1|Page

ON
PAK ELEKTRON LTD.

Presented to: Prof. Muhammad Muazzam Mughal

Presented by: Saba Riaz
Roll No # BC11-441
Session (2011-2015)
B.Com (Hons)/M.Com
Submission date:

20th May 2015

Page | 2

IN THE NAME OF ALLAH

The most Beneficent, the most merciful
And we split the Earth in fragments. And
Produce there corn. And grapes and nutritious
Plants and olives and dates and enclosed
Garden dense with lofty trees, and fruits, and
fodder, for use and convenience to you and
your cattle.
(AL-QURAN)

TABLE OF CONTENTS

 Letter of Transmittal5
Page | 3
Acknowledgement...6
Letter of submission to concern teacher..7
Preface...........8
Executive Summary....9
Dedication....10
Vision Mission Statement....11
Introduction / History....13
Product summary...20
Ratios Analysis...25
Organization chart.....53
Divisions...58
Accounts Department...62
Expenses..64
Finance & I.T Department.71
Financial Statements.84
Balance sheet.
Income statement.
Cash Flow Statements.

Change in Equity..

 SWOT Analysis...89
Page | 4
SWOT ANALYSIS DESCRIPTION...90
Recommendations.91
Work done by me92
New Knowledge Acquired ..95
Biblography.96

Letter of transmittal

Page | 5

Page | 6

ACKNOWLEDGMENT

All the praises are for the almighty ALLAH, who Help me with the ability and potential to
complete this Internship.All the respects for the Holly Prophet (Peace be upon him) who
is forever a touch of guidance and light of knowledge for mankind.And thanks to Prof.
Dr. HASSAN MOBEEN ALAM who gives me the chance for doing internship.
Words are very few to express enormous humble obligations to my affectionate Parents
for their prayers and strong determination to enabling me to achieve this job.
First of all, I am thankful to Almighty Allah, who has given me the strength and
determination to carry out this internship. My resource persons were
Mr. Nadeem Ud Din
Mr. Abdul Ahad
Mr. Asad Ullah
And each personnel of finance department I would like express my sincere gratitude to:
Mr. Nadeem Ud Din
For being so kind and very cooperative

Letter address to concern teacher about the

Page | 7
submission of report
Mr. Prof Muhammad Muazzam Mughal
Hailey College of commerce,
University of the Punjab,
Subject: Address to teacher about Internship Report
Dear Sir,
I have completed the internship report required to be submitted as a
precondition for the completion of B.COM (HONS) at Hailey College of
Commerce, University of the Punjab, Lahore.The Internship Report is based on my
6 weeks attachment in Pak Electron Limited (PVT) LTD, A good and the largest
electronic company in Pakistan. I have tried my level best to prepare an effective and
creditable report.
I also want to thank you for your support and patience with me and I appreciate the
opportunity provided by the Hailey College of Commerce, University of the Punjab,
Lahore.
It will be kind of you if you accept my report. I hope you will be pleased with the report.
Yourssincerely
Saba Riaz
BC11-441

Page | 8

PREFACE

There is a large difference between knowledge and practical work. Books are the
source of Knowledge, but there is the practical work is something different. After
bachelor of Commerce an internship for six weeks is a good step for students to acquire
some practical knowledge about the course.
In class student gain different concepts of accounting, finance, banking, insurance,
management, computer and about other related fields. Internship program provide him
the chance to see all the things from near and strengthened his concepts.
Office environment is entirely different than class, so the student faces various
problems in practical work, business field and office environment. But with the laps of
time they adopt themselves with the office environment and learn the management
behaviors, attitudes and nature of work.
This training provides me a lot of practical knowledge and confidence, which I feel will
help me in my practical life. In the PEL Industry, The person whom I worked tried best to
deliver some knowledge. In this report there is a complete profile of the Saigol Group,
who is the owner of the PEL Industries. There are also all the information about the
policies, structure and all the financial information about Pak Elektron Limited.

EXECUTIVE SUMMARY

Pak Elektron Limited (PEL) is the flag bearer of the Saigol Group of Companies. The
Page | 9 manufactured by PEL have always been of high standard and the name 'PEL'
products
is synonymous with quality all over Pakistan. Since its inception, the company has been
working for the advancement and development of engineering know-how in Pakistan.
The company has produced hundreds of engineers, skilled workers and technicians
through its apprenticeship schemes & training programs.
The company comprises of two divisions:

Appliances Division: This Division of PEL consists of home appliances

manufacturing particularly Refrigerators

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
Modarba have provided especial credit limits to the Company in ordeto support its
operational activities.
While working with PAK ELEKTRON LTD, I got very broader visions about company
financial activities more than those that I had learned during my
B-COM(hons)
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.

Page | 10

DEDICATION
I dedicate this internship report to my beloved Prophet Muhammad (S.A.w) and my
parents who are the one who nourished me and supported me in every walk of life.
My sweet parents, nice teachers, sisters and brothers, friends and very nice cooperative people of the PEL industry who instilled in me the importance of education
and hard work.
Who sacrifice their sweet wishes to fulfill my wants. And whose prayers helped me in
every field.

Vision & Mission Statement

Page | 11

VISION
To excel in providing engineering goods and services through continuous improvement.

MISSION
To provide quality product and services to the complete satisfaction of our customer and
maximize returns for all stake holders though optimal use of resources.To promote
good governance, corporate values, and safe working environment with strong sense of
social responsibility.

Page | 12

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
Page | 13
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, AEG experts and PEL personnel carried out
the designing and manufacturing of all equipment jointly. PEL staff, in the meantime,
had received specialized training in USA and West Germany, which enabled PEL to
establish it as the leading manufacturers of electrical equipment in the country with an
excellent reputation for high quality, and thus PEL came to be known as "THE QUALITY
CONSCIOUS COMPANY".

After conclusion of agreement with AEG, the then sponsors purchased Malik Brothers
Page | 14
total share holding of AEG. 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 PreeceCardew& 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.
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 the
Page | 15
existing plant.

The machinery has come into operation in October 1991 and with the balancing,
modernization and replacement of machinery, the production capacity of Refrigerator
Section will reach a level of 252,450 cubic feet.
The management of the Company decided to further expand its operation by
establishing a plant for the manufacture of compressors for refrigerators and deep
freezers.

The technical know-how agreement has been signed with M/S NECCHI

Compressori, Italy for the assembly and progressive manufacturing of compressors for
refrigerators and deep freezers.

LOCATION AND FACILITIES

The project is situated at 14-k.m. Ferozepur Road, Lahore, and is spread over an area
of 242 kanals and 15 Marlas of leasehold land in industrial area of KotLakhpat, Lahore,
and presently the total covered area comes to 232,883 square feet. Factory is located
on the main road where public transport is available round the clock helping in easy
access to the labor and customers.

