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ACKNOWLEDGEMENT
I am really pleased here to acknowledge the sheer efforts and extreme of numerous people, those who have provided me their service in the completion of my internship report on Business practices at PEL. I would like to express my gratitude to my advisors in PEL who support me to under stand the working in the organization, during my internship. They really helped me a lot to gain practical knowledge about general company working. I am also grateful to finance manager, assistant managers all my supervisors (Mr. Ghulam Murshad, Mr. Khawar, Mr. Ghulam Asghar, Mr. Zaigham Ali, Mr. Tayyab Sharif, Mr. Manzoor Ahmad, Mr. Asad Ullah, and Mr.Tahir Mehmood) and other helpful people during internship period. Without their guidance, this exercise of internship would not have resulted in a success. Secondly I would like to thank my advisor Mr. Rashid Waheed Qureshi who was always there when I needed him. This report would not have been possible without him. I am highly obliged to my respectable advisor and state my gratitude for his valued guidance and her concern about my internship.

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Dadication

I DEDICATE MY SINCERE EFFORTS IN ORDER TO GAIN PRACTICAL KNOWLEDGE DURING THE COURSE OF PRESTIGIOUS DEGREE PROGRAMME OF B.B.A. To my class of BBA with them I have spent some glorious days of my life.

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CONTENTS

VISION STATEMENT -------------------------------------------------------------------------- 16 MISSION STATEMENT ------------------------------------------------------------ 16 To focus on personal development of our employees to meet future challenges ---- 16 OBJECTIVES ------------------------------------------------------------------------ 17 MANAGEMENT PROFILE --------------------------------------------------------- 18 CHIEF EXECUTIVE ---------------------------------------------------------------- 18 BOARD OF DIRECTORS ----------------------------------------------------------- 18 CHIEF FINANCIAL OFFICER ----------------------------------------------------- 18 COMPANY SECRETARY ---------------------------------------------------------- 19 AUDIT COMMITTEE --------------------------------------------------------------- 19 MARKETING DEPARTMENT ----------------------------------------------------- 21

---------------------------------------------------------------------------------------- 21
Sales Support Manager -------------------------------------------------------------- 21 Product Manager --------------------------------------------------------------------- 22 Manager Customer Services --------------------------------------------------------- 22 Credit & Distribution Manager ------------------------------------------------------ 22 POWER DIVISION ------------------------------------------------------------------ 22 Marketing Power Division ----------------------------------------------------------- 23 Production Power Division ----------------------------------------------------------- 23 Production Transformers ------------------------------------------------------------ 23

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Production Energy Meters ----------------------------------------------------------- 24 Production Switchgears -------------------------------------------------------------- 24 Structural Dimensions of Organization ---------------------------------------------- 26 Formalization ----------------------------------------------------------------------------------- 26 Specialization ------------------------------------------------------------------------------------ 26 Standardization --------------------------------------------------------------------------------- 26 Centralization ----------------------------------------------------------------------------------- 27 Complexity --------------------------------------------------------------------------------------- 27 Professionalism --------------------------------------------------------------------------------- 27 Personnel Configuration ---------------------------------------------------------------------- 27 THE EXTERNAL ENVIRONMENT------------------------------------------------ 28 Environmental Domain ----------------------------------------------------------------------- 29 STRENGTHS ------------------------------------------------------------------------- 32 Strong Brand Image ------------------------------------------------------------------ 33 Strong Dealer Network --------------------------------------------------------------- 33 Market leader in WRAC (Window Room Air Conditioner) ------------------------ 34 Number 2 in Refrigerators in Pakistan ---------------------------------------------- 34 Strong Grip in Home Appliance ----------------------------------------------------- 34 Strong Management ------------------------------------------------------------------ 34 Distribution of Authority ------------------------------------------------------------- 35 Strong Research and Development Department ------------------------------------ 35 Free Customer Service --------------------------------------------------------------- 35 Public Limited Company ------------------------------------------------------------- 35 PROJECT Page 5

WEAKNESSES ----------------------------------------------------------------------- 35 Lack of Advertisement --------------------------------------------------------------- 36 System Variations -------------------------------------------------------------------- 36 Lack of Product Range --------------------------------------------------------------- 36 Less Utilization of Capacity ---------------------------------------------------------- 36 Financial Problems ------------------------------------------------------------------- 37 OPPORTUNITIES ------------------------------------------------------------------- 37 Exploration of Market in Pakistan--------------------------------------------------- 37 Increase in Product Range ----------------------------------------------------------- 38 Export Opportunity ------------------------------------------------------------------ 38 Increase in Production Line ---------------------------------------------------------- 38 THREATS ---------------------------------------------------------------------------- 38 Strong Competition ------------------------------------------------------------------- 39 Chinas Product ---------------------------------------------------------------------- 39 Price war ------------------------------------------------------------------------------ 39 Slow Growth Rate in Pakistan ------------------------------------------------------- 40 Instability of Government ------------------------------------------------------------ 40 World trade Organization ----------------------------------------------------------- 40 Investors: ---------------------------------------------------------------------------- 40 BUSINESS PROCESS ANALYSIS -------------------------------------------------- 41 INTER ORGANIZATIONAL RELATIONSHIPS ---------------------------------- 41 Inter-organizational Framework ----------------------------------------------------------- 41

