INTERNSHIP REPORT

ON
PAKISTAN STATE OIL (PSO)

Submitted by

Nouman Khalid
Roll no. 844
MBA (3.5 Years) (Marketing)
Session 2013-17

UNIVERSITY OF EDUCATION LAHORE,

MULTAN CAMPUS
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 Dedication

To all those who have encouraged, supported, challenged and inspired us.

&

Specially I dedicate all my efforts and struggles of the educational life to my dear parents;
without them I’m meaningless. Also I devote the work of this internship report to respectable and
honorable teachers who taught and supported me in developing my personality as a competent
professional.

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 Acknowledgement
I would like to offer our humble gratitude to Allah Almighty, the most Gracious and the most
Merciful, who gave us strength and enabled us to achieve our goals.

All the material that has been included in this report is based on data/information gathered from
various sources and is based on certain assumptions. Although, due care and caution has been
taken to compile this report but the contained information may vary due to any change in any
of the concerned factors, and the actual results may differ substantially from the presented
information.

I am heartily thankful to our Head Irfan Haider whose constant guidance and support enabled
me to develop an understanding of the functioning of the departments which ultimately helped
me in making of this report.

Also to my supervisor Ma’am Maria Kanwal whose motivation and guidance encouraged me to
be dedicated to my work.

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 EXECUTIVE SUMMARY
In order to progress, every country requires a proper source of energy, to strengthen and energize
all the sectors responsible for development. Pakistan State Oil, the largest energy company of
Pakistan, is fuelling all the major sectors including automotive, aviation, railways, power
projects, industries and agriculture sector, thus steering the national economy towards progress
and stability.

With extensive reach from Karachi to Khyber, PSO is effectively fulfilling the responsibility of
driving the nation towards growth and development.

According to one report Pakistan is on 34th number in the oil import. And they are on the 22nd
number in the consumption in world ranking. Total oil production in Pakistan is 68,870 barrels
per day, and the total country’s consumption is 345,000 barrel per day and net import of the
country is 290,600 barrel per day.

Pakistan state oil is largest marketing oil company in Pakistan and also among the top 1000
largest companies in Asia. Pakistan state oil was set up in December 29th 1976 through the
merger of ESSO undertaking with the Pakistan national oil limited (PNOL) and premier oil
company limited (POCL).

In this report I have summarized all our work which we have done till now during my internship
period. I have been in Marketing Department, where we dealt particularly with retail strategies of
the organization.

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 TABLE OF CONTENTS
Chapter 01 COMPANY PROFILE: ........................................................................... 1
1.1 History: ............................................................................................................................. 1
1.2 Nature of the Organization: .............................................................................................. 1
1.3 Equity Shares: .................................................................................................................. 2
1.4 Products: .......................................................................................................................... 2
1.5 Market & Customers: ....................................................................................................... 2
1.6 Competitors:..................................................................................................................... 3
CHAPTER 02 ORGANIZATIONAL STRUCTURE .................................................... 4
2.1 Organizational hierarchy chart ........................................................................................ 4
2.2 Introduction of all the departments:................................................................................ 4
2.3 ORANIZATIONAL STRUCTURE & DESIGN: ................................................................. 5
2.4 BRAND MANAGEMENT AND COMMUNICATION DEPARTMENT:........................... 5
2.5 CUSTOMER SERVICE DEPARTMENT: ......................................................................... 5
2.6 PUBLIC AFFAIRS/PUBLIC RELATIONS DEPARTMENT (PRD): ................................ 5
2.7 CHAIN OF COMMAND: .................................................................................................. 6
2.8 UNITY OF COMMAND:................................................................................................... 6
2.9 CENTRALIZATION: ........................................................................................................ 6
2.10 MECHANISTIC ORGANIZATION: ................................................................................. 6
2.11 DECISION MAKING:........................................................................................................7
2.12 DECISION-MAKING STYLES: .........................................................................................7
CHAPTER 03 PLAN OF INTERNSHIP .................................................................... 8
3.1 Roles and Responsibilities as an intern: .......................................................................... 8
3.2 Working of the Departments in which I worked: ................................................................. 8
3.3 My Responsibilities and tasks during Internship: ................................................................ 8
CHAPTER 04STRUCTURE OF THE MARKETING DEPARTMENT ........................ 10
4.1 Marketing DEPARTMENT SUBSECTIONS .........................................................................10
4.2 Department hierarchy .....................................................................................................10
4.3 Marketing and Product Plan .......................................................................................... 12
4.3.1 Segmentation Analysis ................................................................................................... 12
4.3.2 New Product Plan ................................................................................................... 13
4.3.3 Product Portfolio Management: .............................................................................. 14
4.4.4 Product Line Categories: ............................................................................................... 14