Page | 16
TECHNICAL KNOW-HOW & FOREIGN COLLABORATION
The company had obtained technical know-how from General Corporation (now Fuji
General Limited) of Japan for the manufacture of its Air conditioners and thus was able
to produce a unit, which is now preferred by the consumers over all the other imported
as well as locally manufactured units. The know-how contract was for five years ending
in the year 1988.
For the manufacture of Refrigerators, the know-how was obtained from SILTAL CASA
SPA of Italy, who are one of the major manufacturers of "white-goods" in Italy and has
assisted in the establishment of similar plants in many other countries. The technical
know-how for Deep-freezers was obtained from ARISTON of Italy who is the largest
manufacturers of "white-goods" in Italy. They
have also helped lot of other countries in setting up similar projects for making "white
goods"
The company has obtained technical know-how from HITACHI for the manufacture of
Vacuum Circuit Breakers.

Company Profile & Historical Overview

1956 Incorporation of
Pak Elektron Limited

1958 Start of Commercial Production

Distribution Transformers and Switch
Gears in Technical Collaboration with
AEG Germany

1981
Page | 17 Manufacturing of Air Conditioners
with assistance of Fujitsu Japan

1987 Manufacturing of Refrigerators

& Deep Freezers in Technical
Collaboration with IAR-SILTAL
& ARISTON of Italy

1988 Listing with all of Stock Exchanges

Acquired License to manufacture
VCBs from Hitachi, Japan

1994 Quality Management System

Certification for Energy Meter
ISO 9001 by SGS

1997 Acquired Technology from

Carrier, USA to manufacture
Air Conditioners

2000 Launching of new crystal

series refrigerator under
technical collaboration
of Danfoss, Germany

2004 Acquired Technology from

GANZ, Hungry to Produce
Power Transformers

2006 Formal start of EPC Business

Segment of the Company

2009 4th CSR National Excellence

Award 6th Annual Environmental

Excellence
Page | 18
Award Export of Power Transformer

2010 Inauguration of New Distribution

Transformer Factory by Prime
Minister of Pakistan under
Technical Assistance from
Pauwels, Belgium.

2011 Launching of New Desire

Series Refrigerator
Prequalification with Saudi
Electrical Company SEC

2012 Launch of new Arctic series

Refrigerator with new
Aesthetics

2013 Successful Commissioning of

220 KV GIS Shalimar Grid
Station worth Rs. 1.3 Billion

2014 Launching of New Glass Door

Refrigerator with New
Aesthetics

Page | 19

Notice is hereby given that the 57 Annual General Meeting of the Shareholders of Pak
Electron Limited will be held on Tuesday, April 30, 2013 at 11:00 A.M. at Factory
Premises 14-KM. Ferozepur Road, Lahore to transact the following business:1. To confirm the minutes of Last Annual General Meeting held on30 April 2012.
2. To receive and adopt the Annual Audited Accounts of the Company for the year
ended 31 December 2012 together with Directors' and Auditors' Reports thereon.
3. To appoint Auditors to hold office till the conclusion of the next Annual General
Meeting and to fix their remuneration.
4. Any other business with the permission of the Chair

PRODUCTSSUMMARY

1. Appliances Division
Page | 20
2. Power Division
PAK ELEKTRON
LIMITED

POWER DIVISION

APPLIANCES
DIVISION

TRANSFORMER

ENERGY METER

REFRIGERATOR

SPLIT AIR
CONDITIONER

SWITCHGEAR

POWER
TRANSFORMER

MICROWAVE OVEN

TELEVISION

WASHING MACHINE
DEEP FREEZER

STATEMENT OF VALUE ADDITION

Page | 21

2014

2013

Contract Revenue
Sales

2,842,117
21,283,599

2,026,964
16,829,452

Value Added
Other Income

24,125,716
32,483

18,856,416
46,219

Wealth Created

24,158,199

18,902,635

Rupees in thousands
Wealth Generation

Wealth Distribution
Cost of Sales
Employees Remuneration and Benefits
Depreciation and Amortization
Administrative and Other Expenses
Distribution Cost
Finance Cost
Government Levies
Profit for the Year

12,613,266
1,515,747
756,416
311,026
1,794,325
1,892,828
3,033,122
2,241,469

52%
6%
3%
1%
7%
8%
13%
9%

10,945,419
1,306,677
721,121
314,316
1,121,918
1,819,459
2,066,398
607,327

58%
7%
4%
2%
6%
10%
11%
3%

Wealth Distributed

24,158,199

100%

18,902,635

100%

Page | 22

2013
employees remuneration
and benefits

depreciation and
amortization

administrative and other

expenses

distribution cost

finance cost

govt levies

profit of the year

2014
cost of sales

employees remuneration
and benefits

depreciation and
amortization

administrative and other

expenses

distribution cost

finance cost

govt levies

profit of the year

Page | 23

KEY OPERATING AND FINANCIAL DATA

2014

2013

2012

2011

2010

2009

2014

2013

2012

2011

2010

2009

Gross Sales

24,126

18,856

20,294

13,723

19,895

16,118

Net Sales

20,518

16,469

17,770

11,343

17,523

14,622

Gross Profit

6,309

4,055

3,644

1,065

3,708

3,338

EBITDA

5,159

3,316

2,917

309

2,668

2,082

Financial Charges

1,893

1,819

2,051

1,413

1,624

1,373

Profit/(Loss) Before Tax

2,545

775

161

(1,802)

261

394

Profit/(Loss) after Tax

2,241

607

115

(1,163)

189

261

6.61

4.04

0.59

(9.90)

1.24

2.17

3,981

2,681

1,219

1,219

1,219

970

450

450

450

450

450

526

11,026

6,545

3,908

3,603

4,566

4,007

7,344

5,728

5,621

4,571

4,969

3,597

Rupees in millions
Rupees in millions
FINANCIAL

Earning/(Loss) Per Share - Basic

Share Capital
- Ordinary
- Preference
Shareholders Equity

Long Term Loans

Current Liabilities

7,148

7,782

9,832

9,629

9,006

6,554

Page |Portion
24
Current
of LTL / LF

1,523

422

79

1,145

1,234

763

Non Current Assets

15,068

15,295

14,198

14,463

13,981

10,356

Fixed Assets

14,467

14,818

13,811

14,089

13,435

9,720

Current Assets

17,459

11,848

11,016

9,331

11,549

8,714

Total Assets

32,527

27,143

25,215

23,794

25,530

19,070

2.44

1.52

1.12

0.97

1.28

1.33

25.51%

11.62%

3.05%

4.41%

6.77%

0.32

0.34

0.42

0.38

0.36

0.35

20.86%

19.16%

22.63%

1.57%

16.83%

19.52%

Current Ratio
Return on Equity
Debt Equity Ratio
Return on Capital Employed

(28.47%)

DIVIDEND
Cash Dividend

Stock Dividend

10%

10%

Transformer - MVA

3,097

2,537

3,967

2,029

2,999

2,466

Switchgears - Numbers

6,258

8,021

1,780

1,490

3,443

4,046

579,237

277,732

264,148

349,611

843,880

443307

9,712

1,720

919

39,565

91,952

28,581

4,152,270 3,306,428 3,042,064 2,660,387

3,660,858

3156604

PRODUCTION DATA

Energy Meter - Numbers

Air Conditioner - Numbers
Refrigerators/Deepfreezers - Cfts
Microwave Oven-Liters

236,391

Page | 25

Ratio Analysis
A sustainable business and mission requires effective planning and financial
management.