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Environmental ------------------------------------------------------------------------ 44 Clients & Customers --------------------------------------------------------------------------- 44 Society--------------------------------------------------------------------------------------------- 45 System -------------------------------------------------------------------------------------------- 46 PEL is a large, profitable and successful organization which operates in an open system and interacts with its environment to survive. PEL continuously adapts to the environment and believes in growth rather than stability.PEL has special health and safety measures for its employees and provides clean and healthy working environment to its employees. ---------------------------------------------------- 46 Product ------------------------------------------------------------------------------------------- 46 PEL focuses on quality and variety in its products. PELs aims are to provide customer satisfaction and delighted customers is the preference of organization. For business clients PEL provides standardized as well as the customized products. For home users it offers a wide range of products to choose from. ----- 46 Subunit ------------------------------------------------------------------------------------------- 46 Subunits at production level includes ------------------------------------------------------ 46 Planning ------------------------------------------------------------------------------------- 46 Production ---------------------------------------------------------------------------------- 46 Dicing and Molding ----------------------------------------------------------------------- 46 Packaging ----------------------------------------------------------------------------------- 46 Quality Control ---------------------------------------------------------------------------- 46 Paint plant ---------------------------------------------------------------------------------- 46 Assembly process -------------------------------------------------------------------------- 46 Development ------------------------------------------------------------------------------- 46 Manufacturing ----------------------------------------------------------------------------- 46 Subunits at Finance and Accounting department are ---------------------------------- 47

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Subunits at HR department are ------------------------------------------------------------- 47 Subunits at marketing department are ---------------------------------------------------- 47 FINANCE DEPARTMENT ---------------------------------------------------------- 48 General Manager Finance------------------------------------------------------------ 49 Manager Finance --------------------------------------------------------------------- 49 Assistant Manager Finance ---------------------------------------------------------- 49 Senior Finance Officer (General) ---------------------------------------------------- 49 Finance officer (Leasing & budgeting)----------------------------------------------- 49 Finance Officer (Treasury Finances) ------------------------------------------------ 50 Budgeting Section -------------------------------------------------------------------- 51 Guarantees Section ------------------------------------------------------------------- 51 Leasing Section ----------------------------------------------------------------------- 51 OBJECTIVE OF FINANCE DEPARTMENT -------------------------------------- 51 Finance people concentrate on following points for accomplishment of their tasks 51 FINANCE SECTION ---------------------------------------------------------------- 51 CASH FINANCE FACILITY -------------------------------------------------------- 52 WORKING CAPITAL --------------------------------------------------------------- 52 Use to meet day-to-day routine finance ---------------------------------------------- 52 RUNNING FINANCE ---------------------------------------------------------------- 52 A fix limit is assigned by bank and Co. can use within that limit ------------------- 52 HOW THEY MAKE PLANS -------------------------------------------------------- 52 HOW THEY TAKE DECISIONS --------------------------------------------------- 52

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PROCEDURAL ASPECTS ---------------------------------------------------------- 52 WORKING CAPITAL FINANCE--------------------------------------------------- 52 PLEDGE ------------------------------------------------------------------------------ 52 HYPOTHECATION OF STOCK --------------------------------------------------- 52 CREATION OF HYPOTHECATION----------------------------------------------- 53 DISCHARGE OF HYPOTHECATION --------------------------------------------- 53 PROCEDURE FOR SHORT TERM LOAN ---------------------------------------- 53 OFFERING LETTERS -------------------------------------------------------------- 53 Each bank issues an offering letter that mentions the following things ------------- 53 ACCEPTANCE ---------------------------------------------------------------------- 53 CREATION OF CHARGE ---------------------------------------------------------- 54 LETTER OF CONTINUITY -------------------------------------------------------- 54 PROMISSORY NOTE --------------------------------------------------------------- 54 VOCATION OF CHARGE OR CHARGE SATISFACTION ---------------------- 54 LONG TERM LOANS --------------------------------------------------------------- 54 PREPARATION OF FEASIBILITY REPORT ------------------------------------- 55 FINANCIAL STATEMENTS -------------------------------------------------------- 55 FINANCIAL ANALYSIS ------------------------------------------------------------ 55 ASSUMPTIONS ---------------------------------------------------------------------- 55 SCHEDULES ------------------------------------------------------------------------- 55 THE PROJECTIONS ARE MADE ON --------------------------------------------- 56 BANK FEASIBILITY REPORT ---------------------------------------------------- 56 PROJECT Page 9

OFFERING THE LETTER ---------------------------------------------------------- 56 NEGOTIATION ---------------------------------------------------------------------- 56 CREATION OF CHARGES --------------------------------------------------------- 56 LOAN PREPAYMENT SCHEDULE ----------------------------------------------- 57 This schedule is prepared to show the mark up principal and total installment value for whole tenure.---------------------------------------------------------------------- 57 Problems ------------------------------------------------------------------------------ 57

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EXECUTIVE SUMMARY

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 BBA (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.

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ACTIVITIES PERFORMED DURING THE INTERNSHIP

I worked here in HR, MARKETING and ACCOUNTS department for about 6 weeks and the detail of my activities performed there were as follows: I verified the purchase orders regarding the main sectors applied appliances division with my supervisor I compared all the advertising lists with relevant bill regarding the main sectors applied appliances division. I practiced all the purchase invoices regarding the three main sectors applied appliances, powers and electric. All the invoices were verified in terms of the net amount after the tax, before tax, sales tax value, vendor verification and debit invoice. Debit invoice is a mode to settle the amount differences of the invoices. After my due verification then I have to report to My supervisor the Accounts payable head and after this the entries are recorded in the pel electronic software. With this responsibility I was assigned to take and handle the calls of vendors and from whole the company departments. About 2 weeks of my internship I have worked with the HR supervisor Reconciliation of the vouchers with different organizations relating to it.

