STRATEGIC MANAGEMENT

Presented To:

Mr. Ghulam Ahmad Rana

Presented By:

Waqas Sattar 1205

Bilawal Shabbir 1210
Arham Javed 1215
Usman Ali 1220
Ch.Awais Zahid 1211
Bilal Nawaz 1201
Hassan Imtiaz 1225
Pak Elektron Limited (PEL)
 History of PEL
• Pak Elektron was setup in 1956 as a Public Limited Company with the object of initially
producing transformers, switchgears, and electric motors.

• After the conclusion of joint venture agreement with AEG Saigol Group acquired the PEL
COMPANY in October 1978

• The company floated its shares to the general public and was listed on Karachi Stock
Exchange (KSE) and Lahore Stock Exchange (LSE).

• In 1980, Appliances Division was established

• 1981 it started the production of Window Type Air Conditioners with the technical
collaboration of General Corporation of Japan
1987 the production of Refrigerators and Deep Freezers was started.

In 2006, the Company has started manufacturing of split type air conditioners of various
capacities as the customer choice has shifted from window type to split type.

The product has been well received in the market. This encourages the company to multiply its
production in the coming year.

Today, PEL has become a household name. Its products are not only in great demand in the local
market but the Company has started exporting its appliances division products

PEL (Pak Elektron Limited) is the flag holder of the Saigol Group of Companies
 KEY PEOPLE
CHIEF EXECUTIVE

 Mr. Mian Naseem Saigol

BOARD OF DIRECTORS

 Mr. M. Azam Saigol

 Mr. Shahid Sethi
 Mr. Haroon Ahmad Khan
 Mr. M. Murad Saigol
 Mr. Homaeer Waheed
 Mr. Gull Nawaz
 Mr. Masood Karim Sheikh
 Mr. Tajammal H. Bukharee
 Mr. Wajahat A. Baqi
(Managing Director)
(NIT Nominee)
(NBP Nominee U/S 182 of Ordinance)
(NBP Nominee U/S 182 of Ordinance)
(NBP Nominee U/S 182of Ordinance)
 Business volume

The “SAIGOL GROUP” is one of the leading industrial groups in Pakistan. The Saigol
Group belongs to the Saigol Family, which is an old business family and has
contributed a lot towards Pakistan’s industrial development. Saigol Group remains a
leading and forward-looking group and believes in continuous development and
growth. The result is a global business activity monitored through various offices
worldwide. They are serving nation in diversified business activities in the fields of

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

 To add a new product to its range in every third year for increasing the sales volume

 To set on image as the best quality of local home appliances

 To set an image the best quality of local power division product

Financial goal

 To obtain a real (inflation and adjusted) growth in earning per share 10%per year over
time.

 To increase the market share of split unit to at least 20%-25%by the end of 2009.
 OBJECTIVES OF PEL
The objectives and mission for which the company is established are as following:

• To carry on the business or businesses of manufacturing, selling, installing, maintaining designing and
dealing in all kinds of electrical equipment.

• To carry on any business whether manufacturing or otherwise which maybe found convenient to
undertake in connection with or in addition to any of these objectives mentioned above.

• To do all such things that are incidental for the attainment of the above objectives or any of them.

• To produce high quality and standard products.

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

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

• To produce skilled workers and technicians through its apprenticeship schemes and training programs for
engineers and technician
 COMPANY BELIEFS

The belief of Pak Elektron Limited is the consistent attainment of quality in all facets of our operations so as to
provide consultancy services with professionalism and to the satisfaction of our clients.

COMPANY BELIEFS:

~ Excellence in all we do.

~ Ethical and moral conduct at all times and in all our relationships.

~ Innovations in all areas of our Designs as a mean of attaining and

~ Sustaining leadership.