Ratio analysis is a useful management tool that will improve your

understanding of financial results and trends over time, and provide key indicators of
organizational performance. Managers will use ratio analysis to pinpoint strengths and
weaknesses from which strategies and initiatives can be formed. Funders may use
ratio analysis to measure your results against other organizations or make judgments
concerning management effectiveness and mission impact
For ratios to be useful and meaningful, they must be:

Calculated using reliable, accurate financial information (does your financial

information reflect your true cost picture?)

Calculated consistently from period to period.
Used in comparison to internal benchmarks and goals o Used in comparison to

other companies in your industry.

Viewed both at a single point in time and as an indication of broad trends and

issues over time.

Carefully interpreted in the proper context, considering there are many other
important factors and indicators involved in assessing performance.

Ratios can be divided into four major categories:

Profitability Sustainability
Operational Efficiency
Liquidity
Leverage (Funding Debt, Equity, Grants)

Page | 26
The ratios presented below represent some of the standard ratios used in business
practice and are provided as guidelines. Not all these ratios will provide the information
you need to support your particular decisions and strategies. You can also develop your
own ratios and indicators based on what you consider important and meaningful to your
organization and stakeholders

Ratio Analysis
Ratio analysis includes calculating different ratios for the organization of the figures
taken from its financial statement. The basic purpose of ratio analysis is that absolute
figures often give misleading image so comparison with other figures is necessary
which can be done through ratio analysis.
Ratio Analysis includes the following ratios
1. Liquidity Ratio
a. Current Ratio
b. Quick Ratio
2. Activity Ratios
a. Total Assets Turnover
b. Stock in Trade to total Assets
c. Inventory Turnover
d. Advances to total Stock in Trade
e. Average Collection period
f. Average Payment Period

3. Debt Ratio
a. Debt Ratio
b. Debt to Equity Ratio
c. Time Interest Earned Ratio

Page
27
4. |Profitability
Ratios
a. Net Profit Margin
b. Earnings per Share (EPS)
c. Return on Assets (ROA)
d. Return on Equity (ROE)
e. Gross Profit Margin
f. Operating profit Margin

Page | 28

Liquidity Ratios
The liquidity of a firm is measured by its ability to satisfy its short-term obligations as
they come due.
Current Ratio
The current ratio, one of the most commonly cited financial ratio, measures the firms
ability to meet its short-term obligations. A higher current ratio indicates a greater
degree of liquidity. Current ratio can be calculated as
Current Ratio = Current Assets/Current Liabilities
Ratio
Current Assets
Current Liabilities

2013

2014

11272731
7697604

15621946
7082116

146.44%

220.58%

Current Ratio
250
200
150
100
50
0
2013

2014

Page | 29

Interpretation
As current ratio represents the firms ability to meet its short-term obligations. So it
should be higher not to be decreased so the pel Ltd should think over it to increase its
liquidity. So current ratio of PEL increased in 2014 as compared to the 2013.

FORMULA
[Current Asset Stock/ Current Liabilities]
Rs. in (000)
Ratio
Current Assets
Stock
Current Liability

2013
11272731
3776686
7697604

2014
15621946
6140170
7082116

97.0%

133.8%

Quick Ratio
160
140
120
100
80
60
40
20
0
2013

Interpretation

2014

A ratio shows that organization pay off its debt without selling any securities. Quick ratio
Page | 30
is also increased in 2014 as compared to the 2013.

2013
Sales
Total Assets

15425873
26567825

58.06%

2014
18522117
30689642
60.35%

Activity Ratios

Activity ratios measure the speed with which various accounts are converted into cash
inflows or outflows. Activity ratio measure how efficiently a firm operates along a variety
of dimensions such as disbursements, and collections .

Total Assets Turnover = Sales Total Assets 100

Rs. in (000)

Ratio
Sales
Total Assets

2013

2014

15425873
26567825
58.06%

18522117
30689642
60.35%

Page | 31

Total Asset Turnover

61
60.5
60
59.5
Total Asset Turnover

59
58.5
58
57.5
57
56.5
2013

2014

Interpretation
Total asset turnover increased in 2014 as compared to 2013 by the amount which
shown in abovechart.

Inventory turnover
Page | 32

Inventory Turnover =

Cost of Goods
Inventory

Measures the activity or liquidity of firms inventory turnover

Rs in (000)
Ratio
Cost of goods sold

2013
11542346

2014
12707604

Inventory

3776686
3.056

6140170
2.069

Inventory Turnover
3.5
3
2.5
Inventory Turnover

2
1.5
1
0.5
0
2013

WORKING CAPITAL

2014

Page | 33
FORMULA
[Current Assets Current Liabilities]
(Rs in Thousands)

Ratio

2013

2014

Current assets
Current Liabilities

11272731
7697604

15621946
7082116

3575127

8539830

9000000
8000000
7000000
6000000
5000000
2

4000000
3000000
2000000
1000000
0
2013

2014

Interpretation

Page
34
As
we |observe
that working capital increased in 2014 as compared to 2013. As current
ratio show firm ability to meet its short term obligation.so its should be higher not
decreased.

DEBT RATIO
FORMULA
[Total Liabilities/Total Assets]*100
(Rs in Millions)
Ratio
Total Debt
Total Assets

2013

2014

15821287
26567825

16520203
30689642

59.55%

53.82%

Page | 35

Debt Ratio
62
60
58

Debt Ratio

56
54
52
50
2013

2014

Interpretation
As this ratio measures the proportion of total assets financed by the firms creditors. The
higher this ratio, the greater the amount of other peoples money being used to generate
profits. The higher this ratio, the greater the firms degree of indebtedness and the more
financial leverage it has the debt ratio of PEL company decreased in 2014 as compared
to 2013.


Page | 36
FORMULA

[Debt / Debt+ Equity]

Rs.In (000)
Ratio
Debt

2013
15821287

2014
16520203

Debt + Equity

[15821287+6134282]
72.06%

[16520203+9601082]
63.24%

Debt Equity Ratio

74
72
70
68

Debt Equity Ratio

66
64
62
60
58
2013

2014

Page | 37

Interpretation
As observed that debt to equity ratio decreased from 2013 to 2014.
It measures the return earned on the common stockholders investment in the firm.
Generally, the owners are better off the higher is this return. It indicates that the
company have earned on each rupees of common stock equity in this year.

