Internship Report 2011

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Internship Report 2011
DEPARTMENT OF COMMERCE
Sikandar Ali Mirza
Specialization I Finance Session 2009-11
Date of internship 08 July 2011 to Continue
3. Table of Contents.docx - Powered by Google REFACE
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Preface:
It is the requirement of my degree to work in any organization for two months to get practical exposure and to get familiarized with the ways to live in the organizational environment which is dramatically different from the educational environment. That two months period called Internship Period , if spent properly and sincerely, enables the students to be more confident, more knowledgeable, more responsible and, above all, more committed to its work in the practical field. I was assigned to do internship of 2 month period at Lafarge Pakistan Cement Ltd. It has enabled me to understand the practical scenario and sharpen our decision making power and utilizing the resources in an effective manner, so that our resources generate maximum profit. In preparing this report, I have put all of my best efforts and tried my level best to give maximum knowledge. Despite of my all the coherent efforts, I do believe that there will always be a room for improvement in the efforts of learner like me.
Sikandar Ali Mirza
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ACKNOWLEDGEMENT
All thanks to Allah Almighty, the benevolent and compassionate, who blessed me with the power & capabilities and remained contented on all intricacies found during the successful completion of my task.
Im grateful to my family members whose heart felt prayers and appreciation have always been an asset and a great source of inspiration of me. It could be complicated for me to accomplish to task without their shadow of love.
Im also obliged to respected Chairman Malik Hayat who furnished me this prolific opportunity to avail a practical experience, which is application of theory in Internship and also to revered teacher Mr. Rafi Ullah Bilal who provided his full support and guidance for this 6-8 week internship program.
I also extend my thanks to Mr. Rizwan Aziz along with all the Head Office Staff for their encouraging response and guidance to make my internship as a real learning experience.
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EXECUTIVE SUMMARY
Internship as per requirement of M.com. I was appointed at Lafarge Pakistan Cement Ltd head Office Islamabad. I feel my self lucky to have worked by the grace of almighty Allah, I have successfully completed my 2 month every possible way they can. I was happened to work with Organizational & Human Resource Department. In O&HR department I groomed up my skills I worked on file management system. In file management system I was assigned the task to rearrange all the data of employee ranging from their personal information to their performance and development. Heading file management system a project was given to me which was the requirement of IT department, project was to provide them with full and brief information related to organizations employees which includes their names, father names, date of birth, date of joining, date of resignation in case of resigned employee, blood group, address, phone numbers etc Heading forward I was assigned a task to provide some information related to employee and employer contribution to EOBI. By keeping my eyes opened I observed every single activity in the organization so Im little known to supply chain too. At the end I would conclude that the internship had helped me a lot in different areas of Lafarge Pakistan Cement LTD and other concern areas of my study. I also learned how to work in tough situations which would help me in a long way. And it wouldnt be possible without the assistance of the team.
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Table of Contents
Introduction 7 History.12 Vision and mission..24 Competitors...24 Organizational Structure26 Work done by internee29 Financial Analysis31 SWOT Analysis.44 Conclusion.49 Recommendation.51 Limitations.52 Biblography53 Annexes..54
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Industry Introduction:
Pakistan is a country that is wealthy in cement raw material. Cement, being one of Pakistans major industries, has been playing an essential role in the socio-economic growth of the country. While the industry has seen its highs and lows in the recent past, it has improved during the last couple of years. The growth in current years is the result of the development of export markets and an increase in production ability. In 2010 the Cement Industry witnessed a slow yet steady recovery from the slump of the previous years. The August 2010 floods marred the healthy recovery which was being expected by mid-year, strongly affecting economic and business activity countrywide. However despite the setbacks there was improvement in local dispatches from 22.1 million tons last year to 22.6 million1 tons this year and the same is expected to continue as post-floods reconstruction carries on. Exports on the other hand declined to 9.7 million1 tons in 2010 from 11.2 million 1tons in 2009, mainly due to reduced export opportunities in the Gulf States. Gulf States.
TYPES OF CEMENT PRODUCED WORLDWIDE

Cements that are used for construction are divided into two main categories based on cement properties, hydraulic or non-hydraulic. Although only certain types of cement are commonly utilized today, there are several different types of cement that can be created. Various types of cement are possible by blending different proportions of gypsum, clinker, and other additives together. Non-Hydraulic Cement Non-hydraulic cement is cement which cannot harden while in contact with water, as compared to hydraulic cement which can. When non-hydraulic cement is utilized in construction, it must be kept dry so that it will hold the structure. Due to the difficulties related with waiting long periods for drying, non-hydraulic cement is rarely used in current market. Hydraulic Cement Hydraulic cements are cements that have the ability to set and harden after being combined with water. Hydraulic cement is made mainly from limestone, certain clay minerals, and gypsum, which are burned together in a high temperature. Hydraulic cement is the main cement utilized in modern day construction.
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TYPES OF CEMENT AVAILABLE IN INTERNATIONAL MARKET

1. Portland cement 2. Portland cement blend 3. Portland Blast furnace Cement 4. Portland Fly ash Cement 5. Portland Pozzolan Cement 6. Portland 7. White blended cement 8. Colored cement 9. Silica Fume cement 10. Masonry Cement 11. Expansive Cement 12. Very finely ground cement 13. Pozzolan-lime cement 14. Slag-lime cement 15. Super sulfated cements 16. Calcium aluminate cements 17. Calcium sulfoaluminate cements 18. Natural Cements 19. Geopolymer cements 20. Sulphate resistance cement
TYPES OF CEMENT PRODUCED IN PAKISTAN

Cement industry is indeed a highly important segment of industrial sector that plays a vital role in the socio-economic development. Since cement is a specialized product, requiring sophisticated infrastructure and production location. Mostly of the cement companies in Pakistan are located near mountainous regions that are rich in clay, iron and mineral capacity. Cement industries in Pakistan are currently operating at their maximum capacity due to the boom in commercial and industrial construction within Pakistan. Although a large number of 8|Page Internship Report 2011
cement varieties are produced in different countries of the world, Pakistan has been producing following types of cement. 1. Ordinary Portland cement 2. 3. 4. Portland Blast Furnace Slag Cement Sulphate Resisting Cement White Cement
1. Portland cement It is the most popular type of cement, formerly known as Ordinary Portland Cement (OPC), CEM I. It is the cement that has been most commonly used throughout the world in building works.
2. Portland blast furnace slag cement

The Slag Cement of the Portland Blast Furnace is a type of cement that is hydraulic and is manufactured in a blast furnace. The manufacture of Portland Blast Furnace Slag Cement requires 75% less energy than that for the production of the Portland cement. The low cost of production of Portland Blast Furnace Slag Cement makes it cheaper than Portland cement. It is for this reason that in recent years, the sales of Portland Blast Furnace Slag Cement have increased.
3. Sulphate Resistance SRPC is a special type of CEM I cement. However, it is not the only sulphateresisting cement available; various factory-made composite cements are also sulphate-resisting. SRC is specially used in sea and coastal areas as it offers greater resistance to chemical attack from sulphate and dissolved salts and alkalies present in sea and saline waters.
C
4. White Cement White Portland cement is a unique kind of Portland cement. It is different from ordinary Portland cement. It is of white color, instead of a dull grey one. White
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cement is frequently chosen by architects for use in white, off-white or coloured concretes that will be exposed, inside or outside buildings, to the public's gaze.
CEMENT FIRMS IN PAKISTAN

