You are on page 1of 63



Chapter 1
1.1 Back ground of study:
Students of Business Administration are required to undergo the internship
program of six to eight weeks in any national or international organization. So it is
the academic requirement to justify the BBA program. Being the student of
business administration it was an essential need. it is the better for any student to
join well known organization to enhance his/her knowledge ,skills and attitudes
thats why I decide to join the well reputed organization that is TIP(Telephone
industries of Pakistan) thats makes the fruitful for me as finance manager in the
future . The TIP Haripur Hazara was incorporated as a private limited company in
the public sector 1952 to produce telecommunication equipments in Pakistan. The
company is a joint venture of M/S Pakistan Telecommunication Company limited
(PTCL) and M/S SIEMENS AG Germany. The management is vested in a board
of directors (BOD) having 8-members including the chairman by the Government
of Pakistan while 2-members are nominated by M/S SIEMENS AG Germany
The study of the industrialization of the country is unique and interesting one
where the primary motives behind the establishment of the new industries were
not the general well being of the country and the masses but safeguarding of the
political interest , nepotism and money making of the Governments in this process
of industrialization during the last 50years many medium and large scale
industries have been established most of these industries failed in the long run
when they had to face competition from the private investors , some major reason
behind the failure of these industries were the managerial inefficiency lack of a
check and balance system and corruption .
One such industry established in 1952 as a private limited company in the public


1.2 Objective of report:
This study attempts to:
o Provide an overview of the TIP;
o Analyze TIP management structure/system;
o Analyze TIP financial statements;
o Appraise the organizations performance;
o Recommend policies/measures for making the organization more viable.

1.3 Purpose of study:
Purpose of the study was to convert the knowledge gained in the internship
into theoretical form.
This study attempts to:
Provide an overview of the TIP;
Analyze TIP management structure/system;
Analyze Tip Personnal & Administration Department
Appraise the organizations performance;
Recommend policies /measures for making the organization more viable.

1.4 Scope of study:
This work is an effort to introduce the Telephone Industries of Pakistan in terms
of its recent and past performance. This can be very useful for those interested in
knowing about the organization in terms of its history and performance.
The performance has further been analyzed by using different techniques. This
analysis gives a true picture of the organization and shows its strengths and
weaknesses. The people interested in this organization can make a true image of
the organization in their mind by reading it. It can also be helpful for the
management of TIP who can easily know about their strengths and weaknesses.
The opportunities for the organization and the threats it faces have also been
discussed and these have been used to make the recommendations for the
improvement of the performance. These recommendations can be very helpful for


the top managers of the organization to remove the defects and to improve the
1.5 Methodology of the Study:
For the collection of data and the other relevant material used to write this report, the
following primary and secondary sources/methods have been used.

1 Personal observations
2 Interviews
Following secondary sources for data collection have been used for this report.
1. TIP Annual Reports
2. Brochures.
3. Factory's Articles and Memorandum of Association
4. Internship Reports and assignments written on TIP in the past
5. Internet
During the period of internship, I studied the history and the background of the
Telephone Industries of Pakistan in detail, side by side with the information, which I
gathered during the daily routine work by personal observation. In this work, I came
across on problems, which were not defined in the previous works. So in order to
clear my doubts; I visited the concerned persons in all the departments. I took the help
of interviews with different people at TIP to get the necessary information about the
management structure and functions and present and past performance of TIP.
After reviewing the answers from the interviews and on the basis of personal
observation, I have developed my findings about the organization and have given the
recommendations for the improvement of performance.


1.6 limitation of report:
Limitation of study is just because of following reasons.
Focus on work
Lack of time
Some internet secrecy work
1.7 Scheme of report:
This report has been divided into six chapters, which are in the following order.
Chapter 1
Introduction of Report
Chapter 2
Introduction of Telephone Industry Of Pakistan
Chapter 3
Product Line & Departments
Chapter 4
Ratios Analysis

Chapter 5
SWOT & Critical Analysis
Chapter 6
Conclusion & Recommendation


Chapter 2

2.1. History and Overview of TIP:
Telephone Industries of Pakistan, an ISO certified company, the only local
manufacturing company in telecommunication sector in the real sense. As a
subsidiary to PTCL; it is engaged in providing high tech manufacturing and
installation services for last 50 years. Its contribution towards the growth of
telecommunication in the country is most significant. Even today when more
multinational companies have entered into telecom sector its contribution is 50% to
the total installed network of PTCL. It is equipped with state of the art technologies
and unmatchable product quality. Located at Haripur Hazara (NWFP), 80 kilometers
north-west of Islamabad, Telephone Industries of Pakistan (Private) Limited (TIP)
was incorporated as a private limited company in 1953. The company is presently
engaged in manufacturing and sale of Telephone Sets, Telephone Exchanges and
allied equipment, Energy Meters and providing services for installation and
commissioning of exchanges.
The Authorized Capital of the company as on June 30, 2003 is Rs 1,000 million,
whereas, the issued, subscribed and paid up capital is Rs 909.309 million. The two
shareholders of the company are Pakistan Telecommunication Company Limited
(PTCL) and Siemens A.G of Germany with 70% and 30% shareholdings
respectively. The management of the company is vested with a Board of Directors
having eight members including the Chairman and Managing Director, who are
appointed by PTCL (GoP) while two out of eight members are appointed by Siemens
A.G, Germany. The Federal Ministry of Information Technology and
Telecommunication, Government of Pakistan is the administrative ministry for the
TIP began its production in 1954 with an annual capacity of 7,000 Telephone sets and
7,000 line units of F-1 type Strowger system of exchanges. It continued with changes


of technology to build Electromechanical types of Exchanges (EMD). The production
capacity was increased in different phases according to the requirements of the
2.2 Mission of TIP
A bright communication future of Pakistan.
TIP commitment is a commitment to the pursuit of meaning life. It is meaning
to put quality and meaning to its work and its products.
Commitment is what character is made of, and commitment is what quality is
all about. This commitment to quality permits to all aspect of TIP'S product, its
R&D, its service and people and is expressed in daily action.
2.3 Objectives of TIP
To provide quality products at low price to country
To fulfill the needs of the county for communication equipment
To provide products
To provide after sale service to its customers
A sound communication system in all organizations of Pakistan
To make research for modern telephone equipment and produce them at low
To enter international market and compete international firms. To provide
skilled labor in this field
Increase the revenue of Government
Building new skilled workers.
2.4 CEO Message:
We will work to ensure a greater understanding by key stakeholder for innovative
telecom manufacturing and others TIP products. We will continue our
contributions for finding new solution in telecomm sector and other sectors of


2.5 Nature of Organization:
TIP is well known and distinguished industry of its own nature in the south east
Asia region in the field of production telephone and other equipments such as
energy meters , tools making , plastic circuit board PCB etc , the industry (TIP)
has a key role to the development in the field of telecommunication Although
China has capture the whole market but yet it cannot compete with TIP especially
in telephone sets , its telephone sets are very durable , thats why its demand is
more as compare to China . We can say that Tip is leader especially in the market
of telephone in Asia.
2.6 Production of TIP:
Self reliance in communication industry is judged through its local production TIP
through its constant efforts developed into a complex of multitude technologies by
getting technical knowledge , training and experience from SIEMENS Germany
in the field of supporting technologies such as ;
Telephone sets
Tool designing
Tool making
Fire Alarm for exchange
Drop wire
Energy meters
PCB (plastic circuit board)

2.7 Competitors:
Carrier Telephone Industry of Pakistan.
Hawaii telecom of China.
ZTE of China.
Nokia Siemens Network (NSN)
Alcatel etc.