DEBT TO EQUITY RATIO

FORMULA
[Total debt-Equity]
(Rs in Thousands)
Ratio
Total Debt
Equity

2013
15821287
6134282

2014
16520203
9601082

9687005

6919121

Page | 38

Debt to Equity Ratio

12000000
10000000
8000000

Debt to Equity Ratio

6000000
4000000
2000000
0
2013

2014

Interpretation
Debt to equity ratio of pel company decreased as shown in graph . This ratio is used to
assess the extent to which the firm is using borrowed money. The ratio tells us that the
creditors are providing rupees for each one rupees being provided by shareholders.
Creditors would generally like this ratio to below the

lower the ratio the higher the level of the firms financing that is being provided by
shareholders.

TIME INTERST EARNED RATIO

Formula
[EBIT/ Interest Expense]
(Rs in Thousands)

Page | 39
Ratio

2013

EBIT
Interest

1,551,923
1,093,727
1.42

2014
2,379,491
1,161,062
2.05

Times interest earned ratio

2.5
2
Times earned ratio

1.5
1
0.5
0
2013

2014

Interpretation
Time interest earned ratio increases by the amount which shown on the above
chart.

Profitability Ratios
(
FORMULA
[ Net Profit / Shareholder Equity]
(Rs.000)

Ratio
Net profit

2013
365610

2014
1227298

Shareholder Equity

3130689
11.67%

4431029
27.69%

Page | 40

Return On Equity
30
25
20

Return On Equity

15
10
5
0
2013

2014

Interpretation
The return on equity (ROE) of pel company increased in 2014 as
compared to 2013 which show the positive effect It measures the return earned on the
common stockholders investment in the firm. Generally, the owners are better off the
higher is this return. It indicates that the company have earned more on each rupees of
common stock equity in this year.

FORMULA

[Net profit/Average Assets]

Page | 41
Rs.(000)
Ratio

2013

2014

Net Profit

365610

1227298

Assets

26567825
1.37%

30689642
3.99%

Return on investment
5
4
Return on investment

3
2
1
0
2013

2014

Interpretation
As observe that return on investment of PEL limited has been
increased from 2013 to 2014 Measures the overall effectiveness of management in
generating profits with its available Assets. The higher the firms return on total assets
the better the efficiency of the company will be

FORMULA
[Operating Profit / Net Sale]Rs.(000)

Ratio
Page
|
42
Operating Profit
Net Sales

2013
1551923

2014
2379491

15425873

18522117

10.01%

12.84%

Operating Profit Margin

14
12
10
Operating Profit Margin

8
6
4
2
0
2013

2014

Interpretation
The net profit margin measures the percentage of each sales Dollar
remaining after all costs and expenses, including interest and taxes have been
deducted. The higher the firms net profit margin, the better the FIRM profitability will be.
PEL operating profit margin will be increases in 2014 as compared to the 2013 by the
value which shown in the above graph.

Gross Profit Ratio

Gross profit / sales
Ratio

2013

2014

Gross Profit
Page | 43
Net Sales

2017984

3197354

15425873

18522117

13.08%

17.26%

Gros profit ratio

20
15
Gros profit ratio
10
5
0
2013

2014

Interpretation
Gross profit also increases from 13.08 to 17.26.

Earnings per share

Price per share/price earnings ratio
Ratio
Price per share

2013
10

2014
10

Price earning ratio

2.80

5.8

3.57%

1.72%

Page | 44

Earnings per share

4
3.5
3
2.5

Eraning per share

2
1.5
1
0.5
0
2013

2014

Interpretation
Earnings per share decreases in this year.

Market ratios
Price earnings ratio
Price per share / earnings per share
Ratio
Price per share

2013
10

2014
10

Earnings per share

3.56

1.72

2.80%

5.8%

Page | 45

Price earnings ratio

7
6
5
Price earnings ratio

4
3
2
1
0
2013

2014

Page | 46

The Directors are pleased to present their report together with Company's
audited consolidated financial statements for the year ended December 31, 2014

OPERATING RESULTS AND PERFORMANCE OVERVIEW

The year under review has turned out to be Alhamdulillah, an impressive operational
Page | 47
period. During the year the company have achieved revenue of Rs.24.126 billion,
showing an increase of 28% in comparison to last year. Further, the gross profit hve
also improved from 25% to 31% thereby generating a profit after tax of Rs. 2,241 million
in comparision to Rs.607 million of previous year. Earnings per share, despite increase
in share capital, has improved from Rs.3.01 to 6.61 per share.

Summary of Results is as under:

2014
Rupees in millions 2014 2013
Gross Sales
Gross Profit
Operating Profit
Financial Charges
Profit before tax
Profit after tax
Earnings per share (Basic) Rupees

I. TRANSFORMERS

24,146
6,309
2,556
1,893
2,545
2,241
6.61

2013
18,856
4,055
796
1,819
775
607
3.01

Page | 48

Outdoor and indoor distribution transformers of 11/0.415 KV and 33/11 KV up

to 5000 KVA.
Pad mounted transformers, Kiosks, Dry Type Transformers.
Special Furnace Transformers and Silicon Oil Transformers, etc.
Major Customers
-

WAPDA & KESC

Accounts for over 90% of the total transformer sales

II. SWITCHGEARS

Page | 49

High Tension indoor and outdoor type switchgears up to 33 KV

voltage and short circuit level of 750 MVA.
Low Tension indoors and outdoors type switchgears up to 4000
Amps. And 100 KA short circuits withstand level.
Distribution Boards.
Motor Control Centers.

Major Customers
WAPDA & KESC

Accounts for almost 100% of the total energy a meter sale

Page | 50

III. ELECTRICITY METERS

Major Customer:
WAPDA & KESC
Accounts for almost 100% of the total energy a meter sale

4- REFRIGERATORS

Page | 51

5-DEEP-FREEZERS

6- SPLIT AIRCONDITIONERS

Page | 52

7-MICROWAVE OVENS

Page | 53

8-Energy Meters

All these things sold locally at different centers all over the Pakistan.
Presently we are importing these products under completely built units (CBUs). We
also manufactured earlier Window Type Air conditioners and Split Air conditioners.