Askari Cement Askari cement has two plants, one in Wah and the other in Nizampur which has been installed by Army Welfare Trust. The main product is ordinary Portland cement which is supplied in polypropylene as well as in paper bags of 50kg each. Total Capacity of both lines is 4000 tonnes per day.
D.G. Khan Cement D.G. Khan Cement Company Limited (DGKCC) is one of the largest cementmanufacturing units in Pakistan with a production capacity of 5,500 tons clinker per day. It has a countrywide distribution network. Its main products are ordinary Portland cement and sulphate resistance cement. Lucky Cement Lucky Cement has been successful in establishing its brand in several export markets including Middle East, India, Sri Lanka and East and South African countries. It has a daily production capacity of 4,200 tons per day. Its main products are Ordinary Portland cement (OPC), Sulphate resistant cement and Slag cement.
Maple Leaf Cement Maple Leaf produces Ordinary Portland Cement (OPC), white cement and sulphate resistance cement. It is the largest producer of White Cement in the country with the market share of 80% in the production of White Cement.
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Pioneer Cement The Company's factory is located at Khushab. Its major products are
Ordinary Portland Cement Sulphate Resistant Cement
Attock Cement Main business of the Company is Manufacturing and sales of cement. Its main products are ordinary Portland cement, sulphate resistance cement and Portland blast furnace slag cement.
Kohat Cement Company Limited It is engaged in manufacturing of Grey (OPC) and White Cements. The plant is located in Kohat about 60 kilometers from Peshawar.
Fauji Cement Company The Headquarter of Fauji Cement Company is located in Islamabad; it operates a cement plant at District Attock in the province of Punjab. Its main product is ordinary Portland cement.
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Dandot Cement Limited The Plant is situated at P D Khan, District Jhelum, in the province of Punjab, in northern Pakistan. It is a superior dry process plant. They produce Ordinary Portland Cement.
Bestway Cement Bestway Cement Limited is a part of the renowned Bestway Group of UK. In response to the Government of Pakistan call for non-resident Pakistanis to Invest in Pakistan, Bestway Group invested in cement sector in the shape of Bestway Cement Limited. It has two production plants, one is in Hattar, Haripur in NWFP and the second plant is in chakwal. The Groups cement manufacturing capacity is set to exceed 6.0 million tonnes per annum, making Bestway the second largest cement producer in the country. It manufactures Ordinary Portland Cement, Sulphate Resistant Cement and Low Alkali Ordinary Portland Cement.
History:
AT THE TIME OF INDEPENENCE

The development of cement sector has made rapid strides, both in public and private sectors during last two decades. The history of cement industry in Pakistan dates back to 1921 when the first plant was established at Wah. Pakistan has come a long way since independence in 1947 when the country had inherited four cement plants having total installed capacity of 0.5 million tons, all of which were controlled from India. These units were located at Karachi, Rohri, Dandot and Wah. During the decade of 1948-58, the number of cement units increased to six.
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AYUB KHANS ERA

During the Ayub era the economy started to grow and the construction activities underwent a boom. In 1956 Pakistan Industrial Development Corporation (PIDC) established two plants at Daudkel and Hyderabad and subsequently more plants were established in the private sector. However these expansions that took place in 195666 could not keep pace with the economic development and the country had to resort to imports of cement in 1976-77 and continued to do so till 1994-95.
Pakistan is fortunately rich in the deposits of limestone, clay and gypsum, which constitute basic raw materials for manufacturing of cement. In spite of having abundant raw materials and rising growth in demand of cement, only five cement factories were established during the initial thirty years of independence, with aggregate capacity of 3.2 million tones.
Among these units one was established in Hyderabad (Sind) in the public sector. It was called Zeal Pak and was set up in 1956. Another unit in the public sector was known as Maple Leaf which was established in the province of Punjab in the same year. Three units were set up during 1965-66 in the private sector. These were Javedan in Sind, Gharibwal and Mustehkam in the province of Punjab.
NATIONALIZATION IN BHUTTOS ERA

After nationalization of industries in early seventies, cement industry remained under the control of government till late seventies. During this period, growth in demand of cement was around 7 per cent per annum, whereas new capacities were not coming up to match with the demand. Consequently, Pakistan had to import cement for a long period, which reached to a level of 1.3 million tones in the year 1981-82. Import of cement continued from 1971 to 1985. Its scarcity also hampered the development process in the country.
During the period of Zulfiqar Ali Bhutto all the industrial units, including cement industry, were nationalized, therefore, no new unit was set up during 1971-77. The industry was nationalized in 13 | P a g e Internship Report 2011
1972 and the State Cement Corporation of Pakistan (SCCP) was established following the Economic Reforms Order, 1972, and was given the responsibility to manage the production of cement in the country.
As a result of nationalization, a total of 10 cement units with an installed capacity of 2.8 million tones per annum were transferred to the SCCP. Effective price control was also vested with the SCCP and for a long time the industry operated under a regime of strict regulation and price control. While the cement industry was working under state control, the SCCP established five new units with an installed capacity of 1.8 million tones per annum.
DE-NATIONALIZATION IN ZIA-UL-HAQS ERA

During the period of General Zia-ul-Haq, 1977-88, denationalization of industrial units boosted the investments. Housing and construction industries picked up and the demand for cement increased. Thus, the number of cement units increased from 9 to 23 and finally 24. After the change in government in 1977, private sector was allowed to establish cement plants. As a result, seven projects having a capacity of 2.54 million tons were installed in private sector and simultaneously, State Cement Corporation of Pakistan also put four projects having a capacity of 1.6 million tons, enhancing the total capacity of the country to over 8.5 million tons by the end of 1990.
PRIVATIZATION IN NAWAZ SHARIFFS ERA

During the regime of Nawaz Sharif the industry went through major transformation. The industry was privatized in 1990 which led to setting up of new plants. The government embarked upon an ambitious privatization programe and eight units were privatized. The units working under the SCCP control are old and inefficient using 'wet process' whereas the units established in the private sector are new, efficient and use 'dry process'. With the privatization of cement units after 1990, The SCCP lost its control over the supply of cement and controlled less than 25% of the total installed capacity in the country which was shrinking with the establishment of more plants in the private sector and expansion in the privatized units.
At that time there was an acute shortage of cement in the Northern areas of the country. In the first half of nineties, Pakistan had to import cement which led to the increase in cement prices exorbitantly making cement companies to earn very high profits. This tempted some of the 14 | P a g e Internship Report 2011
existing units like Cherat, Pakland, Dadabhoy, Ac Wah, D.G. Khan, Maple Leaf and Kohat to go for expansion in their plants.
Simultaneously, 5 more new projects with aggregated capacity of 5 million tons came on the stream. As such, production capacity went up to 16 million tons by the end of 2000. The five new units in the private sector were Pioneer (Punjab) 1994, Lucky (NWFP) 1996, Askari (NWFP) 1997, Fauji (Punjab) 1997 and Best Way (NWFP) 1998. Privatization and effective price decontrol in 1991-92 heralded a new era in which the industry has reached a level where surplus production after meeting local demand is expected in 1997.
GENERAL MUSHARRAFS ERA

In the year 1999-2000 the cement industry survived from its earlier crisis of excess production and low demand and resultant under cutting and unhealthy competition. It came out of red because of joint strategy to tailor production to the market requirements. This helped the industry to achieve a price level which not only covered the cost of production but also left some margin of profit to the manufacturers. This agreed sale price was also accepted by the consumers.
Chart 1: Growth in no. of units
The industry is again on the war-path against its own members. The dispute arose in Sept. 2000 when the government levied sales tax on the cement industry. Immediately after, however, the government allowed 4 cement units established in the NWFP and Baluchistan extension from payment of sales tax till June 2001.
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The remaining 19 cement plants operating in Punjab and Sind who were bound to pay sale tax amounting to about Rs. 20 per bag, could not compete with the four privileged one. These four units Best Way, AWT Cement, Lucky Cement were allowed sales tax exemption under an SR0 issued between 1992 and 96 allowing tax exemption to all industrial units set up in NWFP & Baluchistan. The present government allowed this exemption to only cement industries located in these areas till June 2001.
HISTORICAL DEVELOPMENT OF CEMENT INDUSTRY