~ Pursuit of relevant knowledge

~ Commit ourselves to the highest standards of personal and professional integrity at all times.
 Number of Total Employees

There are more than 7000 Workers who are currently working in PEL all over Pakistan.
 Vision Statement

To excel in providing engineering goods and services through continuous

improvement
 Mission Statements

 To provide quality products & services to the complete satisfaction of our customers
and maximize returns for all stakeholders through optimal use of resources

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

 To promote good governance, corporate values and a safe working environment with a
strong sense of social responsibility.
 Analysis of mission statement

I. Core competency

II. Technology

III. Philosophy

These are the three things which are not mansion in the mission
statement of PEL.
 PROPOSED MISSION STATEMENT
 To provide quality products & services to the complete satisfaction of our customers all over
the Pakistan and maximize returns for all stakeholders through optimal use of resources

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

 To promote good governance, corporate values and a safe working environment with a
strong sense of social responsibility.

 Our philosophy is to give people energy efficient and reliable products in home appliances

 Our all across distribution network make us dominant over our competitors

 By using latest technology and providing innovative features in our Product

 LOCATION

 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.
 REGISTERED HEAD OFFICE

17-Aziz Avenue, Canal Bank, Gulberg-V, Lahore

Office -14 Km, Ferozepur Road. Lahore-54760

GP.D. Box No. 1614, Lahore - Pakistan.

Tel: (+92 42) 5811951-59 (9 Lines

Fax: (+92 42) 5810156, 5822682

E-mail: shares@saigols.com

Website Address: www.pel.com.pk

 PATTERN OF SHARE HOLDING

Name Percentage

Saigol Family 54.60

Financial Institutions 13.27
Insurance Companies 3.07
Joint-stock Companies 1.77
Investment Companies 0.46
Modaraba Companies 0.00
Foreign Investors 0.03
General Public 26.80

Total 100.00
Organizational Structure
PRODUCT HIERARCHY
PEL-LG Strategic
Partnership
Pak Elektron Limited, held a press conference (April 21, 2009) to announce the strategic alliance
between Pak Elektron Limited & LG Electronics

An agreement in this regards was signed at the ceremony by Mr. Murad Saigol, Director
Operations, Pak Elektron Limited & Mr. E. D. Choi, General Manager, LG electronics, Pakistan
Liaison Office.

Mr. Saigol announced this to be the biggest partnership in the history of home appliances and air
conditioners in Pakistan and this strategic alliance will expand in the times to come.

PEL has been appointed the official distributor for LG Air Conditioners, Refrigerators,
Microwave ovens, washing machines and vacuum cleaners from June 2009.

The addition of LG for Pak Elektron will now mean Pak Elektron will have two leading brands,
PEL and LG, in both the categories of home appliances and Air conditioners.
Main Strategies Under Taken
 At corporate level

The main objective of firm to give customer’s satisfaction with high

customer satisfaction.

The PEL use grow and build strategy

Two way relationship with distributors

PEL has Strategy for introducing product in every 3 years

 Political environment

 Pakistan is facing the situation of great political instability and uncertainty since last couple
of year.

 According to the economist com survey Pakistan is at the 11th number of top most vulnerable
countries of the world.

 Due to this problem business activates in Pakistan are severely affected. The foreign direct
investment also decreased dramatically due to current insecurity.

 The government decided to increase the minimum wage rate of workers from 6000Rs to
7000Rs which is increases the cost of production and inflation
 There are few incentive to the manufacture of Pakistan by the government as compare to up
coming giants of china.

 The cost of manufacturing is high due to electricity rate and overhead.

 So most of the time manufacture hesitate to do manufacturing in Pakistan and prefer to

import finished goods are only assemble good in Pakistan
 Economic environment
 Due to global environment economic crises, Pakistan is also facing a lot of problem.

 Although Pakistan economy is not directly hit by the crises yet the economic situation in
server in Pakistan

 To resolve the power sector issue, removing subsidies and concurrent transfer of
international oil price changes also likely to risk a further slow down in economic
activities at least in the near future.

 In Pakistan there is a strong black economy due to the circulation of black money illegal
business like smuggling

 Economist are expected better condition for Pakistan economy due to the loan of IMF.

 The consumer in Pakistan is spending most of their income of food and basic needs of
life.
 Social Environment
 Now a day’s people are becoming more price conscious due to inflation and crises of
Pakistan.

 Their primary focus on food and daily use good and thus people have lessened their interest
in electronic good.

 Now consumer prefers the split air conditioner over window air conditioner because split
ACs are considered as energy severs.