Page | 54
ORGANIZATIONAL CHART

Page | 55
Chairman/Chief Executive

Mr. MianNaseemSaigol

BOARD OF DIRECTORS

Mr. M. Azam Saigol

Mr. Haroon Ahmad Khan (Managing Director)
Mr. M. Murad Saigol
Mr. Zaid YousafSaigal
Mr.AbdullahHaroonSaigal
Mr. Syed Zubair Ahmed Shah (NIT Nominee)
Mrs. Tahira Raza (NBP Nominee U/S 182 of
Ordinance)
Mr. Muhammad KhurramKhuwaja (NBP Nominee U/S0
182ofOrdinance)
Mr. Khalid SiddiqTirmizi (BOP Nominee U/S 182 Of The Ordinance)

COMPANY SECRETARY:
Muhammad Omer Farooq

Page | 56

AUDIT COMMITTEE
Mr. AzamSaigol (Chairman/Member)
Mr. Haroon A. Khan (Member)
Mrs. Tahira Raza

(Member)

Mr. Syed Zubair Shah (Member)

AUDITORS
M.YousufAdilSaleem& Company
Charted Accountants
HR & REMUNERATION COMMITTEE
Mr. AzamSaigol (Chairman/Member)
Mr. Haroon A. Khan (Member)
Mr. Akbar Hassan Khan (Member)
Mr. Syed Zubair Shah (Member)

Associated Companies
Page | 57
The following are the associated companies of the Company as per section 2(2) of the
Companies Ordinance 1984.

Kohinoor Industries Limited

Kohinoor Power Company Limited

Kohinoor Energy Limited

Azam Textile Mills Limited

Saritow Spinning Mills Limited

Saritow Pakistan Limited

Saigol Brothers Limited

Guarantee Life Employment Limited

Progressive industries (Lahore) (Private) Limited

Art Center (Private) Limited

Saigols (Private) Limited

Conforce (Private) Limited

Kohinoor Autos (Private) Limited

Kohinoor Tractors (Private)

Innovative Technologies (Private) Limited

Raytex (Private) Limited

Standard Grinding Wheel Industries Limited

Page | 58

Registered /Head Office: 17-Aziz Avenue, Canal Bank, Gulberg-V, Lahore

Tel: (042) 5718274-5 or 5717364-5

Fax: (042) 5715105
E-mail:shares@saigols.com
Website Address:

www.pel.com.pk

Bankers of the Company:

The Bank of Punjab
Bank Alfalah Limited
Faysal Bank Limited
Meezan Bank Limited
My Bank Limited
National Bank of Pakistan
PICIC Commercial Bank Limited
Saudi Pak Commercial Bank Limited

Page | 59

DIVISIONS

Page | 60
POWER DIVISION
Power Division accounted for 47% of the Net Sales of the Company. The sales and
profit participation by the Division is high due to high quality standards and future growth
opportunities.
The Power Division comprises of three departments;
Manufacturing and Quality Control
Design and Development
Marketing
Manufacturing and Quality Control
The Manufacturing Department is responsible for monitoring and execution of
production activities for transformers, energy meters and switchgear and also overlooks
the vendor development and procurement of local and imported components used in
manufacturing of power equipment. The Quality Control department is responsible for
maintaining product quality. Transformers and energy meters production is already ISO
9002: 2000 certified while production of switchgear is in process of being certified.

Design and Development

Page | 61
An independent design and development facility with highly qualified team of engineers
has been established. The facility is equipped with state of the art technology and is
responsible for developing power distribution products in line with customer
Requirements. The facility ensures reliable power distribution to industrial and
commercial projects.
Marketing
The Marketing Department is responsible for the marketing and sales of Power Division
products.

Most of the selling activity involves personal selling. Since the products

involved are tailor made to customer requirements, knowing the requirements well and
adhering to the quality standards required by the customer is of utmost importance. The
Department is responsible for meeting sales target for regular customers and
negotiating sales deals.
APPLIANCES DIVISION
The Appliance Division accounted for 53% of the Net Sales. The Appliances division
comprises of four departments;
Manufacturing and Quality Control
Research and Development

Marketing

 Consumer Finance
Page | 62
A brief description of each is as follows
Manufacturing and Quality Control
The Manufacturing Department is responsible for the monitoring and execution of
production activities related to the refrigerators and air conditioners and also overlooks
vendor development and procurement of local and imported
components. Quality maintenance is the prime concern for the success of this segment
therefore; a separate Quality Control department is responsible for the pre-sale
inspection of products.
Marketing
The Marketing Department is responsible for the marketing and sales of home
appliances products and also undertakes sales promotion. Sales promotion activities
undertaken by this Department involve direct marketing and mass marketing through
media. However, the primary focus is on utilizing the dealer network to push sales,
through incentive schemes targeted at dealers. The Department comprises 21 area
sales offices having over 100 marketing and sales personnel supported by area credit
control and ware housing departments

Page | 63

ACCOUNTS DEPARTMENT
Following sections are in the accounts Department:
1- Accounts payable section.
2- Costing section.
3- Fixed asset section.
4- Book keeping section.
5- Pay roll section.
6- Inventory control section.
7-Expense and revenues
8-Insurance
1- Accounts payable section
PEL pays against purchases through provision account. PEL has created a
separate provision account for each party from which it made purchases. They make
entries at each stage as follows:

When the purchased material arrives at store entry is made against GRN(goods
Page | 64
receipt note) as following

Purchased Material
Provision Account (party)
When purchase bill sent by the party arrives in the account department then entry is
made as follows
Provision Account (party)
Account payable
At the time of payment following entry is made
Account Payable
Bank/Cash
Accountant prepares the Purchase Voucher for record keeping purpose. Following this
procedure payments are made to the parties from PEL.
NOTE
Single provision account can also be maintained for payment to all parties, but PEL
maintains a separate provision account for each party.

Page | 65

EXPENSES DETAIL
Expenses for which PEL has to pay are categorized as follows:
1- ADMIN EXPENSES
PEL records Accounts Department Expenses, Finance Department Expenses, HR
Department Expenses and Gate Reception Expenses as Admin Expenses.
2- SELLING EXPENSES
All the expenses incurred by Selling Department, Advertising Department and warranty
expenses are treated as Selling Expenses.
3- MANUFACTURING EXPENSES
All the expenses incurred by the Manufacturing Department, FOH Expenses
And expenses for raw material are Manufacturing Expenses.