1947(Bad era): 1948-58: 1958-68(Boom era/Ayub era): 1971-77(Nationalization/Bhutto era): 1977-78(Denationalization): Only four units were producing grey cement in the country. The number of cement units increased to six The cement units increased from 6-9 No new units were setup Cement units increased from 9 to 23 24 units
90s(Dark era /Cement sector had to bear massive losses): Current scenario:
29 players are operating
CHRONOLOGY
YEARS 1921 1947 1948-58 1956 1956 1961 EVENTS The first cement plant established at Wah. Pakistan inherited four cement plants having total installed capacity of 0.5 million tons The number of cement units increased to six PIDC established two plants at Daudkel and Hyderabad Zeal Pak and Maple Leaf were established Javedan Cement factory was installed as vallika cement 16 | P a g e Internship Report 2011
1965-66 1976-85 1972 1972 1981-82 1977-88 1977 1981 1990 1992 1992-96 1994-95 1996 1999-00 2000 2000 2005-06 2006-07 2006-07 2007 2008 2008 2008 2009 2009 2009
Javedan , Gharibwal and Mustehkam cement were set up in the private sector Started importing cement * Industry was nationalized and no new units were set up State Cement Corporation of Pakistan (SCCP) was Established Imports reached 1.3 million tons Denationalization of industrial units boosted the investments. Number of cement units increased from 9 to 24 Attock Cement factory was established industry was privatized and eight units were privatized Production increased by 96% to 7.2 million tons than the previous years tax exemption to all industrial units set up in NWFP & Balochistan till June 2001 Pakistan continued to import till 1995 to meet the acute shortage of cement in the northern areas, which led to increase in prices Production increased by 21% approx than the previous year crisis of excess production and low demand production capacity went up to 16 million tons government levied sales tax on the cement industry two new units were installed The installed capacity increased by 44% to 35 million tons from 24.3 million tons Exports increased by 41.5% to 2.13 million ton from 1.505 million tons Cement sales registered a growth of 31% to 17.53 million tons versus 13.25 million tons in 2006 Highest ever dispatches in the history of Cement industry of Pakistan with the growth if 25% same time last year from 1,823,496 to 2,821,216 metric tons Custom duty over import of coal exempted. Import duty over pet coke reduced to 5% Excise duty increased from Rs. 750 to Rs. 900 in April which later was decreased to Rs 700 per ton in July. General sales tax increased from 15% to 16% Pakistan is ranked fifth in worlds cement export
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Cement Market: Growth of cement industry is rightly considered a barometer for economic activity. In 1947, Pakistan had inherited 4 cement plants with a total capacity of 0.5 million tons. Some expansion took place in 1956-66 but could not keep pace with the economic development and the country had to resort to imports of cement in 1976-77 and continued to do so till 1994-95. The industry was privatized in 1990 which led to setting up of new plants. Although an oligopoly market, there exists fierce competition between members of the cartel today. The industry comprises of 29 firms (19 units in the north and 10 units in the south), with the installed production capacity of 44.09 million tons. The north with installed production capacity of 35.18 million tons (80 percent) while the south with installed production capacity of 8.89 million tons (20 percent), compete for the domestic market of over 19 million tons. There are four foreign companies, three armed forces companies and 16 private companies listed in the stock exchanges. The industry is divided into two broad regions, the northern region and the southern region. The northern region has around 80 percent share in total cement dispatches while the units based in the southern region contributes 20 percent to the annual cement sales.
Cement industry is indeed a highly important segment of industrial sector that plays a pivotal role in the socio-economic development. Since cement is a specialized product, requiring sophisticated infrastructure and production location. Mostly of the cement industries in Pakistan are located near/within mountainous regions that are rich in clay, iron and mineral capacity. Cement industries in Pakistan are currently operating at their maximum capacity due to the boom in commercial and industrial construction within Pakistan.
Exports According to the Global Cement Report, Pakistan has been ranked 5th in the worlds cement exports because of high demands in nearby countries. The statistics of All Pakistan Cement Manufacturers Association (APCMA) showed that during the year of 2008-09 cement exports were increased by 47.48 percent.
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Pakistan Cement Industry produces a surplus of cement which is exported mainly to Afghanistan, India, Africa and the Middle East.
Demands Factors behind the increase of demand in cement: Major construction projects such as dams Reconstruction of schools and stores Real estate development projects
Overview of the organization THE GROUP Founded in 1833, Lafarge is the world leader in building materials and holds top-ranking positions in all of its businesses: Cement, Aggregates & Concrete and Gypsum, with 76,000 employees in 78 countries. Lafarges businesses are truly fundamental: we extract mineral resources from the heart of earth and transform them into major construction materials. Our activities meet the basic needs of mankind by providing housing and infrastructures all over the world. Shaping the everyday surroundings of millions of men and women, Lafarge is more than ever at the heart of the way our societies are being transformed. Lafarge is driven by the needs of its customers, shareholders, local communities and architects. The Group creates high value-added solutions which encourage creativity whilst leaving a lighter trace on the world. Lafarge believes that ongoing advances in building materials must integrate respect for people, their different needs and their environment. This strong conviction is reflected in a strategy which combine industrial know-how with performance, value creation, respect for employees and local cultures, environmental protection and conservation of natural resources and energy. The Group has successfully established itself in countries with high growth potential. With our highly cash generative business model and our 19 | P a g e Internship Report 2011
excellent geographical portfolio, Lafarge is ideally positioned to lead our sector in meeting the opportunities offered by demographic growth and housing and infrastructure needs over the next decade.
COMMITMENT TO SUSTAINABILITY Lafarge has for many years pursued a sustainable development strategy that combines industrial know-how with performance, value creation, respect for employees and local cultures, environmental protection and the conservation of natural resources and energy. Integrity, responsibility, ethics, respect as well as courage, empathy and openness are the values underpinning Lafarges philosophy. The Group shares a strong conviction that there cannot be any sustainable leader without respect for the environment and social responsibility. In 2009 and for the fifth year in a row, Lafarge was listed in the Global 100 Most Sustainable Corporations in the World. THE COMPANY The Company, with one of the state-of-the-art plants commenced Commercial Operations in December 2006 with an annual cement production capacity of 2.2m tons. Our plant is located at Kalar Kahar, District Chakwal in the province of Punjab, an area rich in lime stone reserves. The quality of lime stone in this area is considered to be the best in the region. Also, the location of our plant, close to the M2 Motorway, gives a unique edge in reaching all corners of Pakistan and for regional exports. Lafarge Pakistan Cement limited (LP) is proud of its product PAKCEM which is the leader on all quality scales. The compressive Strength of our cement is 10,000 PSI. PAKCEM is the first cement in Pakistan to comply with European Standards (EN 197), British Standard (BS 12-1996) and with Indian Standard (IS 12269). It is also far exceeding requirements of Pakistani Standard (PS 232). In addition to Ordinary Portland Cement (OPC) the plant can also produce Sulphate Resistant Cement (SRC) with the packaging option of 50 kg bags, 1.5 tons, 2 tons jumbo bags and bulk carriers. The advanced plant laboratory is the most sophisticated in the industry and ensures consistent high quality of cement. LP complies with National and International Environmental Standards including the World Bank Environmental Standards. LP has also integrated sustainable development into its daily business. With significant investment in the most energy efficient cement plant of Pakistan, LP produces cement with the least emissions of CO2 and other green house gasses amongst the local industry.
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We have an excellent Quality Management System which is designed to ensure full compliance with applicable standards and a consistent product performance. In line with our policy we are committed to meet the needs and expectations of our customers by providing quality cement according to agreed standards. LPs aim of being at the forefront in creating foundations for a prosperous tomorrow is backed by the Companys philosophy of providing outstanding value to its customers, a safe and stimulating work environment for its employees, superior returns for its shareholders and special focus on social responsibility and environmental protection. LP has always provided and maintained the best working environment to its employees, with keen interest in their health and safety. It always maintains a close liaison with all its employees, with top priority given to their professional growth, safety, development and periodic training programs at all levels.
COMPANY INFORMATION Board of Directors Mr. Ahmad Said Heshmat Hassan Maj. Gen. (R) Rehmat Khan Mrs. Amal Tantawi Mr. Ashraf Abouelkheir Mr. Amr Ali Reda Mr. Bilal Hamid Javaid Mr. Shahid Anwar (Nominee NIT) Chairman Chief Executive Ofcer
Audit Committee Mr. Ahmad Said Heshmat Hassan Mr. Amr Ali Reda Mrs. Amal Tantawi Mr. Ashraf Abouelkheir Chairman
Company Secretary
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Ms. Sarah Farooq Chief Financial Ofcer Mr. Bilal Hamid Javaid Auditors M/s Ernst & Young Ford Rhodes Sidat Hyder Chartered Accountants Bankers Allied Bank Ltd. Askari Bank Ltd. Citibank N.A. Habib Bank Ltd. Habib Metropolitan Bank Ltd. MCB Bank Ltd. NIB Bank Ltd. Soneri Bank Ltd. Standard Chartered Bank (Pakistan) Ltd. Faysal Bank Ltd. United Bank Ltd. Legal Advisors Haidermota & Co.Barristers at Law & Corporate Counsellors, Islamabad Share Registrar Noble Computer Services (Pvt.) Ltd. Mezzanine Floor, House of Habib Building (Siddiqsons Tower) 3-Jinnah
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Cooperative Housing Society, Main Shahrah-e-Faisal Karachi-75350 Tel. # : PABX (92-21) 34325482-87 Fax # : (92-21) 34325442 Registered Ofce 18-B, Kaghan Road, F-8 Markaz, Islamabad Pakistan. UAN: (051) 111 111 722 Fax: (051) 2817300 Plant Site Choie Mallot Road, Tehsil Kalar Kahar, Distt. Chakwal Pakistan.
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VISION STATEMENT Strive to exceed the expectations of our stakeholders through sustainable growth and high quality performance
MISSION STATEMENT We are committed to providing outstanding value to our customers, a safe and stimulating work environment for our employees and superior returns for our shareholders.
OPERATING HIGHLIGHTS The Company continued its efforts to further secure itself as a strong player in the industry, whilst functioning in an external environment thwart with challenges. Gross Profit witnessed a decrease from PKR 984 million in 2009 to 856 million in 2010, however this was compensated by the fact that the Company posted an operating profit of PKR 62 million in 2010, a sharp contrast to the operating loss of PKR 172 million posted in 2009. The Company is poised for profitability if the market continues to improve and in the last quarter on a standalone basis the Company was able to achieve a profit after tax. Similarly we are proud to share that management was able to achieve a significant reduction in financial costs from PKR 1,231 million to 981 million in 2010. It has been the Companys constant endeavor to cut cost by substituting imported coal with cheaper local coal and bio-mass. We are also proud to state that we continue to be a premium brand not only in Pakistan but also in Tajikistan. These achievements have been possible as we draw heavily on the technical expertise of the Lafarge Group.
Competitors:
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S. no
Company Northern Zone
1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19
Askari Cement Ltd Bestway Cement-I Cherat Cement* Dandot Cement Limited* Dewan Cement Limited* D.G. Khan Cement (KK)* D.G. Khan Cement-II * Fauji Cement Company* Flying Cement Limited* Fecto Cement* Gharibwal Cement Ltd* Kohat Cement Company Limited* Lucky Cement (Karachi)* Maple Leaf Cement Mustehkam Cement* Pakistan Cement Pioneer Cement* Bestway Cement Chakwal-II Askari Cement Ltd. (Nazimpur) Southern Zone
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A.C. Rohri Cement Limited Al-Abbas Cement Limited* Attock Cement* Dadabhoy Cement Limited* Javedan Cement Limited* Internship Report 2011
25 26 27 8 29
Pakistan Slag Cement Limited Thatta Cement Limited* Zeal Pak Cement Limited Lucky Cement (pezu)* Bestway Cement (Chakwal)
Organizational Structure Hierarchy Chart:
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No. Of Employees: Currently the board consists of 612 and employee which are located at plant and head office Islamabad and in other regional offices which are in Lahore, Rawalpindi, Peshawar, Multan.
Main Offices: Companys main offices in Pakistan are located are given below: Head Office in Islamabad Plant at Kalar Kahar Regional Office Lahore Regional Office Rawalpindi Regional Office Multan Regional Office Peshawar
Departments:
O & HR department: Organizational and human resource department exists at plant and head office this department looks after the organizational and employees issues. HR take cares of payroll and employee development fulfills the needs of employee. Commercial: This department looks forward to sales based local and international. Liabilities to this department is to create the maximum sales all over Pakistan and to other countries like south Africa, Afghanistan, China and some more other countries. Production: Production department takes cares to the issues and process of production at plant. Liabilities to this department is to achieve economy scale and to produce best cement in Pakistan and this department is producing with brand name PAKCEM. Maintenance: Maintenance department looks after the whole plant which includes machinery and other equipment directly or indirectly related to production 27 | P a g e Internship Report 2011
DO Office: Plant manager office this department deals all the operation of plant and liability to this department is all the activities inside the plant. Supply Chain: This department is based at plant as well as at head office. Liabilities to this department are to provide raw material at the cheapest rate and to achieve economy of scale.
MD Office: Liabilities to this department are all the activities in the organization which includes plant, head office and all other regional offices. IT Department: Liability to this department is to take care of all the IT system on plant and head office. All the computer accessories and servers are under IT department email accounts oracl soft wares are maintained by IT.
Admin: This department take care the for the services given to employee such as cell phone , car, fuel, employee traveling, employee stay out of station, etc
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Learning as an Internee:
Documents Check list for Personal File Personal (Separator 1) SR # Description 1 Resume 2 Employment Application Form 3 Copy of CNIC 4 Copy of Passport (if applicable) 5 Dependants Information 6 Passport Size Photographs 7 Medical Reports 8 EOBI Membership form 9 NTN number Certificates (Seperator 2) 1 Educational documents 2 Experience letters Joining (Separator 3) 1 Resignation from last employer 2 Interview Assessment Form 3 Job Offer 4 Job Description 5 Joining Report 6 Employment Contract 7 Probation Evaluation Form 8 Confirmation Letter Training (Separator 4) 1 Training Invitation/ Notification Letter 2 Training Bond 3 Training Assessment Report 4 Copy of Certificates Others(Separator 5) 1 Performance Evaluation Form 2 Appraisal Results 3 Increment Letters 4 Bonus Letters 5 Leave Application/LFA 6 Tax Returns 7 Travel Forms 8 Copies of Letters issued to employees 9 Copy of Resignations 10 Copy of Final Settlement Status
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I did my internship in human resource department. I worked on File management project, LEA forms, confidentiality agreements currently I was working on a project regarding employee information needed by IT. Explanation is given below
File management:
I was assigned a work to arrange and maintain the employee data and files in a order which was given to me. This symmetry was provided to me by my line manager. Separator 1st includes the information related directly to employee which includes his resume ,employment application, copy of CNIC, copy of his passport if available, dependents information which includes his wife and children, medical report which is tested by Islamabad diagnostic Center and NTN number. Seprator 2nd includes the information related to his education and experience Separator 3rd includes data related to employee joining which includes Resignation from last employer, Interview Assessment Form, Job Offer, Job Description, Joining Report, Employment Contract,Probation Evaluation Form, Confirmation Letter Separator 4th includes the data related to employee development. Separator 5th includes the data related to employee performance.
Job 2nd:
Second task assigned to me to provide the information of all the on board employees which includes the name of employee, father name, CNIC number, contact number, blood group, bank account number, bank name, date of joining, date of resignation in case of resigned employee, their departments, their department code, their sub department code, their designation code, their employee code, their insurance number, marital status, dependents information, their employee card numbers etc
Job 3rd:
Third task assigned to me was to fill in the information required by EOBI (employee old age benefit institution) that information was based on the contribution pooled by employee and the organization, currently employee share was Rs.70 where company is contribution Rs.350 per month.
Job 4th:
Currently I started working on payroll of third party contractors Im under learning for this job.
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Financial Analysis of organization

