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PNSC - Internship Report (Pakistan National Shipping Corporation)
PNSC - Internship Report (Pakistan National Shipping Corporation)
PNSC - Internship Report (Pakistan National Shipping Corporation)
2010
Internship Report
on Pakistan
National Shipping
Corporation
(PNSC).Karachi
By:Qaim Deen
BBA(Hons). Finance
By:
Qaim Deen Mahar
BBA (Hons) Finance.
The Islamia University of Bahawalpur. Rahim Yar Khan Campus.
Status:
Completing MBA from Quaid-i-Azam University Islamabad.
Spring 2011.
Contact No.
0306-3456787
0332-2828028
qaim_mahar@yahoo.com
Executive Summary
Pakistan National Shipping Corporation was established as a
result of merger of the National Shipping Corporation (NSC) and
the Pakistan Shipping Corporation (PSC) in 1979, with effect from
1st January 1979.
This was done with the view to improve the performance of the
shipping and ocean transport services and to develop of the
maritime shipping industry. Pakistan National Shipping
Corporation (PNSC) is an autonomous corporation, which
functions under the overall control of ministry of Ports and
Shipping, Government of Pakistan.
2) Commercial division
Introduction
PNSC Introduction
Company Pakistan
Profile: National
Shipping
Corporation
Ticker: PNSC
Exchanges: KAR
2010 Sales: n/a
Major Transportatio
Industry: n
Sub Shipping
Industry:
Country: PAKISTAN
Employees: 1077
Head PNSC
Office: Building,
Moulvi
Tamizuddin
Khan Road,
Karachi –
Regional 74000
Office: Gulberg
Heights,
Lower
ground floor ,
Near sherpao
bridge Gulbe
rg ,
Lahore,
Pakistan
Corporate Information:
The corporation is managed by a board of directors constituted by
the Federal Government. Five of these Directors including the
Chairman are nominated by Government (majority share holder),
while, two Directors are elected by the Shareholders. Corporation
share holding as under.
The Group:
The Group consists of:
Holding company
Subsidiary companies
Associate:
- Muhzammadi Engineering Works (Private) Limited.
All the fully owned subsidiaries of the Group operate one vessel /
tanker each with the exception of Hyderabad Shipping (Private)
Limited, Karachi Shipping (Private) Limited, Lahore Shipping
(Private) Limited, Lalazar Shipping (Private) Limited, Malakand
Shipping (Private) Limited, Shalamar Shipping (Private) Limited
and Sibi Shipping (Private) Limited which currently do not own
any vessel /tanker. Subsequent to the year end a vessel has been
disposed off and a tanker has been acquired.
Background:
Basically Pakistan National Shipping Corporation (PNSC) is the
merger of National Shipping Corporation (NSC) and Pakistan
Shipping Corporation (PSC).
At the time of the merger the share capital of NSC was Rs.
144,375,000 and that of PSC was Rs. 85,124,350. Both the
Corporations had 24 ships each and their Books of Accounts had
shown a profit of Rs. 28,713,000 for NSC and Rs. 823,606 for PSC.
V ISION &
STATEMENT
M ISSION
Organizational Structure
CHAIRMAN
SA to CHAIRMAN (M)
CA & Share
(DM) Fleet Management Internal Audit
Security Import/ (DM) (Incahrge) (M)Report to
(DM) Export (DM) Board Audit
I & C (M) Committee
Protocol SUPDTS Fleet
(DM) TA (East)
Dry Cargo VSLS
(M)
(DMs)
TA (West)
(DM) Crew Section (M)
Ship Personnel
Lahore (RR) SUPDT SP
Workshop (GM)
CORPORATE
INFORMATION
CORPORATE INFORMATION
BOARD:
Brig. (R) Rashid Siddiqi
Chairman
SECRETARY:
Ms. Zainab Suleman
HEAD OFFICE:
AUDITORS:
BANKERS:
Allied Bank Limited
Bank Al-Falah Limited
Faysal Bank Limited
Habib Bank Limited
Habib Metropolitan Bank Limited
JS Bank Limited
MCB Bank Limited
National Bank of Pakistan
Meezan Bank Limited
Royal Bank of Scotland
Standard Chartered Bank
United Bank Limited
Board of Directors
Management
Cdre.S. Mohammad
Mr. Imtiaz C.