Page | 66
4- TRADE ITEMS
All the items, which they purchase from others and do not incure any manufacturing
expense, are trade items. For example PEL purchase Air Conditioner, Heavy
Generators from career and punch the logo of PEL and pack them into the PEL
packing and send them for sale.
Now we discuss what is GRN and PV(purchase voucher)
1- GRN(Goods Receipt Note)
When purchased material arrives in the factory, a gate pass is made at the gate
and GRN is prepared in the store against that gate pass. GRN includes the following
elements
Voucher Number
Date
Document Type
Invoice Number
Invoice date
Supplier ID

 GRN Number ,
Page | 67

As

0706/T01600706/P0582 etc.
T= Transformer
P=Power
S=Switch gear
D= Deep freezer
X=common
GRN Date
P.O.No (Purchase order #)
Amount

2- PURCHASE VOUCHER
In the account Department at the end of recordings(entries) Purchase
voucher is prepared. It includes the following items:
Voucher Number
Date
Document Type
Invoice Number
Invoice date
Supplier ID:
Expense ID
Expense Title
C.P.No (Capital proposal #)
FB.No. (Fabrication #)
Amount

Page | 68
1- IMPRESED ACCOUNT
PEL has also created an impressed or petty cash account. It contains
a limited amount, which is already decided by the Finance Manager. This account is
used almost in other than factory areas for routine (daily) expense. For example tea,
Entertainment, stationary and other cash purchases at the PEL Customer Service
Center.
Credit Purchases Procedure:
Need Generation

Intend/Demand Note

Buying Department
Quotations*
(Approval by buying head)
Purchase order preparation

Supplier

Page | 69

Delivery by supplier

challan

IGP(Inward gate pass)

SALARIES AND WAGES PAYABLE SYSTEM

PEL has established salaries and wages payable system very efficient.
Cashier pays salaries to the permanent employees after the job time. During the work
time it is intended not to waste the work time. Wages to the temporary employees are
paid at working place. They continue their work while receiving the wages
BOOKING KEEPING SECTION
The record of internal expenses related to the employees is maintained in the book
keeping section
Different types of voucher are prepared in this section.
a) Cash payment Voucher:
b) Bank payment Voucher:
c) Cash Receipt Voucher:

Page | 70
d) Bank Receipt Voucher:
e) Journal Voucher:
Expense Types
Detail of following expenses is maintained in this section.
Medical Expenses
Traveling Expense

Inland

Local

Foreign

Utilities Bills

Electricity

Mobile

PTCL

Gas

Etctricity

Stationary Expense
Employee Welfare Expense
Entertainment Expense
Postage & Telegram Expense
Rent rate & Taxes Expense
Fee & Subscription Expense
Cleaning & Sanitation Expense

Page | 71

Procedure for the approval and payment of these Expenses is given as following.
Section Incharge

Admin

Accounts

Book Keeping section

Voucher preparation

Payment (Through cashier)

Page | 72

FINANCE DEPARTMENT
The Finance department manages the financial resources of the Company. It has the
overall responsibility of preparing the Companys operating results, maintenance of
financial records, preparation and monitoring of budgets targets, variance analysis,
inventory management financing arrangements and dealing with government agencies
such as CBR etc. The Division is also responsible for human resources related
activities.
ACCOMPLISHMENTS
Finance department is working under the supervision of four
managers and one General Manager. This department is comprised of four
sub departments, namely
Budgeting & Forecasting Department.
Treasury Departments.
Material Management Department.
Accounts Department.
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.

Page | 73

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.

Page | 74

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.
CORPORATE FINANCE DEPARTMENT
There are different modes of financing are used.
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.
FUNCTIONS OF CORPORATE FINANCE DEPARTMENT
Arrangement of Loan both short term and long term

Procedure and tasks of corporate section

Page | 75
Try to raise maximum funds.

Make arrangement for allocation of funds appropriately.

Increase working capital.

Loan repayment schedule.

Amount sanctioned.

Mark up rate negotiate.

Charge over fixed assets.

Installment period.

Interest payment period.

Acceptance.

Creation of Charge.

Leasing.

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.
Types of Guarantees
Tender guarantee (Bidguarantee).
Balance of payment guarantee.
Advance payment guarantee.
Performance bond guarantee.

Page | 76
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.

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
Page | 77
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).
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.
LONG TERM LOANS

PEL acquired a long-term loan to finance the import of

Page | 78
machinery. Recently PEL has purchased some machinery from China for
Digital Energy Meters.
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.
SCHEDULES
Sales forecast statement.
Total production cost.
Working capital.
Loan repayment schedule.
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.

Page | 79
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.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.

Page | 80
Form 10. It contains the particulars of assets against which charge is
created.
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.
This schedule is prepared to show the mark up principal and total installment
and Value for whole tenor.
DUTIES OF CORPORATE FINANCE DEPARTMENT
During my stay in PEL as a Internee 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.
TREASURY DEPARTMENT:Treasury management includes management of enterprises
holding with the ultimate goal of maximizing the firms liquidity and
eliminating

its

operational,

financial

and

reputational

risks.

Treasury

management includes a firms collections, disbursements concentration,

investment

and

funding

activities.

Treasury

management

and

cash

management are sometimes used interchangeably, while in fact, the scope

Page | 81
of treasury management is larger. In PEL treasury department is responsible
for the cash transactions with banks, reconcile bank accounts, and maintain
current ratio and payment/receipts from vendors. This section arranges and
allocates funds needed by different departments.
The major functions of the Treasury Department are given below

Cash transactions with the different banks.

Bank Reconciliation.

Payment to vendors.

Receipts from vendors.

Allocation of funds of various departments.

Collections done by online, through bankers Cheque Cashier Cheque

Procedure and tasks of treasury department.

Arrangement of funds for runs the company operations.

This section directly relates to the cash and cash affairs.
Inflow and outflow of cash was the basic work of this section.

This section deals with

Bank dealing.
Fund payments/collection.
Updating banks.
Foreign payments.
Export transactions.
Collection of payment.
Supplier payment.
Issue payment to local supplier, import payment and repayment of

bank loan.
Prepare cheque, made pay order from different bank, arrangement of
online transactions.

 Reconliciliation of bank statements.

Page
82
|Prepare
annually, half yearly, quarterly, month cash and daily cash
flow.
MATERIAL MANAGEMENT DEPARTMENT:Material Management can deals with campus planning and
building design for the movement of materials, or with logistics that deal
with the tangible components of a supply chain , specially , this covers the
acquisition of spare parts and replacement, quality control of purchasing and
ordering such parts , and the standards involved in ordering, shipping and
warehousing the said parts.
PRACTISE IN PEL:In PEL this department has the responsibility to maintain the
stock records on daily basis, pledge and release of material and interaction
with financial institutions regarding pledge and release of material.
A concise description of process of Material Management:

Material is imported against L.C.

Material pledged (FIM)
Released as much as required
Maintaining record of balance

Procedure and tasks of the material management department

Prepare Monthly Material Release Plan

Godowin Insurance
Daily check on production
Controlling the production plan for the future
Control on orders in hand
Issuance of Material on Daily Production.
Full fill the Material requirement for the production.

 Financial payments.
Page
83 / FIM / TR Adjustment.
|PAD
Create funds through CF Facility.
BUDGETING DEPARTMENT: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 then tell the amount to be
arranged for production in order to finance either power divisions production
or Appliances divisions production.
Procedure and tasks of corporate section.

