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Dedicated to my beloved parents and those

advisors & associates who helped me with
their precious ideas regarding this study.

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All praise and thanks to Almighty Allah Who is the source of

all knowledge and wisdom. I have tried my best to share clearly
and specifically my findings and experiences with the readers. First
of all I bow my head before ALLAH, the Almighty the most
beneficent, the merciful, who blessed me with good health, kind
parents, talented teachers, nearer and dearer and an opportunity
for under taking this work. I am thankful to our Prophet
MUHAMMAD (PBUH) who guided the mankind to the path of

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I deem it my utmost pleasure to
avail this opportunity to express
heartiest gratitude and deep sense of
obligation to my Prof. Dr. Liqat Ali Ch.
Principal, Hailey college of Commerce,
Punjab University Lahore and Project
Supervisor, for their dexterous
guidance, untiring help, kind behavior,
moral support and enlightened
supervision during the whole study
period. His effort towards the
inculcation of the spirit of constant
hard work and the maintenance of
professional integrity, besides other
valuable works of advice, will always
serve as a beacon of light throughout
the course of my life.

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I would like to thank my respected teacher advisors like Mr. Muhammad
Aamir, Mr. Musarat Nawaz Dogar, Mr.Muhammad Ramzan, Mr. Muhammad
Akram & finally Ms. Shamma Sadakat for their kind, friendly and dedicated
attitude during my training session and I am sure that their supportive
information will prove itself as an asset for me in my practical life and it will
have a lot of benefits for me in my future concerns.

I have great sense of obligation to the Mr. Abid Hussain,Mr. Hamid

Rasheed and all other class fellow for their inspiring guidance, gracious
hospitality and constructive criticism for the accomplishment of this

I have special words of thanks to staff members of Hailey college of

Commerce, Punjab University Lahore for their wholehearted cooperation.

Last but not the least, I greatly acknowledge my indebtedness to

my parents and pray for their prosperity and I am determined to
continue and complete my study successfully.

Qutab Sikander

Executive Summary

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The company comprises of two divisions; 1st is Appliances Division: This
Division of PEL consists of home appliances manufacturing particularly
Refrigerators. 2nd is Power Division: PEL Power Division is one of the major
electrical equipment suppliers to WAPDA & KESC. The company
manufactures transformers, energy meters, switchgears, 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 Mudaraba 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 B.Com
(Honors) program.

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

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

Finally I have provided recommendations to the company regarding their

management functions and other business plans.

We are now living in that modern era of life which is full of challenges and
hurdles. So to survive in such sort of age a high degree of dedication,
confidence, & competency is required specially for those younger ones who
are going to be the future of the country specially students. But our education
system is not suitable for students as according to the coming period’s
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requirements needed to be successful in life in this severe time. It is just only
limited to knowledge, prepares personnel for clerical work not for

The practical life involves those methodologies and task which the students
never experienced in their daily routine of school, college, or university life.
Only the bookish knowledge is not sufficient to be well at home in all respects
in a student life as it demands strong distinction with respect to knowledge as
well as working capabilities. Only positive attitude and passion to perform any
task makes a man perfect in all respects/

Our educational institutes are only here to provide overviews about any field
or area of interest to students not the practical exposure. The market now a
time is so crucial that it is so difficult to have a place and retain here for a
general fellow. Besides there are some other factors that are responsible for
such critical position of the country like inflation, unemployment, lack of
resources etc. simply each and every part & portion of life of students is full of
problems regarding future. So only those younger ones may be able to
breathe here who may have potentials and commands over various
fundamental tactics of practices and pre-requisites and have enough strength
to face and accept the assigned task in their practical life.

Basically Internship program enables fresh graduates to learn about those

basic tools and methods that may be fruitful for them for their future concerns
in their practical lives. It brings confidence & motivation in addition to that it is
helpful to learn how to do a duty at a work place with experienced
professionals. Simply this training session is very beneficial for students.

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My internship program in Accounts department of PEL (Pak Electron Limited)
provided me a lot of what I had not before. My learning, experiences, &
observations added a value in me that is comparatively profitable for me
regarding my studies as well as my future life. This training experience
enabled me to understand the basic concepts of business world and to
analyze the essential perspectives of business as its conformity deals with
this report.


PAK ELEKTRON LIMITED was set up in 1956 as a joint venture with one of
the largest and renowned manufacturers of electrical equipment messrs. AEG

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of west Germany for manufacturing Transformers, Switchgears and Electric
Motors etc. the entire job of machinery requirements and layout of the factory
building was planned and implemented by AEG who produced very well
balanced facility for the design and manufacture of the above equipment and
the commercial production was commenced on 22 November 1956. Up to
1962, when AEG finally phased out, the designing and manufacturing of all
equipment was carried out jointly by AEG experts and PEL personnel. PEL
staff, in the meantime, had received specialized training in USA and West
Germany which enabled PEL to establish itself as the leading manufacturers
of electrical equipment in the country with an excellent reputation for high
quality and thus PEL came to be known as “THE QUALITY CONSCIOUS

After conclusion of agreement with AEG, total share holding of AEG was
purchased by the then sponsors-Malik Brothers. The production continued
with AEG designs with much greater emphasis on the quality and reliability of
the products which earned unique distinction of supplying electrical equipment
to projects of paramount national importance like Mangla Dam and Tarbela
Dam Projects. PEL equipment was approved by consultants of international
repute including price cardew & Rider (England), Binnie & Partners (England),
Harza Engineering International (USA) and Miner & Miner International Inc.

The majority shares were acquired from Malik Brothers by Saigol Group on 11
October 1978 and immediately on takeover the new management chalked out
both long term and short term plans to put the company back on the path of
progress. As a part of first phase of its BMR Programmer the new
management injected the additional working capital of Rupees 8.98 million
and Bridge loan of Rupees 7.50 million (against the public issue of its shares )
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was provided by the ICP-led consortium. As a part of long term plans, the
manufacturing of window type Air Conditioners was taken up in 1981 and was
immediately established for quality.

The company launched the second phase of its BMR and expansion of
the existing product line in the 1987 and imported machinery for the
manufacture of Refrigerators and Deep-freezers for a total value of Rupees
22.11 million. For the project National Bank of Pakistan – the leading bank of
the company provided the financing. Like Air-conditioners these products
have also been well received by the local market which speaks highly of the
confidence, the consumer has developed in the quality products
manufactured by the company.

During the year 1990 the company has signed an agreement with
Messrs HITACHI of Japan for the manufacture of Vacuum Circuit Breakers.

The company has entered into an agreement with Pakistan Industrial

Credit and Investment Corporation (PICIC) for a foreign currency as well as
local currency loan of Rupees 25million for the expansion, balancing,
modernization and replacement of the existing plant. The machinery has
come into operation in October 1991 and with the balancing, modernization
and replacement of machinery, the production capacity of Refrigerator Section
will reach a Level of 252,450 cubic feet.
The management of the company decided to further expand its operation by
establishing a plant for the manufacture of compressor for refrigerators and
deep freezers. The technical know-how agreement has been signed with M/S
NECCHI compressor, Italy for the assembly and progressive manufacturing of
compressors for refrigerators and deep freezers.

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Since its inception the company has always been contributing towards the
advancement and development of the engineering sector in Pakistan by
introducing a wide range of quality electrical equipments and home
appliances and by producing a number of engineers, skilled workers and
technicians through its apprenticeship schemes and training programs.


The head office is in Gulberg Lahore and the production unit is situated at 14-
k.m. Ferozepur Road, Lahore, and is spread over an area of 242 kanals and
15 Marlas of leasehold land in industrial area of Kot Lakhpat, Lahore, and
presently the total covered area comes to 232,883 square feet. Factory is
located on the main road where public transport is available round the clock
helping in easy access to the labor and customers.
The company had obtained technical know-how from General Corporation
(now Fuji General Limited) of Japan for the manufacture of its Air conditioners
and thus was able to produce a unit which is now preferred by the consumers
over all the other imported as well as locally manufactured units. The know-
how contract was for five years ending in the year 1988.
For the manufacture of Refrigerators, the know-how was obtained from
SILTAL CASA SPA of Italy, who are one of the major manufacturers of "white-
goods" in Italy and has assisted in the establishment of similar plants in many
other countries.
The technical know-how for Deep-freezers was obtained from ARISTON of
Italy who is the largest manufacturers of "white-goods" in Italy. They have also
helped lot of other countries in setting up similar projects for making "white
The company has obtained technical know-how from HITACHI for the
manufacture of Vacuum Circuit Breakers.
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To excel in providing engineering goods and services through continuous

 To provide quality products & services to the complete satisfaction of
our customers and maximize returns for all stakeholders through
optimal use of resources.
 To focus on personal development of our employees to meet future
 To promote good governance, corporate values and a safe working
environment with a strong sense of social responsibility.