2.8 Service provide by TIP:
TIP only provides service for installation and commissioning of exchange.
2.9 Division as in terms of Units:
TIP has been divided into following groups.
a) Finance Department
The finance department deal with the purchasing an sales receipts and payments
and the income and expenditure
b) Personal & H.R
The personal and H.R department deals with employees and worker recruitments
to retirement policy thats includes the selection placement, training and
development salaries and wages and the welfare policies among the many other .
the basic purpose of both division is to run an organization most successfully.
c) General product Division :
General product Division has its own manager under whose supervision all
departments works. In this division energy meters, telephone sets, drop wires.
PCB are made.
The General Manager works under the supervision of the M.D and board of
Directors and controls the whole division.
This department also makes arrangements for the sale of the goods produced by
the production department. The quality of the products produced by the
production department is checked and controlled by Quality Assurance
Department. The Finance department of this division provides funds for the
purchase expenses. Salaries wages and other allowances are also paid to workers
and employees by this department. Personnel section keeps track of the activities
of the staff in the department and handles different administrative matters related
to the department. This department also controls annual reports of employee's
welfare activities and the records related to medical facilities.

d) digital switching division:
The most important department of TIP produces permanent and the containerized
exchanges. Digital switching division performs functions under the G.M who is


responsible and report to the managing director. There are different department
such as: sales department deals all the matters related to the sales and services.
Production department handle the matters related to the production of exchanges
and the quality assurance department assures that the production meets the
standard. The personnel department handles the matters related to employees and
the finance department deals with the financial problems.
2.10 Branches & Offices:
The branches and offices of TIP are in big cities of Pakistan.
a) Head office :
Head office of TIP is in Haripur Hazara.
b) Regional Offices
2.11 Code of Ethics:
Because of the right may not always be obvious we must be guided in our every
action by a set of well-define value , governing our decision So the employees of
TIP are order to abide the rules , which are restricted and obey the lawful orders
and direction given by the management.
2.11.1 Timing & attendance
Starting Time: 6:00
Closing Time: 14:00
Lunch Break: 11:00 11:30
2.11.2 Dress code
A) For Employees & worker:
All employees are order to wear neat and clean. There is no any hard and fast rule
for dressing but not unethical.


B) For Executives:
No any formal dress i.d necessary for managers or executives but the dress which
shows seniority respect like shalwar suit with waistcoat.
2.12 Organizational Charts
a) Function Departments


GM Production GM Finance GM PA & P GM Marketing
DGM Internal
MR (ISO 9001)
b) Top management


DGM Finance
Corporate & DS
DGM Finance
P & A


Manager PA & P
Personnel GP
Personnel DS
Personnel F&P
Procurement GP
Procurement DS
General Manager
Manager R&D
AGM Marketing
Manager Marketing


Chapter 3
3.1 Product line:
TIP as a Telecom Equipments Manufacturer delivered high quality, hi-tech
products and services. TIP provided its customers a One-stop manufacturing
solution for quick turn-around, high quality and cost competitive Electronic,
Mechanical and Electro-mechanical components and assemblies by using their
own broad variety of manufacturing resources. TIP is one of the most qualified,
expanding manufacturing source in Pakistan using high quality latest technology
of CNC machines, and high qualified, skilled and hardworking experienced labors
up to 2000. All the setup of TIP is an advanced system accordingly to the
standards of International standards and produces high quality leading and
professional types of products and services. All these products are inspected in
every step and then presented to the market. TIP offers the following products and
1. Telephone.
a. Telephone Set-210
b. Telephone Set-240
c. Telephone Euro Set-802.
d. Master Set Telephone M-113
e. DTMF Steno Phone
f. CLI Telephone Set
2. Telephone Exchanges
a. Automatic Public Exchanges (Systems) & Telephone Sets
b. Digital Public Exchanges EWSD
c. Digital Mobile Exchanges
d. Subscriber Trunk Dialing Equipment.
e. Private Manual Branch Exchanges.
f. Private Automatic Branch Exchanges.
g. Terminal Equipment (Telephone Sets)

3. Telephone Drop Wire.


4. Training of Telecom Technicians and apprentices:
a. Telecom Apprentices
b. Electronics Apprentices
c. Mechanical Apprentices
5. Production of Electrical Energy Meters

3.2 Personal &Administration Department:
The personnel section of TIP is concerned with the planning, organizing directing and
controlling of the recruitment and selection, development, compensation, maintenance
and separation of human resources to accomplish organizational as well as individual
objectives. The personnel section deals with the policies and procedures of personnel
selection while administration section deal day-to-day operationalization of personnel
Personnel section make policies for the selection of personnel, therefore, job
description is the main for the administration work there are graduate engineers,
which are the main requirement of the TIP for clerical job, TIP require matriculates of
scale-5. The procedures for selection so simple in which applications are send to the
administrative officer who put them in the specified categories to make them feasible
for interview purposes. They issue letter to the candidate then selection committee sits
for the selection of their own departments jobs. Normally, the selection committee
consists of the head of departments. After selection, the candidate is sent for medical
examination. If he has cleared that test physically, they send him to the superintendent
of police for verification. Finally, the candidate is capable for the job, therefore, on
appointment letter with all of the details about work, salary/wages and other necessary
briefings is send to him, that appointment letter must be approved by the General
Manager of Telephone Industries of Pakistan. Whenever, any department wants any
staff then, administrative officer call the explanations from that department, about that
vacancy and then advertised it in newspapers. The grade-17 employees are selected
on the all Pakistan basis.
Personnel section not only make policies for selections but it also define disciplinary
procedures for TIP when a mans character is not according to the codes of conduct or
either he misconduct then, the TIP takes the disciplinary actions against him/her. West


Pakistan Industrial and commercial Employment ordinance of 1968-15 (3) deals with
the disciplinary procedures. Misconduct in following acts;

i.Willful in subordination or disobedience to a lawful and reasonable order of a
ii. Theft, fraud or dishonesty in connection with the employees business or
iii. Willful damage/loss of employers goods/property
iv. Taking or giving bribe or any illegal gratification
v. Habitual absence with leave or absence without leave for the more than ten
vi. Habitual late attendance
vii. Striking or insisting others to strike etc.
The method of action against these grievances depends upon these three necessary
a) The time of that misconduct
b) The date of that misconduct
c) The place of that misconduct
The inquiry officer gives him a charge sheet. At first time, it is only mentioned
that on such date, place & times you do this misconduct etc. And informed him to
follow the procedures otherwise, they will be punished or reported to the concern
department. The inquiry officer is not responsible or allowed to punish but simply
forward the report along with his remarks that what or not the charges against a
man have proved the final decision about punishment is only taken by the General
Manager. The main or extreme punishment is dismissing but others are as
a) Fine
b) With holding of increment or promotion for a specified period not exceeding
more than one year
c) Reduction to lower post or distiller without any payment of compensation
without any notice
The procedure for any of the above punishment is as follows;
a) They write a letter to the concerned man about above punishment whichever is
applicable on him/her


b) The dismissal letter s only issued with the approval of competent authority
c) The personnel and administration section also deal with promotional policy
and procedures.
The promotions made on the basis of;
i. Seniority cum fitness
ii. Length of services prescribed
iii. Shouldering of high responsibility
iv. Availability of a higher post
If there is no higher post available but a man is eligible for the promotion, then,
up gradation is given to him by it we mean that the grade not the post in
increased with all the facilities of that higher grade is given to that man.
At the age of 60 years, department bring a notice to the General Manager that he
will be retired. The general Manager issues a letter of retirement to that man.
In case of death of any worker, TIP sends a letter of sympathy to his family and
always pays the insurance as soon as possible.
A man on job also takes leaves for different occasions. There is well-defined
system about the leave e.g. a man hired on job at 18-12-1998, and at the date of
18-07-2002, he want leave for 210 days from 19-7-2001. If he can attend 16 days
of month than, he get 4 leaves month. If a man wants leave from 31-07-2001 to
01-08-2001, then, the four 4 leaves of the next month will be dismissed.

