Pak Electron Limited.

(PEL)
Introduction and Financial Analysis
History

Pak Elektron Ltd. is one of the oldest and amongst the leading Home Appliances
Manufacturers and Distributors in Pakistan. Established is 1956, the company has an
annual turnover of Rs 11 billion and is the only company in consumer electronics
industry listed on the Karachi Stock Exchange.
In 1981 the Home Appliances Division was also established. The company specializes
in the field of Major Domestic Appliances, with over 25 years of experience.
Vision & Mission

Vision
To Excel in providing engineering goods and services through continuous
improvement.
Mission
To provide quality products and services to the complete satisfaction of our customers
and maximize returns for all stake holders through optimal use of resources. To
promote good governance, corporate values, and safe working environment with
strong sense of social responsibility.
Ratio Analysis

Liquidity Ratios:
Current Ratio = Current Asset
Current Liabilities
=2.52
Acid Test Ratio/Quick ratio = Quick Assets
Current liabilities
=1.61
Cash to current liability = cash
Current liabilities
=0.07
 The standard value for the current ratio is 2:1 the company current ratio shows that it
have maximum current assets to cover his current liability and quick ratio also shows
the favorable result because it have 1.61 assets against 1 liability. The standard value
for quick ratio is 1:1. Current assets include inventories, trade debts short term
advances, deposits, prepayments and other receivables, short term investments,
current tax assets and cash and bank balances. With an aggregate balance of Rs.19,431
million at the close of 2015, the current assets recorded an increase of Rs. 7,781 million
since 2010 mainly on account of increase in stock in trade and trade debts due to
increase in business volume in past 6 years. Current liabilities of the Company, over the
last six years, have decreased by Rs. 1,284 million to Rs. 7,722 million at the close of
2015 in spite of tremendous volume increase, primarily on account of equity injection
through issue of right shares and restructuring of short term debt into long term debt.
Turnover/activity ratio

Inventory Turnover Ratio = Cost of goods sold

Average Inventory
=2.83 time
Debtor Turnover Ratio = Net Credit Sales
Average Trade Debtors
=3.96 time
Creditor Turnover Ratio = Net Credit Purchases
Average Trade Creditor
=23.54
Average Debtors turnover in days= Average G. receivable
Net sales/365
=16 days
Cont..

Inventory turnover in days= 365*Average inventory

Cost of sale
= 129 days
Operating cycle= Debtors turnover in days + Inventorys turnover in days
=206 days
Debt Ratio= Total debts
Total Assets
=0.22
Times interest earned Ratio= EBIT
Total interest expenses
=3.67
Asset Turnover Ratio

Total asset turnover = Total Sales

Total Assets
=0.69 time
Fixed asset turnover = Total Sales
Net Fixed Assets
=1.85 time
Current asset turnover = Total Sales
Current Assets
=1.12 time
Net working capital turnover ratio = Total Sales
Working Capital
=0.31
Interpretation

Inventories, Receivables and Creditors days at 129 days, 92 days and 16 days for the
year 2015 are slightly improved as compared to previous trend of 131 days, 95 days
and 21 days respectively in year 2014. Total asset turnover ratio recorded at 0.69
times in year 2015 against 0.63 times for the year 2014 showing considerable
improvement from 0.48 times of 2011.
Profitability Ratio

Gross profit margin or ratio = Gross profit X 100

Net sales
=29.59%
Net profit margin or ratio = Earning after tax X 100
Net Sales
=11.46%
Operating profit margin or ratio = Operating expenses X 100
Net sales
=0.58
Return on Assets = Net income
Total Asset
=7.97%
Return on Equity= Net income
Shareholders equity
=14.40
Interpretation

Rise in cost of sales owing to increased raw material cost resulted in a reduction in
gross profit margins for 2015. However due to some economies in operating and
financial costs net profit margin for the year is increased by 0.54%. Consequently,
return on capital employed also increased by 0.58% in comparison with 2014.
Consistent profitability growth resulted in highest ever performance during the year
since 2010.
Market Ratio

Earnings per share = Earnings after tax Preferred dividends (if any)
Equity shares outstanding
=7.13 rupees
Dividend per share = Earnings paid to the ordinary shareholders
Number of ordinary shares outstanding
=0.13 rupees
Dividend payout ratio=Total dividend paid to equity share holders
Total earnings available to equity share holders
=1.75%
Price earnings (P/E) ratio = Market price of share
Earnings per share
=8.78 time
Interpretation

As a result of increase in profits, the Company's earnings per share was recorded at
Rs. 7.13 per share. Price to earnings ratio improved by 2.59 times as compared to
2014 as the market price of Company's share rose from Rs. 40.93 at the close of 2014
to Rs. 62.54 as at December 31, 2015.
Organization Hierarchy
Types of Product

Window-Type Air conditioners

TV
Split-Type Air conditioners
Refrigerators.
Deep freezers
Microwave
Washing Machine
Product Development

Because the PEL produce consumer durable goods, so product development is usually
done in following ways:
Through Extensive Market Research.
Involving the channel and end users
Test Market with the help of Focus Group
At final Stage it will be launch into the market.
Packging

Play a very important role especially in home appliances, appearance and strength the
material give a good quality image insight.
Here are five key things to consider when developing the packaging strategy.
Do have an attractive and appropriate business identity package.
Do have basic marketing material (or Brochure).
Have you design a basic strategy for what services you will offer.
Do you have basic logistic plan.
Have you put some attention on your personal package, your personal Presentation?
Product Price Determination &
Strategy

Product cost plus price methodology determine the product price, competitors price positioning of
similar model also taken into consider in this regards. Aggressive activities are to be considered to
promote it.
Budget for these is Approx Rs. 100 Million

Print Media
Mass Media
Electronics
Out Door
Direct Mail
Sales promotion (Through incentives Schemes)
Local Cable etc.
Product Life Cycle

A new product progresses through sequences of stags from introduction to growth,

maturity and decline. This sequence is known as product life cycle and associated with
the changes in the marketing situation.
Average Life cycle of Products of PEL: 8 ~ 10 Year
How it can extended:
Minor Design Changes are done in order to extend the product life.
Overall Analysis as Inverstor

As an investor we suggested that Pak elektron ltd have good financial position than
orient his liquidity position is also strong than orient Pak elektron limited show more
efficiency and profit from previous year and the earning per share. Share per price is
also increase continuously from previous year which shows that company increase his
efficiency continuously. We suggest to the investors who want his investment for
longtime invest his money in pak elektron because he increase his profitability and
market share continuously from previous year as compare to the orient he has less
efficiency and profitability and the growth rate of the orient is very slow than pak
elektorn limited.
Recommendations

Co-ordination should be developed between departments to departments. This can be

done through setting goals and objectives of the whole company not only for their
different departments.
As I found brand name is very important factor in consumer buying behavior, thus it is
advised that PEL should work on the brand image. Although PEL has a strong brand
name, but it has to create much more stronger one, mainly through advertising, to
compete with Dawlance, Waves, and other international brands.
The company should add more features to their products. People are attracted towards
a product with unique features and something that would make the customers feel
that they have got their moneys worth.
Cont

The company should take measures to improve the quality of their products by
improving the process. Thus the company is advised to take steps towards improving
the quality of its products, other wise it will lose a lot of potential customers to their
competitors.
To gain more competitive advantage over their competitors, PEL has to work on their
distribution network.
PEL more focus should be on electronic media to get competitive advantage over the
competitors. They have to increase their advertising expenditures.