Starting with Budgeting Department that forecasts Annual Sales

Expenditures and Costs for the company after getting production estimate

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.
ACCOUNTS DEPARTMENT:Accounting is an art of recording, classifying, and
summarizing the facts and figures .Accounting department is necessary for
every organization even private , manufacturing, Government, or selling,
Actually PAK ELEKTRON LIMITED is a manufacturing unit, therefore all the
manufacturing,

selling,

purchasing,

administrative

export

and

import

transactions are in recorded and financial statements are prepared in

accounting department
There are the main sub departments in PEL

ACCOUNTS PAYABLE SECTION

COSTING SECTION

 PAYROLL SECTION
Page | 84
INVENTORY
First of all requirements are created by production department, they send the
demand in purchase section. Purchase section contact to payable section
they provide the finance for purchase, small amounts is paid in cash but
large amounts are paid in shape of cheque.
RESPONSIBILITIES OF THE DEPARTMENT:

CASH PAYMENT VOUCHER.

CASH RECEIPT VOUCHER.

BANK PAYMENT VOUCHER.

BANK RECEIPT VOUCHER.

JOURNAL VOUCHER.

SALES INVOICE RECEIPT.

CREDIT PURCHASE VOUCHER.

SALE & INCOMETAX RETURN.

LOANING PROCEDURE
Since PEL is a manufacturing concern, so they finance(Take Loan) in the
form of material.
When they import material from outside of the country. They go to the bank and apply
for LC(letter of credit) in the home bank. The home country bank contact with the
foreign bank for LC opening. The foreign bank issues a LC to the foreign company of
the specified amount for which they started production. After the production has been
completed they send documents to the foreign bank and claim for payment. The foreign

bank sends the documents to the home bank and claims for payment and material is
Page | 85
sent into the bank Godon. Liability is created against PEL.
The PEL make the payment to the home bank through FIM(Finance against import
material) in small shipments. They pay the shipment and receive the material of same
amount of the shipment from the godom.

Financial Statements for the year ended December 31, 2014

CONSOLIDATED BALANCE SHEET

AS AT DECEMBER 31, 2014
Rupees in thousands

Note

2014

2013

EQUITY AND LIABILITIES

SHARE CAPITAL AND RESERVES
Authorized capital

6,000,000

4,000,000

Issued, subscribed and paid-up capital

Capital reserve
Accumulated profit
TOTAL EQUITY

7
8

4,431,029
1,293,858
5,301,554
11,026,441

3,130,689
529,740
2,885,041
6,545,470

SURPLUS ON REVALUATION OF PROPERTY, PLANT AND EQUIPMENT

4,568,357

4,612,256

LIABILITIES

Page | 86

NON-CURRENT LIABILITIES
Redeemable capital
Long term finances
Liabilities against assets subject to finance lease
Deferred taxation
Deferred income

CURRENT LIABILITIES
Trade and other payables
Accrued interest/mark-up
Short term borrowings
Current portion of non-current liabilities

10
11
12
13
14

4,826,469
2,442,807
74,715
2,394,344
45,158
9,783,493

2,464,286
3,233,175
30,685
2,426,847
47,535
8,202,528

15

881,429
500,528
4,243,261
1,523,155
7,148,373

945,608
1,454,626
4,960,209
422,019
7,782,462

16
17

TOTAL LIABILITIES

16,931,86

CONTINGENCIES AND COMMITMENTS

18

TOTAL EQUITY AND LIABILITIES

Rupees in thousands

32,526,664

Note

15,984,990
-

27,142,716

2014

2013

ASSETS
NON-CURRENT ASSETS
Property, plant and equipment
Intangible assets
Long term investments
Long term deposits

19
20
21
22

14,466,890
344,008
63,890
192,808
15,067,596

14,818,060
348,962
8,295
119,677
15,294,994

CURRENT ASSETS
Stores, spares and loose tools
Stock in trade
Trade debts
Advances
Trade deposits and short term prepayments

23
24
25
26
27

462,140
6,316,868
7,702,272
1,256,100
853,209

285,771
3,883,379
5,665,870
879,586
453,055

Other receivables
Short term investments
Page | 87
Advance income tax
Cash and bank balances

187,730
21,596
319,067
340,086
17,459,068

28
29
30

TOTAL ASSETS

25,289
22,785
354,183
277,804
11,847,722

32,526,664

27,142,716

For the year ended December 31, 2014 Consolidated Profit And Loss Account

CONSOLIDATED PROFIT AND LOSS ACCOUNT/STATEMENT OF COMPREHENSIVE INCOME

FOR THE YEAR ENDED DECEMBER 31, 2014 Rupees in thousands

Note

2014

20

Revenue

31

24,125,716

Sales tax and discount

31

(3,607,686)

Revenue - net
Cost of sales

20,518,030
32

Gross profit
Other income

33

Distribution cost
Administrative expenses
Other expenses

34
35
36

Operating profit

18,856,416
(2,387,238)
16,469,178

(14,208,775)

(12,414,101)

6,309,255

4,055,077

32,483

46,219

(1,089,521)
(689,570)
(113,604)

(809,246)
(642,665)
(34,053)

(1,892,695)

(1,485,964)

4,449,043

2,615,332

Finance cost

37

(1,892,828)

Page | 88
Share of loss of associate

2,556,215
21.1.1

Profit before taxation

Taxation

2,545,291
38

(303,822)

Profit after taxation

2,241,469

Other comprehensive income

795,873
(20,968)
774,905
(167,578)
607,327

Total comprehensive income

Earnings per share - basic and diluted

(10,924)

(1,819,459)

2,241,469
39

6.61

607,327
3.01

CONSOLIDATED CASH FLOW STATEMENT

FOR THE YEAR ENDED DECEMBER 31, 2014
Rupees in thousands

Note

2014

2013

CASH FLOW FROM OPERATING ACTIVITIES

Cash (used in)/generated from operations

40

(566,184)

1,782,543

Payments for:
Interest/markup on borrowings
Income tax

(2,747,954)
(170,064)

(1,505,739)
(213,856)

Net cash (used in)/generated from operating activities

(3,484,202)

62,948

CASH FLOW FROM INVESTING ACTIVITIES

Purchase of property, plant and equipment
Purchase of intangible assets
Proceeds from disposal of property, plant and equipment
Long term deposits made
Acquisition of short term investments
Proceeds from disposal of short term investments

(386,819)
(234)
15,744
(73,131)
(50,219)
-

(333,606)
(41,620)
34,412
(53,779)
438

Net cash used in investing activities

(494,659)

(394,155)

CASH FLOW FROM FINANCING ACTIVITIES

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Long term finances obtained

Repayment of long term finances
Proceeds from sale and lease back activities
Repayment of liabilities against assets subject to finance lease
Net increase/(decrease) in short term borrowings
Proceeds from issue of ordinary shares