 That is why window ACs are almost obsolete because of high consumption and split ACs
are becoming more popular because of low electricity.

 In countries like Pakistan the usage of air conditioner is great because of extended summer
season of nearly 8 month.
 The company are becoming more socially responsible these days as they have introduce
CFC free refrigerant, anti bacterial and dust filter.
 Technological environment
 With the introduction of spilt air conditioner, it made the air conditioner more affordable
and easy to install and maintain.

 The efficiency of air conditioner depends upon its outer unit. The bigger is the outer unit
the more efficient will its inner unit.
 In split air conditioner the rotator compressor are used which are soundless and do not heat
up in extreme situation.

 Companies are introducing refrigerator with cool bank which remain working for 5 hours
even after switch off.

 The multinational national companies are using information technology to coordinate and
communicate with in companies as well as extreme parties. The electronic management
system are used to reduce the cost of handling the inventory order.
 Legal

 Legal factors include description law employment law, and earth and
safety.

 These factors can affect how a company operates, its costs, and the
demand for its products
 Bargaining power of supplier

The bargaining power of supplier is low because of availability of a

number of chine’s brand in the market.
 Bargaining power of buyer

The bargaining power of the buyer is high because

 They have choice of different in the market

 They have choice of models and features

 They have choice of product in different prices

 Threats of substitute

 Threats of substitutes high because

 The gas generators and ups are the substitute of Pel’s diesel and petrol generator

 The major substitute of air conditioners are Room air cooler

 The room air coolers are available at are low price starting from 6000

 Electric fans are also very cost effective and its major company GFC fans ,Younas fans
Royal fans
 Threats of new Entrants

PEL has low level of threats of new entrants in the industry as the electronics
industry has different barrier to entry

 Requires huge capital to get entry in the industry

 High manufacturing costs

 High advertisement cost

 High cost of raw material

 Rivalry among competitors

 There is intense competition with in the industry to capture the market in

term of share of market.

 The companies are introducing product with new and advance technology to
attract and capture the customers.

 They are using advertisement and technology as a weapon to increase market

share in related market.
 Description PEL HAIER DAWLANCE
CRITICAL SUCCESS Weights Rates Weighted Rate Weighted Rate Weighted
FACTOR average average score average
score score

Strong brand 0.25 4 1 3 0.75 4 1

name
Strong dealers 0.2 2 0.4 2 0.4 4 0.8
network
Product quality 0.12 3 0.36 3 0.36 3 0.36

Customer 0.14 4 0.56 3 0.42 3 0.56

services
Strong 0.09 2 0.18 3 0.27 2 0.18
management
Strong home 0.2 4 0.8 2 0.4 3 0.6
appliances
Total 1 3.32 2.6 3.5
strength weight rate Average weight score

image Strong brand 0.15 4 0.6

Strong dealer network 0.12 3 0.36

Good product quality 0.14 4 0.56

Firm grip home appliances 0.10 4 0.4

Strong management 0.11 3 0.33

Distribution of authority 0.07 3 0.21

Free customer services 0.09 3 0.27

weakness
Financial problem 0.03 1 0.03

Lack of advertisement 0.09 1 0.09

System variation 0.07 2 0.14
Lock of product range 0.02 1 0.02
Less utilization of capacity 0.01 1 0.01
Total 1 3.02
Opportunities weights rates Weighted average
score

Exploration of market 0.25 3 0.75

Increase product range 0.15 3 0.45

Export opportunity 0.17 3 0.51

Threats

Tough competition 0.12 4 0.48

Slow growth rate 0.13 3 0.39

Instable government 0.08 2 0.16

High tax rate 0.10 3 0.3

Total 1 3.04
IFE = 3.04
EFE = 3.02
The strategy for PEL to growth and build
STAR:
Star is a business unit that has large market share in fast growing industry. Such unit requires
more investment to generate more cash. If due to more investment it will become successful and
become cash cow and it will reach at maturity stage.

 Refrigerator of PEL is the product having high market share and high annual growth rate.
Cash Cow:
It is the business unit sometimes known as problem child. It has a large market share and low annual growth. Each
cash cow requires little investment and it generates more cash that can be used for investment purpose in other
business units. For cash cow the strategy is called HOLD, you must preserve market

 Split air conditioners is the product of PEL having high market share and low annual growth rate.