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 4.5 Pricing Strategy: .................................................................................................................. 14
4.6 Market Segmentation ........................................................................................................... 16
4.7 Advertising: Promotion ........................................................................................................18
4.8 STORAGE & DISTRIBUTION CHANNELS ........................................................................ 19
Chapter 05 STRUCTURE OF THE SALES DEPARTMENT ...................................... 21
5.1 Department hierarchy: ......................................................................................................... 21
5.2 Sales operations: .................................................................................................................. 21
5.3CUSTOMER SERVICES DEPARTMENT: ........................................................................... 22
5.4 FINANCIAL ANALYSIS: ................................................................................................ 23
5.4.1 Liquidity Analysis: .................................................................................................. 23
5.4.2 Profitability Analysis: ................................................................................................... 23
5.5 Long term debt paying ability analysis: .............................................................................. 24
5.6 Analysis for investor ............................................................................................................ 24
5.7 Analysis of the Financial Statements of the PSO: ............................................................... 25
CHAPTER 06 SWOT ANALYSIS .......................................................................... 27
6.1 STRENGTHS:................................................................................................................. 27
6.2 WEAKNESS: .................................................................................................................. 27
6.3 OPPORTUNITY: ............................................................................................................ 28
6.4 Threats: .......................................................................................................................... 28
CHAPTER 07 CRITICAL ANALYSIS ..................................................................... 29
7.1 Accomplishments ........................................................................................................... 29
CHAPTER 08 CONCLUSION ............................................................................... 30
8.1 Recommendations: ........................................................................................................ 30
REFERENCES ....................................................................................................... 31

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Chapter 01 COMPANY PROFILE:
Pakistan State Oil, the largest oil marketing company in the country is currently engaged in the
marketing and distribution of various POL products, including Motor Gasoline, High Speed
Diesel, Furnace Oil, Jet Fuel, Kerosene, LPG, CNG, Petrochemicals and Lubricants. In addition
to this we also import different products according to their demand pattern and possess the
biggest storage facilities representing 80% of the country’s total storage capacity.

1.1 History:

The creation of Pakistan State Oil (PSO) can be traced back to the year 1974, when on January
1st; the government took over and merged Pakistan National Oil (PNO) and Dawood Petroleum
Limited (DPL) as Premiere Oil Company Limited (POCL).
Soon after that, on 3rd June 1974, Petroleum Storage Development Corporation (PSDC) came
into existence. PSDC was then renamed as State Oil Company Limited (SOCL) on August 23rd
1976. Following that, the ESSO undertakings were purchased on 15th September 1976 and
control was vested in SOCL. The end of that year (30th December 1976) saw the merger of the
Premier Oil Company Limited and State Oil Company Limited, giving way to Pakistan State Oil
(PSO).It is considered as one of the most successful mergers in the history of Pakistan.
After PSO’s inception, the corporate culture underwent a comprehensive renewal program which
was fully implemented in 2004. This program over the years included the revamping of the
organizational architecture, rationalization of staff, employee empowerment and transparency in
decision making through cross functional teams. This new corporate renewal program has
divided the company’s major operations into independent activities supported by legal, financial,
informative and other services. In order to reinforce and monitor this structural change, related
check and balances have been established by incorporating monitoring and control systems.
Human Resource Development became one of the main priorities on the company’s agenda
under this corporate reform.

1.2 Nature of the Organization:

PSO is engaged in storage, distribution, marketing of various petroleum oil and lubricant products.

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1.3 Equity Shares:

PSO has 200 million shares authorized for public offering and it has currently 171,518,901
shares floating in Karachi Stock Exchange. The latest stock price was Rs. 405.35. Apart from the
public offering of the equity shares, Government of Pakistan holds 54% majority stakes in the
company, including both direct holdings of the Federal Government and indirect holdings
through GOP owned institutions.According to the Privatization Commission of Pakistan,
Government of Pakistan is in the advanced stages of divesting 51% of its stakes in PSO to a
strategic investor.

1.4 Products:
Pakistan State Oil deals in both White Oil and Black Oil markets. White Oil consists of High
Speed Diesel (HSD), Gasoline (which includes the Retail Fuel and Gaseous Fuels), JP-1 (Jet
Fuel) and Superior Kerosene Oil (SKO). Black Oil consists of Furnace Oil and Light Diesel Oil
(LDO).
Besides selling Gasoline, Furnace Oil, Jet Fuel and HSD, Pakistan State Oil also caters to the
vast customer base of lubricants in the country. PSO sells two types of lubricants; Automotive
Oils and Industrial Oils, catering both types of customers in this area as well.
Pakistan State Oil also exports JP-8 Jet Fuel to Afghanistan. It is being used by the DESC and
NATO forces.

1.5 Market & Customers:

PSO caters to POL (Petroleum, Oil and Lubricants) requirements of a wide spectrum of
customers comprising the retail consumer, various industrial units, government, power projects,
aviation and marine sectors of Pakistan.
PSO industrial consumer dominance in the government sector can be judged by the fact that all
the major government entities like OGDC, Pakistan Army, Pakistan railways, Navy, NLC and
PAF Wah have entrusted PSO to meet their POL needs. Besides supplying fuel to national power
utilities like WAPDA and KESC, PSO is the sole furnace oil supplier to all Independent Power
Projects (IPPs) in Pakistan.