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INTRODUCTION OFCOMPANY
Pak Elektron Limited (PEL) was in corporate in Pakistan on march 03,1956 as a public limited company under the companies Act, 1913 (replaced by companies ordinance1984). Registered office of the company is situated at 17 Aziz Avenue, canal bank Gulberg_ V Lahore. The company is currently listed on all three stock exchange of Pakistan. The principal activity of the company is manufacturing and sales of electrical capital goods and domestic appliances. These activities are organized under following divisions. Power division: manufacture of switchgear, energy meter, and transformers. Appliances division: manufacture and assembling refrigerator air conditioner, microwave oven, television and washing machine

BRIEF HISTORY
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 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 enabledPEL to establish itself as the leading manufacturers of electrical equipment in the countrywide an excellent reputation for high quality and thus PEL came to be known as "THEQUALITY CONSCIOUS COMPANY

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After conclusion of agreement with AEG, total shareholding 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 Preece Cardew & Rider (England),Binnie & Partners (England), Harza Engineering International (USA) and Miner & Miner International Inc. (USA).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) 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 year 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 Airconditioners 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 25 million for the expansion, balancing, modernization and replacement of the4

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 plant for the PROJECT Page 14

manufacture of compressors 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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VISION STATEMENT
To excel in providing engineering goods and services through continuous improvement

MISSION STATEMENT
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

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OBJECTIVES The Objectives and Missions for which the company is established are as following:

The purchase and acquire from Messrs. Malik Brother Limited on Ferozepur Road (Near Walton) in the district of Lahore under the name of Pak Elektron and all plant, machinery, goodwill and all the subsisting contracts in respect thereof with right, privileges and obligations relating to the sold properties and with a view there of to enter into the agreement and to carry the same into effect with or without modifications.

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

To carryon 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 or conductive 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 WAPDAs demand for power products.

To produce skilled workers and technicians through its apprenticeship schemes and training programmed for engineers and technicians

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

CHIEF EXECUTIVE

Mr. Mian Naseem Saigol

BOARD OF DIRECTORS
Mr. M. Azam Saigol Mr. Shahid Sethi Mr. Haroon Ahmad Khan (Managing Director) Mr. M. Murad Saigol Mr. Homaeer Waheed Mr. Gull Nawaz (NIT Nominee) Mr. Masood Karim Sheikh (NBP Nominee) Mr. Tajammal H. Bukharee (NBP Nominee) Mr. Wajahat A. Baqi (NBP Nominee)

CHIEF FINANCIAL OFFICER Syed Manzar Hassan

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COMPANY SECRETARY Sheikh Muhammad Shakeel, FCA

AUDIT COMMITTEE Mr. Azam Saigol (Chairman/Member) Mr. Haroon A. Khan (Member) Mr. Tajammal H. Bukharee (Member)

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ORGANIZATIONAL STRUCTURE

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MARKETING DEPARTMENT Marketing and sales manager (M&S manager) is head of marketing department, appliance division. M&S manager has a span of management of four people. Those are performing different group of activities. The organizational chart of marketing department (appliance division) is under:
Manager Marketing & Sales

Sales Support Manager

Product Manager

Manager Customer Services

Manager Credit & Distribution

Conventionally, M&S manager involves in all those activities that could fall under marketing territory of a company. M&S manager formulates marketing strategies and enhances the probabilities for their implementation. M&S manager sets targets for his team. He diffused his sales force into different regions. He visits them periodically for their motivations and assists them for the betterment of their performance. Financial matters, such as budgeting for marketing department including planning for future promotional and incentive schemes are handled with the conspiracy of M&S manager. M&S manager plays an important role in hiring and terminating of companys executives and other personnel of concerned department. His entrepreneurial charge is also creditable. He arranges foreign business tours for the Internationalization of companys image.

Sales Support Manager Primarily, Sales Support Manager involves in sales concerned activities, such as sales budgeting and planning, coordination and monitoring sales forces performance through out the country are those matters for which Sales support manager takes responsibilities.

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He is also responsible for institutional sales of the company. On the next page, chart shows countrywide hierarchy. Product Manager He manages promotional schemes. Coordination with advertising agencies is another responsibility. He also plans for advertising and gives budgeted figure for advertising Product Manager plays an important role in launching a new product. He scans competitors activities. Their price trends, promotional activities including

advertisements, their outdoor promotions and incentive schemes are the examples of those activities. Manager Customer Services Company is looking for creating an image of Service Oriented Firm. Thats why Manager Customer Services plays an important role in this marketing organization. Basically, he is responsible for all the activities concerning after sales services. Credit & Distribution Manager Credit and distribution team performs two types of activities one is to set and monitoring credit limits for credit sales in order to maintain required level of cash flow for the company. He is responsible to assess sales performance in regions and their recoveries. Sales force performance in terms of sale figures are evaluated against budgeted sales. Dealership matters are also falls under his responsibility. Secondly, dispatching and delivering goods to different sales regions

POWER DIVISION The second but the most powerful revenue generating business unit of PAK Elektron, produces Transformers, Switchgears and Energy Meters for the public sector such as KESC Karachi Electric Supply Corporation, LESCO Lahore Electric Supply Corporation, IESCO Islamabad Electric Supply Corporation, PESCO Peshawar Electric Supply Corporation, etc and for public sector as well. This division is comprised for four departments.

Marketing Power Division Page 22

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Production Transformers Production Switchgears Production Energy Meters

Marketing Power Division Marketing department of power division consists of most professional engineers who market all the power products, seeks new customers and supervise all these three departments to ensure best quality and reliable products every time. Production Power Division The General manager Production (Power division), who is working under command of the Chairman, supervises three Production managers. These production managers are responsible for separate power products. The products are Transformers, Switchgear, and Energy meters. Another department that consists of purely technically professional staffs, called Design department, is also working under GM Production. The job of this department is to draw specified products structure, calculate material requirements for production of such product.

GM Production (Power Division)

Manager Transformer

Manager Power Transformer

Manager Switch Gear

Manager Electric Meter

Production Transformers PEL has vast experience in design and manufacturing of standard and special purpose transformers up to 05 KVA and up to 6000 KVA ratings. This department make oil immersed transformers with natural cooling are suitable for both indoor and outdoor

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installations. All transformers are offered with tabular tank, having a conservator and breather. This department manufactures following types of transformers.