Question Mark:
It is the business unit that has a low market share and high annual growth. These business unit requires resources to
grow market share but if they succeeded that will become STAR. For question mark the strategy is called BUILD, you
try to make up the market share.

 Washing machine and microwave oven are the products of PEL having low market share but high
annual growth

Dog:
Dog is the business unit that has small market share as well as low annual market growth rate. A company normally
would be unwise to invest substantial funds in SBUs in this category. Marketing strategies for dogs are intended to
maximize any potential profits by minimizing expenditures or to promote a differential advantage to build market
share and the company can diverts or liquidate the dog product

 Deep freezer is the product of PEL having low market share plus low annual growth share.
 SPACE MATRIX
Financial stability
Return on investment +4
High working capital +5
Profitability +4/3
. 4.25
Industry stability
Growth rate +5
Increase in demand +5/2
. 5
Competitor advantage
Quality product -4
Market share -3/2
. -3.5
Environment stability
Unemployment -2
Advance technology -5/2
. -3.5
IS+CA
5+ (-3.5) =1.5
FS+CS
4.25+ (-3.5) =0.75
 STRENGTHS – S WEAKNESSES – W
PEL 1. Strong brand image 1. Financial Problems
2. Strong dealer network
3. Good product quality and service 1. Lack of advertisement
4. Number 2 in refrigerators in Pakistan
5. Firm grip in home appliances
1. System variations

1. Lack of Product range

1. Less Utilization of capacity

OPPORTUNITIES – O SO STRATEGIES WO STRATEGIES

1. Exploration of market in Pakistan 1. Start a campaign to increase the product 1. Increase advertising for gaining new markets
range (w2,o1)
1. Increase in product range ( s1,s3,o2)
1. Product range to be increased with variety
1. Firm should focus on international market (w4,w5,o1,02,03)
1. Export opportunity (s1,s2, s3,o3)

THREATS – T ST STRATEGIES WT STRATEGIES

1. PEL facing tough competition. 1. Let customers know company’s Product 1. Use the advertisement and by increasing product
2. Mostly companies Give High Credit in market Quality and Achievements. (s3,o1)
and get current market 2. range remove some pressure of competition. (W2,
3. Slow growth rate in Pakistan 2. Provide the product in market at credit to W4, T1)
4. Instability of government enhance the market share
5. Tax department (S2, S4, S5, T2,)
 QUANTITATIVE STRATEGIC POSITION MATRIX
Marketing Development Marketing penetration
strengths weights Attractive Total attractive Attractive score Total attractive
score score score
Product quality 0.15 4 0.6 2 0.3
Strong brand name 0.13 3 0.39 2 0.26
Strong brand image 0.19 2 0.38 3 0.57
weaknesses
Financial problem 0.06 2 0.12 3 0.18
Lack of advertisement 0.04 1 0.04 1 0.04
Less utilize of capacity 0.05 2 0.10 2 0.1
opportunities
Explore market 0.18 3 0.54 3 0.54
Increase product range 0.15 4 0.6 3 0.45
threats
Tough competition 0.02 2 0.04 1 0.02
Slow growth 0.03 2 0.06 2 0.06
1 2.87 2.52
 COMPETITOR ANALYSIS

In this modern word, it is very hard to survive in the market due to swear
competition between the companies. Every existing product in the market has its
substitute or similar product.

“Competitors are the companies that satisfy the same customer needs and wants.”
To explain the competition we can classify the competitors in two ways which are
given below:

• Direct competitors
• Indirect competitors
 DIRECT COMPETITORS

The direct competitors of PEL are Dawlance, Waves, LG, and Haier etc. The Dawlance is
market leader in the refrigerator and PEL is still on second number. But in window room air
conditioner (WRAC) the PEL is market leader

REFRIGERATORS:

Total market sale of refrigerator in 2006 is 2924905 units. Last year sale was 2091779 units.
These figures show 30% market growth. But this is not the exact figure of growth rate it varies
from year to year.
DAWLANCE is a market leader in refrigerator with 46% share.
PEL has 38% market share
Waves has 10% market share.
6% shares are others
 WINDOW AIR CONDITIONERS:

PEL is a market leader with a market share of about 60% in local manufacturing industry. And
overall has 35% market shares for this product.
LG has about 32% market share and stands on number two. And rest of the manufacturers have
23% marker share.