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PSO also supplies fuel to industrial units like textile, cement, agriculture, transport etc. Its
industrial consumer base includes prestigious entities like the Presidency and the Prime Minister
Secretariat, where PSO has developed consumer outlets for timely refueling of their fleets.
Furthermore, PSO also serves the fuel needs of both national & international air carriers. It also
provides jet fuel into-plane refueling facilities at 9 airports of Pakistan i.e. Karachi, Lahore,
Islamabad, Peshawar, Multan, Faisalabad, Turbat, Pasni and Sialkot.
PSO also supplies fuel to ships at Karachi Port, Korangi Fish Harbor & Port Qasim. Moreover,
we cater to the fuel requirements of Pakistan Navy, Maritime Security Agency, Karachi Port
Trust, PNSC, Faisal Marine Oil Services (Pvt) Ltd.
Pakistan State Oil also has strategic investments in related projects such as:
 Joint Installation of Marketing Companies (JIMCo) – PSO holds 62% stakes of the
facility which is operated by PSO itself. It has maximum daily throughput of 17,000 kilo
tons.
 Asia Petroleum Limited – PSO holds 49% stakes in the company which operates 82
kilometer pipeline as well. It has a capacity of 3.6 million tons per annum.

 Pak Grease Manufacturing Company –PSO holds 22% stakes in the manufacturer of the
specialized grease catering to the requirements of many the customers including Pakistan
Steel and Armed Forces

 Pakistan Refinery Limited – PSO holds 18% stakes in Pakistan’s third largest oil refining
company. The annual capacity of this refinery is 2.2 million tons per annum

 White Oil Pipeline Project – PSO holds 12% stakes in this project which is a joint
venture of PSO, Shell Pakistan (26%), Caltex Pakistan (11%) and PARCO (51%). It is a
817 kilometer, 26 inch diameter pipeline dedicated to transfer refined products from
PARCO to the other regions of the country.

1.6 Competitors:

 Direct Competitors: Shell, Caltex, Total, Bosicar, Admore

 Indirect Competitors: C.N.G, L.P.G

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CHAPTER 02 ORGANIZATIONAL STRUCTURE
2.1 Organizational hierarchy chart

Number of employees: The no. of employees working in the organization are about 3,000.

2.2 Introduction of all the departments:

 Marketing Department.
 Finance Department
 Supply & Distribution Department
 Operations Department
 Information System Department
 Human Resources Department
 Training & Organizational Development Department

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2.3 ORANIZATIONAL STRUCTURE & DESIGN:

The organizations formal framework by job tasks is divided in groups but is

coordinated.The basis on which jobs are grouped in order to accomplish organizational
goals is functional departmentalization.

2.4 BRAND MANAGEMENT AND COMMUNICATION DEPARTMENT:

Branding is the reputation and the image of a company, which is conveyed via names
logos, acts packaging and word of mouth. Corporate branding used to focus on logo and
name but today it has a broader meaning. The need for branding arises when consumers
expect more than a good product at a fair price. They seek service experiences that
compliment their life styles and brands that align with their personal aspirations. And
that’s exactly what company try to convey to target market.

2.5 CUSTOMER SERVICE DEPARTMENT:

PSO has recently set up a dedicated service department that is major step towards
company’s overall objective of becoming a customer-oriented company. Located at the
company’s head office in Karachi the CSD is the first point of contact for the customers
on day to day concerns and provides centralized customer service across Pakistan.Trained
and professional staff attends to and solves the customers concerns and complaints
quickly and effectively.

2.6 PUBLIC AFFAIRS/PUBLIC RELATIONS DEPARTMENT (PRD):

The major function of the PRD is to ensure the projection of the company’s image as the
country’s premier public sector organization and conscientious citizens. This is achieved
by highlighting positive stories about the company in the media. Other functions of the
department include event media management speech writing and keeping Managing
Director and the company hierarchy informed. The department also tackles press queries
and sets up interviews of the Managing Director with the media. It also coordinates with
the brand management and other departments in the planning of events press conferences

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 workshops seminars etc. The department is also involved in giving banners and tackling
adds requests not related to advertisements campaign. The department personnel are also
involved in the preparation of the annual report and writing of articles.

2.7 CHAIN OF COMMAND:

It is an unbroken line of authority that extends from the upper levels of the organization
to the lowest levels and defines who reports to whom.As PSO follows traditional
objective setting decision are made totally by the top management. The authority is given
to the managers to give orders and employees are bound to follow them. It is the
responsibility of the employees to perform those duties assigned to them.

2.8 UNITY OF COMMAND:

On PSO the unity of command hoes in the following sequence: Chairman, Managing
Director,7 general managers, Divisional managers, 1 sale Executive,8-12 Sales
Officers.Managing Director is answerable to the Chairman. MD has 7 general managers
working under him. Every G.M has 8 DMs working under him. Every DM has a Sales
executive and under him there are 8-12 sales officers.

2.9 CENTRALIZATION:

PSO is a highly centralized company i.e. decision-making is concentrated in the upper levels
of the organization. The Top management makes the company’s key decisions with little or
no input from the lower level employees. PSO is more centralized because the environment
is stable company is large and lower level managers are not as capable or experienced at
making decisions as upper level managers.

2.10 MECHANISTIC ORGANIZATION:

PSO is a mechanistic organization with a highly controlled structure. In the mechanistic

structure work specialization creates jobs that are simple routine and standardized.
Extensive departmentalization increases impersonality and the need for multiple layers of

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 management to coordinate these specialized departments. There is also a strict adherence to
the unity of command principle. As the distance between the top and the bottom of the
organization is wide, top managers tend to impose rules and regulations to control the
employees’ behavior.

2.11 DECISION MAKING:

Decision-making is an important aspect of the company, which needs to be thoroughly

evaluated before making a final and firm decision. The working of organization depends
upon top management; so good and firm decision in the organization will have a direct
impact on the working environment of such organizations. The manager is responsible for
taking the decision of effected matter keeping in view the after effects. The decisions must
be in interests of the organization.