3.2.1 Compensation & Benefit:
The compensation programmed of TIP consists of two type of compensation;

a) Direct compensation including salary and wages
Direct compensation includes salary and wages of the employees and the workers.
The payroll section of finance and personnel department deals with direct
compensation. The salaries and wages are awarded on the basis of the Basic Pay
Scale- 2001.
b) Indirect compensation comprises of number of schemes the payroll section of
finance and personnel department deals with direct compensation.
The TIP offered following indirect compensation to its employees including;
i. Medical facilities


ii. Social security
iii. Employee old age benefit institution
iv. Education grant
v. Education assessment/accommodation
vi. Housing scheme
vii. Accident compensation
viii. Insurance
ix. Hajj
x. Retirement award
xi. Child birth
xii. Special allowance
xiii. Canteen

Different functions performed by the personnel and administration
department are:

3.2.2 Promotion:
The personnel and administration section also handle the promotional policies and
systems. The promotion will be on the basis of i Seniority cum fitness ii. Length
of service prescribed iii. Shouldering capability of high responsibility iv
Availability of a higher post. If there is no superior post available but an employee
is qualified for the promotion, then, the "Move-over" is granted to him, meaning
that the grade not the post is improved and all the facilities of that superior grade
are given to that employee.

3.2.3 Recruitment & Selection:

TIP is a manufacturing industry therefore it needs the services of engineers and
the skilled labor force. The process for the selection of labor force and the clerical
staff is very simple it is usually based on the reference or recommendation of
existing employees. TIP also has its own training department from which student
can be selected for the appropriate jobs. The basic education is needed for these
candidate mostly S.S.C or intermediate. the candidate after the interview and the


demo work selected. Grade 15 or the above employees are selected inside the
concerned departments and dealt by the central P&A division.

3.2.4 Training & Development:

Usually workers and clerical staff dont know their job description and capable of
doing assigned task because of new environment and the work place therefore
new employees need training. TIP after selection of employees and worker, under
grade 16 provide training them through attaching them with the experienced
workers of concerned department there is no specific time period for training and
development. Usually the first three to four months are considered as the training
and development period. The period can be shorten and extend keeping in view
the time and capacity of employee.
Following training programs are offered in TIP
1. Apprenticeship programs
2. Computer training

3.2.5 Social Security & Welfare Fund:
a) Social Security
According to the provision of Social Security regulation all employees whose wages
are up to Rs.6000/- pm (inclusive of all allowances) is covered, irrespective of their
designation, position or nature of work. TIP also contributes in the social security
fund to provide facility to the eligible workers for their well being. The contract
employees of telephone industries of Pakistan use the medical facility and other
benefits that may apply.

b) Welfare Fund
The welfare fund is reserved in the welfare fund budget for allowing economic help to
the small paid employees/workers. There is a board to distribute this endowment. The
fund allowed to an individual who remains on leave without disburse due to illness or
due to family problems. The welfare fund is also permissible in purchase of
medicines, which are not sheltered under the medical policy and are deducted from
the statement of employees/workers. The board consists of Chief Engineer
(production), Executive Personnel and Executive Administration.


3.2.6 Retirement of Employee:
P & A department maintain the record of the employees service, which contain the
date of birth, joining and the retirement dates of the workers and employees. As a
worker reaches the age of 60, the department sends a notice to the GM that
employees are near the retirement age. GM then issues the retirement letter. In
case of casualty of any worker, TIP sends a letter of sympathy to his relatives and
also the insurance as soon as possible.

3.2.7 Disciplinary Policy:
Personnel department not only makes policies for selections but it also defines
disciplinary rules for TIPs employees. When a man's character is not according to
the codes of conduct then TIP takes the disciplinary actions against him or his

3.3 Finance Department:
After the initial development work of the organization is complete and the human
resources necessary to execute these plans. Available to perform their tasks, the
next most significant factor for the organization is the capital or the financial
resources. Financial resources are very essential for the realization of the
organizational plans. With the availability of finances the human resources will
quit the organization as the organization won't have anything to pay them as
compensation or a reward of their work. The accessibility of raw material and
other required inputs of the production can also be guaranteed only with the
availability of financial resources. At TIP, each division has its own separate
department to arrangement of the financial matters of its departments.

3.4 Accounts Department:
To keep record of the financial transactions the accounts department plays a vital
role in any organization. It performs the check and balance system and also keeps
record of transactions. Telephone industries of Pakistan have its accounts
department working under Finance department accounts department has further
sub sections as following;


3.5 Costing Section:
Costing section is the most important section because the act of this Office may
affect the profit/loss of the business. A small inaccuracy in cost computation may
upset the result and demonstrate adverse picture of economic position of the
organization. A vast arrangement of attention on the branch of Cost Accounting is
required for calculating the cost of products, because the removal of any cost
factor may lead to failure of organization. There are two segments of costing
1. Internal Accounting Value Section.
2. Cost Calculation Section

I.A.V. (Internal Accounting Value) Section
The major function of this Section is to keep the records of the raw material
purchased locally or from abroad. T.I.P is purchasing different types of parts in
bulk from different vendors. For such massive purchases it is not probable to
workout price of each article by taking into account all additional expenses
incurred on each item until they arrive at the T.I.P. Stores.

Cost Calculation Section
Cost calculation section calculates the prices of all the local manufactured marts.
It also calculates the price of Work in Progress and finished parts lying at different
position in different departments.