SPLIT AIR CONDITIONERS:

The main competitor of PEL in Split air conditioner is DAWLANCE. Other competitors are
MITSUBISHI and HAIER

MICROWAVE OVEN:

In case of Microwave Oven DAWLANCE is the main competitor of PEL.

But the company claims to be the leader in this product line.
 INDIRECT COMPETITORS

The indirect competitors for PEL in this industry are Samsung, Orient, Mitsubishi,
Sabro, Nobel and others Chinese brands available in the market.

The PEL has no big threat from all these companies. But the Sabro pioneer for
introducing the split air conditioner in Pakistan.
 BUSINESS DIVISIONS

PEL is organized in two business divisions:

1. Appliances Division
2. Power Division
 APPLIANCES DIVISION:

PEL’s Appliances Division is the flag carrier of the Saigol Group involved in home
appliances manufacturing.
Air conditioners.

 Refrigerator

 Deep freezers

 Microwave oven

 Washing machine

 Generators.
PEL Air Conditioners:

PEL window-type air conditioners were introduced in 1981 in technical collaboration with
General Corporation of Japan. Ever since their launch, PEL air conditioners have a leading
position in the market. PEL air conditioners cooling performance has been tested and
approved by Copeland and ITS USA. With the shift of users preference from window type 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's refrigerators are also in great demand.
Today, PEL Crystal has 30% market share. Its cooling performance is tested and approved by
Danfoss, Germany and its manufacturing facility is ISO 9002 certified by SGS Switzerland
 POWER DIVISION
PEL Power Division manufactures

 Energy meters

 Transformers

 Switchgears

 Kiosks

 Compact stations

 Shunt capacitor banks

 Energy meters

 Generators
1. All these electrical goods are manufactured under strict quality control and in accordance
with international standards.

2. PEL is one of the major electrical equipment suppliers to Water and Power Development
Authority (WAPDA) and Karachi Electrical Supply Corporation (KESC), which are the
largest power utilities in Pakistan.

3. Over the years, PEL electrical equipment has had been used in numerous power projects of
national importance within Pakistan.

4. In spite of stiff competition from emerging local and multinational brands, PEL Group's
appliances and electrical equipment's have remained in the spotlight due to constant
innovation.

5. Strategic partnership with multinationals of repute have enabled the PEL Group to
incorporate new technologies into existing product ranges, thus giving the Pakistani market
access to innovative, affordable and quality products
 Strengths
 Brand Name

 Strong Dealer Network

 Quality Products

 Best Sales Services

 Market leader in WRAC

 Number 2 in Refrigerators in Pakistan

 Strong Management Team

 Distribution of Authority

 Research and Development Department

 Free Customer Service

Brand Name:
PEL has created a strong brand image in the mind of the customers through higher
quality and low prices. The customers of PEL always prefer its home appliances like Window AC,
split AC and refrigerators, during the time of purchase. PEL is a popular company in Pakistan and
every one knows about the PEL products and its brand name. That’s why PEL is a market leader
when it comes to Window AC.

Strong Dealer Network:

It is also the plus point for PEL that it has developed a strong dealer network in the market. The
dealers always try to sell the PEL products to the customers because, the company for its
products, gives them a high margin. 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 products.

Quality Products:
PEL is also in a strong position because it provides superior quality products to customers. So it
gives an edge to company over its competitors. Due to best quality, guarantee of products of PEL
is more than its competitors.
Best Sales Services:
PEL provides the after sale service to customers which increases the customers satisfaction. The
biggest strength of services department is that it handles a complaint within 24 hours in any part
of the country, that helps in increasing the satisfaction level of customers.

Market leader in WRAC (Window Room Air Conditioner):

It is also strength of PEL that it is a market leader in WRAC. Costumer always gives preference to
PEL in window AC market because of low price, high quality and durability.