2.12 DECISION-MAKING STYLES:

 ANALYTICAL STYLE: (LONG RUN)

As PSO is sales oriented company and it has many competitors like PSO, Caltex etc. So they
have to consider more alternatives after making a decision. The managers in this condition have
the ability to cope with unique situation.

 DIRECTIVE STYLE
In short run, the decision making are more in directive style i.e. managers made fast and logical
decisions. The manager is the focal point in the organization and he is appropriate authority to a
problem arise by his observation or reflected by someone else from the organization.

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CHAPTER 03 PLAN OF INTERNSHIP
3.1 Roles and Responsibilities as an intern:

I have completed my internship my internship at PSO regional office (officer colony,Khanewal

road Multan) from 6th June to 15th July.During my stay I was attached with departments of Retail
sales and Operations. I have done 6 weeks internship.

3.2Working of the Departments in which I worked:

Operational Department: Operational department of the PSO is responsible for running the
organization. It has the ultimate accountability for profit and loss, and seeks to maximize return
on investment for the shareholders.It is also responsible for the profitability of the
company,increasing sales, managing assets and deciding the proper inventory levels.

Retail:

The basic concern of this department is with petrol pumps. To enhance the sales of
petroleum products in already existing petrol pumps and to install new one are its major
objectives .It gives certain targets to outlets dealers (owners) which they have to achieve in a
certain time period. The 3805 outlets all across the country are supported by storage depots
which are being facilitated by the product movement through tank Lorries, railway tank wagons
and pipelines. The major policy of these departments these days is the new vision program of
outlets .It makes the decision of new vision on the basis of some factors like location of outlets,
potential of sales area, existing sales, competitor’s strong hold etc. There are three ways to bring
the outlets in new vision. These are:
100% contribution by company

50% contribution by company

100% contribution by dealer

3.3My Responsibilities and tasks during Internship:

My task in PSO was to work within the Divisional Office and involved with the understanding of
the Retails Department.I was assigned main projects regarding in which make a detailed report

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on PSO Castrol GTX market and the other one was to conduct survey about the Castrol GTX
awareness.PSO is the largest oil company in Pakistan having the advantage to conduct large
internship activity.

Mr. Irfan Haider (DBM & Internee co coordinator)

My duties were:

 Visits on Castrol GTX. survey

 Conduct In-house survey to know about employee’s awareness about Castrol GTX
 Find out the problems and loops of PSO Castrol GTX by its competitors
 Make a short report of pie chart on in-house survey

 Make a long report on PSO Castrol GTX Sales and sales incline strategies.

I had to conduct in-house survey for checking employs awareness about Castrol GTX and
presented it to my supervisor. I also contact staff, find out the problem or loops, and evaluate the
finding.

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CHAPTER 04 STRUCTURE OF THE MARKETING DEPARTMENT

4.1 Marketing DEPARTMENT SUBSECTIONS

PSO has the following marketing departments:

1. Retail. (Further Defined)
2. Industrial consumers.
3. Aviation.
4. Compressed Natural Gas.
5. Liquefied Petroleum Gas.
6. Chemicals.
7. Marine.
8. Lube sales and Agency trade.

4.2 Department hierarchy

Marketing Operations: Pakistan State Oil has introduced various new ways to market the
POL (Petroleum, Oil and Lubricants) products. They were the pioneers of introducing the cards
business in the OMC industry. The customer loyalty cards product is a way to pre-pay for the

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future fuel consumption. This product proved beneficial also for the Fleet and Corporate Card
customers. The corporate customer base has increased to more than 10,000 corporate accounts
serving more than 100,000 customers. Pakistan State Oil has also joined hands with United Bank
Limited as a corporate partner. UBL is the third largest bank in Pakistan having a good customer
base in credit card business. UBL has issued Pakistan’s first Auto Credit Card named; UBL PSO
Auto Credit Card. UBL and PSO are offering high value incentives and discounts on fuel and
other automobile related products on the usage of the Auto Credit Card. PSO had also
successfully introduced yet another technology-driven initiative for large corporate fleet
accounts, namely the Vehicle Identification System (VIS) that confines the delivery of fuel to
authorized vehicles only. Pakistan State Oil also puts greater emphasis on the Non-Fuel Retail
(NFR) Business in order to diversify and strengthen the bond with its customers in a bid to
provide convenience and services that distinguish it from the competition. Providing a
diversified range of services at strategically selected locations, NFR aims to enhance PSO’s
brand image and generate supplementary revenue for the Company by utilizing the capacity of
PSO’s valued retail space and by leveraging the advantage of a captive target market.
Collaborating with renowned local and international banks, PSO has launched financial facilities
such as ATMs and Banking Centers that provide the ease of 24-hour banking services in a secure
environment.Customers can also find Pizza Hut and Dunkin Donuts outlets available at selected.