HR Vision
To achieve excellence through innovative HR practices and continuously
exceeding our PEOPLE Expectations.
HR Mission
PEL’s HR Mission is two-fold:

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To manage talent and build capabilities of its people thus enabling them to
deliver sustained performance
To facilitate them in creating a collaborative work environment that develops a
culture of continuous learning

Major managerial policies, practices/styles

• Employment policy

• Working conditions

• Leave policy

• Health policy

• Transition policy

• Relocation policy

• Insurance policy

• Vehicle policy

• Mileage claim policy

• Car loan scheme for executive

• Motorcycle loan for executive

• Performance appraisal policy

• Hotel/travel policy

• Paid leave policy

• Attendance policy

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• Compensation and other benefits

HR Values
Respect, Team spirit, Commitment & Customer Satisfaction.

Clients & Customers

PEL serves three types of customers/clients which include home users,
business clients and dealers.
PEL says:
Delighted customers are our first priority.
Customer service Excellent.
PEL has its dealers in 24 cities country wide.

By incorporating the essence of the mission statement in the company
branding line, company intends to create the desired image and achieve the
following objectives.
 A high visibility level.
 Heightened awareness amongst the target market.
 To favorably mobilize the target market towards the organization and its
 Minimum cost for maximum projection.
 Enhance the level of relationship with customers (corporate / individual)
and employees.
 Upgrade teaching abilities, skills and knowledge of teaching staff.
 Upgrade teaching equipment to the required standards.

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 Enhance the participation of private Sector in training activities at
Management level.
 Prepare training plans, programs and projects keeping in view the local
as well as foreign manpower training requirements.
 As stated earlier the corporate image will bring within its ambit all the
facets of the organization. The facets, which while specific in their
content, will corroborate the main branding, line. By unified approach all
the media will be utilized to build a strong corporate identity, which will
spill over into all facets (Marketing, Customer care, sales,)and within
the organization effecting a strong mobilization at every level achieving
one major objective “A stronger image of PEL”.

A committed team of highly qualified, experienced professionals, financially
sound and reputed sponsors manages the company. Through sheer
dedication, diligence and the Almighty’s Beneficence the management team
at Pak Elektron Limited have earned reputation for excellence in
manufacturing of electrical as well as home appliance and their marketing.

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Mr. Naseem Saigol

Mr. Naseem Saigol Chairman / chief Executive
Mr. Azam Saigol DIRECTOR
Mr. Murad Saigol DIRECTOR
Mr. Zeid Yousaf Saigal DIRECTOR
Mr. Haroon Ahmad Khan Managing DIRECTOR
Mr. Muhammad Rafi Khan DIRECTOR
Mst. Neelofer Hameed NBP Nominee U/S 182 of The
Mr. Rizwan Hameed NBP Nominee U/S 182 of The
Mr. Tajammal H. Bokhree NBP Nominee U/S 182 of The
Mr. Wajahat A. Baqai NBP Nominee U/S 182 of The

Sheikh Muhammad Shakeel, FCA
M/S Yousuf Adil Saleem & Company
Charted Accountants
(A member firm of Deloitte Touche Tohmatsu)
M/S Hassan & Hassan

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Business Overview
In 1948, the Saigols migrated from Calcutta and initiated their business in
Lyallpur (known 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 the finished product
manufacturing Its laboratory is rated among the best laboratories in Pakistan
for testing of raw materials, other inputs, and yarn.

Initial Capacity 25,000 spindles

Current Capacity 147,620spindles

Annual Turnover Approx. $39 milllion

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
transformers and switchgears. With the Saigols in management, PEL
expanded into Air Conditioner manufacturing.

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Now a day PEL comprises of two divisions:
 Power Division
 Appliance Division

Pak Electron

Power Appliances Division


Transformers Energy Meter Switchgears

Refrigerators Split A/C Trading LG

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PEL Power Division manufactures energy meters, transformers, power
transformers, switch gears, Kiosks, compact stations, & shunt capacitor etc.
All these electrical goods are manufactured under strict quality control and in
accordance with international standards.

PEL is one of the major electrical equipment suppliers to major power sources
like Water and power Development authority (WAPDA) and Karachi Electrical
Supply Corporation (KESC).

Over the years, PEL electrical equipment has been used in numerous power
projects of national importance within Pakistan. PEL has the privilege of
getting its equipment approved and certified by 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

In spite of stiff competition from emerging local and multinational brands, PEL
Group’s appliance and electrical equipments have remained in the spotlight
due to constant innovation. Strategic Partnership with multinational of repute
have enabled the PEL Group to incorporate new technologies into existing

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product ranges, thus giving the Pakistani market access to innovative,
affordable and quality products. PEL’s usually power products are as;

PEL has vast experience in design and manufacturing of standard and special
purpose transformers. New technical designs for improved efficiency and
quality against special orders of non-standard transformers are continuously
being explored. These transformers are available for various applications.

I. Distribution Transformers
II. Auto Transformers
III. Furnace Transformers
IV. Welding Transformers

PEL transformers have been successfully type tested for impulse voltage and
short circuit tests by KEMA Laboratories of Holland. Customized
transformers, in accordance with domestic and international client
specifications have also been manufactured for use within and outside
Pakistan. Transformers are normally supplied in a period of 3 – 4 months
after the receipt of orders from respective distribution companies of WAPDA
and varied supply time for private customers. The company provides one year
after sales service warranty to WAPDA, DESC and private sector customers.
Main competitors are Siemens, Transfopower, Elmetec and Climax while PEL
having a market share of 38%.

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Extensive experience and success in manufacturing distribution transformers
led to the establishment of power transformer division in 2005. since its birth
the division has produced transformers of ratings 31/40 MVA, and 10/13 MVA
for rating up to 132 KV. In order to provide its customers the best of
technology and products of international competence, PEL has combined its
technical expertise with GANZ, a renowned and experienced Hungarian
transformer manufacturer.
PEL is also exporting Power Transformer to International customers for their
special Requirements and specifications. PEL power transformers are
equipped with best
Transformer accessories like OLTC from MR (Germany) , High Voltage
Bushing from PASSONI @ VILOLA (Italy), Buchholz Relay from EMB
(Germany), Insulation material from WEIDMANN (Switzerland), silicon steel
from THYSSEN (Germany), and cooling fans from SCHORMANN (Germany).
Material of the windings is usually 99.99%pure electrolytic copper. Multiple
conductors as well as CTC are used in winding. The magnetic cores are
manufactured from cold rolled grain oriented (CRGO) steel sheets. A robust
clamping structure, jointing technique and cutting and mitering of laminations
and laminations ensure low no load losses. The steel sheets in the core limbs
and in the yokes are clamped together by glass-epoxy bands.
Tank is constructed with boiler steel plates welded together and a cover plate
bolted on top. Strength is ensured by stiffeners. Ear thing terminal are
attached to both sides of tank. Measuring Instruments are installed on cover
plate. Surface protection is done by the process of sand blasting and by
applying weather resistant paint. Tap changers are in accordance with IEC
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standards. Usually motorized On-Load tap changers are provided switch is
placed in hermetically sealed oil filled chamber in order to avoid contamination
of oil in main tank.
Distribution Transformers
PEL made distribution transformers’ range includes oil immersed core type
transformers, Dry type (VP impregnated) transformers and autotransformers.
These transformers are tailor made for various ratings. IEC or national
standards are followed. We offer distribution transformers voltage up to 33kv
and ratings up to 30MVA.

PEL offers transformer tanks with corrugated walls, detachable radiators and
tubular arrangement. The corrugated tanks have a better cooling efficiency,
since the fins are expandable. Tanks are hermetically sealed where possible.
In order to meet sophisticated requirement of customers PEL has also started
manufacturing transformers with foil winding. Foil winding efficiently uses
space which results in size reduction. It has better heat dissipation and also
increases potential to withstand short circuit current.

PEL transformers are available for various applications:

 Distribution Transformers (Pole/ pad Mounted)
 Auto Transformers
 Furnace Transformers
 Welding Transformers
 Chokes for furnace Transformers
 Any other special requirement
Dry Type Transformers
The demand of electricity in Pakistan has been increasing rapidly in the last
few years. There is a mushroom growth in the high rise buildings, shopping

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areas, CNG and petrol stations, residential colonies, etc. Due to the scarcity
of space in cities, installation of conventional oil type transformers in such
congested and populated areas is always a big safety risk. The developed as
well as many developing countries are installing dry type transformers as a
solution for ensuring safety in such scenarios.