Year Ended Dec 31st. (Rs. 000)
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Assets Fixed Assets Property Plant & equipment Intengible Assets Long term Advances Long Term Deposits Deferred Taxation 16,291,971,459 2,345,118 61,977,000 39,866,542 749,347,229 17,145,507,348 1,268,297,857 624,932,927 417,119 38,050,028 30,828,677 860,097 35,103,771 353,082,246 7,268,152 2,358,840,874 19,504,348,222 16,687,997,614 2,958,803 77,868,592 40,578,283 749,347,229 17,558,750,521 937,101,437 724,360,867 76,614,388 37,537,844 54,652,098 992,063 24,454,058 218,518,014 71,260,931 2,145,491,700 19,704,242,221 Current Assets Stores and Spares Stock in Trade Trade Debts Advances Short Term Prepayments Interest accrued Other Receivables Taxation - net Cash and Bank Balances Total Assets Equity and Liabilities Share Capital and Reserves Share Capital Authorized 2,250,000,000 Ordinary Shares for Rs.10 Issued Subscribed and Paid up Capital Reserves Non- Current Liabilities Current Liabilities Total Equity and Liabilities
2010
2009
2008 17,247,914,421 4,102,705 82,636,000 43,787,015 749,347,229 18,127,787,370 2,453,835,221 946,934,376 33,926,585 149,227,888 66,650,552 1,724,652 148,643,834 --55,472,574 3,856,415,682 21,984,203,052
2007
2006
17,962,218,515 7,148,514 92,965,500 42,429,872 542,157,959 18,646,920,360
16,995,907,107 --92,965,500 41,705,960 265,470,973 17,396,049,540
1,249,318,008 498,784,914 74,358,911 78,545,073 41,378,080 1,177,958 230,920,250 --678,424,680 2,852,907,874 21,499,828,234
273,440,674 158,358,236 --153,919,105 113,664,497 1,177,988 21,820,750 9,987,197 41,909,797 774,278,244 18,170,327,784
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22,500,000,000 13,126,444,880 (4,311,012,410) 8,815,432,470 1,761,663,367 8,927,252,385 19,504,348,222
22,500,000,000 13,126,444,880 (3,362,517,173) 9,763,927,707 3,075,231,877 6,865,082,637 19,704,242,221
22,500,000,000 13,126,444,880 (2,092,041,278) 11,034,403,602 5,680,934,617 5,268,864,833 21,984,203,052
22,500,000,000 11,345,149,360 (844,193,832) 10,500,955,528 7,876,583,521 3,122,289,185 21,499,828,234
22,500,000,000 6,768,378,870 (304,078,828) 6,464,300,042 8,018,308,565 3,687,719,177 18,170,327,784
Statement Of comprehensive Income Statement
Net Sales Cost Of Sales Gross Profit Distribution Cost Selling and admin Operating Expenses Operating Income Operating Profit Financial Cost Loss befor taxation Taxation Net Loss/Profit for the year Total Comprehensive Loss/Profit
33 | P a g e
2010 6,880,766,785 (6,024,857,146) 855,909,639 (491,859,027) (408,652,307) (6,109,517) 112,402,527 (794,218,324) 61,691,315 (980,678,084) (918,986,769) (29,508,468) (948,495,237) (948,495,237)
2009 8,129,960,591 (7,146,258,006) 983,702,585 (459,776,930) (547,245,050) (169,447,635) 21,218,643 (1,155,250,972) (171,548,387) (1,082,954,593) (1,254,502,980) (24,461,787) (1,278,964,767) (1,278,964,767)
2008 2007 2006 7,439,375,345 4,191,594,084 88,585,535 (6,864,524,968) (4,684,077,998) (230,399,966) 574,850,377 (492,483,914) (141,814,431) (520,314,667) (35,035,616) 47,408,433 (507,941,850) 66,908,527 (1,481,673,766) (1,414,765,239) 172,261,681 (1,242,503,558) (1,242,503,558)
(540,870,650) (3,187,200) 34,475,781 (506,394,869) (998,878,783) 19,201,854 (979,676,929) 276,686,986 (702,989,943) (521,096,900)
(150,781,932) (2,733,750) 1,634,361 (151,881,321) (293,695,752) (2,465,056) (296,160,808) 263,070,973 (33,089,835) (33,089,835)
Horizontal Analysis Of Balance Sheet