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4.3 Marketing and Product Plan

4.3.1 Segmentation Analysis

Lubricant Brand Income Bracket Vehicle Type Example of Vehicle

Castrol Magnatec 50,000+ 2000CC+ [Petrol] Honda Accord/BMW

Castrol GTX 25,000 - 50,000+ 1300CC - 1600CC [Petrol] Honda Civic/Toyota Corolla

Castrol XL 18,000 - 30,000 850CC - 1300CC [Petrol] Suzuki Cultus

Carient 24,000 - 44,000 1000CC - 1600CC [Petrol] Honda City

Carriers and 2000CC cars

Castrol CR 10,000 - 42,000+ Toyota Corolla 2.0D
[Diesel]

Castrol RX 8,000 - 18,000 Pick-up trucks and Vans [Diesel] Suzuki Van

Large Transport Trucks and

DEO 10,000 - 24,000 Transport Trucks
SUVs

Castrol Activ 10,000 - 35,000 4-Stroke [Motorcycles] Honda CD 125

Blaze 7 5,000 - 18,000 70CC - 125CC [Motorcycles] Yamaha

Two-Stroke Oil Under 5,000 - 15,000 2-Stroke [Motorcycles] Yamaha Royale

 PSO’s best selling lubricant is Castrol CR.

 Castrol CR falls under a broad range of customer segments.
 Its dual appeal, to both lower end truck drivers, and higher scale Corolla 2.0D owners, allows
it to capture a greater piece of the market.

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4.3.2 New Product Plan

Product Category

Existing Existing New

Line Extension
Brand Extension
Castrol Magnatec Advance
Brand Name

New

Multi-Brands New Brand

 Although PSO has had Castrol GTX Magnatec on the market for the last few years,
no significant effort has been made to position it in the minds of the consumer.
Features of Magnatec Advance:

1. Best grade of lubricant worldwide

2. Manufactured with highest quality standards
3. Life of lubricant nearly three times as long as any other currently on the market: can
run for 15,000 kms without needing to be changed
 These features need to be highlighted in a heavy marketing campaign in order to raise
awareness about Magnatec, as well as build overall consumer perception regarding
PSO’s lubricants.

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4.3.3 Product Portfolio Management:

BCG Matrix
Market Share
High Low

Star Question Mark

Castrol CR Blaze 7
High DEO
Growth
Market

Cash Cow Dog

Castrol GTX Castrol Magnatec

Low Carient Castrol XL
Two-Stroke Oil Castrol RX
Castrol Activ

4.4.4 Product Line Categories:

Petrol Engine Oils

 Carient
 Castrol GTX
 Castrol XL
Diesel Engine Oils

 DEO
 Castrol CR
 Castrol RX
Motorcycle Oils

 Blaze 7
 Two Stroke Oil
 Castrol Active

4.5 Pricing Strategy:

Price is the amount of money for which a product is offered in the market. The amount of money
charged for the product of services of sum of the value that consumer exchange for the

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consumers exchange for the benefits for having or using the product of services price is only
which brings revenue in the market, so it plays a tremendous role in the market.

Basic Objectives of Pricing

 Survival:
PSO ltd also tends to its lubricants in order to survive the tough competition lubricants industry.
The pricing of fuels is not in the bands of PSO limited or any other such company.

 Maintenance of current profit:

The next objective of pricing is the maintenance of current profits. At the moment PSO is the
leader in fuel and lubricants industry and there for tends to maintain its profits through
appropriate pricing.

 Product quality Leadership:

PSO lubricants and fuels have been especially formulated to meet the demanding requirements
of a wide range of customers in most sectors of the company.

 Selection of Pricing Method:

Companies usually select the price of their products in accordance to the following three:
customer demand schedule, the cost function and competitors price. However companies adopt
various strategies in order to price their products.

The strategies adopted by the PSO ltd are:

1: Price of competitor’s product

2: Price premium for high quality

3: Price premium for high purity

4: Price premium for better services

5: Is the appropriate price for PSO.

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  Going price rate
“Going price rate means that a company bases the price of its product in accordance to the price
offered by its competitors.” In fact PSO Pakistan’s competitors are like;

1.PSO

2. TOTAL

3. ATTOCK

4. CALTEX

5. ADMORE

4.6 Market Segmentation

Market is the processing which dividing a market in to distinct group of buyers on the basis of
needs characteristics or behave who might requires separate products or marketing mixing.

Market consist of buyers and buyers differs in one or more ways they may differing their wants,
resources, locations, buying attitude and buying practice.

PSO Pakistan ltd. Divide his market in to following segments:

 Demographic segmentation
 Geographic segmentation
 Psychographic segmentation
 Demographic Segmentation:

Demographic segmentation is dividing the market in to groups based on demographic variables

such as:

 Age
 Gender Education
 Income
 Family size
 Occupation

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  Social class
PSO introduces their product for upper class, upper middle class and middle class. In other
words PSO produces its products for everyone who have automobile.

 Geographic segmentation:

Geographic segmentation is dividing the market in to different geographical units such as.

 Region
 Density
 Cities
This is all about the segmentation of PSO. PSO provides facilities of petroleum to urban as well
as rural areas. Segmentation basically depends upon

 Population of that area

 Living standards of people

 Levels of Market Segmentation:

There are three levels of market segmentations

 Mass marketing
 Segment marketing
 Niche marketing
Mass Marketing:

PSO Pakistan limited go for the mass marketing because its distribution is very extensive.
Internationally its products are goes into international market.

Marketing Channel:

“Marketing channels are set of interdependent organizations involved in the process of making a
product or service available for use or consumption”

The entities involved in the distribution of PSO products in Pakistan are:

 Supply Chain Department

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  PSO Depots
 Distributors
 Fuel Stations
 Consumer

4.7 Advertising: Promotion

“Advertising is any paid form of non-personal presentation and promotion of ideas, goods or
services by an identified sponsor.”