Distribution transformers (pole mounted or pad mounted design) Auto transformers Furnace transformers Welding transformers Chokes for furnace transformers Any other special requirement

PEL's transformers have been successfully type tested for Impulse voltage and short circuit tests at KEMA, (Holland), HV&SC Lab, Rawat (Pakistan), NIP (Pakistan) and UET (Pakistan). Production Energy Meters Another successful and most powerful department of power division is its energy meter production department that manufactures Electro-mechanical Energy Meters under license from ABB-USA. The quality of PEL meters has been certified by KEMA Laboratories (Holland) and conforms to IEC 521, SGS Yarsley, and U.K, has certified PEL Energy Meter plant for ISO 9002. This department also manufactures MC8 type a direct connection single-phase meter, which is commonly used for each home. Its design and constructional features include overload compensation and temperature compensation, thus providing maintenance-free operation over a long period and accurate measurement of electrical energy. The frame is sturdy in construction and the covers are available in unbreakable polycarbonate plastic material. Production Switchgears MV & LV Switchgear being one of the major power products of PEL is produced for indoor installations company with the latest international standards by this department, PEL's Switchboards are steel sheet fabricated, totally enclosed, floor mounting and

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vermin & dust proof. These are supplied with factory fitted relevant components and copper bus bars, internal wiring, terminal blocks etc. The cubicle housing and doors are fabricated from 2-3mm thick sheet steel, welded together to form a robust and self-supporting structure. Painting procedure includes through cleaning, pre-treatment, anti-rust coating and final finishing in standard colors. PEL equipment has been used in numerous power projects of Nation importance within Pakistan over the years and PEL has had the privilege of getting its equipment approved and certified from well-reputed international consultants. Preece, Cardew And Rider, England. Harza Engineering company, USA. Snam Progetti, Italy. Societe Dumezm France. Miner & Miner international Inc. USA. Ensa, France.

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Structural Dimensions of Organization

Formalization

PEL has high level of formalization. Organization has written rules and procedures, job descriptions, regulations and policy manuals.

High Specialization

Moderat e

Low

Organization is highly specialized because the organizational tasks are sub divided into separate jobs and each employee performs only a narrow range of tasks (according to job description of the organization).

High

Moderat e

Low

Standardization Standardization is high at PEL. The procedures are well defined and the employees perform their task/activities in a uniform manner. Hierarchy of Authority

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The span of control is narrow at PEL. The hierarchy of authority is very tall in the organization. Usually on average 8 to 10 employees are reporting to a supervisor at departmental level. At production level there is relatively wide span of control and many workers are reporting to a supervisor. Centralization At PEL decision making is centralized at upper management level. Normally general managers of all departments make decisions and then build consensus about the decisions. Complexity Complexity within PEL is high because there are many subsystems, departments and number of job titles. At PEL there are approximately 300 job titles, 9 levels of hierarchy and 10 departments which includes departments of HR, IR (Industry Relations), IT, Finance, Accounting, R&D, Marketing and Sales. At PEL Marketing and Sales department are separate for appliances and power division. Subsystems at PEL include the production subsystem, boundary subsystem, maintenance subsystem, adaptive subsystem and management subsystem. Professionalism At PEL professionalism is high. The formal education requirement at the managerial level is minimum bachelors whereas at production level the minimum education requirement is matric. PEL provides training to its employees not only at the time of hiring but its an ongoing process and training is given to employees every year. Personnel Configuration The total numbers of employees at PEL are 7670. At power division numbers of employees are 2760, at common departments are 776 and at appliances division are 4134.

Division Appliances Power Common PROJECT

Number of Employees 4134 2760 776

Personnel Ratio 53% 35% 12% Page 27

THE EXTERNAL ENVIRONMENT

International Context The external environment of PEL is becoming extremely complex and extremely competitive. PEL faces uncertainty domestically as well as globally. PEL is exporting its product to Iran, Afghanistan, India, Dubai and Saudi Arabia. Adapting to environmental uncertainty Positions and Departments As PEL is operating in the complex external environment which in turn has increased its internal complexity which can be depicted by the number of position and departments within the organization.

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Environmental Domain

Task Environment
Industry Sector In appliances business Waves, Orient, Haier, Dawlance and Mitsubishi are competitors of PEL. Where as in power business Syed Bhais, Siemens, ABB and Ariva are competitors of PEL. Raw Material Sector In appliances business Chinese and Thai companies are suppliers of PEL where as in power business PEL has local suppliers as well as suppliers from Germany. Market Sector Customers of PELs products are home users, dealers and business clients. International Sector PEL is facing foreign competition with Seimens, ABB, Haier and Mitsubishi. PROJECT Page 29

General Environment Government Sector Rules and regulations of FBR, Companies Ordinance and other governmental regulations also get imposed on PEL and PEL always comply with these rules, regulations and policies. For example recent regulation of Government for increasing the labor wages and employee salaries affected PELs employees wages and salaries. Economic Conditions Globally there is recession. Unemployment and inflation rate is increasing, rate of investment is decreasing and all these things have impact on the economy of Pakistan and as well as on PEL.

Technology Sector PEL has separate departments of Information Technology and Research and Development. PEL is using latest techniques of production to produce the up to date products for the delighters of its customers.

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 Page 30

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Royal Bank of Scotland Limited SILK Bank Soneri Bank Limited Dawood Islamic Bank Habib Metro Molitron Bank

Organic Versus Mechanistic Management Processes

PEL has mechanistic structure. Tasks are broken down into specialized, separate parts. Tasks are rigidly defined. There is a strict hierarchy of authority and control, and there are many rules. Knowledge and control of tasks are centralized at the top of the organization. Communication is vertical.

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SWOT ANALYSIS STRENGTHS

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

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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 they wanted to buy. PEL is a popular company in Pakistan and every one knows about the PEL products and its brand. Thats 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

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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 competitors 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 WRAC. Thats why customers always purchase the PEL window air conditioner. 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

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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 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.

