1 RECOMMENDATIONS

1.1 Market Demand Vs Internal Measures

Since 2015, ASL has improved its revenue generation, from its financial statements we can see

that their annual revenues, which was complimented by the improving economic out look of the

country. In 2016, Government policies foresaw the materialization and there was surge in real

estate and construction sector, moreover the CPEC was getting in its maturity level, therefore

overall economic outlook of the country was improved.

It suggests that the it was market demand which drove improvements in the revenues of ASL,

rather than their internal efforts. Once economy took downturn started in late 2018, and in 2019

whole year, growth rate of revenues dropped.

Revenues
Rs25,000,000.00

Rs20,000,000.00

Rs15,000,000.00

Rs10,000,000.00

Rs5,000,000.00

Rs0.00
1

2019.00 2018.00 2017.00 2016.00 2015.00

It suggests that company lacks the internal sustainable model and company needs to generate for

itself on internal efforts too rather than relying on external factors, as external factors fluctuate

on regular basis. External factors are like tide, every ship will rise once tide goes up but to

outstand that tide company needs to build internal sustainable strategy.

 1.2 Increase Research & Development Spend

Company has two main products and they are standard products, company has not spent single

penny on the Research and Development, which may make them differentiate their product from

other companies, or which may decrease their reliance on the imported raw material.

With improving outlook of country and foreign direct investments increasing, there is no doubt

that competitor will arise with similar offerings, therefore company needs to develop model that

will make them rely on raw material manufactured locally and decrease the import cost.

1.3 Cost Cutting

Company’s main strategy is to reduce costs and achieve economies of scale, and to some extent

they have been successful with cutting their costs and achieving economies of scale, but there is

no sustainable model which should be consistent as we see from their financial models. We have

witnessed that cost started to decrease as percentage of revenue in 2016 to 2018 but in 2019 the

cost of goods sold increased, which is most related to market demand, as due to external demand

company was utilizing its economies of scale more than 2015 and previous years, once the

demand reduced company’s cost of goods sold increased and crossed up to 91.%.

COGS % of Revenue
120.00%
100.00%
80.00%
60.00%
40.00%
20.00%
0.00%
1

2019 2018 2017 2016 2015

1.4 Control Employee Earnings

 Per Employee Earning

42964

34670
32526

24766 25516

2019 2018 2017 2016 2015

As shown in graph, another major concern for company is per employee earning, which has been

inconsistent. Company had Rs. 25516 thousand per employee earning but it reduced to Rs.

24766 thousand, and it peaked in 2018 to Rs. 42964 thousand per employee which again reduced

to Rs. 32526 thousand per employee. It shows company has not been taking best out of their

employees consistently, company must develop a mechanism which promotes employee

earnings. Company needs to revisit its reimbursement and paying system, introduce a system

which promotes employees’ involvement in company’s strategic decisions and implementation

of those decision. We have studied in various cases that how involvement of employees brought

better results for different countries, i.e. Traders Joe and IBM.

Better use of Human Resource is key for any company and to get best out of employees on

consistent basis brings sustainability for company.

1.5 Increase Number of Shareholders

Company’s more than 95% of shares are held by its parent group, Arif Habib Group. Due to high stakes

of single group, it brings sort of monotony in the company and management follows interest of single

group and in end the company lacks efforts which may bring best out of company. With interest of single
group being protected company misses on the opportunity in the sector, which otherwise would have been

exploited.

It will be overall good for the company if number of share holders are increased and other people can get

stake in the company, which may bring best out of employees. Moreover, there is no use of being public

listed company if its shares are held in hands of one group. Company can use its shares to generate extra

equity to start more projects which can benefit company overall and in long term.

1.6 Increase Number of Marketing Budget

Marketing and Selling Expenses

1.8372%
1.7067%
1.4706%
1.3544%
1.1162%

2019 2018 2017 2016 2015

It is evident from its financial statements that company does not spend much on its marketing and selling.

Company generally relies on its parent group for business generation and word of mouth, marketing

makes up small portion of selling and general administration expenses.

Company needs to spend more on its marketing and selling expenses to generate more business utilize its

economies of scale for longer time. In addition to that, the external sectors will not have more effect on

the revenues as it has been lately which is also visible in its financial statements.