PEL manufactures these types of energy meters; single Phase and Poly
Phase. The electro-mechanical energy meters are manufactured under
license from ABB of USA. The quality of PEL meters has been certified by
KEMA Laboratories of Holland. PEL meters are superior to others due to their
ability to lower revenue losses through accurate & precise operation and
reduction of maintenance expenses.

Energy meter orders from WAPDA are received annually and their supply
period is 9-10 months. Energy meter to KESC are supplied in a period of 3-4
months. The company provides one year after sales service warranty to
WAPDA, KESC and other customers. In the supply of energy Meters PEL
share accounts for 35% of the total supplies while the rest is shared by Syed
Bhais, Escort and Telephone Industries, A brief description of Energy Meter
is as under.
Single Phase Static Energy Meters
Single phase static energy meter used for measurement of active kwh energy
for Domestic & commercial consumers. The meter complies with the IEC
62052-11. IEC 62053-21. some of the main features include:
 Capable of recording on the basis of current with assumed voltage and
power factor in the absence of voltage on its terminals.
 Display of energy kwh during power outages.

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 High performance lithium battery with long storage life for display of
data during power outages.
 Window based application software for configuration of parameters.
 Anti-tamper indication on meter LCD
Description Whole Current Meter LT & HT Type Meter
Rated Voltage (UN) v 3*230/400 9*230/400 ,

Maximum Current (Lmax) A 60,80,100 6, 10

Switchgears are one of the highly technical and specialized power products of
PEL. They are produced for indoor and outdoor installations complying with
international installation standards. A major customer fore this product is
WAPDA. The company provides one year after sales service warranty to
WAPDA, DESC and other customers. In Switchgear, PEL enjoys market
share 33% while competitors are Alstom, Siemens and Fico.

MV & LV switchgear are produced for indoor and outdoor installations. The
switchgear and their key components comply with the requirement of all
significant international standards and regulations i.e. IEC, BSS or VDE. SGS
UK has certified PEL Design & Manufacturing of Switchgear for ISO
9001:2000. PEL’s switchboards are steel sheet fabricated, totally enclosed,
floor mounting type and vermin and dust proof. These are supplied with
factory fitted components, copper bus bars, internal wiring and terminal blocks

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PEL’s Services:
Transformers as one of the major component of AC power system, empower
the generation, transmission and distribution of electrical energy at proper
voltage level. There are different types of transformer e.g. Auto, Power,
Industrial, Rectifier, Furnace, compact, ear thing, and reactors network
transformers used for purpose of energy transmission, isolation of two circuits,
impedance adjustment of two sources and their loads, in accordance with
their unique specifications.

PEL offers complete testing, maintenance , modernization, upgrade and

repair services for power and large distribution transformers. The services
include but not limited to:
• Testing, erection, installation, commissioning, supervision, renovation,
rehabilitation, painting and reconditioning.
• Tap changer overhauling and repair
• Oil cooler, pump, and radiator change out.

Technical & Engineering Support

Customer support regarding transformer purchase as per customer

specification and requirements.
 Rating selection(KVA/MVA)
 Voltage selection (primary / secondary voltage)
 Vector group & percentage impedance selection
 Cooling art selection
 Components / accessories

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 Offering efficient and economical solutions from operation and
maintenance point of view.

Consultancy / Expertise
 Fault investigation
 Trouble shooting
 Condition assessment
 Capacity enhancement

Customer Training
 Product / operation training
 Product maintenance training
 Risk assessment training

This Division of PEL consists of appliances manufacturing. The Appliances
Division of PEL is the pioneer manufacturer of electrical goods in Pakistan.
The Division’s product portfolio comprises of air-conditioners, refrigerators,
televisions, microwave ovens, and split air-conditions. PEL is one of the
three leading players in the home appliances market. The company is
engaged in the manufacturing an/ or marketing of the following home

PEL Air Conditioners

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PEL window-type air conditioners were introduced en 1981 in technical
collaboration with General Corporation of Japan. Ever since their launch,
PEL air conditions have a leading position in the market. PEL air
conditioners cooling performance has been tested and approved by
Copeland and ITS USA. With the shift of users preference from window
type of to split type air conditioners, PEL has started manufacturing split
type air conditioners.

PEL Refrigerators
The manufacturing of refrigerators started in 1986-87 in technical
collaboration with M/s IAR-SILTAL of Italy. Like the air conditioner, PEL
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

PEL Deep Freezers

PEL deep freezers were introduced in 1987 in technical collaboration with
M/s Ariston of Italy. Because of durability and high quality, PEL deep
freezers are preferred choice of companies like Unilever.

Besides PEL Appliance division is proficient in production and marketing

of other domestic products like Microwave ovens, Washing machines, TV,
& some other similar types of items.

Associated Companies
The following are the associated companies of the Company as section
2(2) of the Companies Ordinance 1984.
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 Kohinoor Industries Limited.
 Kohinoor Power Company Limited.
 Kohinoor Energy Limited.
 Azam Textile Mills Limited.
 Saritow Pakistan Limited.
 Saigol Brothers Limited.
 Guarantee Life Employment Limited.
 Progressive industries (Lahore) (Private) Limited.
 Art Center (private) Limited.
 Saigol (private) Limited.
 Conforce (private) Limited.
 Kohinoor Autos (private) Limited.
 Kohinoor Tractors (Private)
 Innovative Technologies (Private) Limited.
 Raytex (Private) Limited.
 Standard Grinding Wheel Industries Limited.

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Major Competitors in Appliances Major competitors in Power Division
Division Seimens
AB Ampere
Ahmad & companies



Tariq Electric

Syed Bhais



SB Electronic

Creative Electric

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Organizational Hierarchy



GM GM Marketing GM
GM Finance
Manufacturing (Power Manufacturing
(Power Division) Division) (Appliances

Sr. Manager GM
Sr. Manager
Sr. Manager Marketing Marketing
Finance (Power (Appliances
Division) Division)

Commercial Sr. Manager Sr. Manager
Marketing. QC. Sr. manager
(Appliances (Appliances HR & A
Division) & Power)

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My Learning

Being a graduate in commerce with specialization in Finance &

Accounting, my training session was conducted in the accounts
department of PEL. I was strongly encouraged by each and every person
there and so I learned a lot from there. A complete summary of my
internship period is as follows.
• Inventory
• Accounts Payable
• Costing
• Imports(L/C)
• Payroll
• Assets Management
• Reporting
Some of the above have relevant sub-sections that will be discussed here.

Inventory Section
The inventory section of PEL handles the activities of stock dispatch as well
as the stock taking procedure. Concerned departments raise “indents” or
requests to the local procurement section as per their requirements. PEL’s
procurement department uses four types of purchases as:

Credit Purchases:
It includes purchases by procurement department from suppliers’ on
credit. A “purchase Order” (PO) is made that bears the quantity computer
code rate and value drawing and all the specifications of required items.(PO)

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also bears the terms and conditions of payment and delivery schedule
according to production plan.
Suppliers Direct Purchase:
In this case neither (PO) is made and nor indents are raised. The
purchase is made directly and is usually for small additional items requires in

Cash Purchase:
In this type of purchase materials are supplied to the local vendor for
Die casting, Molding, Chroming=, Machine printing, Powder coating etc. in
other words we may say that materials are given and some work is performed
on those materials and for these services, the local vendor is paid. Vendor
claims only processing charges.

Further Procedure:
When items are purchased, through any type of purchasing method
mentioned above, procurement section makes “Purchase challan” against the
cash memo or delivery challan provided by the suppliers. The supplies are
then sent to the stores.. in the stores, the keeper checks the items according
to the delivery challan. If he finds any discrepancy, he mention it on the
challan,. After counting, weighing, measuring the goods as per their nature,
he makes a goods receipt note (GRN) and hands the goods over to the
Quality Control department. Quality Control examines the goods to see
whether they match the required standards or not. Defective or sub-standard
items are returned. Remarks or reasons for rejection are mentioned on the
(GRN) by the Quality Control department. After checking for quality and
subsequent approval Quality Control sends the item back to the receiving
store, store-keeper assigns the goods a serial number and date on their
(GRN). Now the receiving store process is OK. After this the store-keeper
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sends the items along with their (GRN) to the relevant store, relevant store-
keeper further re-checks the material according to the (GRN) and makes entry
on his Bin Card. Material is now officially stored. The store-keeper now sends
the (GRN) to the accounts department where it is posted in the Stock Ledger
after its valuation.