Number Two in Refrigerators in Pakistan:

After the Dawlance refrigerators, PEL has the second position in the refrigerators market. PEL is
gradually coming up in refrigerator market and increasing its market share. Due to improved
quality, innovative features and good sales services PEL is becoming the first choice for
customers.
Strong Management Team:
It is another plus point that PEL has a strong management. Its employees are competent, efficient,
skilled and knowledge. They always cooperate with the top management in achieving of goals that
are assigned to them.

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 to take decisions to
achieve the goals of company. In this way they save the time and react quickly.

Research and Development Department:

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
new products.

Free Customer Service:

PEL provides free customer service for one year to its customers. The customers who buy the PEL
products become brand loyal due to this facility.
 Weaknesses of PEL:

Like other companies PEL has some weaknesses. If PEL overcomes these weaknesses then
it can become a market leader in home appliances. PEL looses some competitive edge in
the following areas:

 Financial Problems

 Lack of advertisement

 System variations

 Lack of Product range

 Less Utilization of capacity

Financial problems:
Sometimes PEL faces the financial problems because its stocks are so much piled up in the stores that
creates problem of cash flow because when the stocks are not sold and the production is in process for 24
hours a day then the company faces such problems.

Lack of advertisement:
It is a second major weakness of PEL that it is not a vigorous advertiser. Only recently has PEL invested a
considerable amount in advertisement, but when we look at its competitors, PEL still has to do a lot in this
sector.

System variations:
It is also the main weakness of PEL that there is a rapid change in polices of selling the products. That
creates problems for the selling team to sell the products to the dealers because the top management
requires urgent amount of money. Thus the products are sometimes sold on hard cash that reduces the
prices of products that 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.

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 margin of each consumer
item. Sometimes, the company cannot allocate the resources according to the
requirements of the production department, which later on becomes a problem for the
complete utilization of resources
 Opportunities for PEL:

For PEL, there are more opportunities for expansion in business.

Following are the opportunities for the PEL.

 Exploration of market in Pakistan

 Increase in product range

 Export opportunity

 Increase in production capacity

Exploration of market in Pakistan:
PEL has the opportunity to explore the market in all over the Pakistan. Even though PEL has
introduced its products in many cities of Pakistan but there are so many places that are yet to be
exploited.

Increase in Product Range:

PEL can increase its product range that will be more profitable for the company. There are more
needs to develop new consumer items like PEL washing Machines, Vacuum cleaner and other
items.

Export opportunity:
PEL has also the opportunity to export their products in other international countries like UAE,
SAUDI ARABIA, and other Arabic and African countries.

Increase in production Line:

Company can also increase its production line at the maximum level that will increase the
efficiency of the employees and will also reduce the total cost.
 Threats for PEL
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

Strong competition:
There is very strong competition in the home appliance division. Every company adopts different
strategies for selling of the products. It reduces the profit margin of each company and increases
the bargaining power of the buyers who will demand higher quality of products at lower cost.

China’s product:
China’s products are another threat for the Pakistani companies because these products are
cheaper than the Pakistani products. 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.

Slow growth rate in Pakistan:

There is also slow growth rate of home appliance in Pakistan that will increase the stocks of the
company. Although, this industry is in the growth phase, but the speed of the growth is very slow.
Instability of Government:
The rapid changes in governments will become a threat for the companies because every
government adopts new policies for the industries. So it increasesthe uncertainty for the
investors who want to invest heavy amounts in their new projects.

Tax department:
Tax department is another major threat for the company that will restrain the business
expansion. There is a most complicated tax procedure operating in the country that creates
hurdle in the production and smooth functioning of different companies in Pakistan.

World trade organization:

World trade organization will give the permission in 2005 to each company of home
appliance to export their products after paying less 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.
 Balance Sheet
as at December 31, 2012

December
Note December 31, 2011
31, 2012
(Rupees in thousand)
EQUITY AND LIABILITIES
SHARE CAPITAL & RESERVES
Authorized capital 4 2,500,000 2,500,000

Issued, subscribed and paid up capital 5 1,668,264 1,668,264

Reserves 6 164,134 164,134
Un-appropriated profits 2,075,931 1,770,706
3,908,329 3,603,104
SURPLUS ON REVALUATION OF
PROPERTY, PLANT AND 7 3,873,505 3,962,040
EQUIPMENT