Accounting Cycle of Foreign Invoice:
a. On receipt of advance copy of Invoice:-
Say FOB value Rs.25000/-


1. General Journal Entry

Date Description Ref Dr Cr
Goods in transit a/c 25000
Supplier a/c 25000

B. On payment to suppliers:-

General Journal Entry
Date Description Ref Dr Cr
Suppliers a/c 25000
Cash a/c 25000
b. Payment of other charges:

Income Tax, Custom Duty, Excise Duty, Insurance, Transportation etc.
Interim account operate for the booking of other charges

General Journal Entry
Date Description Ref Dr Cr
Interim a/c 27000
Cash a/c 27000


c. On receipt of goods in TIP:
General Journal Entry
Date Description Ref Dr Cr
Store a/c 55000
Goods in transit
Interim a/c 30000

d. Issuance of material for production
General Journal Entry
Date Description Ref Dr Cr
Consumption a/c 55000
Store a/c 55000
At the end of each financial year, costing office conducts annual stock taking of
local manufactured parts foreign ordered parts and material lying in the store or on
the shops in different manufacturing position and purchase/material in the
respective stores. The store department notes down the balance quantity of each
item on the store ledger card and prepares list of items laying in the store on the
date of stock taking from ledger card send to Costing Office (C.O)
This section multiplies the balance only with the unit price available in this
section and reconciles the result in the balance of store ledger, this section checks
out the receipts and issue of each item and prepares discrepancy booking note,
because the stock-taking result must be agreed with the financial ledger. At the
end of each year this section reconcile stores balances with the financial ledgers
and prepares financial schedules of accounts and get it checked by External


3.6 Commercial Department (sale)
The basic aim of all the (profit) organization is the earning and the increase of
profit. The only means of earning profit for the organization is to sell the goods
and services produce. This profit is used to run the operations of the organization
and to expand the business for this purpose the sales or marketing department is
one of the most important departments in any organization
The main function of the Sales Department is to receive purchase orders from the
customers and arrange the supply of equipment to them. PTCL is the major
customer of TIP products. In addition to PTCL, TIP also sells its products to
other Government organization, Armed Forces and National Radio &
Telecommunication Corporation (NRTC) HARIPUR, Carrier Telephone
Industries (CTI) Islamabad and other private parties. TIP charges profit margin
from all the customers.

3.6.1 Stores Section:
Telephone industries of Pakistan is a manufacturing concern so to production
departments required different type of parts and raw material. TIP purchases raw
material and parts in bulk quantity so that production function can run smoothly.
Because of huge raw material inventory TIP set up store section that keeps record of
the inventory. Purchase of raw material and parts is the responsibility of purchase
department. TIP manufactures those components that can be produce in the factory.
Purchase of parts is also made because of economic benefits instead of producing
these parts. Some parts require specialized equipment that is costly and are not
available in the factory. TIP therefore prefers to buy these parts from the markets
where these parts are available at low cost. All these production materials are needed
on the daily basis as the manufacturing goes on and their requirement is not periodic
i.e. just once in a year or in a period. These materials are a1so not easy to acquire
through just-in-time supply system. So, there is a need to keep an inventory of those
materials, which is used on regularly basis. For this reason stores have been
established under a Stores Department at TIP. The Store department has the following
1. Raw Material Store
2. Part Store


3. Oil Store
4. Overhead Store.
5 Stationary & Overhead Store
6 Machine Parts Store
7 General Tools Store
8 PCB Store
3.6.2 Sales Procedure:
Sales Department of TIP receives formal orders from PTCL, for the supply of the
equipment. On the receipt of formal order, sale department prepares quotation
and submit the same to PTCL Head Quarter Islamabad for the issuance of firm
order. Despite these formal direct orders TIP also participates in any tenders
competing with other firms.
The Quotation consists of the following items:
1) Cost of the equipment
2) Sales tax
3) Transportation charges
4) Packing charges
5) Insurance charges.
After acceptance of the quotation PTCL issues firm order. On the receipt of firm
order, sale department starts supply of the material if required material is already
lying in TIP stores as finished products otherwise production department as well
as purchase department are requested to procure / produce required goods within
the specified time. Sale department dispatches the equipment to the consignee on
advice notes.
The following detail is available on the advice note:
1) Name and address of the consignee
2) Advices Note No. and Date


3) Details of the equipment
4) Mode of dispatch
Customers other than PTCL are treated as Private Parties. It has sales offices in
Islamabad, Lahore, Karachi, Peshawar and Quetta. Sale procedure is same for all
the customers as in case of PTCL Purchases order TIP claims 50% advance of
order value, which is flexible against claim of supplied equipment

3.7 Book Keeping Section:
Book keeping is the record-keeping part of accounting system. It means to record and
sum up the business activities having financial effects in a set of books called books
of accounts.

3.8 Books of Account:
The accounting books that are being used are as follows:
i. Cash book
ii. Purchase book
iii. Sales book
iv. Bank book
v. General ledger
vi. Subsidiary ledger

In these books the original entries are posted by the book keepers. entries in thses
books made through the bank voucher cash payment and received vouchers. the
sales book is maintain with the help of invoices. General ledger is also prepare
and correctly maintain in this section. Record keeping in TIP is based on the
double entry system where every transaction have dual effects one is called debit
and second is credit which is the best system considered in the accounting system.

3.9 Payroll Section:

Payroll section deals with the salaries and wages of the employees and performs
different function such as:
i. Preparation and Payment of monthly salaries.


ii. Calculation and Payment of monthly allowances of workers
iii. Payment of T.A D.A advances
iv. Compensation of medical advances.
v. Payment of all indirect reimbursements.
vi. Payment of overtime of workers.
vii. Payment of vehicle advance.

Payroll office keeps personal files of every one employee and worker. All documents
relating to employees and workers are kept in this record. Whole record of each
employee since his joining till retirement is available in his personal file.

3.9.1 Payroll Work Procedure:
Main purpose of the payroll division is to prepare the salaries, wages and other
various payments i.e.
i. Allowances to workers & bonuses
ii. Medical bills
iii. TA/DA bills
iv. Advances
v. Welfare payments
vi. Education grants
vii. Workers participation fund etc.
Making revitalization of advances, income tax, electricity bills and other found
etc. from the salaries, wages and allowances is also the job of pay roll section.

Payroll office conducts this work in the following manner:

a) Wages

Wages are paid to workers after 15 days.
There are two categories of workers:
Fix rate workers
Piece rate workers


1. Fix Rates Workers
Fix rate workers means that their hourly or daily wage is fixed at certain amount.
They are mainly the workers of overhead shops such as maintenance shop drivers
and labors of different shops. As mentioned above that their wage rate is fixed at
hourly or daily basis the supervisors and timekeepers keep record of their presence
at the work place and prepare the individual record after 15 days they send this
report to the payroll office where the wages prepared according to the timekeepers
record and made the voucher and payment is made through cash department.

2 . Piece rates workers:-

Piece rate workers are being paid the wages on the basis of their efficiency rate
(which is determined on the basis of their performance). Payment procedure for
piece rate workers is quite different, as they are paid their wages accordingly their
efficiency rate. The efficiency rate is determined on the basis of their previous
performance of the last two payments.
For example:
Time allowed=01 hr
Pieces to be make=1,000
Pieces produced=1,500
Excess production = 500 pieces
In this case the worker has earned 15% efficiency and his rate per hour increase.

b) Salary

The employees appointed on monthly payment basis are paid salaries as per their
appointment letters. On joining their job, salaries are prepared at the end of month
and sent to banks for crediting to their personal accounts as per their requests.
3.9.2 Allowances:
Pay roll office makes monthly payment of allowances. The following allowances
are allowed to workers at presently
a) Conveyance Allowance = Rs. /per month (45 % of Basic


b) Factory pay = Rs.750/per month
c) C.L.A = Rs.30% of pay per month
d) Special Incentive Allowances = Rs.1375/per month
e) Special Additional Allowances = Rs. 1250/- per month
g) Milk/butter allowances = Rs.25/per attendance
3.10 Cash Office: -
The main function of this office is to arrange all the cash payments and payments
by the cheques for the items daily sanctioned by the competent authorities.