Brig. (R) Rashid Siddiqi Obaidullah
Agboatwala
Executive Director Executive Director
Executive Director
(Administration) (Special Project &
(Finance / CFO)
Planning)
1. PNSC Building
2.Muhammadi House:
Trade Areas
Trade Areas:
1. Japan
2. Nepal
3. Sri Lanka
4. China
5. India
6. Indonesia
7. Thailand
8. Hong Kong
9. Philippine
10. Taiwan
11. Others
• China (26%)
• Japan (15%)
• South Korea (11%)
• Persian Gulf
• European Countries
• African Region
• USA
• Canada
• Others
PNSC Ships
PNSC Ships:
FLEET:
COMBIES:
TANKERS:
COMBIES:
M.V. BOLAN
SPECIFICATIONS
M.V. SARGODHA
SPECIFICATIONS
M.V. ISLAMABAD
SPECIFICATIONS
M.V. MULTAN
SPECIFICATIONS
Tankers:
M.V. SWAT
SPECIFICATIONS
M.V. JOHAR
SPECIFICATIONS
M.T. QUETTA
SPECIFICATIONS
M.T.LAHORE
SPECIFICATIONS
M.T.KARACHI
SPECIFICATIONS
Bulk carrier:
M.V.KAGHAN
SPECIFICATIONS
Commercial division
Finance Division
Ship Management division
Administrative Division
Special Project& Planning Division
Internal Audit Department
Commercial Division:
Finance Division:
• Finance
• Insurance and Claim
• Corporation Secretariat
• Corporate Affairs and shares
This Division deals only with the affaire of Ship. This division is
headed by Ship Executive Director of Ship Management that is
Mr. Zaheer Babar Quershi.
All the issues that are related to the Ship like Vessel
Management, Crew management, Repair and Maintenance of
Ship etc… are handled under this division.
• Fleet Management
• Bunker section
• Workshop
• Repairs & Maintenance
• ISM Code/ Training section
• Ship Personnel
• Stores Supply Depot
Administrative Division:
• Personnel
• Administration
• Estate
• Security
• Public Relations
• Legal sections
• Medical sections
• Contributory provident fund functions
• Special Projects
• Planning
• Management Information System
Pre Audit:
Post Audit:
Commercial Division/Department:
1. Trading
2. Chartering
3. Tanker Line
4. Containers
5. Bills
1. Trading:
12. Japan
13. Nepal
14. Sri Lanka
15. China
16. India
17. Indonesia
18. Thailand
19. Hong Kong
20. Philippine
21. Taiwan
22. Other
The purpose of formation of trade area east is to control all the
matters of and shipping trade in the eastern side of Pakistan.
The main countries in the east to which we have goo and strong
relations in trading are:
• China (26%)
• Japan (15%)
• South Korea (11%)
• Persian Gulf
• European Countries
• African Region
• USA
• Canada
• Others
2. Chartering:
Most of the tome a party or parties charter the ships for the
voyage and freight is received to PNSC. Two types of contracts
can be done when chartering ships that are:
• Time charter
• Voyage charter
In Time Charter the main thing is focused is time. In this case the
ship is chartered for a specific time period, no matter how many
voyages are completed.
2. Tanker Line:
• Saudi Arabia
• United Arab Ammarat
• Iran
• Johar
• Swat
• Lalazar
3. Containers:
Containers are the Boxes that load goods have some specific
sizes.
4. Bills:
Working on Various
Departments
Finance Department:
1. Freight Section
2. Port Section
3. Assets Section
4. Spares Section
5. Insurance & Claim Section
6. Payrolls Section
7. Remittance Section
8. Tax Section
9. Bill Section
10. Cash Section
11. Book Keeping Section
12. Afloat Section
13. Mess Committee Section
14. Workshop Section
15. Store Account Cell Section
First of all when the ship is sailing for a voyage from Karachi, at
that time all the needed food items are purchased according to
the need and according to the estimated days that would be
spent on the ship during voyage.