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Diagrammatical View
Overall procedure of inventory section may be represented as follows:

Production Department (Requirements)

Concerned Department (store)

(through intends)
Procurements Section (PA or AD)

(through any purchase type)


(makes delivery)
Gate Entrance (through physical check & IGP is issued)

(A challan is formed & GRN is


Quality Control Section (Inspection)


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Concerned Department (for Production)

Quality Control & Assurance

Appliance Division

Single Sampling Plan for Special Inspection

Inspection Level S4 at Acceptance Quality Level 4.0

Lot or Batch Size Sample Size Acceptance Rejection
1 1 0 1
2 2 0 1
3 to 90 3 0 1
91 to 500 13 1 2
501 to 1200 20 2 3
1201 to 10000 32 3 4
10001 to 35000 50 5 6
35001 to 500000 80 7 8
500001 to over 125 10 11

Purpose of Inspection:
The purpose of these procedures is to establish uniformity and
consistency in the quality assurance of material and components
received from supplier by incoming quality control.

Issue Procedure:
Production department when in need of material sends a “Production Request
Form” to the stores. The form consists of items code, quantity, fabrication
number, cost center number etc. the department head must approve of this
request. It is then sent to the relevant store for issuance, if available stock is
issued after completion of some formalities such as store allocation etc. if
there is any difference in requested quantity and that what is available the
store-keeper change that quantity and posts it on the Bin Card. After posting
into Bin Card, store-keeper sends the request to Accounts department.

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Accounts department allot serial numbers automatically along with date and
value before the incorporation in the ledger. In this way the all materials sent
to the various departments are of high quality and are made available as per
the need of the particular department.

In this section I completely learned the overall activities of receipt and
issue procedures of materials through built in software there.

Accounts Payable section (APS)

(APS) handles pending payments. Here payments are given to the creditors,
venders, and other parties. Payment is done through check and cash. If
payment is less than 10,000 then it can be in cash form, but if payment is
more than 10,000 then cheque is drawn in the name of creditor. Simply book
keeping of daily monetary transactions is APS. The Accounts Payable section
basically deals with the credit portion of the balance sheet of a company. The
process of payables also starts with the particular department making a
request or indent. The indent is sent to the Purchasing/Procurement
department. A representative of Power division or Appliances division goes to
the market and gets a quotation from the supplier parties. The rates are
verified and then further approved. After an approval. A purchase order (PO)
is made and sent to the supplier who has the lowest or most competitive rate.
On the arrival of goods an “Inward Gate Pass” (IGP) is made. This is also
known as an “IGP” to check because it is of a temporary nature. Quality is
then approved from Quality Control. If acceptable then “IGP” ok is made.
Next step is the making of the Good/Materials Receipt Note. This is made on
the arrival of goods. It is basically a voucher of the stores department.
The goods are reached to the store and from there a “Store Issue Note (SIN)”
is made when the goods go to the requisite department which raised the
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indent,. When the materials are received a bill or sales tax invoice is made by
the supplier. In case of a listed company, a sales tax invoice is made and
incase of a non-listed company a bill is made. The (GRN) so made may be of
different types regarding the various departments.
S stands for switch-gear, T for transformer, P for power, Q again is
transformer division, N stands for energy meter and so on.
Apart from goods purchased, payables also stand for expenses. Expenses
booked are of three types like:
Selling expenses, Administration expenses,
Manufacturing expenses, all three of the expenses are booked with unique
expense Ids, first 2 digits of the ID tell the type of expenses, the next 2 digits
which are separated by a hyphen, stand for the division i.e. Appliances or
Power , the 2nd last figure signifies the department and the last figure tells the
area i.e. whether it is inland, local or foreign from the recording point of view 2
entries are basically made.
When the goods are reached to store and (GRN) is made, the following entry
is made in the journal:
Material Accounts
Provisions Account
Provision account is a temporary account which is zeroed through (GRN). A
contra-entry is passed for the purpose.
Provision account
Excise duty account
Sales tax account
Party account

Provision account is ended and excise duty and sales tax are charged to the
Party account
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Bank account
In this entry the party is clearing all dues by payment through bank.
Diagrammatical View
Overall procedure of APS may be represented as follows:
Sales invoices or Bills (From creditors)

Journal Account (Material A/c

Party A/c)

(Through invoices)
Voucher preparation

(Invoice, voucher & GRN0


(Makes delivery)
Supplier’s Request (For payment through buying department)

(By compliance with necessary formalities)

Payment Preparation (Through crossed cheque)

(By deducting 3.5% withholding tax for particulars)

Payment done (through cheque or cash)

(Tax is paid to FBR & claimed hereafter)

Accounts Entries (Party A/c
Bank or Cash A/c)

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Sales Tax
Sales tax is the tax which is deducted directly on purchase and is included in
the retail price of the goods. As per new budget, it is 16% of the cost price of
the goods. On some materials it varies e.g. on chemicals it is 20% of cost
When PEL purchases goods from suppliers, it is obliged to pay sales tax on
these purchases. This is known as input tax as it is so charged from us. On
the other hand we sell goods we are charging sales tax also from the
consumer. This is known as output tax, as we pay it to government and it is
basically being charged by us. If the input tax on purchases is greater than the
output tax on sales then the company tax payer is eligible for a refund. In case
output tax being greater than input tax, we have to make payments to the
government. Sales tax is paid through special sales tax returns. These returns
show the net value of output and input tax.
Each supplier from whom the purchase goods sends us a bill if he is non-
listed i.e. does not poses a national tax number (NTN) of its own. Sales tax is
however still written on the bill. In case of a registered supplier who poses an
NTN, a sales tax invoice is sent which consist of the NTN of both purchaser
and supplier, the value of goods purchased and the sales tax so calculated on
these purchases. The original copy of the sales tax challan is sent to the
commercial department,
Excise duty so paid is separate from sales tax. It is basically an output tax
which is government income. The government at any time may demand a
sales tax audit. The audit is managed by the commercial department. The
following documents for each sales tax transaction have to be made available
• Sales tax invoice
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• Goods receipt note (GRN)
• Cheque
• Bank statement
Few rules pertain to this audit e.g.
• The payment of amounts above Rs. 15,000 is made through cheque
with in 90 days.
• Below Rs 15,000 payments are made through cash.
• In case of delayed payment fine is charged.

Income Tax
Income tax is also dealt in the Account department the tax is called
withholding tax also. It is at the rate of 3.5% of supplier, 6% on services, 5%
on rent paid and 2% on freight paid for transportations.
Income tax payments are made on daily basis to the State Bank Of Pakistan
by PEL.
Payments of tax is made through a withholding tax challan, which consist of
purchaser (i.e. PEL in this case) details on top name, NTN, registration
number etc, next comes the list of suppliers from whom sale tax is deductible
on the current date. The cost of purchases made from them and the taxes cut
are shown.
The challan is submitted to the bank and a temporary receipt/token is given.
After 3 days the challan is returned with a stamp that is proof of payment.
In the same way taxes on the salary of employees is deducted, retained and
then sent to the State Bank of Pakistan. Through payment of tax, refund may
be claimed for taxes on utility bills etc, the advantage to the supplier is that
now he may take refund of the withholding tax challan form PEL and send it to
the Federal Board of Revenue (FBR). This is proof that taxes on purchase
from them have been paid. The FBR then asks PEL for approval. The supplier

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also writes to PEL to verify their challan. PEL provides its suppliers with a
certificate which shows that their taxes have actually been deducted before
hand. This along with the copies of challan is send to FBR.
PEL makes daily payments of taxes to the bank. The Finance and Accounts
department have decided between themselves, the maximum value of sales
tax to be paid per day and funds are arranged for this payment by the Finance
department, so that cheque for payment of taxes are easily cleared and do
not bounce.

In this section I learned the internal operations of payment system by
personally practicing through preparation of the vouchers, posting of GRN,
verifying amounts and quantities of stock as according to vouchers, BRN, and
transactional reports (records) in order to avoid the dual discrepancies, mostly
APS involves the usage of software so too observed the coding system.
Besides I too learned to make details for audit work by having view of
previous vouchers of CP, JV,& BP respectively etc.