3.11 Production Department:
After the agreement of human and financial resource and the planning of the
companys mission and objectives the stage is set for the production of the
product (in manufacturing concern).
For a manufacturing firm the production department is a very important
department can realize and fulfill the company mission and objectives in a true
sense. The production department helps the firm in the making and successful
implementation of the production plans.
As telephone industries of Pakistan (TIP) is a manufacturing industry, all of its
upon the performance of this department.
The production department of TIP is working competently and performing hard to
meet the necessities of the market, keeping in view the resources of the telephone
industries of Pakistan. It has get in touch with the Sales Department to make the
standard products available at time. TIPs workshops are fully set and are
equipped with the latest and state of the art machines. Workshops can perform the
task in efficient manner. There is also a system for on the job training of technical
personnel, so that they are able to work with the new technology using the
complicated machinery.

3.12 Purchase Department:
For a production oriented industry, the department of purchase has a great importance.
The reason is that no firm can get all the raw material and the equipment used in
production process by itself and without taking the help of any external supplier or


manufacturer. The raw material and the equipment not extracted and produced
internally is purchased from the external suppliers and the producers. In order to
ensure the in time availability of the materials used and the smooth working of the
purchase process, a purchase department is necessary.
TIP is a production-oriented company and it has a well-organized purchase
department to support its production.
TIP makes purchases of the raw material and components mostly from within the
country but as all the materials and components are not available within the country,
some are imported from outside. These materials are usually imported from the
sharing partner Germany along with the U.S.A, Italy, France and Turkey etc.
The aim of purchase is to get technically most suitable, easily available materials,
parts and components on cheaper rates without compromising on qualities by quickest
means, under very rigid Govt. policies within restrictive resources.
Keeping in views the above aims and goals, the purchase department of TIP
comprising of engineers and Associate engineers, makes it possible to buy a right type
of material at the right price from the right source of delivery at the right place.
Purchases are made at TIP by the following three ways:
i. By calling tender
ii. By calling quotation
iii. By cash.

3.12.1 By Calling Tender

In this purchase method, an order is drafted by the order section mentioning the
requirements of the company on the basis of the reports of the production and the
stores departments. This draft order is then presented before a committee
comprising the following members:
a) Deputy General Manager (DGM) /Assistant General Manager (AGM), the
head of ordering department
b) Deputy General manager (Planning, Procurement, and stores.


c) Deputy General Manager (Finance and Personal).

3.12.2 By Calling Quotation
If the amount of material required is less than Rs.50, 000, the quotations are
invited from the registered firms. The quotation committee consists of the
following officers
a) Assistant General Manager (Plam1ing, Procurement and Stores).
b) Executive (Budgets, Accounts, Payroll)
c) Executive (Quality Assurance Department).
3.12.3 By Cash
Cash -purchases are generally made for small quantity and for urgently required
material by the stores. After approval from the concerned committee, the
following committees will make cash purchases.

1). For The Purchase Cases Above Rs. 50,000
a) Assistant General Manager (AGM) of the concerned division.
b) Executive (Budget/Accounts/Tax).
c) Assistant General Manager (Quality Assurance Department)

2). For The Purchase Cases Below Rs. 50,000
a) Assistant General Manager (Planning, Procurement and Stores)
b) Executive (Budget/Accounts/Tax).
c) Executive Quality Assurance Department (QAD).



Chapter 4

Financial statements are organized mainly for the use of investors, creditors and for
managerial decision making. They provide support to the managerial decision but the
information provided in the financial statement is not complete and not show the
certain result. However, the information provided in the financial statements can be
use in making decision after calculation the ratios and constructing results. Ratios can
be calculated by establishing a reasonable relationship between balance sheet items
and profit and loss accounts. It also helps us for measuring the end result from the
operation of that firm. This analysis also helps us in determining the strengths and
weakness of a firm. Or in other words we can say that financial analyses are done for
the purpose of identifying the financial strength and weaknesses of an organization.
The ratios simply mean one number expressed in terms of another. A ratio
is a statistical yardstick by means of which relationship between two or
various figures can be compared or measured (Advanced Accounts by M.A

4.1 Liquidity Ratios Analysis:
Liquidity ratio provides information about a firms ability to meet its short term
financial obligations. They are particular interest to those extending short-term credit
to the firm.


4.1.1 Current Ratio:
Current ratio measures the short term liquidity position of the companies. It measures
the extent of the current assets to cover the current liabilities. It is the ratio of current
assets to current liabilities.2:1 is considered as standard ratio, however low ratio like
1:1 is also considered good. This ratio is a general and quick measure of liquidity. It
represents the margin of safety or cushion available to the creditors. It is also an
indicator of strength of working capital of the companies.

Liquidity Ratio Analysis
Current Ratio = Current Assets / Current Liabilities
Particular 2012 2011 2010 2009
Current Assets 1,483,288,422 1,558,828,599 319,884,935 369,907,949
1,492,653,279 1,669,788,171 444,900,527 3,210,545,822
0.99 0.93 0.72 0.11

Current ratio shows the firm ability to meet short term obligation. Although ratio is
improving but not at a standard rate which is not sufficient to meet its short term
obligations. Firm has to make improvement in reducing its liabilities.


4.1.2 Acid Test Ratio
The liquidity refers to the ability of a firm to pay its short term obligation as and when
become outstanding. The quick ratio/acid test ratio is very helpful in measuring the
liquidity position of a company. It measures the business capacity to pay off current
obligations straight away and is more exact test of liquidity than the current ratio.

Acid Test Ratio
Acid Test Ratio = Quick Asset / Current Liabilities
Particular 2012 2011 2010 2009
Quick Assets 1,323,369,875 1,406,709,904 178,341,041
Current Liabilities 1,492,653,279 1,669,788,171 444,900,527 3210545822
0.88 0.84 0.40

Quick ratio is used to test quick response to its short obligations by deducting
inventory from current assets. By deducting the inventory quick ratios do not improve
to the level which is benchmark for a standard organization. Main reasons are the
increase in liabilities by taking short term loans from banks and other creditors and
not paying them at due time.


4.1.3 Working Capital Ratio:
Working capital ratio helps to know whether a business has sufficient short term assets to
meet its short term liabilities. The formula for calculating working capital ratio is:

Organization is facing the problem of not having order for supply of finished goods.
Due to which currents assets lying with organization are declining and reducing the
working capital ratio. To improve this ratio organization must make decisions to
improve current assets and reduce current liabilities.

Working Capital Ratio
Working Capital Ratio = Working Capital / Current Liabilities
Particular 2012 2011 2010 2009
Working Capital -9,364,857 -110,959,572 -125,015,592
Current Liabilities 1,492,653,279 1,669,788,171 444,900,527 3210545822
-0.0062 -0.066 -0.11


4.2 Leverage Ratios:
Financial leverage ratios provide an indication of the long term solvency of the firm.
Unlike liquidity ratio that are concerned with short term assets and liabilities,
financial leverage ratios measure the extent to which the firm is using long term debt.
4.2.1 Debt Ratio:
The ratio of total debt to total assets, generally called the debt ratio, measures the
percentage of funds provided by the creditors. The proportion of a firm's total assets
that are being financed with borrowed funds. The debt ratio is calculated by dividing
total long-term and short-term liabilities by total assets. The higher the ratio, the more
leverage the company is using and the more risk it is assuming. Assets and liabilities
as found on a company's balance sheet are:

Debt Ratio
Debt Ratio = Total Debt /Total Asset
Particular 2012 2011 2010 2009
Total Debt 2,436,552,718 2,505,120,897 1,784,340,732 4387694822
Total Asset 1.848,252,584 1,925,633,447 1,517,561,189 1,504,597,402
Ratio 1.31 1.30 1.18 2.91


Company debts are increasing due to non-availability of supply order. Due to over-
drafting, long term debts have increased. With the passage of time fixed assets either
depreciated or have been sold which decreased the amount of total assets.