PROMOTIONAL STRATEGY

It is using modern and one almost effective idea promoting its product not only to fill the gas but
also provide all consumer products like ice-cream, chocolates, fruit juices egg medicines cold
drinks in their new “stop shop” other include mosque filtered water public toilets& wind screen
cleaning for 24 hrs.

ADVERTISING & SALES PROMOTION

Advertising & sales promotion investment is estimated at Rs. 160 million per annum. It shall be
spent on Retail side and on corporate image building we shall invest up to 7% of the revenue of
Lube sales on promotion of the Lubricants business with some assistance from Castrol and
approximatelyRs.60 million per annum is envisaged (included in the total figer) However,
company had negotiated with Castrol and once the agreement with them is finalized, they shall
share some of the lube advertising and sales promotional expenses with PSO, which shall reduce
these expenses.

 Introduction of smart cards & prepaid cards

 Installation of ATM’s at retail outlets.

 Training of forecourt attendants for improved customer service

 Introduction of quick oil charge facilities at retail outlets as well as Mobile oil changing
and testing facility for door-to-door service

 Introduction of new products API SJ Level oil as well as introduction of 2-stroke oil
sachet

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  Introduction of lubricants in pilfer proof attractive plastic packages

 Products and services and thus retaining the leadership tall in the petroleum industry in
Pakistan.

 Introduction of CNG station on nationwide scale.

 Customer service help-line in major cities.

 Motivated and innovative sales force.
 Introduction of a new concept of a business center at retail outlets.
 PSO-PEPSI Joint Summer Promotion.

Kinds of Media to be used for Advertising:

“Media is basically a carrier which carries a message or any kind of information from the sender
to the receiver.”

The different kinds of media used by PSO.Ltd. are:

 Television
 Radio(Especially FM stations)
 Internet
 Telephone Service (This function is performed by “PSO” customer services centers. Their
toll free number is 0800-03000)
 Newspapers
 Billboards
Distribution Strategies:

4.8 STORAGE & DISTRIBUTION CHANNELS

We are also establishing network of Lube shop for lubricants directly to customers. This channel
is being successfully used by Caltex and Mobil to promote sales of their products, but has never
been thoroughly exploited by PSO retail rationalization.

Company has a network of 364-retail outlet as on 30 Nov 99 and there were an other 907
proposals on hand in the third quarter 99. However company has embarked on a retail

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rationalization program as a result of which 340 of these new proposals have been cancelled.
Moreover about 100 sites have been identified for possible closure (cancellation of dealership),
as those were not uplifting any products from PSO. Works on retail rationalization is in full
swing and only those outlets would remain which will improve their thrust. Regrettably it has to
be stated that a large number of unwanted DFB stogies (rural) have not brought any good to PSO
except bad customer’s perception for which immediate corrective actions are being taken.
CNG at 16 PSO station are currently available in the following cities:

Karachi 3 Multan 1

Islamabad 4 Gujranwala 1

Lahore 5 Sialkot 1
Sargodha 1

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 Chapter 05 STRUCTURE OF THE SALES DEPARTMENT
5.1 Department hierarchy:

5.2 Sales operations:

The Retail team at PSO works relentlessly to fulfill the needs of the automotive and agricultural
sector of the country. With more than 3,500 retail outlets nationwide; PSO serves approximately
3 million retail customers on a daily basis. They have 26 Company Owned Company Operated
(COCO) Retail Outlets across Pakistan which are state of the art facilities, run effectively by
PSO’s retail team.

PSO’s retail department has 14 divisional offices nationwide. All divisional offices are linked to
the head office through the modern enterprise resource planning software SAP. Retail
Department continuously strives to provide you with unmatched service and care at PSO’s
forecourts round the clock.
They strive to fulfill the requirements of their valued customers by providing superior quality,
energy-efficient fuels that improve the vehicle’s performance and provide a great driving
experience. They fuel range is carefully designed and tested to help customers save fuel at no
extra cost and help clean their engine thereby improving engine efficiency. They ensure that only

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 high quality fuel reaches the engine.
As their main focus is on utmost customer satisfaction, we believe that every customer should
leave our forecourt with a ‘WOW’ feeling. They strive to understand their customers’ needs and
relentlessly work towards fulfilling them by adding value in fuel and non-fuel areas. Their Shop
Stops and other non-fuel retail services provide convenience and an array of products and
services to choose from.
The retail business team ensures the maintenance of every safety standards at the retail outlets.
Utmost importance is given to the quality and quantity of the products. They ensure that the right
product in right quantity is delivered to valued customers as desired by them.

5.3 CUSTOMER SERVICES DEPARTMENT:

PSO’s customer services department deals with and help resolve any customer complaints.PSO
customer service department provides many facilities:

Techniques of retaining customers

PSO Fleet Card

The PSO Fleet Card is a vehicle specific card that enables customers to track the consumption of
each vehicle in the fleet. The vehicle registration number and the vehicle category are embossed
on the Fleet Card enabling Fleet Managers to track the purchases of each vehicle, economize fuel
expenses and manage the fleet effectively.