PEL uses job-order costing method. The two main product divisions of PEL
are appliances division and power division. Both divisions use similar costing
methods, save that in appliances division specific job-orders are not made
because the party is not defined. Appliances sales are usually to individual
consumers as per their requirement. A Cost Control System (CSS) is used to
control the costs of the products manufactured, production planning is both
month-wise and annual. After production plans are made, orders are made for
request of raw material. Orders are made on “production Order Forms” which
is made in the production department. Each order has a Fabrication Number.
This number has a special significance. The 1st figure is the division code, the
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2nd figure is the product code, the 3rd figure is the nature of the job and the rest
is just the serial number.
PEL’s specially designed software is used to keep track of the number of
orders. Quantities, fabrication number, model number and date are fed into
the system to get the rest of the information required. At any point of time, this
information may be fed in for a particular order to see up to what extent it has
been fulfilled, how much of the order is yet to be fulfilled, whether it is in parts
or the whole order has been demanded at once, so on and so forth. Another
important document formed is the “Bill of Quantity” (BOQ). This bill shows the
quantity of material that shall be used for the order in question. Issuance of
material may be of two types also. Incase of normal or routine issue the term
“issue Normal” (IN) is used and incases of any excess issuance an “excess
Voucher “ (EX) is made. Apart from the main materials, extra materials may
be required for a particular order. This may be the case when wastage takes
place e.g. when a required shape of metal is cut from the sheet provided, the
metal on the sides is extra and is scrapped. In some orders “auxiliary
materials are used which are not required in all orders. These are accounted
for also.
Further the costing of the product takes place. For this the cost of the three
basic parts required to make a product are calculated namely;
• Materials
• Labor
• Factory overhead
If the materials value is not present actually, it is taken from the “Bin Card”
which is a document made especially for each item. It records quantity issued,
quantity received and balances. Standard quantity is used in calculations. For
the cost of labor, Inspection Report is used. The value from inspection report
is multiplied by labor hours and labor rate. Factory overhead is taken as a

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percentage of the labor value. These calculations are done for the budgeted
production or those numbers of units that we have forecasted that we will
produce. If the total production in actual is not equivalent to what we
calculated, then the system will adjust the number of units and find out cost of
units actually produced.

In costing section I experienced the costing methods, techniques, & other
procedures followed by PEL. Usually there is built-in software being used by
costing section named as FOX PRO but now it is being changed to ERP
(Enterprise Resource Planning) for budgeting and for other costing section
requirements. By observing sales advice, BOQ , Inspection report, system
flows I became able to understand each and every step of costing section
working. Besides I performed several calculations based on rates, quantities ,
& specifications in order to be assisted that in preceding audit job.

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Diagrammatical view
Overall procedure of Costing section may be represented as follows:

Job Orders (From clients to marketing department)

Sales Advice (From marketing to QC, A/c, &

Manufacturing department etc.)

(By material and planning department)

Worker Order Preparation (Having FB. No & T. to A/c dept.)

(Processing to finished goods)

Production Department

(Inspection of Foreign goods)

Quality control department (Report to A/c, PD, TM & others)

Finished Goods (To store)

Evaluation of Cost (Through charging Mat., Lab., & FOH)

(Dispatch of Foreign goods to clients)

Further formalities (For Reporting)

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Imports (L/C)
Letter of credit or (L/C ) is used as a bridge for payment between importer &
exporter. Suppose PEL has gotten some raw material imported from a foreign
country etc. China. The exporter may want some guarantee that the money
will be paid to them. An assurance from a local bank may not be satisfactory
to the exporter. To solve this problem the importer gets an (L/C) opened by a
local bank called the issuing bank. The issuing bank will coordinate with a
bank will coordinate with a bank in the exporter’s country known as the
advising bank. It is so called because it advises the exporter whither or not to
carry out this transaction. If this bank also known as the confirming bank. The
exporter after preparing the goods intimates the advising bank and gives them
the documents of the goods. In case of sight (L/C) where immediate payment
is demanded the advising bank after receiving payment from the issuing bank
forwards the document to them. The issuing bank gives these documents to
the exporter so that he may get the goods released from customs. Payment is
mad later on by the importer. The bank charges markup on the facility
provided which is payable on a monthly basis. The issuing bank also fixes the
max time for repayment of the money. The importer must pay the bank within
the stipulated time to maintain good relations with the bank. Also the importer
may have a maximum credit limit with the bank within which he must remain.
In this case a new (L/C) may be issued only if dues of the old one have been
paid. The second main type of (L/C) is the Usance (L/C).in this type payment
is made after a period of time. The time is basically multiples of 30 i.e. 3,4 or
months. A number of extra charges are also included which are commission
of the bank and federal excise duty (FED). These are the charges which will

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be payable if the payment is not made at the maturity date. In event of
payment at maturity only the basic value which is fixed beforehand is payable.

In this section I observed the routine system of Letter of Credit of PEL
whenever it imports any material from foreign suppliers. I was also sent to
commercial department to know more about L/C through that source I got
enough valuable information fruitful for my further concerns.

Diagrammatical view
Overall procedure of Imports (L/C) section may be represented as follows:
Production department (Requirements)

Procurement department (Analysis local or foreign purchase)

(In case of foreign material)

Import Section (Contact and evaluate foreign suppliers)

(Processing to finished goods0

Opening of L/C (Sight or Usance through bank)

(Deliveries of Foreign goods to PEL)

Suppliers (Too shipment documents through own bank)

(Receiving documents and makes payment)

Importer’s Bank (Through exporter’s bank to supplier)

(Receives foreign goods and makes payment to its bank)

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PEL (During a period with commission and others etc.)
(Overall information)
Accounts Department (For records)

There are two sub sections of payroll section;
• Salary
• Benefits and other expenses
So payroll section is managed by two persons. Whenever a new person is
recruited at
PEL the Human Resource (HR) department prepares an appointment letter. A
photocopy of this letter as intimation is sent to the Account department having
details about basic salary and allowances etc. this person is then formally
added to the payroll section of PEL. The salary period for the staff is from 25 th
of the last month to the 25th of the coming month. For workers the salary
billing is from 1st to 30th of the same month.
At the end of month, all the appointment letters of that month along with the
salary details is sent to the (HR) department to check for any discrepancies.
The marking of attendance for both the graded staff and the non-grade staff
i.e. workers and peons etc is in the same manner. When the employee walks
in, the time of his arrival is noted down at the gate. Graded staff has two
attendances, one being at the gate and one on an attendance register once
they reach their requisite department. Non-grade staff has one attendance.
Payroll is managed through the specially designed software of PEL.
Full profile of the employee is maintained in the database of the software
namely: name, father’s name, date of birth, area of work etc. This profile
information is forwarded by Human Resource Department who collect it in the
first place through forms provided to the new entrant.

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Salary definition is a separate file which gives details/break-up of salary of an
employee. It consists of some important parts like Basic salary; House rent
allowance, utilities, Conveyance, and other special pays etc.
At the 25th or 26th of the month, the data pertaining to amount of salary and
attendance are up-dated. Shifts, over-time working and leaves are taken into
Deduction file shows the details of all deductions or advances taken against
salary. If workers wish to take food items from PEL’s personal stores, supply
deductions are made.
Lastly non-graded employees use the canteen for tea and snacks etc. they
are given coupons and deductions are made from their pays as per their
The Salary Processing File deals with updating the employee database
incase of new entrants, deleting the unnecessary information of employees
who have resigned. Details regarding increment, promotions, attendance,
overtime leave, loans taken by employees and any goods bought on
installment basis by the employees.
Salary slips are made at the end of each year. Salary of managers is dealt
separately in the finance department. PEL pays provident fund but does not
provide the facility of gratuity. Provident fund deductions are made at the rate
of 4.5% of basic salary for supervisors, 4% of basic salary for junior
executives and 3% of basic salary for executives and managers. Bonuses are
paid on Eid-ul –Fitr, Eid-ul-Azha and a final one is paid in august. Increments
are made in October. Payment of salaries up till Rs 15000 may be in cash,
above this payment is made through cheque. PEL’s main bank is National
Bank of Pakistan (NBP) though which all payments are made. For people
without bank accounts, demand drafts are made.
A part from salary payments, there are provisions for medical allowances
also. In this case all documentary proof is required. In case of hospitalization
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or doctor’s prescription and all hospital bills are to be attached and
documentary evidence for refund of money. The head of department must be
approved the bill and then they are sent to the main administration
department for final approval. Finally they are sent to accounts for recording
and subsequent payment. For non-grade workers there is a system of social
Workers are allowed 14 holidays per year, 10 days are allowed as casual
leave and 8 days for sick leave. Executive are allowed 30 holidays per year. If
one year leave has been used up then holidays from the next year may also
be availed in that year. Information of leave comes from the Human Resource
department for graded employees. Industrial relation and administration
department deal with the non-grade employee leaves. Both departments
subsequently send information to accounts department.