The Mess Committee section will pay that amount to the seller
and food items will be sent to the ship. The Mess Committee will
charge this to the expenses head.
Cargo section:
• Asset Insurance
• Liability Insurance
Asset Insurance:
Liability Insurance:
If the loss that is beard is due to the negligence of our own, then
it will be liability insurance. Like stowaway cases in which illegal
persons come to the vessel because of our own negligence.
Short Landing:
Short landing occurs when goods that are on the ship are short in
quantity. In this situation following documents are required:
Shortage case:
Freight Section:
It includes:
• Release all the information about the freight and all other
receivables from the parties before the release of delivery
order for cargo that is being discharged from Pakistan.
Bills Section:
The ill section doesn’t receive the bills directly. Bills are all those
payments that need payments. Like bill against purchasing of
uniform need payment of the bill of uniform.
If the bill is less then Rs. 25000 then no need of quotation. But if
the bill is greater than 25000 then the bill section need quotation
of all the products that are purchased. At that time requirement
of quotation is necessary for the payment made against the bills.
Different items or expenses that need bills and need payment are
the following items. Pakistan National shipping Corporation set a
specified budget each item in the following list has its own
budget.
• Courier services
• Printing and stationary
• Repair & Maintenance of different things like office
machines
• Uniforms for employees
• Telephone bills
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113
• Computer expenses
• Diesel or oil for generator
• Postage
One thing also can be possible that the bill section has less
amount or budget for an item but the bill or payment is much
more then the budget, at that time the billing section will make
request to the General Manager of Finance for the sanction of
payment or budget.
All the other finance sections send their all data related to book
keeping department which maintain all the data electronically.
The book keeping department is responsible for the preparation
of financial statements.
After the ledger posting the balances are posted to Trial Balance.
In a trial balance, separate debit and credit columns are used to
list the balance of the individual balance account.
After that closing entries are made, Closing entries are the
journal entries made at the end of the period for the purpose of
closing temporary accounts.
Book keeping section has to arrange all the data of all other 14
sections and it will bring all the data in a mannered way and
arrange all those sections in a single section to use all the data of
all sections to make the financial statements.
Workshop Section:
All the wages and salaries related to the workers that are doing
work in the workshop are maintained and kept proper in books of
accounts are under workshop section.
All the expenses are also kept in record in this section that is
related to the workshop. Like maintenance of workshop, wages
Afloat Section:
All the members on the ship in voyage didn’t need pay in cash
because it will be useless for them on the ship. They need no
money on the ship; they need only daily usage products and the
food when they are on the voyages.
At the end of the voyage the members are paid their wages with
their earnings on the ship. The wages are always paid at the end
of the voyage except any kind of emergency or uncertainty.
Payrolls Section:
Payrolls are all the wages or salaries that are related to the office
workman. These are also called Ashore section. Like the
employees who are working in Pakistan National Shipping
Corporation at Main office also including all the employees
working on all 19 subsidiaries office work.
This section maintains all the information and keep the record
salary of each employee separately in Pakistan National Shipping
Corporation. This section also deals extra benefits that are
offered to the employees and maintain the record of extra
benefits also.
Permanent
On contract
On daily wages
The employees that are on daily wages and they are off from the
office for one day then the wage of that day will not be payable
to that employee.
• Land
• Buildings
• Vessels
• Vehicles
• Office equipment
• Furniture and fittings
• Motor launch and jetty
• Equipment on board
• Container fitting
• Beach huts
• Workshop machinery and equipment
• Computer equipment
Dry Docking means color paint of the vessel and its repair and
maintenance. I mean that vessel is brought at dry place and color
and other work is made. It is necessary for all the shipping
companies to dry dock their vessels after 2.5 years of last dry
docking. When 2.5 years are passed they are asked to dry dock
their vessel as soon as possible.
can go to the negative side because the dry docking is very much
expensive even in million dollars.