WEAKNESSES

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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 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. Thats 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 others company products. Less Utilization of Capacity PROJECT Page 36

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 company cannot allocate the resources according to the requirements of production department thats 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 PELs products to the end consumers. Company sometimes sells their products on advance bases to the dealers and gives them high margin of profit. Thats 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.

OPPORTUNITIES
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

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 PROJECT Page 37

capacity to absorb the PELs products. These places are tribal areas in NWFP and northern areas of Punjab and NWFP, central area of SIND. 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. 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 thats becomes the problem for the complete utilization of resources. Company should look the market conditions then it will produce their products.

THREATS
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: PROJECT Page 38

Strong competition Chinas product introduction in the market Price war Slow growth rate in Pakistan Instability of government Tax department World Trade Organization Investors

Strong Competition 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. Chinas Product Chinas 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 consumers 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

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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 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. Thats 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. Investors: 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.

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BUSINESS PROCESS ANALYSIS

INTER ORGANIZATIONAL RELATIONSHIPS Inter-organizational Framework

PEL inter-organizational framework is collaborative network. Major reasons are sharing risks when entering new markets, mounting expensive new programs and reducing cost, and enhancing organizational profile in selected industries or technologies. PEL is a prerequisite for innovation, problem solving and performance. PEL consider its suppliers and dealers as its partners. PEL has involvement in partners product design and production, shared resources. PEL has recently collaborated with LG and design and make products for LG. ORGANIZATION TYPE Dissimilar ORGANIZATION RELATIONSHIP Similar

Competitiv e

Resource Dependence

Population Ecology

Cooperative

Collaborative Network

Institutionalism

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Innovation PEL has a separate R&D department which keeps on researching for new ideas and developing the innovative products. These days PELs R&D department is considering the project of Digital Meter for WAPDA. This year PEL has entered in the strategic alliance with the LG Electronics. The addition of LG to Pak Elektron
will mean that Pak Elektron will now have two leading brands, PEL and LG, in both the categories of home appliances and Air conditioners. This synergy of brands will bring technologically better products to the customer at competitive prices. This means that PEL will be offering innovative products made from cutting edge technology of LG. LG Electronics has 30 R&D centers globally and spends hundreds of millions of dollars on R&D, making it one of the leading brands in the world. It has a wealth of global expertise in terms of designing the right product for the consumer. Thus, this alliance will ensure enhancing, the production capabilities of Pak Elektron through technology transfer which will translate into more smart and sophisticated designs, with competitive cost of production.

Employee development
PEL has operative goals employee development and training in this fiscal year. PEL says the following for its Human Resources: We MAKE individuals Better Professionals. We BELIEVE in Trust and Respect. We ENCOURAGE Change and Sharing of Ideas. We AVOID Organizational Barriers. We DEMONSTRATE Commitment and Enthusiasm. We REWARD High Performance. We ENHANCE Innovation and Creativity.

HR Vision To achieve excellence through innovative HR practices and continuously exceeding our PEOPLE Expectations.

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HR Mission PELs HR Mission is two-fold: 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 Compensation and other benefits

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

Environmental
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.

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Country-wide Area Sales Offices

Government Rules and regulations of FBR, Companies Ordinance and other governmental regulations also get imposed on PEL and PEL always comply with these rules, regulations and policies. For example recent regulation of Government for increasing the labor wages and employee salaries affected PELs employees wages and salaries. Society

PEL is a socially responsible organization and in addition to business considerations, the social dimensions of its corporate activities play an increasingly important role in overall assessment of the Company. PEL embrace responsibility for the impact of its activities on the environment, consumers, employees, community, stakeholders and all other members of the public sphere. PEL monitors and ensures its adherence to law, ethical standards and international norms. PROJECT Page 45

System

PEL is a large, profitable and successful organization which operates in an open system and interacts with its environment to survive. PEL continuously adapts to the environment and believes in growth rather than stability.PEL has special health and safety measures for its employees and provides clean and healthy working environment to its employees.

Product PEL focuses on quality and variety in its products. PELs aims are to provide customer satisfaction and delighted customers is the preference of organization. For business clients PEL provides standardized as well as the customized products. For home users it offers a wide range of products to choose from.

Subunit Subunits at production level includes Planning Production Dicing and Molding Packaging Quality Control Paint plant Assembly process Development Manufacturing

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Subunits at Finance and Accounting department are

Costing Credit Clearance

Subunits at HR department are

Recruitment and selection Learning and training Performance and organizational development

Subunits at marketing department are

Branding Sales

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FINANCE DEPARTMENT
Finance manager works under General Manager Finance. His span of management contains three finance officers. Major function of this department, obviously, is to arrange funds for company and also allocate funds. These officers perform significant role at their stead. Manager Finance

Finance Officer (General)

Finance Officer (Treasury finances)

Finance Officer (Leasing & Budgeting)

Finance Executive

Finance Executive

Finance Executive

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General Manager Finance

His duty is to take major financial decisions. Manager Finance Rate negotiations Handling cash in & out Bank relations Handling short term and long term funds requirements

Assistant Manager Finance Reports to manager finance Arranging funds for production Preparation of Budget

Senior Finance Officer (General)

Fund arrangement is a major responsibility of this officer, including leasing, mudaraba, and secured and unsecured loan arrangements. He keeps check on inventory in Bond houses against which company finances. He is responsible to release raw material from bond houses for production and sales purpose. Check on working capital of the company is another task that falls in his job description. What are the receipts and due payments for a day is also a matter of concern. Moreover, he also coordinates with other departments. Generally, most senior person is entitled for this job. Three assistant accountants work under his supervision while the senior finance officer (General) himself reports to Manager Finance

Finance officer (Leasing & budgeting) It is job title assigns a group of activities concerning leasing, mudaraba and other finance arrangements. His job is to formulate and conduct analysis on present status of company PROJECT Page 49

financing, particularly, repayments and restructuring of installments. Certainly, budgeting is also a part of his responsibilities.