Assets Fixed Assets Property Plant & equipment Intengible Assets Long term Advances Long Term Deposits Deferred Taxation Current Assets Stores and Spares Stock in Trade Trade Debts Advances Short Term Prepayments Interest accrued Other Receivables Taxation - net Cash and Bank Balances Total Assets Equity and Liabilities Share Capital and Reserves Share Capital Authorized 2,250,000,000 Ordinary Shares for Rs.10 Issued Subscribed and Paid up Capital Reserves Non- Current Liabilities Current Liabilities Total Equity and Liabilities
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2010 90.70 32.81 66.67 93.96 138.22 91.95 101.52 125.29 0.56 48.44 74.50 73.02 15.20 1.07 82.68 90.72
2009 92.91 41.39 83.76 95.64 138.22 94.16 75.01 145.23 103.03 47.79 132.08 84.22 10.59 10.50 75.20 91.65
2008 96.02 57.39 88.89 103.20 138.22 97.22 196.41 189.85 45.63 189.99 161.08 146.41 64.37 8.18 135.17 102.25
2007 100.00 100.00 100.00 100.00 100.00 100.00 100.00 100.00 100.00 100.00 100.00 100.00 100.00 100.00 100.00 100.00
2006 94.62 --100.00 98.29 48.97 93.29 21.89 31.75 --195.96 274.70 100.00 9.45 6.18 27.14 84.51
115.70 510.67 83.95 22.37 285.92 90.72
115.70 398.31 92.98 39.04 219.87 91.65
115.70 247.82 105.08 72.12 168.75 102.25
100.00 100.00 100.00 100.00 100.00 100.00
59.66 36.02 61.56 101.80 118.11 84.51
Vertical Analysis Of Balance Sheet

