increase the effective cost of the organization that reduces the profitability


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PAK ELEKTRON LTD

of the company and further deviates the investors in the stock market towards

other companies stocks.

Though PEL is struggling to build an exclusive distribution channel in market

but still a flaw exists in its marketing strategy that is a non-justification of the

distributed incentives to the retailers and wholesalers. In the market, during the

survey, we found small retailers claiming for the equalent incentives and benefits

provided to the big retailers and wholesalers by the company. Due to this small

retailers and wholesalers resist to continue any further business with PEL and

prefer Dawlence and other brands to be sold by them due to their non-

discrimination policy.

Pak Elektron has started buying almost all the Equipments, Auto Mobiles, and

Machineries on Leasing Agreements from different Institutions. No Doubt it first

collects the quotations to make a comparison from all the leasing companies in

order to buy any product at best price but while working on Machinery Leasing

Statement, I found that it purchases machineries usually with the help of Private

Leasing Companies charging high interests rates than the public institutions and

this further effects over the profitability of the company significantly.

As it was mentioned earlier that due to certain reasons PEL’s Cost of

Production fluctuates it simultaneously effect over the sales price level due to

which it does not remain stable through out the year. And if the company does

not have a tight control over cost of production, customer who comes to buy any

product after estimating its own budget when finds a different price from the prior

visit or information faces decisional problems and in this way Company looses its

customer. It is happening with Pak Elektron.

While preparing Actualized Statement for the Budgeting Section the thing I

have noticed was an improper forecasting method, adopted by the Finance

Managers to project the Sales of the following months in order to add it up in the

monthly realized sales to further get the Annual sales. They use an average


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PAK ELEKTRON LTD

method without considering Economical, Political factors such as Refrigerators

are usually less purchased in winters as compare with summer but average

method results might fall outside due to which company can suffer huge losses

and frustrations.

Another weaknesses of PAK ELEKTRON, is its delivery system. Retailers of

PEL use to complain about its delivery patterns and they are un-happy and

moving towards other company’s products.

PAK ELEKTRON OPPORTUNITIES:

Following are the opportunities on the way, which the company can avail in

future.

SAFTA, a free trade agreement between South Asian Countries, is hopefully

going to bring large number of penetration opportunities for the companies like

PEL in January 2006. This will help PEL in achieving Economies of Scale and

further help it in bringing technological enhancements in it all facilities. This will

also make its name stronger in the market.

Since couple of years, Pakistani Government has initiated many development

plans for the prosperity of general public including direct and in direct

employment opportunities, similarly electric supply to the rural areas and etc,

these steps ensure huge demand of Appliances and Power products in future.

PEL being the giant will be flourishing much more in the future.

Another opportunity is the Sales Tax exemption by the Government over the

Production material and Sales of transformers, switchgears, electric meters, etc

by this year. Due to this PEL soon will enjoy huge profits than before.


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PAK ELEKTRON LTD

PAK ELEKTRON THREATS:

Following are the threats on the way, which the can shake the Company badly in

future if appropriate steps will not be taken by it.

As SAFTA, an agreement between south Asian Countries is on its way so

sooner we will be having all Asian Products and producers such as Chinese,

Hong kong, etc. Competition in all Asian Countries will be so tight we can’t even

imagine. Where it is going to bring large number of opportunities it will also

create threats for the domestic producers like PEL because of their Advance

Factors of production such as technology and because of their Basic Factors of

Production such as cheep labor etc. Further, these factors will give those

producers a chance to charge lower prices than domestic producers for their

products and they will soon be having a competitive edge over companies like

PEL due to which its survival would become difficult.

Similarly, another threat for PAK Elektron is the increasing preferences of

customers towards other companies’ products like Dawlence, which is speedily

exploring un-identified markets in Pakistan and engage in heavy advertisement

of its products. This has been increasing its brand loyal day by day. It seems that

PEL will be no more dealing in Appliances if it does not take any precautionary

measures for future.

Distributors of any product always look forward for the higher margins.

Companies have started offering sufficient amount more than PEL, as incentives

to the distributors soon will take over PEL’s Exclusive Distribution Network and

this will be the huge loss for PAK ELEKTRON.


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PAK ELEKTRON LTD

25. RECOMMENDATIONS:

After looking into different weaknesses and future threats I recommend following

steps to PAK Elektron in order to cope with future problems.

PEL must introduce a true decentralize setup in the organization, giving every

one some grounds for decision making, increase employees involvement in day

to day planning and retain back the morale plus satisfaction of the employees.