Finance Officer (Treasury Finances)

National Bank of Pakistan (NBP) facilitates the company in Bond financing, discounting bills, opening L.Cs. Bank also acts as guarantor in particular cases. Financial officer (Treasury finances) deals with all corresponding processing in this regard .Nation Bank of Pakistan (NBP) is the bank by whom the company deals with. Bank is performing duties regarding secured financing, discounting bills and opening L.Cs. Bank developed a chain in such and manner that all financial activities interrelate with each others. Company acquires finance against the pledged stock; Pledging stock includes imported raw material, components of air conditioner and refrigerator, transformers, energy meters, refrigerators etc. These stocks will be pledged in bond housed that situated in companys premises, which is under-control of ban authorities. Bank opens an account in the name of company, said as Cash finance account. But as per requirement stock will have to be released for production purpose or sales purpose. Bank sets limits in this regard, so each replacement requires bank permission. The difference between borrowed money and pledged stock would have to adjust either by pledging more stock or by making payments equivalent to the value of released stock.

DUTIES During my stay in PEL as a Internee I do my duties in following section of the finance department. Issuance of Bank Guarantee Daily reconciliation of Bank Statement regarding FIM & PAD Duty assigns to me Release of Finished Goods from different Bank. Calculation of Long term & Short Term Loan Mark up Page 50

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ACCOMPLISHMENTS Finance department is working under the supervision of four managers and one General Manager. This department is comprised of four sections, namely

Budgeting Section Guarantees Section Inventory Control Section Leasing Section

Budgeting Section Starting with Budgeting Department that forecasts Annual Sales, Expenditures and Costs for the company after getting production estimates and Sales plans from the marketing and than tell the amount to be arranged for production in order to finance either power divisions production or Appliances divisions production. Guarantees Section Secret behind PELs success and increasing market share is its guarantees section that actively works to get every order either for appliances or for power of the company by speedily participating for the contract with the help of Tender Bonds of Guarantees. Leasing Section This section works in order to fulfill the corporate production, personnel and operational needs such as Machineries, Auto Mobiles and office equipments. It enters into the Buying Contracts always with the one who offers best terms and conditions as well as the best Internal Rate of Return to the Company. OBJECTIVE OF FINANCE DEPARTMENT Finance people concentrate on following points for accomplishment of their tasks Try to raise maximum funds Make arrangement for allocation of funds appropriately Doing above mentioned activities by controlling cost

FINANCE SECTION There are different modes of financing are used. PROJECT Page 51

CASH FINANCE FACILITY Loans can be taken from any commercial bank. WORKING CAPITAL Use to meet day-to-day routine finance RUNNING FINANCE A fix limit is assigned by bank and Co. can use within that limit HOW THEY MAKE PLANS Planning is an important aspect for achieving objectives ahead. So while making plans manager foresee the situations in advance and take decisions. It is true in case of finance department. Finance department have to do advance Planning for different tasks about production and utilization of loans appropriately In advance HOW THEY TAKE DECISIONS The only thing that is considered at the time of taking decisions regarding fund raising is lower markup rates down because this is what makes loans feasible or otherwise. PROCEDURAL ASPECTS WORKING CAPITAL FINANCE This type of loan is secured against; Pledge Hypothecation

PLEDGE It may be constructive or actual. Constructive pledge is that in which goods are not taken by bank rather keep them in company's good own under its own security. In case of actual pledge, bank holds the possession of goods. HYPOTHECATION OF STOCK It can also give against receivables. Incase of stock (raw material W.I.P finished Goods) all are include. Pay back capacity of exporter should be considered. In case of amount of loan exceeds that amount of stock or receivables pari passu Charge may create if more than one bank involved.

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CREATION OF HYPOTHECATION These documents are required to create hypothecation; Form 10 Affidavit Agreement of hypothecation

DISCHARGE OF HYPOTHECATION There are no documents required for the discharge of hypothecation. As the loans Amount and the markup are paid. The hypothecation automatically comes to an end. PROCEDURE FOR SHORT TERM LOAN In PEL Industries following procedure is applied for short-term loans. OFFERING LETTERS Each bank issues an offering letter that mentions the following things Amount sanctioned Markup rate Charge over assets (hypothecation/pledge) Period Other conditions

ACCEPTANCE If PEL agrees on the conditions given by the bank it sends the following Documents. In case the conditions are not acceptable then negotiations are made to bring the conditions to point where there are acceptable to both the parties. Board of directors to open the account List of directors Form 29 (details of Original limit documents) Copy of resolution Directors) Page 53

PROJECT

Signature cards of Directors to open the current account Memorandum and Articles of association

CREATION OF CHARGE To create charge, following documents are sent: Form 10 Affidavit Letter of hypothecation/pledge

LETTER OF CONTINUITY When PEL wants a renewal to the existing line after expiry date, it submits a letter of continuity. PROMISSORY NOTE It is promise of company to pay to the bank the amount of loan plus markup. VOCATION OF CHARGE OR CHARGE SATISFACTION Once the amount of loan is paid the company i.e. PEL sends the following documents: CHARGE OF VOCATION APPLICATION

It is addressed to the bank stating that has paid off its entire loan therefore the bank should sign and return the documents to the company so that it can be sent to registrar for the vocation of charge. FORM 17

This form is for the registrar, signed by the company director, sent to the bank with the charge of vocation application, it is signed by the bank verifying that loan has been paid and it agrees to locate the charge. The form 17 is sent to registrar and in return a charge vocation certificate is issued to the company. For each charge a separate application to bank is sent. LONG TERM LOANS PEL acquired a long-term loan to finance the import of machinery. Recently PEL has purchased some machinery from China for Digital Energy Meters. PROJECT Page 54