NON CURRENT LIABILITIES

Long-term financing - secured 8 5,587,486 4,548,852
Liabilities against assets subject to
9 33,555 21,841
finance lease
Deferred taxation 10 1,930,107 1,973,350
Deferred income 11 50,037 56,069
7,601,185 6,600,112
CURRENT LIABILITIES
Trade and other payables 12 1,692,148 1,485,002
Interest / mark-up accrued on loans and
13 1,245,589 823,896
other payables
Short-term borrowings 14 6,815,091 6,174,860
Current portion of:
- long-term financing 8 40,729 1,106,375
- liabilities against assets subject to
9 38,218 38,393
finance lease
9,831,765 9,628,526
CONTINGENCIES AND
15
COMMITMENTS
25,214,784 23,793,782

December
Note December 31, 2011
31, 2012
ASSETS
NON-CURRENT ASSETS
Property, plant and equipment 16 13,811,250 14,089,185
Intangible assets 17 310,969 314,874
14,122,219 14,404,059

Long term investments 18 10,216 4,393

Long-term deposits 19 65,898 54,636

CURRENT ASSETS
Stores, spares and loose tools 20 126,792 109,582
Stock-in-trade 21 3,789,580 4,247,023
Trade debts - unsecured 22 5,775,681 3,746,881
Advances 23 527,751 625,559
Trade deposits and short-term
24 290,799 227,555
prepayments
Other receivables 19,662 17,241
Other financial assets 25 11,663 7,491
Income tax refundable 258,174 187,496
Cash and bank balances 26 216,349 161,866
11,016,451 9,330,694

25,214,784 23,793,782
 Profit & Loss Account
year
year ended
ended
Note December
December
31, 2011
31, 2012

(Rupees in Thousand)

Revenue 27 20,293,973 13,723,169

Sales-tax and discount 28 2,524,084 2,380,339

Revenue - net 17,769,888 11,342,830

Cost of sales 29 14,126,276 10,277,948

Gross profit 3,643,612 1,064,882

Other operating income 30 36,269 37,140

3,679,881 1,102,022

Distribution cost 31 827,192 792,803

Administrative expenses 32 624,338 683,115

Other operating expenses 33 4,648 4,838

Finance cost 34 2,050,054 1,413,264

3,506,232 2,894,020

173,649 (1,791,998)

Share of Loss of Associate 18 (12,729) (10,162)

(Loss)/ Profit before taxation 160,920 (1,802,160)

Provision for taxation 35 46,245 (638,698)

(Loss)/ Profit for the year 114,665 (1,163,242)

Other comprehensive income -

Total comprehensive (Loss)/ income for the year 114,665 (1,163,462)

Financial 2012 2011
Sales Gross 20,294 13,548
Net Sales 17,770 11,237
Gross Profit 3,646 849
EBITDA 2,917 333

Financial Charges 2,051 1,413

Profit before Tax 161 (1,918)

Profit after Tax 115 (1,269)

EPS - Basic 0.59 (10.95)

Share Capital - Ordinary 1,219 1,219

Share Capital - Preference 450 450
Share Holders' Equity 3,908 3,498
Long Term Loans 5,621 4,571
Current Liabilities 9,832 9,622

Non-current Assets 14,198 14,463

Current Assets 11,016 9,219
Total Assets 25,215 23,683
 Production Data

2012 2011
Transformers - MVA 3,967 2,029
Switchgear - Nos 1,780 1,490
Energy Meter - Nos 264,148 349,611
Air Conditioners - Tons 919 39,565
Refrigerators/Deep freezers -
3,042,064 2,660,387
Cfts
 Segmentation

Psychographi
Geographic Demographic Behavioral
c

Geographic Segmentation:
PEL is doing mass market which is not limited to one county but all over the world. The main target of PEL is
Pakistani market.In Pakistan,PEL is available at every city because its very famous and good product of market.
Demographic Segmentation:
PEL divide its market on the basis of following characteristics of population
Age group:
Earlier PEL used to segments its market among people age ranges from 35-----45years.But Now PEL focus between
the age group ranges from 25----35 years.
Gender group:
For the segmentation, the company is recently focusing on young graduate girls and the latest ad of PEL reveals the
fact in which famous singer Hadiqa is representing young college girl.
Psychographic Segmentation:

Income group:
PEL is offering its several products to different income groups of society
• In case of Generators, company focuses on elite class.
• In case of refrigerators, split air conditioners, washing machines, deep freezer.
• Televisions Company focus on middle class.
• In case of Microwave oven, the company focuses on elite and middle class.