PEL should also consider the importance of Advertisement for its microwaves

and Splits, which plays an important role in increasing awareness, customer

preferences and in maximizing market share. It should also use some

promotional tools like organizing shows, schemes, gifts, etc.

PEL should at least ensure same level of growth and packages among

employees working at each level like its competitors are offering to its employees

in order to retain the old employees as well as to attract new talent.

PEL should also tighten up its monitoring and inspection Networks in order to

minimize the miss-utilization of the resources by the employees and verify the

data accuracy gathered by them.

PEL should also form especial skilled and efficient sales collection team in

order to collect Receivables amount from the retailers and the wholesalers

especially from ones located in Karachi, Lahore and at least reduce their

payment time period from 180 days to 90 days. Further should also negotiate

with them to ensure that we care for you and for the best in time delivery we

need you to be more responsive in making early payments to the company.


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PAK ELEKTRON LTD

PEL should also ensure equal incentives to all the distributors in order to

increase their willingness to offer more shelf space to the company.

PEL should also negotiate with the public leasing institutions in order to buy

desired equipments such as machines, cars at low interest rates than private

ones. Similarly ask them to introduce new packages to the company like private

sector. This will significantly help it in having a tight control over cost of

production.

PEL should also take care of the Economical, Political Factors such as

inflation, Government Policies while projecting the Cost of Production for future

because this will help the company in entering into a fix price contracts for the

purchases of material at a single time similarly than it will be able to charge

stable prices to its customer.

PEL should also adopt any other methodology for projecting up coming time

period sales which should include seasonal factors consideration in order to get

accurate future estimates rather than using that silly old average methodology.


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PAK ELEKTRON LTD

A F Assets FANFORDCompany’s belongings such as Buildings, Machineries. A special type of voucher that reflects a

refundable amount which was deducted from the DEMAND DRAFT’S.

Accrued FIM Outstanding liabilities. Finance against Merchandise A credit facility or

Limit provided by the Bank to the Company in order to make the import’s payment

Advance Bond A guarantee given by the Banks in order to

provide some Sales Revenue to the Selling company G from the Buying party and an assurance that in case of fraud liability will fall over Bank . Guarantees An assurance given by the bank to the buying party that selling party has a legal entity and will be able to fulfill the desired order and to get its good released.

B

BenchmarkingCopying any of the other company’s process with its consent

Bonus SharesNew shares which are offered to the share holders, instead of offering the profit, by the company.

BudgetA Statement showing predications regarding company’s different activities.

C

Cash financingA credit facility provided by the Bank on a negotiated markup to the Company in order to meet its daily operational expenditures.

ContingenciesAssets and liabilities about which the company doesn’t have any idea whether they will incurred or not?

D

DividendsProfit allowed to shareholders

DebtsLiabilities of a company.Interest Coverage ratioA ratio showing how many times a company is able to pay its interest liabilities with the help of generated profits.

E


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PAK ELEKTRON LTD

Exclusive Dealers NetworkA network that resist sharing the shelf with other corporate

Economical FactorsInflation, Wars, etc.

I R Inflation RectificationsA rise in the general price level. Errors identification and adjustments.

Right sizingReducing the men power in the company.

InventoryStocks of the company such as Raw material. Reserves

Saved amount for different operations.ISO 9000 A quality maintenance certification

K S

KAIBERKarachi inter bank Exchange Rate. Sales Promotion Offering Discounts, Dealer’s incentive Gifts, etc with the product to the customer.Key figures

Daily performance report of the company. T

L Tender Bond A guarantee given through the Bank to the Buying party to represent company’s willingness in order to participate in the contract.Leasing A Financing facility of goods. Turnover

A company’s realized sales of the year.

Lesser Offer different buying packages on installments.

W Lessee Willing to buy any desired thing on installments Word of Mouth A Marketing tool in which company uses humans

to spread the name, quality of the products all over in the assigned areas

Letter of Credit

An assurance given by the importer’s bank Z that he will surely make the payment of import

ZERO DEFECTSDefect less products.

M

Model MixA combination of Refrigerator models

MarkupProfits earned on providing different credit facilities to the company.

N

Net ProfitProfit earned after taxation

P

Preference Shares Shares having a fixed income

Performance bond.


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PAK ELEKTRON LTD

A guarantee given through the Bank in order to assure the Company had certain production prior year.

Political FactorsGovernment’s policy, rules, intervention etc

BIBLOGRAPHY

The sources from where I have gathered data for my report are

www.pel.com.pk

Finance Department. PEL, Lahore

Consumer Marketing Department, PEL, Lahore

Appliances Division, Marketing Department, PEL, Lahore


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PEL Ltd

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