The process for long-term loan is explained in following. PREPARATION OF FEASIBILITY REPORT Following points are considered while preparing the feasibility report. FINANCIAL STATEMENTS Cost of the project. This includes operating assets (land, building, Vehicles, furniture, capital expenditure and means of finance) Project profit and loss account Projected statement of changes in financial position. It gives sources of Finance and the application Projected balance sheet

FINANCIAL ANALYSIS Pay back period of total investment Ratio analysis Breakeven analysis

ASSUMPTIONS Production schedule Dues and chemical assumption

SCHEDULES Sales forecast statement Total production cost. Working capital Loan repayment schedule

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THE PROJECTIONS ARE MADE ON Quantitative of any other companys previous years are taken related to the same industry and multiplied with the present rates. Technical expertise is hire to make projections. BANK FEASIBILITY REPORT Bank studies the feasibility report and prepare report and prepare its own feasibility report to see where it would be feasible to sanctioned loan to company or not. OFFERING THE LETTER The bank, if it is satisfied with the feasibility report then send offering letter. It has, Amount sanctioned Mark up rate Charge over fixed assets Tenor Installment period Interest payment period Acceptance If company accepts the terms, it must respond with this period.

NEGOTIATION Negotiation between bank and company takes place to change certain conditions of offer letter and it acceptable for both parties. A second draft of the offer letter is prepared with changes and signs of bank and CEO OF PAK ELEKTRON LIMITED. CREATION OF CHARGES A charge is created in favor of the bank to secure its loan with following documents affidavit. It is an undertaking by the company that will follow all conditions. Form 10. It contains the particulars of assets against which charge is created. Page 56

PROJECT

Memorandum of constructive deposit of little deeds. It tells about the conditions that the company will follow along with the details of property under charge.

All the above documents are submitted with registrar against whom a Certificate of Registration of Mortgage is issued.

LOAN PREPAYMENT SCHEDULE This schedule is prepared to show the mark up principal and total installment value for whole tenure.

Problems Main problem I have found in this company is that it has the communication barriers among the departments. If PEL is a team; departments are its players, they need to work as one unit rather than seem working in their own capacity. Age difference: Lack of advertisement: PEL does not focus on advertising while its competitors are focusing on this part. Lack of co-ordination: There is lack of co-ordination between the departments. Every department has concern with its own matters not with the whole company. Lack of Product Range: Competitors are offering the products at a wide range in term of different sizes and colors while PEL has limited offerings in terms of different sizes and colors. Lack of well qualified staff in finance department. In some sections highly qualified person is a subordinate of less qualified person. Dressing of officers even at executive level is casual. Too much favoritism and nepotism in PEL. There is no rotation of job work so one person is limited to his work. Page 57

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RECOMMENDATIONS 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 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 expenditures. The company must give more incentives to the dealers so that they remain loyal to the company and promote the products. 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 Slogan. PEL should define the companys mission and vision statement that can be more helpful for them in future. Every organization however it is small or large has clear

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direction where they want to go. Without direction or knowing the purpose of their existence how an organization can make progress. 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. PEL must introduce a true decentralize setup in the organization, giving every one some grounds for decision making, increase employees involvement in day to day planning and retain back the morale plus satisfaction of the employees. PEL should also adopt any other methodology for projecting up coming time period sales which should include seasonal factors consideration in order to get accurate future estimates rather than using that silly old average methodology. 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 its good for the company for more success if they work on it. PEL should at least ensure same level of growth and packages among employees working at each level like its competitors are offering to its employees in order to retain the old employees as well as to attract new talent.

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PEL should also tighten up its monitoring and inspection Networks in order to minimize the miss-utilization of the resources by the employees and verify the data accuracy gathered by them.

PEL should also form especial skilled and efficient sales collection team in order to collect Receivables amount from the retailers and the wholesalers especially from ones located in Karachi, Lahore and at least reduce their payment time period from 180 days to 90 days. Further should also negotiate with them to ensure that we care for you and for the best in time delivery we need you to be more responsive in making early payments to the company.

PEL should also negotiate with the public leasing institutions in order to buy desired equipments such as machines, cars at low interest rates than private ones. Similarly ask them to introduce new packages to the company like private sector. This will significantly help it in having a tight control over cost of production.

PEL should also take care of the Economical, Political Factors such as inflation, Government Policies while projecting the Cost of Production for future because this will help the company in entering into a fix price contracts for the purchases of material at a single time similarly than it will be able to charge stable prices to its customer.

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COSTING SYSTEM AND INTERNAL CHECKS ON PRODUCTION

Planning Department

As the all the production depends upon the excellent production plan so the top level management 1st identifies Demand and supply and then set standards and targets. Production plan Production plan is different for every product e.g. for refrigerator the plan will be different from of the generator etc. Slabs

All the production is made in slabs e.g. of the total of order of refrigerators is 2000 per month then the whole production is set up in the weeks like 500 units per month. Fabrication number

Specific work orders are issued special no in order to have better check on the production. Requirement of material

Production head sends the requisition to the specific costing heads.

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 B.O.Q

Its stands for bill of quantity which entails of the quantity of each item required in the production of a specific unit.

E.g. for a refrigerator the following materials are required

Coolant Thinner Paint Thermostat Condenser Compressor Gas (etc)

Additional Material
If any component which is required for the production after the inspection in case if some part breaks or is out of order.

Auxiliary Materials

Materials such as the nuts, bolts washers etc There is no check or specific counting of such materials infact they are distributed approximately to the concern worker.

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 Standard Labor Hours

For every order or type of the product there are specific Standard labour hours predefined by the top level management.