4.2.2. Debt to Equity Ratio:
Indicates relationship between external equities and internal equities or shareholders
funds. Debt to equity ratio indicates the proportionate claims of owners and the
outsiders against the firms assets. The purpose is to get an idea of the cushion
available to outsiders on the liquidation of the firm. However, the interpretation of the
ratio depends upon the financial and business policy of the company.

Debt to Equity Ratio
Debt Ratio = Total Debt /Total Equity
Particular 2012 2011 2010 2009
Total Debt 2,436,552,718 2,505,120,897 1,784,340,732 4387694822
Total Equity (588,300,134) (579,487,450) (1,872,497,213) (1,705,948,420)
Ratio (4.14) (4.32) (0.95) (2.57)


As equity is not increasing due to loss to company and debts are increasing which
decreases the required debt to equity ratio. Company can improve this ratio by
decreasing its debt.

4.2.3. Total Capitalization Ratio:
The capitalization ratio measures the debt component of a company's capital structure,
or capitalization (i.e., the sum of long-term debt liabilities and shareholders' equity) to
support a company's operations and growth. Long-term debt is divided by the sum of
long-term debts and shareholders' equity. This ratio is considered to be one of the
more meaningful of the "debt" ratios and delivers the key insight into a company's use
of leverage.

Total Capitalization Ratio
Total Capitalization Ratio=Long term debt/Long term debt+ Shareholder Equity
Particular 2012 2011 2010 2009
Long term debt 943,899,439 835,332,726 1,339,440,205 1,177149000
Capital Employed 355,599,305 255,845,276 (533,057,008)
Shareholder Equity (588.300.134) (579,487,450) (1,872,497,213) (1705948420)
Ratio 2.65 3.26 -2.51


Long term debts are increasing and capital employed is decreasing which resulted in
the decline of the required ratio. To make improvement in this ratio company has to
pay long term debts or increase equity capital so that the employed capital increases.

4.3. Profitability Ratios:
Profitability ratios offer several different measures of the success of the firm at
generating profits.
4.3.1 Net Profit Margin Ratio:
NP ratio is used to measure the overall profitability and hence it is very useful to
proprietors. The ratio is very useful as if the net profit is not sufficient, the firm shall
not be able to achieve a satisfactory return on its investment. This ratio also indicates
the firm's capacity to face adverse economic conditions such as price competition, low
demand, etc. Obviously higher the ratio, the better is the profitability. But while
interpreting the ratio it should be kept in mind that the performance of profits is also
seen in relation to investments or capital of the firm and not only in relation to sales.



Company has no orders for supply of goods or services. Due to competition in
telecommunication sector many companies entered into this field and also the taste of
people changed and they shifted from fixed line telephones to mobile phones. This
demand and supply situation decreased the sale of this organization. Expenses are
increasing due to inflation but revenue is still declining and all the profitability ratios
are declining.

Net Profit Margin
Net Profit margin ratio = Net Profit / Net Sales*100
Particular 2012 2011 2010 2009
Net Profit (110,982,797) 106,435,395 (166,548,795) (434185660)
Net Sales 69,659,098 77,570,737 136,398,467 229314018
Ratio -159.32 137.21 -122.10 -180


4.3.2 Return on Assets:
Measure of a companys profitability, ROA measures the return on assets.

Due to decline in total sales, return on assets declines as illustrated above

4.3.3 Do Pont Return on Assets Ratio:
Return on Assets Do Pont is a financial ratio that shows how the return on assets
depends on both asset turnover and profit margin. The Do Pont method breaks out
these two components from the return on assets ratio in order to determine the impact
of each on the profitability of the company. This ratio helps to show up the impact of
changes in asset on turnover and profit margin.

Return on Assets
Return on Assets = Net Income / Assets*100
Particular 2012 2011 2010 2009
Net Profit -110,982,797 106,435,395 -166,548,795 (434185660)
Assets 1,848,252,584 1,925,633,477 1,517,561,189 1504597402
Ratio -6.00 5.52 -10.97 -28.85


Total assets are either constant or declined but with decrease in net profit this ratio
decreased. To make improvement in this either increase net profit or reduce expenses.

4.3.4 Return on Equity Ratio
This ratio is more meaningful to the equity shareholders who are interested to know
profits earned by the company and those profits which can be made available to pay
dividends to them. Interpretation of the ratio is similar to the interpretation of return
on shareholder's investments and higher ratio is better.

Return on Assets
Return on Assets = Net Income / Assets*100
Particular 2012 2011 2010 2009
Net Profit -110,982,797 106,435,395 -166,548,795 (434185660)
Assets 1,848,252,584 1,925,633,477 1,517,561,189 1504597402
Ratio -6.00 5.52 -10.97 -28.85


Company net loss decreased during this period resulting in net equity loss increase.

4.3.5 Gross profit ratio:
Indicates to what extent the selling prices of goods per unit may be reduced without
incurring losses on operations. It reflects efficiency with which a firm produces its
products. As the gross profit is found by deducting cost of goods sold from net sales,
higher the gross profit better it is. There is no standard GP ratio for evaluation. It may
vary from business to business. However, the gross profit earned should be sufficient
to recover all operating expenses and to build up funds after paying all fixed interest
charges and dividends.

Return on Equity Ratio
Return on Equity = Net Profit / Total Equity*100
Particular 2012 2011 2010 2009
Net Profit -110,982,797 106,435,395 -166,548,795 (434185660)
Total Equity (588,300,134) (579,487,450) (1,872,497,213) (1705948420)
Ratio 18.86 -18.36 8.89 -25.45


Company may make improvement in its profit by entering into private sector.

4.3.5 Fixed Assets Turnover Ratio
This ratio measures the efficiency and profit earning capacity of the concern. Higher
the ratio, greater is the intensive utilization of fixed assets. Lower ratio means under-
utilization of fixed assets. The ratio is calculated by using following formula.
Fixed Assets Turnover Ratio
Fixed Assets Turnover Ratio = Net Profit / Fixed Assets*100
Particular 2012 2011 2010 2009
Net Profit -110,982,797 106,435,395 -166,548,795 (49475202)
Fixed Assets 40,295,589 42,136,275 29,543,592 31050605
Ratio -275.42 252.59 -563.73 -159.33
Gross Profit Ratio
Gross Profit ratio = Gross Profit / Net Sales*100
Particular 2012 2011 2010 2009
Gross Profit -150,460,197 -179,232,437 -121,592,017 (49475202))
Net sales 69,659,098 77,570,737 136,398,467 229314018
Ratio -215.99 -231.05 -89.14 -21.57


4.4 Common size analysis
The use of common size analysis makes comparisons of firms for different sizes mush
more meaningful. Common size analysis means that in this analysis result to be show
in percentage all the items from the assets side of balance sheet will be divided by the
total assets for example if the cash is Rs 20,000 and the total assets are Rs. 100,000
then the cash will be shown in common analysis as 20% of assets. A small change in
amount can results in a very substantial percentage change. This is the analysis where
total assets are divided by all balance sheet items, and all income statement items are
divided by net sales or revenue is called common size analysis. Common size analysis
gives analyst a view of firms financial trend and to see the changes in the financial
conditions. As common size analysis gives us relative percentage of an item with
respect to total, so the growth or decline in various items of balance sheet and income
statement cannot be detected from common size percentages. It has the following two
4.4.1 Horizontal analysis
Horizontal analysis compares each amount for a selected base year or we take each
item o base year as 100% and compare with other items.