In this section I experienced all the formalities like voucher preparation,
expenses entries in ECM as well understood clearly the coding system of

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Diagrammatical view (salary portion)
Overall procedure of salary portion of Payroll section may be represented as

Recruitment & Selection (Through HR or IR & A)

(Intimation of Basic salary, allowances etc.)

Accounts Department

(Input of general information)

ECM (Employee Cost Management)

Accessing (available data & details)

(For information)


(Recalled information)

Accounts section

Salary Preparation (After additions & deductions)

(Through bank or cash)

Salary Payments

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Diagrammatical view (Expenses & Benefits Portion)
Expenses & benefits portion of Payroll section may be represented as follows:

Bill (From client write any expense or facility like Advance, medical,
or traveling etc.)

Verification of Bill

(All expenses details)


(Bank or cash form)

Voucher Preparation

Attachments (Bill & vouchers)

(By senior official)


(Final signature)

Approval of expense

Payment (Through bank or cash)

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Accounts Payable system

New Supplier Account Creation Procedure:

A requisition is raised by the Buying & other concerned department for
opening new party code. Buying department provide following information for
• Supplier Name

• Address
• Telephone #
• Fax #
• Contact Person
• E-mail Address
• NTN #
• Sales Tax
• Payment Term

Verification Process (FBR)

After collection of all detail about the party it is cross verified from
(Federal Board of Revenue). Party’s STN verified from FBR site.

Completion Process:
After verification new account is open according to Division
(Appliances, Power, and Common).
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Following reports/ out put are available on APS system:
I. Purchase Voucher Report with GRN Support.
II. Debit Note Report
III. Bank Payment Voucher along with invoice detail
IV. Due Date Report (Due Payment)
V. Payment against Cash Purchase
VI. Party ledger
VII. Creditor Aging
VIII. Creditor Reports – Product wise
IX. Month wise Creditor Reports
X. Suppliers Payment Aging Report
XI. Suppliers Income Tax Challan Printing
XII. Supplier Income Tax Return on Monthly , quarterly and annual basis.
XIII. Supplier income tax Certificate
XIV. AP Voucher for Journal Ledger Posting
XV. Missing GRN Report
XVI. Party cheque Printing
XVII. Detail of Bills which is sent to vendor with cheque
XVIII. List of purchase Vouchers / Bank Payment Vouchers
XIX. Invoice Register

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Assets Management Section
Overall procedure of Assets Management section may be represented as

Purchase voucher (Through any section like Inventory, APS, or other etc.)

Assets management Section (For depreciation charge)

(For accessing depreciation)

Separation (Of fixed assets & division in sub section)

(Through diminishing balance method)

Depreciation Charge (By recalling previous statements)

R.M.C (Assets amount for reporting & for balance sheet)

In this section of Accounts section depreciation is evaluated of fixed assets
only. Any financial transaction done through any section like APS, inventory or
any other section by means of voucher is brought down here. Form that
voucher fixed asses treatment is brought under consideration by dividing into
its sub sections where from depreciation is charged according to diminishing
balance method & as according to software. The whole process includes the

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amounts of previous year’s amount also. Finally total amount of given assets
under each section head is rounded off & and reported to the higher
authorities of the development of balance sheet as well as fro further

I thoroughly observed the overall system of depreciation through annual
report and too understood the basic concepts of depreciation methods as well
as prepared details on assets like vehicles.


Reporting section delivering information of multiple activities observations as

well as expenses verifications.

Overall procedure of Reporting section may be represented as follows:

Costing Section (Variances)

Work in Process (Current Assets-Current Liabilities)

Journal Ledger or other Reports (Vouchers Verification of Expenses)

(For Decision Making)

Higher Management

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In this section all the information drawn from costing, work in process, &
journal ledger section is sent to the higher management for business
concerns. This process is done after having a complete verification like in
case of costing section, time & rate variances are observed and in case of
work in process, current assets & current liabilities are treated for calculations.
Similarly fro journal ledger or other sections, the expenses like TA & DA are
verified carefully.

In reporting section I knew how to prepare a report and how to precede it with
higher authorities. Besides I experienced to observe the verification of
monetary transactions done in the multiple sections of the accounts

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Financial Sector
PEL is a public limited company and is listed in Lahore, Karachi and Islamabad
stock exchanges. PEL deals with all of the following banks for its loans and savings:
• National Bank of Pakistan

• Bank Alfalah Limited

• Bank of Khyber

• Bank of Punjab

• Deutsche Bank

• Faysal Bank Limited

• KASB Bank Limited

• Meezan Bank Limited

• My Bank Limited

• NIB Bank Limited

• Royal Bank of Scotland Limited

• SILK Bank

• Soneri Bank Limited

• Dawood Islamic Bank

• Habib Metro Molitron Bank

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Financial Statements Analysis

Ratios Formulae

Current Ratio current Assets

Current Liabilities

Quick Ratio Current Assets-inventory

Current Liabilities

Inventory Turnover Cost of Goods Sold


Average Collection Period Account Receivable

Average Sales Per Day

Total Asset Turnover Sales

Total Assets

Debt Ratio Total Liabilities

Total Assets
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Gross Profit Margin Gross Profit

Operating Profit Margin Operating Profit


Net Profit Margin Earnings for common stockholders


Return On Assets Earning for common stockholders

Total Assets

Return On Equity Earning for common stockholders

Common Stock Equity

Earnings Per Share Earning for common stockholders

No.Of Common.Shares.Outstanding

Financial Ratios & %change Analysis

Rations 2008 2009 Difference %change

Current Ratio 1.43 1.33 -.10 -6.99
Quick Ratio .89 .83 -.06 -6.74
Inventory Turnover 2.74days 3.46days .72 26.27
Average Collection
0.935 0.316 -0.619 -66.20
Total Asset
0.777 0.767 -0.010 -1.29
Debt Ratio 0.654 0.644 -0.010 -1.53
Gross Profit Margin 0.225 0.229 0.04 17.78
Operating Profit
0.34 0.31 -0.03 -8.82
Net Profit Margin 0.36 0.18 -0.18 -50
Return On Assets 0.28 0.14 -0.14 -50

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Return On Equity 0.081 0.038 -0.043 -53.09
Earning Per Share 4.14 2.17 -1.97 -47.58

Vertical Analysis

Final Analysis

Ratios % Change Company’s Favor

Current Ratio -6.99 No
Quick Ratio -6.74 No
Inventory Turnover 26.27 Yes
Average Collection Period -66.20 No
Total Asset Turnover -1.29 No
Debt Ratio -1.53 Yes
Gross Profit Margin 17.78 Yes
Operating Profit Margin -8.82 No
Net Profit Margin -50 No
Return On Assets -50 No
Return On Equity -53.09 No
Earning Per Share -47.58 No

All the amounts are drawn from the financial statement of PAK ELEKTRON LIMITED
as according to annual report of 2009 and all the calculations are performed

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Profit & Loss


Loss 2009 2008 2007 2009 2008 2006
Gross Sales 16,118 13,927 13,078 2,349 1,924 1,568
Less : Sales
Tax & 1,496 1,275 1,264 480 423 340
Cost of
11,284 9,815 9,224 1,478 1,225 1,002
Gross Profit 3,338 2,837 2,590 448 359 280
Gross profit
22.83 22.42 21.92 23.26 22.66 21.84
operating 37 18 100 5 9 6
ve 609 514 387 36 30 26
Profit from
1,874 1,665 1,684 207 160 123
cost / Net of 1,373 994 937 125 86 71
Provision for
133 178 125 16 20 12
Profit /
260 452 582 53 43 32

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Horizontal Analysis (Profit & Loss)


Loss 2009 2008 2007 2009 2008 2006
Gross Sales 15.73% 6.49% 18.44% 22.09% 22.70% 20.62%
Less : Sales
Tax & 17.33% 0.87% -22.64% 24.41% 18.88% 21.19%
Cost of
14.97% 6.41% 25.33% 20.65% 22.26% 17.88%
Gross Profit 17.66% 9.54% 26.46% 24.79% 28.21% 30.84%
Gross profit
1.81% 2.28% 0.71% 2.63% 3.77% 8.59%
operating 105.56% -82.00% -11.50% -44.44% 50.00% 50.00%
18.48% 32.82% 47.15% 20.00% 15.38% 18.18%
ve expenses
Profit from
12.55% -1.13% 28.84% 29.38% 30.08% 30.85%
Finance cost
/ Net of 38.13% 6.08% 26.28% 45.35% 21.13% 57.78%
Provision for
-25.28% 42.40% 66.67% -20.00% 66.67% -29.41%
Profit /
-42.48% -22.34% 31.67% 23.26% 34.38% 28.00%