IR/ INSPECTION REPORT

After the goods are completed they are thoroughly checked by the inspection department whether the produced units meet the required standards or not. Variance Analysis

If the production order was of 550 refrigerators and out of which 50 units were rejected because of any defects in them. Even then to per unit cost is calculated by dividing the total no of cost by the produced units only. Hence the cost of defective Goods Is also charged to the total production. Formula

Total cost of production No of good units

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BOOK KEEPING
All employees of PEL are categorized in the following grades. NG: Non-grade which includes workers C: Clerical workers S: Supervisors, further categorize in S-I, S-III E: Executives, further categorize in JE, E-II, E-III, E-I

According Company Policy Expenses dealt in Book Keeping section i.e Travelling and Daily Allowances (T/A, D/A).

TRAVELLING EXPENSES Foreign Travelling Inland Travelling Local Conveyance

In case of official Inland Travelling, employee gets Per Diem for its daily meal. If official trip is more than 24 hours Then employee can either stay at Hotel or at his relatives. In case of stay at Hotel his allowance will be paid by Company but according to employee rank and hotel grading. Similarly PGA (Paying Guest Allowance) is given if employee stays at relatives place.

If an official trip of employee is less than 6 hours that he will not be given any DIEM. If more than 6 hours but less than 12 hours travelling then he will be given half Diem. More than 12 hours then he will be given full diem.

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DAILY ALLOWANCES Entertainment Expenses (Lunch and Dinner)

TELEPHONE EXPENSE

Prepaid and Postpaid connections are given to few workers and staff members. Specific limits are assigned to each employee according to categorization.

PROCEDURE FOR INLAND TRAVELLING

TRAVEL AUTHORITY FORM

Employee (worker/staff member) going for an official trip will first get Travel Authority Form. The main agenda of travelling will be defined in it. This form will be signed by employee and his Head of Department.

In case of advance form will be given to I R & A department they will write the amount of advance on it and after signing it will send to the accounts department. Accounts department will check it manually an update the record in to Employee Cost Management System and issue cash payment voucher against it. Now Employee can take the advance amount from the cashier while giving him the voucher.

TRAVEL EXPENSE REPORT When employee will come back from official trip he will form Travel Expense Report in which he will define all the expenses and ask for the payment of his expenses.

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EMPLOYEE COST MANAGEMENT SYSTEM (ECMS)

VOUCHERS Cash Receipt Cash payment Voucher Bank Payment Voucher Bank Receipt Journal Voucher

In case of allowances Cash Payment Voucher is made for payment of Rs 10,000 or less. Bank Payment Voucher is made for payment more than 10,000 Next day check all the Inland and Foreign Travelling expense sheets claimed by the employee along with relevant documents (Hotel bill, Fair of Vehicle, Travel Authority Form and Travel Expense Report).

I have entered inland expenses in ECMS against Employee Personal Number, Expense ID, Expense Code and amounts. When all the expenses were added then vouchers were printed and attached with all the documents and forward for approval.

Cash Payment Voucher detailed Summary is made on Excel Sheet.

Employees who needed advance for Inland travelling cash payment vouchers are made from the ECM System and prints were taken. Next day I made Detailed Summary of Cash Payment Vouchers on Excel Sheet. From cash Payment Vouchers employee name, Department, Expense Type and Amount entered. Expense Type was sorted and their Summary is made in another sheet. Amounts of all Expenses were added in Summary as well.

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ERRORS IDENTIFIED AND REPORTED TO THE ACCOUNTS MANAGER

They was a blunder while recording the entries of all the insurance premiums that all the employees were recoding the transactions with dual references like some of them were recorded through policy no, reference no and credit note. So there was diversification and no synergy in recording the transactions.

When I was to reconcile this whole thing it took me 4 hours to reconcile about 13 pages because of the difference of recording of transactions. However the manager was quite impressed because of my identification.

Then another mistake was there that they were rounding off the figures in order to make the terms of payment is easy but I made them realized that rounding of figures can create a massive different at the end of the month even weeks .

So both of these acknowledgements were highly appreciated by the accounts manager

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AREAS OF IMPROVEMENT
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. Sales promotion should be aggressive and PEL should identify their name as a REAL BRAND. Lack of communication is there between the departments. Canteen should be upgrade. Mess for the internee should be upgrade.

PROBLEMS AND RECOMMIDATION

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. PROJECT Page 68

 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 Slogan. PEL should redefine the mission and vision statement because they fail to comply and align the company objectives. 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 its good for the company for more success if they work on it. PEL should also form especial skilled and efficient sales collection team in order to collect Receivables amount from the retailers and the wholesalers especially from ones located in Karachi, Lahore and at least reduce their payment time period from 180 days to 90 days. Further should also negotiate with them to ensure that we care for you and for the best in time delivery we need you to be more responsive in making early payments to the company.

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INTERNSHIP EVALUATION

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.

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QUALIFICATION AND INTERNSHIP

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.

SOURCES OF INFORMATION AND LIST OF PEOPLE WHOM I INTERACTED

The sources from where I have gathered data for my report are: www.pel.com.pk D&CC Department Finance Department Accounts Department Mr. Tariq Irani (Senior Manager D&CC). Mr. Tanvir Malik (Manager D&CC). Mr. Khalid Masood (Accout Officer D&CC). Mr. Muhammad Hanif (Manager Finance). Mr. Tahir Mehmood (Senior Executive).

Mr. Gulzar Akbar (Finance 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 ).. PROJECT Page 71

Impact of internship on my future career

During my internship I learned lot of 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. Due to my internship habit of regularity and punctuality.

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REFERENCES
The sources from where I have gathered data for my report are: www.pel.com.pk Finance Department. Power Projects. Appliances Division, Marketing Department. Consumer Market Department.

Mr. Muhammad Hanif (Manager Finance). Mr. Tahir Mehmood (Senior Executive). Mr. Ghulam Murshad (Finance Executive). Mr. Zaigham Ali Sheikh (Finance Executive Budgeting section).

PROJECT

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PROJECT

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PROJECT

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