Assets Fixed Assets Property Plant & equipment Intengible Assets Long term Advances Long Term Deposits Deferred Taxation Current Assets Stores and Spares Stock in Trade Trade Debts Advances Short Term Prepayments Interest accrued Other Receivables Taxation - net Cash and Bank Balances Total Assets Equity and Liabilities Share Capital and Reserves Share Capital Authorized 2,250,000,000 Ordinary Shares for Rs.10 Issued Subscribed and Paid up Capital Reserves Non- Current Liabilities Current Liabilities Total Equity and Liabilities 2010 83.53 0.01 0.32 0.20 3.84 87.91 6.50 3.20 0.00 0.20 0.16 0.00 0.18 1.81 0.04 12.09 100.00 67.30 (22.10) 45.20 9.03 45.77 100.00 2009 84.69 0.02 0.40 0.21 3.80 89.11 4.76 3.68 0.39 0.19 0.28 0.01 0.12 1.11 0.36 10.89 100.00 66.62 (17.06) 49.55 15.61 34.84 100.00 2008 78.46 0.02 0.38 0.20 3.41 82.46 11.16 4.31 0.15 0.68 0.30 0.01 0.68 0.25 17.54 100.00 59.71 (9.52) 50.19 25.84 23.97 100.00 2007 2006 83.55 93.54 0.03 0.43 0.51 0.20 0.23 2.52 1.46 86.73 95.74 5.81 1.50 2.32 0.87 0.35 0.37 0.85 0.19 0.63 0.01 0.01 1.07 0.12 0.05 3.16 0.23 13.27 4.26 100.00 100.00 52.77 37.25 (3.93) (1.67) 48.84 35.58 36.64 44.13 14.52 20.30 100.00 100.00
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Horizontal Analysis Of Income Statement
2010 Net Sales 164.1563 Cost Of Sales 128.6242 Gross Profit -173.794 Distribution Cost Selling and admin 113.8378 Other Operating Expenses Other Operating Income 326.0333 244.75 Operating Profit -7.55109 Financial Cost -5107.21 Loss befor taxation 115.1924 Taxation -10.6649 Net Loss/Profit for the year 182.019 Total Comprehensive Loss/Profit 182.019 Loss/Profit Per Share - Basic 122.0339
2009 193.9587 152.5649 -199.743 152.4455 61.54652 356.0075 20.99772 -5639.84 157.2485 -8.84096 245.437 245.437 164.4068
2008 177.4832 146.5502 -116.725 144.9435 137.5123 156.5297 -8.18968 -7716.31 177.3369 62.25869 238.44 238.44 171.1864
2007 100 100 100 100 100 100 100 100 100 100 100 100 100
2006 2.113409 4.91879 28.79575 42.00316 4.740606 46.80446 35.9487 -12.8376 37.12294 95.07891 6.350035 6.350035 10.16949
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Vertical Analysis Of Income Statement
Net Sales Cost Of Sales Gross Profit Distribution Cost Selling and admin Other Operating Expenses Other Operating Income Operating Profit Financial Cost Loss befor taxation Taxation Net Loss/Profit for the year
2010 -725.44 635.2016 -90.2387 51.85677 43.08428 0.644127 -11.8506 83.73456 -6.50412 103.393 96.88892 3.111082 100
2009 -635.667 558.7533 -76.914 35.94915 42.78813 13.24881 -1.65905 90.32704 13.41307 84.67431 98.08738 1.912624 100
2008 -598.741 552.4753 -46.2655 41.87631 2.81976 -3.81556 40.88051 -5.38498 119.2491 113.8641 -13.8641 100
2007 -804.379 898.8881 94.50909 68.88884 -6.616 62.27284 156.7819 -3.68489 153.097 -53.097 100
2006 -267.712 696.2862 428.574 455.6745 8.261601 -4.93916 458.9969 887.5709 7.449587 895.0205 -795.021 100
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Profitability Ratios
2010 2009 2008 Definition: Return on Assets Ratio = Average Total Assets Return on Equity Ratio = Average Owners' Equity Profit Margin Ratio = Total Sales Earnings Basic Earnings = Before Interest and Taxes Power Ratio Total Assets 2,358,840,874.00 (0.39) = (918,986,769.00) (0.06) = 6,880,766,785.00 Net Income (0.14) = (948,495,237.00) (0.16) = (1,278,964,767.00) 8,129,960,591.00 (1,254,502,980.00) 19,704,242,221.00 (0.06) = 13,126,444,880.00 13,126,444,880.00 (0.17) = Net Income (0.07) = (948,495,237.00) (0.10) = (1,278,964,767.00) (0.09) = 29,456,416,332.00 30,696,343,747.00 Net Income (0.03) = (948,495,237.00) (0.04) = (1,278,964,767.00) (0.04) = (1,242,503,558.00) 32,734,117,169.00 (1,242,503,558.00) 13,126,444,880.00 (1,242,503,558.00) 7,439,375,345.00 (1,414,765,239.00) 21,984,203,052.00
2007
2006
(0.02) =
(521,096,900.00) 30,584,992,126.00 (0.04) = (521,096,900.00) 14,729,338,795.00 (0.12) = (521,096,900.00) 4,191,594,084.00 (0.05) = (979,676,929.00) 21,499,828,234.00
(0.00102) =
(33,089,835.00)
32,508,387,421.00
(0.00466) =
(33,089,835.00)
7,106,797,805.00
(0.37) =
(33,089,835.00)
88,585,535.00
(0.02) =
(296,160,808.00)
18,170,327,784.00
Earnings per Share Ratio Income = Net Average Number of Common Shares Total Debt Ratio = Total Liabilities Total Assets Interest Coverage = Earnings Before Interest and Taxes 0.94 Ratio Interest Expense = 0.55 =
(0.72)
(948,495,237.00) 1,312,644,488.00 10,688,915,752 19,504,348,222 (918,986,769) (980,678,084)
(0.97) =
(1,278,964,767.00) 1,312,644,488.00 0.50 = 9,940,314,514.00 19,704,242,221.00 1.16 = (1,254,502,980.00) (1,082,954,593.00)
(0.95) =
(1,242,503,558.00) 1,312,644,488.00 0.50 = 10,949,799,450.00 21,984,203,052.00 0.95 = (1,414,765,239.00) (1,481,673,766.00)
(0.46) =
(521,096,900.00) 1,134,514,936.00 0.51 = 10,998,872,706.00 21,499,828,234.00 (51.02) = (979,676,929.00) 19,201,854.00
(0.03) =
(33,089,835.00)
676,837,887.00
0.64
= 11,706,027,742.00
18,170,327,784.00
120.14
(296,160,808.00)
(2,465,056.00)
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Definition: Current Ratio = Current Liabilities 8,927,252,385 6,865,082,637 5,268,864,833 Current Assets 0.26 = 2,358,840,874 0.31 = 2,145,491,700 0.73 = 3,856,415,682 0.91 = 2,852,907,874 3,122,289,185
0.21 =
774,278,244
3,687,719,177
Net Working Capital = Current Assets Current Liabilities Ratio Total Assets (0.34) = 19,504,348,222 19,704,242,221 2,358,840,874 - 8,927,252,385 (0.24) = 2,145,491,700 - 6,865,082,637 (0.13) =
2,453,835,221 - 5,268,864,833 21,984,203,052
(0.09) = 1,249,318,008 - 3,122,289,185
(0.19) =
273,440,674 - 3,687,719,177
21,499,828,234
18,170,327,784
Current Liabilities to = Inventory Ratio Inventory 1,268,297,857 937,101,437
Current Liabilities
7.04 =
8,927,252,385
7.33 =
6,865,082,637
2.15 =
5,268,864,833 2,453,835,221
2.50 = 3,122,289,185 1,249,318,008
13.49 = 3,687,719,177
273,440,674
Cash Ratio = Cash and Cash Equivalents Current Liabilities Operating Ratio = Operating Income Operating Expenses (0.05) = (6,109,517) 112,402,527 8,927,252,385
(0.50) = (4,494,847,219)
(0.34) = (2,362,600,782) 6,865,082,637 (7.99) = (169,447,635) 21,218,643
(0.45) = (2,362,600,782) 5,268,864,833 (0.74) = (35,035,616) 47,408,433
0.22 =
678,424,680 3,122,289,185 (0.09) = (3,187,200) 34,475,781
0.01 =
41,909,797
3,687,719,177
(1.67) =
(2,733,750)
1,634,361
Total Assets Ratio =
Total Sales Total Assets
0.01 =
61,691,315 8,815,432,470
(0.02) = -$171,548,387 $9,763,927,707
0.01
66,908,527 (0.10) = 11,034,403,602
(998,878,783) 10,500,955,528
0.004875 = (293,695,752) 6,464,300,042
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Liquidity Ratios
2010 2009 2008 2007
2006
Ratio Analysis: Current Ratio: The current ratio measures the number of items of the firm s current assets cover its current liabilities. The current ratio should be part of your business' basic financial planning, meaning it should be tracked monthly or quarterly. By keeping a close eye on this figure, you will recognize if it begins to get out of line. This will allow you to take early action to prevent your business from ending up in a difficult position. Cash Ratio: Cash and equivalent are the most liquid assets. The cash ratio shows the proportion of the assets held in the most liquid possible form. It is used to check the liquidity of the organization. Cash Ratio= Cash Equivalents + Marketable Securities/Current Liabilities Interest Coverage Ratio Interest coverage ratio shows the ability of a firm to cover up its interest charges on the income before interest and taxes. The ratio is obtained through dividing earning before interest and taxes (EBIT) of the bank by its interest expenses. Debt to Equity Ratio Debt-to-Equity ratio shows the extent to which debt financing is used relative to equity financing. Debt equity is calculated by dividing total liabilities of the bank by the total owner equity Working Capital: Working capital is the difference between current assets and current liabilities. Working capital is often considered a measure of liquidity by it self. This ratio shows the amount of liquidity. Working capital is used to check liquidity of the organization. Return on equity The amount of net income returned as a percentage of shareholders equity. Return on equity measures a corporation's profitability by revealing how much profit a company generates wit 40 | P a g e the money shareholders have invested.
ROE
is
expressed
as
percentage
and
calculated
as:
Return on Equity = Net Income/Shareholder's Equity
Return on asserts An indicator of how profitable a company is relative to its total assets. ROA gives an idea as to how efficient management is at using its assets to generate
earnings. Calculated by dividing a company's annual earnings by its total assets, ROA is displayed as a percentage. Sometimes this is referred to as "return on investment" The formula for return on assets is:
Earning Per Share Earning Per Share Net Income after Tax/Weighted Average Number of Common Share Outstanding Net profit margin The profit margin tells you how much profit a company makes for every $1 it generates in revenue or sales. Profit margins vary by industry, but all else being equal, the higher a company's profit margin compared to its competitors.
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FINANCIAL RATIOS