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Vertical Analysis (Profit & Loss)


Loss 2009 2008 2007 2009 2008 2006
Gross Sales 100.00% 100.00% 100.00% 100.00% 100.00% 100.00%
Less : Sales
Tax & 18.01% 17.67% 18.24% 18.01% 17.67% 18.24%
Cost of
62.92% 63.67% 63.90% 62.92% 63.67% 63.90%
Gross Profit 19.07% 18.66% 17.86% 19.07% 18.66% 17.86%
Gross profit
0.99% 1.18% 1.39% 0.99% 1.18% 1.39%
operating 0.21% 0.47% 0.38% 0.21% 0.47% 0.38%
ve 1.53% 1.56% 1.66% 1.53% 1.56% 1.66%
Profit from
8.81% 8.32% 7.84% 8.81% 8.32% 7.84%
cost / Net of 5.32% 4.47% 4.53% 5.32% 4.47% 4.53%
Provision for
2.94% 3.27% 2.81% 0.68% 1.04% 0.77%
Profit /
2.26% 2.23% 2.04% 2.26% 2.23% 2.04%

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Balance Sheet

Balance Sheet 2009 2008 2007

Fixed Capital
10,304 6,907 4,628
Current Assets 8,713 9,401 6,870
1. Stores, spares
77 82 64
and loose tools
2. Trade deposits
and 229 322 306
3. Advance Income
292 87 47
19,070 16,395 11,545
Total Assets
Current Liabilities 6,555 6,605 5,178
1. Advances
from 137 169 111
2. finance lease
86 100 103
Long Term Liabilities
6,796 5,618 4,063
1. Long-term
3,493 2,480 1,315
2. Liabilities
against 103 170 187
finance lease
3. Long-term
3,493 2,480 1,315
Total Liabilities
19,070 16,395 11,545

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SWOT Analysis

PEL has the following strengths and is in more competitive position in these
areas than its competitors. Following are the main strong points of PEL:
• Strong brand image

• Strong dealer network

• Strong quality, sale and service

• Market leader in WRAC

• Number 2 in refrigerators in Pakistan

• Strong grip in home appliances

• Strong Management

• Distribution of Authority

• Strong research and development department

• Free customer service

Strong Brand Image

PEL has created the strong brand image in the mind of the customers through
higher quality and low price. The customers of the PEL always prefer to buy
the PEL home appliances like WRAC split AC and refrigerators whenever

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they wanted to buy. PEL is a popular company in Pakistan and every one
knows about the PEL products and its brand. That’s why PEL selling of
WRAC are very high in the market than the competitors selling.

Strong Dealer Network

It is also the plus point for the PEL that it has also developed the strong dealer
network in the market. The dealers are always trying to sell the PEL appliance
to the customers because they know there are high margin in the PEL
products. They can get more money after selling the PEL products. The
management of PEL also provides more incentives to their dealers than their
competitors. Dealers are very conscious about the PEL products and always
guide the customer in buying the PEL appliances and tell them the more
qualities of PEL products than others products
.Strong Quality, Sale and Service
PEL is also in a strong position that it provides the superior quality to your
customers. It makes sense in the mind of the customers that PEL products
are better in quality than the other companies’ products. PEL also provides
the after sale service to their customers which delight the customers
satisfaction. It is another way to advertise the products because when
customer is highly satisfied then he tells the other ten persons that they
should buy the PEL products. It is the free publicity of PEL products that PEL
Company gains.
Market leader in WRAC (Window Room Air Conditioner)
It is another strong point that PEL is a market leader in WRAC. The window
room air conditioner is more demanded by the customers than its competitor’s
air conditioners because it has more durability in operating systems and cools
the room in few minutes. PEL always strives to provide the innovative features
in WRAC. PEL air conditioner is cheaper and has a higher quality than others

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WRAC. That’s why customers always purchase the PEL window air
Number 2 in Refrigerators in Pakistan
After the Dawlance refrigerators PEL has a second position in refrigerators
market. PEL always continuously strives to pursue the strategies adopted by
the competitors. As a consequence the price war starts among the companies
so each company reduces the prices and tries to increase the sales of its
refrigerators. PEL is also making efforts for the quality improvements than its
competitor Dawlance.

Strong Grip in Home Appliance

So PEL is one of the companies, which is having a strong grip in the home
appliance i.e. WRAC, Refrigerators, micro way Owen etc that is a strong point
for the company. PEL is penetrating the market by introducing the new home
appliance like Split Air conditioner and always trying to get the maximum
shares in the home appliance market.
Strong Management
It is another plus point that PEL has a strong management. Its employees are
more competent and fully skill and knowledge. They always cooperate the top
management in achieving the goals that are assigned to them. Employees are
well aware about the company objectives and so they are committed to the
development of company.
Distribution of Authority
Top management of PEL delegates the power to the subordinates for
achieving the marketing objectives in a specified time period. So every
manager has an authority that use in achieving the Goals. He can easily
handle the complaints of customers and try to satisfy them. So it is a strong
point for the PEL because there is decentralization of powers.
Strong Research and Development Department
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PEL has a strong research and development department that is continuously
trying to develop new features for the products. R&D department spends huge
amount of money for the development of product. R&D makes research for
introducing the new product and asks the customers what they want extra in
our products. For this purpose they hire the highly qualified employees in R&D
department. That is another strong position of PEL.

Free Customer Service

PEL provides free customer service for one year to its customers. So the
customers always buy the PEL products due to its free service and it
becomes loyal customer for the PEL. PEL always provides help to their
customers for repairing the WRAC, Refrigerators and other items. PEL always
make efforts to satisfy the customers.

Public Limited Company

Although PEL is owned by the SAIGOL GROUP but its shares can be
purchased and sold in stock exchange market. So every one who is interested
in purchasing the shares of PEL he can purchase. It is also called public
limited company. So people are more interested in buying the PEL products.
Like other companies PEL has some weaknesses in operating the business. If
PEL overcome on these weaknesses then it can become a market leader in
the home appliance. PEL loose some competitive edge in the following points:
• Lack of advertisement

• System variations

• Lack of Product range

• Less Utilization of capacity

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• Financial Problems

Lack of Advertisement
It is a second major weakness of PEL that it never makes advertising on TV.
That creates hurdle in selling the products and customers cannot know the
changes, which are made in products by the company time to time. Company
is not in a position that it made advertising of all their products on a wide
range because of its high cash requirement towards the production side. Due
to this problem company always make efforts to develop strong relationships
with dealers.
System Variations
It is also the main weakness of PEL that there are rapidly a change in polices
of selling the products. That’s creates problems for the selling team how to
sell the products to the dealers because the top management requires the
urgent amount of money. So selling team sells the products sometimes on
hard cash that will reduce the prices of products that gives the benefits to the
dealers and creates problems for the management.
Lack of Product Range
PEL has introduced more products of consumer items but there are more
needs to develop new consumer items like PEL washing Machines, Vacuum
cleaner and other items. Due to lack of product Range, Company cannot earn
more profit because consumers have high demand of these products and they
say that if company is investing in these products then we can keep all PEL
items and we never need to keep other’s company products.
Less Utilization of Capacity
Due to lack of finance a company cannot utilize all its resources on its full
capacity. It increases the cost of products per unit that decreases the profit

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margin of each consumer item. Sometimes company cannot allocate the
resources according to the requirements of production department that’s
becomes the problem for the complete utilization of resources. For the
company it is also the main point of weakness.
Financial Problems
Sometimes PEL faces the financial problems because its stocks are so much
piled up in the stores that create the problem of cash flow because when the
stocks are not sold and the production is in process for 24 hours a day than
the company faces such problems. So company aggressively researches the
sources of cash and stresses the dealers to sell the PEL’s products to the end
consumers. Company sometimes sells their products on advance bases to
the dealers and gives them high margin of profit. That’s why a company is
facing the financial problems and company never pays attention on the
alternative resources that will help in reducing the stocks. That is a customer
demand and due to this it is the main weakness of company.