Behavioral Segmentation:

We provide a quality product for our customers. It is purely base on local demands and
needs, and we sure that our product will be appreciated by that people who are quality
conscious.
 MARKETING MIX

I. PRODUCT
II. PRICE
III. PLACE
IV. PROMOTION
 Product
Product is a thing that satisfies customer demands. Pel Company is very much conscious to make the products
which satisfy the customer needs.

Company makes the product:

• According to the needs of the customer.
• What kind of size and model they want.
• What kind of features and functions they want.
• What kind of packaging they want.
Price
Price is very much important because its attracts the customer in first look.Pel company is very much conscious
about price.
Company sets the prices of the products by

• Analyzing the market situation.

• Actual cost of the product
• Marketing expenses of the product.
• Profit margin of the company.
• Comparison to other home appliances.
• Setting deal with dealers.
 Place
Place plays a very important role for any company’s product. If the product is not rightly placed,
company will suffer from loss.

Company places its product:

• According to the requirement of customer and market.
• In more populated area of the city.
• Against competitors products.
• More convenient to the customers.

Promotion
Once company makes the product, it needs promotion for the awareness of the customers. Unless
a company will not arrange for promotion a products can’t succeed.
Pel Company promotes its product through:
• Bill boards • Internet
• News paper • Brushers
• Television
 Department Control

Finance department:
Finance department provide money for the working of the
organization. Pel Company’s department borrows loan mainly from national bank and
settle terms and conditioned of the interest and time period of returning the load with it.
When the sale is made the company firstly return the loan with interest.

Human resource department:

Human resource department of the Pel Company is very
much conscious of hiring the employees for the company. The standards he set for
hiring the new people. HRM department of the company mainly makes the external
recruitment .this is usually done through news paper web sites extra.HRM department
also set salaries, packages and TA, DA allowances.
Marketing department:

Marketing department is the back bone of any firm. marketing

department generally analyze the needs and wants of the customer. Then this department tells
about the customer needs to the company which in tern launches the products according to the
needs of the customers. Marketing department is responsible for making strong advertisement for
the products.

Sales department:

Sales department is responsible for making sales of the product. This

department generally takes orders from the market, gives information to the credit control
department. Area credit control department gives information to the head office. Head office
discuss situation with the finance department and then at last finance department gives authority
to area credit control department to settle term and conditions with dealers.
 Customer service center department:

This department is very much important for the company

because its makes the good will of the company. Its provide services to the customers who have
their clams and makes the customer loyal. Its also gives the feed back to the head office to provide
the required spare parts.

Production department:

Production department is involved only producing the products. This

department purchases raw material from the suppliers. Then passes the raw material from various
dyes machines. Modeling machines etc…from the assembly line according to the required shapes
of the products.
In Future What Should

PEL To Do
• Increase Utilization of capacity:
PEL could not make the freezer as they target. They have enough capacity to make but the less
or lack of utilization of capacity they fail to meet their targets.

• Lack of advertisement:
Other competitor companies have good marketing and advertising campaigns as I observed
that near the PEL there is a great sign board of Waves.

• System variations
PEL should have to adopt the one system. As they are changing the system to ERP which is
very good but they have to train their employee as well. Training procedure must be change.
There should be the presentation to all workers.
Lack of Product range:
They should have to increase their product range as their new competitor SAMSANG in
appliances has a lot of product range so they also have to increase their products.

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

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

• PEL should open its internship programs on frequent basis so more and more students can
get the chance to work as an internee in such a huge institute and get their relevant work
experience.
• Introduction of seasonal schemes can help to boost sales
 Too much favoritism in PEL so there should be control and merit
should be followed.

 There is no rotation of job work so one person is limited to his work.

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

advantage over the competitors.

 They have to increase their advertising expenditures