PROFITABILITY: Lafarge Pakistan Cement, established in December 2006 showed impressive performance over the three years period in business. After its first year in FY'06 most of the figures were shown a negative range. Gross Profit Margin was -158.1% followed by Net Profit Margin of -43.15%. ROA and ROE showed similar results in FY'06. However improved performance was seen in the FY'07, where the negative ratios were improved and minimised. The Gross Profit Margin was -11.91% with the Net Profit Margin to 12.43%. ROE and ROA both remained in negative percentages. However we saw a positive value in FY'08; Gross Profit Margin was 7.73%. However, Net Profit Margin deteriorated because of hefty finance costs that the company had to bear for their debt. ROA and ROE remained negative. In FY'09, the company continued its improving trend of Gross Profit Margin, mounting to 12.10% from 7.73% in FY'08. However, further analysis show a decline in the Net Profit Margin and Return on Equity and Assets. The decline in Net Profit is attributed to High Administrative Expense and lower Other Income. Administrative expense was due to Royalty fees mounting Rs2bn and the other income decreased due to the lower mark-up on advances, which had reduced because of the loosening of the monetary policy by the State Bank. With this trend the ROA and ROE reduced by 6.49% and 13.1% respectively.
LIQUIDITY:
In FY'06, Current Ratio and Quick Ratio were low at 0.21 and 0.16. In FY'07 the Current Ratio peaked at 0.91 and the Quick Ratio at 0.75. This year the ratios were the highest compared to the coming years. Lafarge Cements was again seen in a deteriorating liquidity condition as the Current Ratio and Quick Ratio both decreased in FY'09. The Current Ratio fell to 0.31x from 0.73 in FY'08 and the Quick Ratio following a similar trend plunged to 0.21x from 0.55x in FY'08. The condition was due to a decrease in Current Assets along with an increase in Current liabilities for the current period.
DEBT MANAGEMENT RATIOS The gearing ratio for the company have been varied. In FY'06 the Debt-to-Asset ratio was 0.50, whereas the Debt-to-Equity was 1.37x. Long Term Debt to Equity was 1.09, showing that emphasis was on long term debt. In FY'07, conditions improved as the Debt to Asset ratio fell to 0.33x, showing the repayment of their loans within a years 42 | P a g e Internship Report 2011
time. This behaviour was also noted in the Debt to equity section where the ratio declined to 0.67x from 1.37x in the previous year.
In FY'08, the ratio slightly deteriorated as the Debt to Asset increased to 0.37 followed by the Debt to Equity to 0.70x, reason for this is the short term running finance that increased the debt for the company(Rs.2.4bn). However, the Long Term Debt to Equity further improved by decreasing to 0.40
In FY'09, the company reduced its leverage position by retiring most of long term and secure short term financing. The debt included long term loans acquired through a syndicate of local banks and also Liabilities Subject to Financial Lease. The company has repaid all the amount outstanding with respect to Financial lease and acquired assets at the end of term. The other long term loans are being repaid on bi-annual basis which was acquired in March 2008 for capital expenditure purpose. The repayment has been relaxed due to loosening of key rate policy which has affected the KIBOR rate. The debt to asset reduced to 0.34x in FY'09 from 0.37x in FY'08, similarly the debt to equity reduced to 0.69x in FY'09from 0.73x in FY'08.
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SWOT Analysis: Opportunities and Threats Opportunities Construction of large dams Construction of four large dams will generate demand of 3.7mn tons as construction activities start. Extent of demand generation will depend on size of dam. Improved access to regional market Afghanistan is Pakistans largest cement export market. The prospects for cement exports seem bright in the medium term due to rising domestic cement demand. Pakistan also achieved improved access to India after the complete removal of the 12.5 percent custom duty on Portland cement imports from January 2007, showing improved export opportunities for Pakistan. Demand of Pakistani cement by Russia Fresh enquiries have been received from Russia and buyers are quoting very attractive prices as Pakistani cement quality is of very high standard and holds good strength. Earthquake in China In the month of May china is hit by severe earthquake having the magnitude of 7.8 rector scale. This earthquake has caused the serious destruction in china. This disaster is also an opportunity for Pakistan cement industry to export cement to china. High prices of cement in the international market Cement exports are expected to rise by a massive 107 per cent due to the primary source of overall cement growth in FY08, the high exports outstanding to the cement supply shortage in India and Middle East which lead to rocketing cement prices in the region. Increase in demand of cement due to the up coming sports event South Africa is schedule to host the football world cup of 2010 due to which they need to make the football stadiums for the World Cup and Sri Lanka are also expected to approach Pakistani companies for cement imports because Sri Lanka to co-host the cricket world cup of 2011.
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Threats Indian industry is also expanding its cement capacity Presently, India faces an acute cement shortage in its Southern states of Tamil ado and Madras and in north Punjab. However, reports indicated that the Indian industry is also working on a fast track to expand their capacity in these regions to off-set the shortfall and this can convert India from dependent importers to potential exporters. High energy prices Recently cement industry of Pakistan is facing high energy prices due to increase in the international prices of coal and oil. As our coal contain high percentage of sulphur. Due to which Pakistan cement industry is not able to use local coal as a source of energy and import coal from different countries at high prices. High finance and depreciation cost As Pakistan cement industry is expanding its capacity to get the proper advantage of strong demand of cement in different countries. The total industry installed capacity is expected to reach 49.1 million tons per annum by FY10 and because of higher expansion, finance and depreciation cost is also going to rise by the FY10. Decrease profitability due to competition in cement industry The increase in competition among the players has decreased the prices of cement in the local market. The cement manufacturers decrease the prices of there products in order to get high market as compared to its competitor. High level of taxation Presently, the cement industry of Pakistan is heavily burdened due to levy of Federal Excise Duty @ Rs. 700 per ton and General Sales Tax @ 16% on duty paid value. In addition to Federal Excise Duty and General Sales Tax, cement industry is also paying the provincial taxes (Excise Duty) on acquiring of raw material for production of cement i.e. limestone and clay. A comparison of taxation and retail prices with other regional countries revealed that taxation in Pakistan is highest while
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Strengths Cement export to India through railway Most of the cement export to India is through railway. In order to facilitate cement export to India, the railways has increase its frequency of trains to India from Pakistan. This step has been taken by Pakistan Railways in order to increase cement export to India, which is regarded as a highly profitable market. Use of Coal At present most of the cement companies have switch to coal or gas as their basic fuel. The cost of cement production per ton by furnace oil was around Rs2, 083 whereas the cost of production per ton by coal was Rs8, 68, saving Rs1, 215 per ton. Cheaper labor The labor of Pakistan is very cheap. This is the important strength of the cement industry as the cement companies of Pakistan has to pay less to there labor which result in saving of there income which later on can be utilized in the expansion of cement plant. Good Government Policies Government policies are in the favor of cement sector. Due to the government favorable policies the cement sector gets the highest growth rate of 21.11% among all the industries of Pakistan in year 2006-07. The total industry installed capacity is expected to reach 49.1 million tons per annum by FY10 High Quality of Cement Pakistan produces good quality of cement. This is the main reason due to which recently Russia is offering high price for Pakistani cement. Globally Pakistan is recognized for producing good quality of cement due to which countries like Afghanistan, India, Middle East and some African countries prefer to import cement from Pakistan. Weaknesses Increase freight charges Exporters of the cement often complain that railways freight charges for carrying cement from Lahore city to the border of India are Rs500 per ton ($8 per ton) while it covers only 35 km. Against this, they say on the Indian side, the freight is only $3 per ton for bringing goods from Chandigarh to the border area. Cement exports have been badly hit by high fee that is being charged by trucks and also by foreign shipping companies for the transport of cement from Pakistan to India. This increase in freight charges effect our exports.
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Logistic Problem Some of the cement companies of Pakistan have received orders from Russia with a price tag of Rs 860 per bag. But our service is the biggest hurdle in the way as our transportation system is not good enough to transport cement to Russia due to which our cement companies might lose the chance to capture the Russian market which is a highly profitable market. Usage of Paper bag Pakistani cement companies export their cement in paper bags because paper bags are cheap as compared to plastic bags. But the Cement exported in paper bags is against the International standards and companies have to pack the cement in plastic bag. Idle capacity of various players The biggest problem of cement industry is the idle capacity of various players. As many cement players are not operating at there full capacity.
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SWOT-I MATRIX OPPORTUNITIES