1,850,000
(272,790)
100,000
(45,826)
345,301
2,064,458

(35,638)
(44,849)
(1,354,882)
1,828,031

Net cash generated from financing activities

4,041,143

392,662

62,282
277,804

61,455
216,349

340,086

277,804

NET INCREASE IN CASH AND CASH EQUIVALENTS

CASH AND CASH EQUIVALENTS AT THE BEGINNING OF THE YEAR
CASH AND CASH EQUIVALENTS AT THE END OF THE YEAR

41

CONSOLIDATED STATEMENT OF CHANGES IN EQUITY

FOR THE YEAR ENDED DECEMBER 31, 2014
Issued

subscribed and
Rupees in thousands

Note
equity

Balance as at January 01, 2013

paid-up capital

1,668,264

Capital
Total
reserve

164,134

Accumulated
profit

2,075,931

3,908,329

Comprehensive income
Profit after taxation
Other comprehensive income

607,327
-

607,327
-

Total comprehensive income

607,327

607,327

201,783

201,783

Incremental depreciation

Transaction with owners

Issue of right ordinary shares

1,462,425

365,606

Balance as at December 31, 2013

3,130,689

529,740

2,885,041

1,828,031
6,545,470

Comprehensive income
Profit after
taxation
Page
| 90

Other comprehensive income

2,241,469
-

2,241,469
-

Total comprehensive income

2,241,469

2,241,469

175,044

175,044

Incremental depreciation

Transaction with owners

Issue of right ordinary shares

7.1.2

1,032,229

1,032,229

Issue of bonus ordinary shares

7.1.1

268,111

(268,111)

4,431,029
11,026,441

1,293,858

Balance as at December 31, 2014

SWOT Analysis
Strengths

Well established base

Hard working and committed employees
High growth rate
Uniqueness of operations from competitors
Good departmental support by other deptts
Flexible supply of appliances

Weaknesses

Long official procedures

Vast uncovered markets
Lack of advertisement
Lack of public awareness
Slow order processing and delivery

Opportunities

5,301,554

2,064,458
-

 Large market areas with great potential

Page
91
|Formation
of alliances with potential partners
Online and more customized marketing
Search for more suitable banking institutions with lowest mark-up
Foreign alliances especially in technology and development
Threats

Competitors threat to occupy markets that are not yet covered

Un-explored markets may be attacked by foreign companies
Difficulties in recovery process
Deteriorating political conditions
Increasing prices due to inflation

BRIEF EXPLANATION
STRENGTHS
The organization process and procedure are well organized and its management is very
sound and efficient as compared to other companies such as Haier and waves. I
observed that employees are very hard working and there motivation is very high and
they very keen to helps other in performing different task. And its growth rate
continuously increased as compared to other companies such as haier and waves.It
used best technology to compete other company.
WEAKNESS
I observe during my internship that the procedure of recruitment is very complicated and
there market is very broad and they do not advertise according to their market
sometime people are unaware about their newly products. There order processing
delivery procedure is very slow.
OPPERTUNITIES

Pagehave
| 92 very big market and they need to increase their resources to achieve large
They
market area and this will provide them with grater revenue moreover it must deal with
those banks which provide credit facility at low interest rates.
THREATS
The main threat is that the competitors companies take advantage of those areas
where they do not perform their market activities. There products prices is very high as
compare to other companies which may lead them to lose the customers.

Page | 93

Recommendations

The PEL industry is should try to expand the market by exploring new areas.

Save time by minimizing the official procedures

Advertise the companys offerings to maximum extent

Form alliances with potential partners to strengthen the grip over market

Search for more suitable banks

Try to focus on foreign market for consideration

Strong focus on marketing intelligence

Speed up recovery procedures by using specialized methods

Speed up delivery process by establishing stores in areas of high demand

Customer serviceneed to improvecustomers needs.

Incentives should be given to motivate sales and recovery teams at initial stages

Develop proper goals and objectives for every member of team and department.

Page | 94

WORK DONE BY ME
First of all I worked in payroll department of PEL because it was referred to
me by Human Resource department. Payroll department is a sub part of
finance department. In payroll department I learned that how salaries are
distribute among the all employees of the PEL.
There are three categories of employees in the PEL (120) Executive Staff
members, Senior/Junior staff (1500 to 1600) and workers (5500).
There are three methods which used by the payroll department of the PEL for
distribution salaries among above categories. First is payment through
cheque. Second is through online transfer and third is by cash.
I also learned different policies which organization make for its employees
and used these policies in payroll department, such as over time policy, Hajj
policy, medical policy, mobile phone allowance policy, travelling allowance
and car financing
Payroll department maintain daily base attendance and working hours of
the employees on the attendance register then forward it towards the H.R
and accounts department for approval after the data approval payroll
department issue salaries according to employees working hours and
attendance.

Human Resource Department:

Page | 95

Workers at PEL always feel free in expressing their needs, desires and problems and
this right and freedom has been given to them by the personnel of Human Resource
Department that always look forward to serve everyone in the company. This
department is handling the personnel of both power and appliances division.
Whenever it gets any new plan either from power or from appliances it starts searching
the best talent to be hired for the respective need and prepares salaries estimates
statement. Similarly it also actively participates in hiring employees for other
departments and settling down all issues related with employees needs, wants and
hurdles.

Accounts Department:
Pak Elektron has a big accounts department that records daily transactions of both
appliances and power division that prepares financial statements such as balance
sheets, income statements, cash flow statements, etc.

Finance Department:
In PEL 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

 Material Planning Section

Page | 96

Leasing Section

Budgeting Section
Starting with the budgeting department that forecasts annual sales, expenditures and
costs for the company after getting production estimates and sales plans from the
marketing and then tell the amount to be arranged for production in order to finance
either power divisions production or appliances divisions production.

Guarantee 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.

Skills acquired during internship Period

Doing Internship at Pak Electron (PVT) Limited has provide me the opportunity to
Page | 97
gain the following skills which I believe, has added value and benefited me for
my future career. The skills acquired during my internship period can be classified
as;
Table: Skills acquired during Internship
I

Acquired Skills

1.
2.
3.
4.
5.
6.
7.
8.

Strong work ethic

Dependable and responsible
Adaptability
Gain self confidence
Problem solving skills
Interpersonal skills
Networking skills
Presentation skills

developed strong work ethics from my internship, which is very important for
an employee, which also defines their interest in their work along with their
skills. I also learnt to depend on others as it is very important for a team member to
depend on other team member to successfully accomplish assign goal. In my earlier
stage of internship I was to extend self-dependent on towards my work and as
result I tried to do every

task without coordinating with team members others, but later I realized how wrong I
was. Deliberately I learned to adapt to different environment and culture.

I also had the opportunity to enhance my presentation skills, interpersonal skills and
Page | 98
networking skills. At the end of my internship period I was successful enough to develop
a client base of more than hundred clients through above learnt skills.

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

www.pel.com.pk

Human Resource Department

Finance Department

Payroll Department

Marketing Power division

Power Projects

Appliances Division, Marketing Department

Annual Report of PEL 2013 & 2014