Loyalty Card The card entitles customers to earn “PSO Loyalty points” on every purchase of fuel or
lubricant. Customers shall keep accumulating such points till they become eligible to redeem the
same from PSO’s merchant consortium that covers a wide range of categories to choose from or from
PSO’s own station that offer petrol, hi-octane diesel or lubricant.

PSO is the first OMC that has introduced computerized complaint lodging system with toll free
number on round the clock basis.

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5.4 FINANCIAL ANALYSIS:

5.4.1 Liquidity Analysis:

 Current Ratio:

Current ratio = Current assets / Current liabilities

= 249,925,320 / 224,451,448 = 1.1134

This shows that current assets of PSO are slightly greater than its current liabilities.

 Quick Ratio:
Quick Ratio = (Current assets – inventory – Prepaid expenses) / Current liabilities
= (249,925,320 - 92,165.8 – 279) / 224,451,448 = 1.1130
Measure of liquidity is satisfactory in this case. Because Quick Ratio > 1.
 Current Assets to total Assets:
Current Assets to total Assets = Current assets / Total assets
= 249,925,320 / 317,551,978 = 0.7870

5.4.2Profitability Analysis:

 Net profit Margin:

Net Profit Margin = (Net Profit after tax / Net Sales) * 100

= (2,131,826 / 134,622,293) * 100

= 1.58%

 Administrative Expense Ratio:

Administrative Expense Ratio = (Administrative expenses /Net sales) × 100

= (634,088 / 134,622,293) × 100

= 0.47 %

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 Operating Expense Ratio:
Operating Expense Ratio = (Operating expenses /Net sales) × 100
= (398,110 / 134,622,293) × 100
= 0.29 %
 Return on Equity:
Return on Equity = Net Income / Average Total Equity
= 2,228,951 / 84,304,555
= 0.026
This implies that return is earned on the equity at a rate of 0.026.

5.5Long term debt paying ability analysis:

 Debt Ratio:
Debt Ratio = (Total Liabilities / Total Assets) * 100
= (224,451,448 / 317,551,978) * 100
= 70.68%
This shows that 70.68%of assets are financed by the creditors. It indicates the relative size the
equity position.

 Debt to Equity Ratio:

Debt-to-equity ratio = Total liabilities / Total shareholders' equity
= 224,451,448 / 84,304,555 = 2.66

5.6Analysis for investor

 Earnings Per Share:

EPS = Net Profit after tax / Outstanding
= 3,242,318 / 422,176
= 7.68 Rupee per share

 Dividend Payout Ratio:

Dividend Payout Ratio = Dividends / Net Income

= 1,574,813 / 2,228,951
= 0.70

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5.7Analysis of the Financial Statements of the PSO:

VERTICAL ANALYSIS OF BALANCE SHEET March 31, June 20,

2016 2015
Property, plant and equipment 3.17% 4.60%

Long term investments 1.00% 1.40%

Long term loans, advances and receivables 0.16% 0.26%

Long term deposits and prepayments 0.06% 0.05%
Deferred tax 0.00% 3.28%

Total Non-Current Assets 4.39% 9.60%

Current Assets
Stores, spares and loose tools 0.06% 0.07%
Stock-in-trade 28.97% 26.53%
Trade debts 58.10% 52.48%
Loans and advances 0.20% 0.27%

Deposits and short term prepayments 0.18% 0.36%

Other receivables 7.20% 8.35%
Taxation – net 0.02% 0.46%
Short Term Investments 0.00% 0.00%
Cash and bank balances 0.88% 1.88%
Total Current Assets 95.61% 90.40%
Net Assets in Bangladesh - -

Total Assets 100.00% 100.00%

EQUITY AND LIABILITIES
Share Capital 0.85% 1.12%
Reserves 13.66% 12.49%
Total Shareholders Equity 14.51% 13.60%
Long term deposits 0.47% 0.56%

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Retirement and other service benefits 0.93% 1.09%
Total Long term Liabilities 1.40% 1.65%
Trade and other payables 77.15% 71.78%
Provisions 0.34% 0.45%
Accrued interest / mark-up 0.16% 0.36%
Short term borrowings 6.44% 12.16%
Taxes payable 0.00% 0.00%
Total Current Liabilities 84.09% 84.75%

100% 100%
HORIZONTAL ANALYSIS
Property, plant and equipment 83% 91%
Total Non-Current Assets 82% 137%

Stock-in-trade 391% 272%

Trade debts 1978% 1355%

Other receivables 200% 176%

Cash and bank balances 112% 182%

Total Current Assets 611% 438%
Total Assets 477% 362%
Share Capital 100% 100%
Reserves 201% 140%
Total Shareholders Equity 190% 135%
Total Long term Liabilities 173% 154%
Trade and other payables 767% 541%
Total Current Liabilities 672% 513%
Total Equity & Liabilities 477% 362%

9.

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CHAPTER 06 SWOT ANALYSIS
6.1 STRENGTHS:

 PSO is having product innovation as it frequently introduces new products according to

the requirements of its consumer.

 A distinctive competitive advantage, with an acknowledged market leader as it is having

largest market shares of 67%
 Being a government company it has big contracts with other governmental organizations
like Pakistan Railways, PIA etc.

 PSO utilizes sophisticated equipment and sound industry standards to prevent any form
of pollution and preserve natural habitat.

 Large Number of outlets in Pakistan.