STRENGTH
o Most of the cement companies have switch to coal as their basic fuel to reduce the cost of production per ton of cement. Cement export to India has increased as Indian market is highly profitable. Government policies are in little favour of cement sector as it has reduced the excise duty over cement. o Even though coal is readily available in Pakistan but we import coal because local coal available contain high percentage of sulphur. We shouldnt completely focus over Indian market because little political differences can terminate the contract. Due to political instability there are chances that new Government takeover and impose new rules and regulations.
THREATS
WEAKNESSES
There is an opportunity for us to focus over other markets rather than only focusing the Indian market. Pakistani cement companies export their cement in paper bags because paper bags are cheap as compared to plastic bags.
Freight charges for carrying cement from Lahore city to the border of India are high. The Cement exported in paper bags is against the International standards and it should be packed in plastic bags. Fluctuating fuel prices can have a negative impact on the revenues which can discourage foreign investors.
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CONCLUSION
At present there is no such organization in the world that is free from problem and challenges. Every concern has to strive and struggle a lot to be more profitable and to get more competitive edge.
The industry should review its price structure and not lose sight of fact that its survival and sustainability lies in consolidating its domestic market as the construction boom in neighboring markets may not last long. The industry needs to have a long-term vision. It is essentially important for it also to adopt measures to reduce its present production cost further by improving production efficiency, conserving energy and employing advanced techniques, such as installation of advanced process controls and developing bulk handling system.
Material sciences are developing rapidly the world over, and advanced construction materials are being produced, in particular, for enhancing quality, strength and efficiency in the concrete construction. The industry should, therefore, make investment in advanced cement technologies, over short and long term horizons, in the wake of recent destruction due to earthquake.
Consolidation is needed for industry stability because of following reasons: Cartels are unstable by their nature. Industry needs one or two dominant players for long-term sustainability in prices and profits World norm is that top four players have more than 60% market share Consolidation process will be needed to increase market share of larger players rather than going for capacity expansions We may see acquisitions in the industry as the industry goes through overcapacity cycle FUTURE OUTLOOK: The breaking of the cement cartel has affected the industry profitability wise, however in the current condition Lafarge Pakistan Cement has shown results which are competing to the industry leaders.
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The company being a multinational with leading global construction company, it has alot to offer to Pakistan and to the cement industry. With the foreign expertise and management skills Lafarge has bright prospective for future. Although the prevailing condition of the country with high uncertainty and many financial risks such as the exchange rate, country and liquidity condition swirling around, lafarge promises to be one of the leading companies in the industry which is ready for any challenge ahead. Certain factors can still play a detrimental role in the growing process of the company, such as reformation of the cartel, exchange rate hike, which is likely to affect imports of the company, the current demand situation for construction etc. However, the multinational company can use its resources worldwide and diversify its risk from one country to another.
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RECOMMENDATIONS:
After doing a deep study and witnessing everything that goes on in a branch, I would then like to make the recommendations that; First of all, the management needs to overlook the major problems that the organization is currently facing and then develop strategies to eradicate them. Some of the suggestions that I would like to give at the end are: Promotion and Mass Media Publicity Lafarge Pakistan Cement LTD can improve its Marketing strategies to acquire more promotion and mass media publicity by the use of effective channels of promotions like TV, Newspaper Advertisements. It can also improve its magazine publication that it releases each month. Better Reward System Better reward system is one of the most important requirements in order to reduce the problem of Employee retention and improve Employee motivation. Continuous Training Of Employees There is lack of proper and continuous training of employees that needs to be solved. Creation of enhanced performance appraisal system. Proper use of stationary. Implementation of enhanced Marketing system.
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Limitation:
Internship was done for my own sake of doing best but there were some limitations applied on me for being an internee though I was provided by all the information I needed but I didnt have excess to confidential information and it is obvious company does not share such information with an internee.
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BIBLIOGRAPHY
(Cement Pakistan Company - Pakistan Cement Industry 2009) http://www.cement.com.pk/cement/pakistan-cement-industry.html (Attock Cement Pakistan Ltd 2004 - 2005) http://www.attockcement.com/ (Lucky Cement n.d.) www.lucky-cement.com (China Cement net - Cement network 1999-2009) http://www.cementchina.net/ (Economy of Pakistan 2009) http://en.wikipedia.org/wiki/Economy_of_pakistan (DG. Khan Cement Company Limited 2005) http://www.dgcement.com/ (World Trade Organization n.d.) http://en.wikipedia.org/wiki/WTO (Sector Overview - Cement n.d.) www.LafargePakistan.com Wikipedia Larfarge Pakistan. Www.scribd.com History of cement industry Wikipedia
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ANNEXES:
Documents Check list for Personal File Personal (Separator 1) SR # Description 1 Resume 2 Employment Application Form 3 Copy of CNIC 4 Copy of Passport (if applicable) 5 Dependants Information 6 Passport Size Photographs 7 Medical Reports 8 EOBI Membership form 9 NTN number Certificates (Seperator 2) 1 Educational documents 2 Experience letters Joining (Separator 3) 1 Resignation from last employer 2 Interview Assessment Form 3 Job Offer 4 Job Description 5 Joining Report 6 Employment Contract 7 Probation Evaluation Form 8 Confirmation Letter Training (Separator 4) 1 Training Invitation/ Notification Letter 2 Training Bond 3 Training Assessment Report 4 Copy of Certificates Others(Separator 5) 1 Performance Evaluation Form 2 Appraisal Results 3 Increment Letters 4 Bonus Letters 5 Leave Application/LFA 6 Tax Returns 7 Travel Forms 8 Copies of Letters issued to employees 9 Copy of Resignations 10 Copy of Final Settlement Status
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DETAILS OF INSURED PERSONS FOR WHOM CONTRIBUTION HAS BEEN DEPOSITED BY THE EMPLOYER YEAR MAIN_CODE SUB_CODE EOBI_NO NIC CNIC NAME DOB DOJ DOE EMP_SHARE IP_SHARE TOKEN_NO
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