For the PEL there are more opportunities for expansion the business. If PEL
realize that opportunities then it will be more fruitful and profitable for the
company. Even if company does not take advantage of these opportunities
then it will loose its competitive position and high profit. Its competitors will
give PEL tough time to pursuing the opportunities that are adopted by them.
Following are the opportunities for the PEL.
• Exploration of market in Pakistan

• Increase in product range

• Export opportunity

• Increase in production capacity

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

Increase in Product Range

It is the main opportunity for the PEL that it can increase its product range that
will be a more profitable for the company. There are more needs to develop
new consumer items like PEL washing Machines, Vacuum cleaner and other
items. Due to lack of product Range, Company cannot earn more profit
because consumers have high demand of these products. If PEL does not
take this opportunity then it will loose high margin of profit and market share. It
will reduce the fixed cost and increase the efficiency of the employees.

Export Opportunity
PEL Company has also the opportunity to export their products in other
international countries like UAE, SAUDI ARABIA, and other Arabic and
African countries. It will not only reduce the dependence on one market but
also increase the market shares and profits. It will also help the company to
spread the fixed cost on all of its production that will reduce the total cost and
company will enjoy the high profit.

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Increase in Production Line
Company can also increase its production line at the maximum level that will
increase the efficiency of the employees and also will reduce the total cost.
Sometimes company cannot allocate the resources according to the
requirements of production department that’s becomes the problem for the
complete utilization of resources. Company should look the market conditions
then it will produce their products.

PEL Company in such a competitive era has many threats as well. These
threats are for the present situations and future. Company should make its
policies and strategies according to these threats. So following are the main
threats for the PEL:
• Strong competition

• China’s product introduction in the market

• Price war

• Slow growth rate in Pakistan

• Instability of government

• Tax department

• World Trade Organization

• Investors

Strong Competition

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There is very strong competition for the home appliance in the market. So
every company tries to come in the number 1 position for achieving the
maximum shares in the market. Every company adopts different strategies for
selling of the products. It reduces the profit margin of each company and
increase the bargaining power of the buyers who will demand higher quality of
products and lower cost. That is the main threat for the PEL Company.
China’s Product
China’s products are another threat for the Pakistani companies because
these products are cheaper than the Pakistani products. An even china
product not well in quality but it is comparatively in low prices than the
consumer’s home appliance that are manufactured by the indigenous
company. China products stress the indigenous companies to lower the
quality and prices that will not be profitable in the long run.

Price war
As there is stiff competition in the home appliance market that will cause the
price war, So every company reduces the prices of its products to increase
the sales. It will not only reduce the profit margin of the company but also
reduce the quality of products. So price war is the main threats for all the
companies, which are operating in these products.

Slow Growth Rate in Pakistan

There is also slow growth rate of home appliance in Pakistan that will increase
the stocks of the company. It becomes the burden for the company that how
to sell these stocks. Its main reason is that purchasing power of the buyer is
very low and it has no income to buy the expensive the home appliance. It is
also becoming a main threat for all the companies.

Instability of Government
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The rapid changes in governments will become threats for the companies
because every government adopts its own policies for the industries. So it
increases the uncertainty for the investors who want to invest heavy amount
in their new projects. That’s become the major threat for the companies and
decreases the profitability. Due to fear of politically instability companies will
also not invest the heavy amounts.
World trade Organization
World trade organization will give the permission in 2005 to each company of
home appliance to export their products after paying fewer duties or duty free
products. That will increase the pressures for the indigenous companies to
reduce the prices and increase the quality. It will increase the competition
among the foreign companies and indigenous companies. But our companies
also run under uncertainty conditions. This will decrease the morale of
indigenous companies.

There are few people who have big investments and they are importing the
Chinese product by their own Brand name. This is a very big threat for the
company and company is trying to create some attraction for the investors to
demotivate the investors.

• Co-ordination should be developed between departments to
departments. This can be done through setting goals and objectives of the
whole company not only for their different departments.

• As I found brand name is very important factor in consumer buying

behavior, thus it is advised that PEL should work on the brand image.
Although PEL has a strong brand name, but it has to create much more

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stronger one, mainly through advertising, to compete with Dawlance,
Waves, and other international brands.

• The company should add more features to their products. People are
attracted towards a product with unique features and something that would
make the customers feel that they have got their moneys worth.

• The company should take measures to improve the quality of their

products by improving the process. Thus the company is advised to take
steps towards improving the quality of its products, other wise it will lose a
lot of potential customers to their competitors.

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

work on their distribution network.

• PEL more focus should be on electronic media to get competitive

advantage over the competitors. They have to increase their advertising

• The company must give more incentives to the dealers so that they
remain loyal to the company and promote the products.

• PEL should define the company’s mission and vision statement that can
be more helpful for them in future. Every organization however it is small or
large has clear direction where they want to go. Without direction or
knowing the purpose of their existence how an organization can make

• They should advertise throughout the year so people should remember

them and will be more brand loyal and new customers will be attracted.
They should use all the medium of advertising to be more successful in
attracting customers.

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• PEL should open its internship programs on frequent basis so more and
more students can get the chance to work as an internee in such a huge
institute and get their relevant work experience. They can personally go to
colleges/universities or give an ad in newspaper.
• In future, the managers of PEL should assign duties on daily basis.

• The work given to the internees should not be general, rather it should
be according to their specialized field (i.e marketing, finance, HR) so after
the completion of their internship program they have practical knowledge
of that specific field.

• Introduction of seasonal schemes can help to boost sales.

• The product line of PEL is not good as compared to others like Haier,
Waves, Super Asia, so it’s good for the company for more success if they
work on it.

• 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 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.

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There are certain vague points which should be the prime objective of this firm
to improve and come over them and the points are enumerated as follows

 In the Accounts department there is a lot of unequal distribution of the

work in the whole departments. Some sections work very hard and
through out the day but some work just for limited time period.

 The mission and vision statement need to be revised as it fails to

comply the objectives of the firm and hence it is blurring regarding the
deputation of the enablers.

 Equal work should be distributed.

 Lack of communication is there between the departments.

 Canteen should be upgrade.

 Mess for the internee should be upgrade.

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 Giving more work to internee for the quick completion of the company


 It is advised that PEL should work on the brand image. Although PEL has a
strong brand name, but it has to create much more stronger one, mainly
through advertising, to compete with Dawlance, Waves, and other
international brands.

 The company should add more features to their products. People are
attracted towards a product with unique features and something that would
make the customers feel that they have got their moneys worth.

 To gain more competitive advantage over their competitors, PEL has to work
on their distribution network.

 PEL more focus should be on electronic media to get competitive advantage

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

 The company should change the advertising theme and slogan to attract and
for the attention of customers. They should show some creativity in all
promotional activities. So PEL should come with some catchy and appealing

 PEL should redefine the mission and vision statement because they fail to
comply and align the company objectives.

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 PEL should open its internship programs on frequent basis so more and more
students can get the chance to work as an internee in such a huge institute
and get their relevant work experience. They can personally go to
colleges/universities or give an ad in newspaper.

 The product line of PEL is not good as compared to others like Haier, Waves,
Super Asia, so it’s good for the company for more success if they work on it.


My internship was highly successful here at PEL though there were

some lack of training, lack of concern from the departmental employees,
lack of facilitation from HR department etc. In Order to prelude it can be
safely said the overall experience was really good and I tried hard to
gain maximum knowledge Impact of Internship on My Future Career.


During my internship I learned a lot by applying my knowledge that is

helpful in my future planning and future career. I learned how to interact
with senior management and get their experience that is helpful in my
career. I have built the habit of regularity and punctuality through this
internship program. And there was a link between my qualification and
internship program I am applied my knowledge on internship which I
learned from my university.

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

 Finance Department

 Accounts Department

Mr. Muhammad Hanif (Manager Finance).

Mr. Tahir Mehmood (Senior Executive).
Mr. Ghulam Murshad (Finance Executive).
Mr. Zaigham Ali Sheikh (Finance Executive Budgeting section).
Mr. Fakhar Ali (Accounts Officer ).
Mr. Abdul Rasheed (Accounts Officer and Accounts Payable Head )
Mr. Ali Asad (Accounts Officer ).
Mr. Muhammad Afzal (Accounts Officer ).

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First of all, I would like to say that I am so happy after performing my task effectively
& efficiently. This obligation taught me a lot that will be very beneficial for me in my
future concerns. After completing my report & analysis of the financial performance, I
came to know about the real business tactics as well as the value of training.

One most important thing that I experienced in my training session was the training
ethics. Some people resist against some little work which is not according to their
status & qualification but still that little work may provide a lot.

Simply I found there that

“Each & every sphere of life is training”

Thank You

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