 PSO was the first oil marketing company (OMC) to introduce Premier Plus in Pakistan. It
is a low lead gasoline with a special additive to reduce Carbon Monoxide levels in
vehicle emissions. CNG, a much cleaner fuel in place of gasoline, is also being
introduced in Pakistan by PSO.

 PSO is the only company in Pakistan which is listed in top 1000 companies of Asia and
has received TOP 25 Companies Award every year, for the last 13 consecutive years.

6.2 WEAKNESS:

 The managing Director (MD) of company is changed every time when the government is
changed which creates in stability in the company.

 Old retail outlets are major weakness for PSO as they are not enough capable to compete the
Shell, Caltex or Total outlets.

 Untrained staff at outlets is causing inefficient services.

 Word of Mouth is not much effective

 Lack in Advertisements or promotional strategy in lubricants and petroleum products

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  Quality assurance is not so effective to build the image of “Quality & Quantity.

 Falling down retail network with low throughput per outlet; lack of assured supply
sources; obsolescence, improper controls and lack of professionals.

6.3 OPPORTUNITY:

 Diversity into the related products i.e. creating some unique features in the products to
attract their consumer
 Privatization may be subjected to positive outcomes
 Afghanistan's Market is the biggest opportunity for OMC’s in Pakistan
 Industrial & Trade growth in Pakistan is also the opportunity for PSO as they are adding
revenues in Power sector that is the major customer of PSO.
 Deregulation, globalization, upstream/downstream integration and diversification

6.4 Threats:

 Due to more inclination towards CNG, the demand for petrol and HSD is in danger .As is
the law of Canadian government for built in CNG kits in cars, it will be a threat for fuel
oils if imposed in Pakistan

 Availability of Alternative
Availability of alternative at low price is a threat for the organization. It may be
possible that the competitors facilitating the customers with low price and better quality
then it will decline the sales example .TOTAL is offering low prices of lubricants as
compared to PSO and SHELL. It may be possible that it will shift the demand of price
conscious customers towards itself

 If the staff servers are untrained, unethicaland don’t know about the products they are
selling then they are unable to satisfy the customers, unable to providing proper customer
feedback to company and can’t explain to the company that what is the demand of
customers so it will be a threat for the PSO of low sales.

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CHAPTER 07 CRITICAL ANALYSIS
We have to agree in that; internship plays practical role in building the personal skills and support to
give knowledge of environment and enables internee to think and analyze; what are different
between book and practicality, and what are the similarities. As a student of BBA (HONS) Majors
in Marketing, I am quite familiar with the marketing and retail techniques that organizations use.
Internship is basically utilizing the knowledge what you learn at University and implementing it on
the professional ground and getting experience from the leading corporation. Being an internee I
have found my internship very much knowledgeable.

In somewhat more concrete terms, PSO provides the responsibilities with timely ,scientifically
credible, policy-relevant environmental data and information for decision-making and action
planning for sustainable internee personal development.

7.1 Accomplishments

I tried my best to accomplish all the responsibilities or targets which assigned to me during my
internship. The supervisor assigned me duties and I fulfill the requirements on time and they
admire my capabilities of work. I accomplished following the tasks during my internship.

 Daily report to supervisor in detail of last day work

 Completion of pie charts of survey
 Completion of detailed report on Castrol GTX.

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CHAPTER 08 CONCLUSION
Pakistan State Oil is playing an important role in the economic development of the
country. PSO is not only a national marketing company but also serves as vehicle of government
energy policy.

PSO not only shoulders the responsibility of meeting the petroleum needs in all sectors of
economy and defense but also undertakes all measures for the conservation of energy by
reducing stocks, trans-shipment in handling losses. PSO is supplying oil in even those areas
where other companies have refused due to security reasons.

My perception about the company have totally changed during my six weeks internship, I
met to the point that this is a professionally focused and full organized and developed company.
Even it is totally a government sector but it has successfully managed its corporate culture.

PSO has an edge all over the government sectors. I observed the positive points in PSO
that was its strengths and near to be its opportunities in future but as I observed weakness it will
be a harmful threat for this organization.

8.1 Recommendations:
After the SWOT analysis I have come with these recommendations that I would like to explain.
PSO should redesign its old retail outlets. The old outlets are the reason of sales decline up to
some extent. New and fresh presenting of products always attracts the customers. It is very
important for PSO because it is already facing its competitors in the same market. PSO should also hire
trained staff or give training to existing staff. Through this way PSO can win customers satisfaction.
Every organization in the market want to get customers satisfaction but there is no need for PSO to adopt
different way to do so because PSO already satisfy its customers but to increase the loyalty and make
strong customer relationship it is compulsory for PSO to give incompatible service to its customers.

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 REFERENCES
1. http://www.psopk.com/en/investors/results-reporting/financial-ratios

2. http://www.psopk.com/en/investors/results-reporting/financial-reports

3. http://www.psopk.com/en/investors/company-information

4. http://www.psopk.com/procurement/

5. http://cards.psopk.com/products_commercial_cards.php

6. http://cards.psopk.com/products_fleet_corporate.php

7. http://www.slideshare.net/frqali/pakistan-state-oilpresentation

8. http://www.psopk.com/en/quality-assurance/quality-assurance-activities-in-different-

functions

9. https://snousheen.wordpress.com/2011/01/06/psopakistan-state-oil-short-overview/

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