Common size (horizontal) analysis of balance sheet
FIXED ASSETS 2009 2010 2011 2012
Plant, property and equipment 100% 95.6% 135.7% 129.7%
Long term investments 100% 105.8% 29.44% 29.44%
Stores and spare parts 100% 59.3% 295.3% 209.4%
Trade debts 100% 76.5% 278.2% 341.9%
Stock in trade 100% 74.8% 84.1% 88.4%
Bank balances 100% 86.4% 157.7% 73.5%
Share capital and accumulated loss
Issued subscribed and paid up 100% 0 0 0
Share allotment deposit 100% 0 0 0
Accumulated loss 100% 106.3% 56.7% 57%
Pension and other staff benefits schemes 100% 106.9% 55.6% 62.7%
Short term loans 100% 100% 110.7% 107.3%
Deposits 100% 110% 163.1% 147.7%
Creditors 100% 184.9% (220%) 206.7%
Accrued liabilities 100% 41.63% 50.5% 48%
Advance payments 100% 96.4% 137.8% 117.1%

4.4.2 Trend Analysis of Income Statement
The trend analysis of the income statement shows the performance of an organization
and capability to meet the expenses. It also shows the future trend of organization.
When we see the trend analysis of Telephone industries of Pakistan it comes into our
knowledge that TIP continuously suffering from loss. Why TIP going into loss it can
be seen in the following table:


Trend analysis of income statement
Head of income statement

2009 2010 2011 2012
Sales 100% 59.4% 33.8% 30.3%
Cost of goods sold 100% 92.5% 92.1% 78.9%
Gross (Loss)/profit 100% 245.7% 362.2% 304.1%
Other income 100% 65.5% 133.8% 171.5%
Other operating expenses 100% 82.4% 82.1% 240%
Finance cost 100% 87.1% 90.3% 89.6%
(Loss)/profit before taxation 100% 38.2% 24.5% 25.5%
(Loss)/profit for the year 100% 38.3% 24.5% 25.5%

The above trend analysis shows that the cost of goods sold in 2012 is 78.9% which is
less than the cost of goods sold of 2011 that was 92.1% thats why the company bear
less gross loss in 2012 as compare to 2011. The amazing trend is the operating
expenses with increase of 240%% which shows the TIP is not controlling the
operating expenses.
Telephone industries of Pakistan also incurring cost in respect of finance its cost is
also increasing continuously which must be noticed by the management of
organization and take the measure to reduce theses non-productive cost .the cost of
goods sold and the sales relationship also demand attention. Administrative cost and
finance cost increasing trend is cautious and demands serious attention from the
management policies and it will be in the best interest of the organization.
4.4.3Vertical analysis
Vertical analysis compares each amount with a base amount selected from the same
year. Simply, we compare the items of balance sheet or income statement vertically
by taking on item as 100%.


Common size (vertical) analysis of balance sheet (Assets side)
ASSETS 2009 2010 2011 2012
Cash and bank balances 2.40% 4.22% 30.29% 14.72%
Stores and spare parts 0.45% 0.26% 1.04% 0.77%
Loose tools 0.22% 0.14% - -
Stock in trade 12.01% 8.91% 7.89% 8.65%
Trade debts 5.35% 4.06% 11.64% 14.91%
Loans and advances 1.71% 1.73% - -
Trade deposits and short-term prepayments 0.39% 0.04% 30.05 41.18%
Other receivables 1.14% 0.88% - -
Plant, property and equipment 2.06% 1.94% 2.18 2.18%
Tax refund due to Government 0.85% 0.75% - -
Long term investments 73.29% 76.94% 16.86% 17.56%
Long term advances 0.06% 0.03% - -
Interest accrued 0.01% 0.04% - -
TOTAL ASSETS 100% 100% 100% 100%


Chapter 5
5.1 SWOT Analysis:
SWOT analysis is the management technique to measure the organizations
This analysis helps the organizations management to get the position where the organization is
standing and what will be the future position of the firm.
TIP is a private limited company in public sector so Govt. can intervene in its financial as well as
managerial problems.
Good will is an important resource for any organization and TIP has a well established
good will because of its quality production and brilliant performance records in the
The main strength of any company is its skilled labor force and highly experienced and
qualified management which is committed to work. TIP is a company blessed with these
gifts. It has many devoted people who are sincere in the well being of this organization
and are ready to face any challenges to bring it out of trouble
TIP is the organization well known for:
Its good quality products
Long life of the products TIP has got the advantage of vast technical and infrastructure
resources which provide a good opportunity for its expansion.


TIP is equipped with modem technology. It can manufacture almost all kind of tools and
machinery of common use.
Easy availability of spare parts.
The two shareholders of the company i.e. Pakistan Telecommunication Corporation
Limited (PTCL) and Siemens AG of Germany are well established organizations with
efficient management and technical staff. They can provide managerial and technical
assistance to this firm.
TIP has nothing to do with the fraud deductions while an organization is run by the
people and if the management is corrupt than organization nothing can done, this is the
big weakness of the TIP is that it is not a privatize organization rather it is a semi Govt
Bureaucratic style of management is a big hurdle in the way of development. The
employees are not given a chance to participate in decision-making process, which
creates frustration among them.
Most of the employees and workers are appointed on contract basis, which needs to be
revised after every three months. Due to this uncertainty of the job, they don't develop
interest in the organization. The regular workers on the other hand are very careless
because there is no check on their performance.
TIP has been affected badly by the downsizing policy of the government.
During VSS (Voluntary Separation Scheme) in 1998, most of the skilled people left the
organization (nearly 1200 employees).
There is also stories absolute corruption of top level management.
Even a simple job takes time to complete because of the formalities and lengthy
procedures it has to follow.
Labor union of TIP is also ineffective because it doesn't represent all the employees and
the temporary workers are not given participation in the union at all.


Pakistan is a big market with a population of more than 140 million people. Most of the
people living in villages still do not have the facility of telephone. With the expansion of
PTCL service areas, TIP has an opportunity to sell its products for installation in these
With the introduction of chord less and mobile technologies, the conventional telephone
sets are becoming less popular. Even in these conventional desk mounting sets, many
new features have been introduced. TIP can enter these areas to expand its product line
and to capture new markets.
TIP has the production facilities available for almost all the electrical appliances as the
energy meters, air conditioners, ovens, refrigerators etc. but it is producing much lesser
than its capacity and potential. It has an opportunity, therefore, to expand its business in
these areas.
TIP has an opportunity to sell its products in the foreign markets if they are properly
designed and marketed.
Government of Pakistan is planning the privatization of PTCL and TIP will also be
privatized with it. SIEMENS of Germany having 30% shares in TIP will be the most
probable buyer. As TIP is the only Tele-communication equipment manufacturing
company of Pakistan, the deal will badly affect the country.
The market share for the production of military telecommunication equipment has
finished due to the establishment of NRTC (National Radio and Telecommunication
TIP loses tender due to its high cost of production, which is a serious threat to the
All these foreign companies import installation equipment from their home countries
which affects TIP as its products go unsold.
Smuggled goods from China and other countries having latest technology and beautiful
designing at much lower rates and are also posing a threat to the company's business.
Invasion of foreign companies in the field of telecommunication in Pakistan has adverse
effects on the firm's business like Z- TEL, ALCA TEL.


There is working Carrier Telephone Industry in Islamabad is big competitor and big
threat to the TIP.
One serious threat to the company is its declining sales due to the bad economic
conditions of country.

5.2.1 Lack of Motivation:
Motivation refers to forces that energizes, direct and sustain a persons efforts. Lack of
appreciation, performance appraisal, no participation in decision-making, absence of employee
counselling, nepotism and unequal distribution of work results is greater level of de-motivation.
Boss is always right concept if regularly employed results in trying down the creativity,
suggesting ability of employees and lowers the employees involvement in decision making.
Some of the reasons of low motivational level in TIP are:
1. Centralization of authority:
Centralization refers to the situation in which a significant number of job activities and a
maximum amount of authority vested with some hands.
Centralization in large organization like TIP affects the duties and responsibilities of
manager, as his tasks and responsibilities increase. He is unable sometime to concentrate
on important matters and operations. There by affecting the overall performance of the

2. Ceiling Effect:
Ceiling is another flaw, which persist and affect the employees motivation level for the
job. This has resulted in a substantial increase in the employees dissatisfaction. This
problem remains in practice even if the staff members undergo training and acquire some
additional qualification. They can never become a part of the line hierarchy. For
instance an Associate Engineer cannot move upward in the hierarchy even if he gets


Master Degree in Business Administration. For instance an account assistant cannot
move upward in the hierarchy whatever qualification and experience he gets.
3. Hiring:
Nepotism brings forward a major flaw in the hiring of individuals. When nepotism
comes into practice it results in de-motivation among the employees. Beside this it also
results into the job dissatisfaction affecting the quality of work and performance that
eventually affects the overall performance of an organization. In addition, this practice of
nepotism has also been observed in the appointment of officers. An inappropriate person
is appointed to a certain post; it adversely affects the quality of work and eventually the
overall performance of TIP. This situation becomes worse when inappropriate individuals
are appointed on sensitive posts.
5.2.2 Lack of job analysis and Evaluation:
For the successful achievement of goals, each organization has specific outlines for the
jobs and commitments concerned with job. Every organization, at the time of recruitment,
defines job description and job specification. The question arises, whether job analysis and job
evaluation process is present or not. Job evaluation is the process of using information in job
analysis to systematically determine the balance of each job in relation to all jobs with in the
organization. Both the job analysis and evaluation ensures the performance of duties and
responsibilities according to the job description by matching with job specification.
Considering the case of TIP, job analysis as well as evaluation process is not practiced
that result in unequal distribution, de-motivation, boredom, and burden on some employees
among the same hierarchy of line managers. In the absence of these, there is no performance of
line managers. In the absence of these, no performance appraisal can be given to specific
line/staff member. It is the case in TIP that many of the employees suffered because of the
workload and burden. This also creates dissatisfaction and decrease the level of motivation
when performance appraisal is given on the expense of others work hard.
Although the goals and objectives are assured to achieve, but still it shows the lack of
efficiency and proficiency of the top-level management


5.2.3 No Job Rotation:
Like any other professional organization, job Rotation is vital for the smooth operations of
TIP. Job rotation is the process of moving workers from one job to another rather than
requiring them to perform only one simple and specialized job over the long term. The main
objective behind job rotation is to expand their skills, knowledge or abilities that in the
absence of the concerned employees, any other person would carry out his work. In specific
case of TIP job rotation is missing that creates bourdon and delays, consequently affect in the
organization to operate smoothly. Especially in the staff, in the absence of a concerned
person even a routine job is not performed. Very rarely the job enlargement practice is made
but still it also wastes the time of the manager or supervisor to guide a staff member for a job
not related to him.
5.2.4 Internees/Trainees Training Program:
Today almost every organization welcomes internees and trainees. Reason being that
these organizations may get inexpensive help in their operations and office. It increases the
image and introduces the organization in the new emerging market, by educating and training
them. Training is an art of making other people work and to extract as much work as imposable
especially from temporary employees/trainees. The lack of professional training and evaluation
of the trainees/internees leave an empty room in the training program of TIP. Instead of having
facility and spending a lot of money on the training program the evaluation of the program is not
merely considered an important job. An effective training program increase the goodwill and
provide best opportunity of getting help not only in office work but also in their future
recruitment, so that to get benefit of the training program.
Many organizations have specialized programs for the trainees/internees instead of increase in
their cost of the personnel and Human Resource Department. However on the other hand it is
beneficial by getting work done for free or with a very low stipend cost. TIP is also providing
this opportunity to the fresh or the students who are still studying and doing their internships as
their degree requirements. TIP not only gives opportunity to the internees/trainees to get employ
in TIP but also provide help the selection committee and lesson the cost of recruitment.


Chapter 6
TIP should have a proper system to deal with the fraud corruption by the upper management so
that these types of events can never be happen again. As soon as possible TIP should start its on
fully fledged marketing department as it is age of marketing and competition. Telephone
industries of Pakistan we found that telephone industry of Pakistan have old, machinery and
insufficient workers. With the passage of time new technologies are brought in the market and
the organizations which adopt new and better technologies have cost of production much lower
than the other firms having old technologies. There is need for Telephone Industries to install
new machinery and overhaul old machinery to work properly. It should also give training to its
unskilled workers to become profitable for the organization. This is very necessary for the long
term survival of the organization.
The analysis of TIP tells that there are some basic problems with the organizational design,
human resource, R&D and some other departments, which should be removed immediately for
the successful working of the organization. The details are given as under:

Finance Department:
Main draw backs are the non-availability of modern technology and well educated persons in this
department. Management has not hired the professional staff since 1988. Even the software
packages are used in this department is Excel and FoxPro although Quick book and Peach tree
are available in market. It is recommended that management should focus on professional staff
as well as modern techniques and soft wares to be used in finance field.


HR department:
HR department is not familiar with HRD techniques. There is no one having degree of Human
Resource Management. People working in this organization are not motivated so the staff is
dysfunctional. It is recommended that management should use latest HRD technique.
This is the era of Telecom and electronics but professional working in R& D are not properly
trained. Their deficiency makes this organization unable to achieve it required objectives in the
market place.
Product ion Department:
Machinery used in this organization is mostly outdated only one or two shops use the latest
technology. Main production of TIP is Telecommunication equipment. This organization is not
moving with the world leading organizations in innovation so it is behind in telecom sector. It is
recommended that TIP adapt s the latest telecom technology to compete with world.
Marketing Department:
This organization has no plans to introduce its products on electronic media due to which a huge
population of this country is not familiar with its products. For future success, electronic media is
power full tool to make customer s for any innovated product.



Fundamentals of Financial Management (13 edition) by James C. Van Horne
Umer Akhtar 2011. An Internship Report on TIP. Haripur, Hazara University,
Department of Administrative Sciences.

Waqas Ali , Internship Report on TIP. Hazara University.

Financial report, Telephone Industries of Pakistan, 2012, 2011, 2010, 2009