If the ship is declared fit for the sail to sea for upcoming 5 years
or more then 5 years then a letter will be issued that this ship is
fit for sail for 5 years and after 5 years again a survey will be
conducted to see the performance of the ship. As it is fit for more
voyages then now you can do repair and maintenance on the
ship.
Assets
Rate
Buildings 3% to
20%
Vessels 04%
Vehicles
20%
Office equipment
15%
Furniture and fittings
10% to 15%
Motor launch and jetty
10% to 15%
Equipment on board
10% to 15%
Container fitting
15%
Beach huts
15%
Workshop machinery and equipment
5% to 10%
Computer equipment
25%
MIS Department:
• Support function
• Software function
• MIS also asses the software needs and plan various actions
to fulfill the requirements of software.
• Provide all the account reports that are required by the any
user department, whenever the user department need
more particularly the following:
Financial statements
Purchasing Process:
The purchasing process starts from the Requisition of the ship
mean there is the requirement of an inventory.
After that the sign of the supplier are required who will supply the
inventory at the ship.
Then we will make analysis the quotation that is sent by the ship
to ensure that the inventory required is necessary to purchase.
Then the seller will send the required inventory and we will make
payment.
At the last stage the physical inventory will reach on the ship.
Financial Statements
2009 2008
(Rupees in '000)
NON-CURRENT ASSETS
Property, plant and equipment 8,264,524
13,624,883 Intangible asset -
1,649 Investment properties
969,296 969,987 Long-term
investments in: - -
Related party (associate) -
- Listed companies and another entity
22,715 40,229
Long-term loans 1,012
1,434 Long-term deposits 90
90 Deferred tax - net
20,655 15,316
9,278,292
14,653,588
--------------------------------------
-------
CURRENT ASSETS
Stores and spares 444,682
475,663 Trade debts 798,023
563,000
Agents' and owners' balances 20,420
32,145 Loans and advances 76,852
39,495
Deposits and short term prepayments 21,260
9,535
Interest / mark-up accrued 147,214
65,143 other receivables 136,052
137,148
Incomplete voyages 83,587
-Insurance claims 33,063
13847 Short-term investments 5,108,614
3,113,147 Cash and bank balances
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113
2,223,490 3, 39
------------------------------------------
9,093,257 7,848,228
NET CURRENT ASSETS 18,371,549
22,501,816
===================
============
Continued
Long-term financing -
-Deferred liabilities 219,894
208,783
--------------------------------------
-------
18,371,549
22,501,816
================
===========
2009 2008
(Rupees in
'000)
REVENUES
Chartering revenues 5,390,341
4,761,142
Freight 6,005,781 5,915,303
Rental income 78,227 77,083
-----------------------------------------
--
11,474,349
10,753,528
EXPENDITURE
Fleet expenses-direct 31 8,394,921
7,258,730
- Indirect 16,860 18,331
-----------------------------------------
--
8,411,781 7,277,061
-----------------------------------------
--
GROSS PROFIT 3,062,568 3,476,467
2009 2008
(Rupees in '000)
Cash flows from operating activities
01 00
16,030 132,063,379
Summarized Performance
Summarized Performance:
Revenue:
The consolidated revenue for PNSC group for 2009 was 6.7%
higher than FY08. It increased from Rs 10.753bn to Rs 11.474bn
in 2009. This increase is credited to the increased voyages in the
current year as well as the enlarge freight tons for the current
year.
Coming to the net profit margin, we can see the same trend as it
is for gross profit margin. It decreased from 22.7% to 20.16% in
FY09. This again can be seen as the general and other expenses
increased in a great proportion to the revenues earned. Though
the financial costs were reduced, it couldn’t t play a considerable
role in increasing the net profit as huge expenses were incurred.
The major sub-category that showed an increase in the direct
expenses was the fuel expenses which showed a 4.3% and claims
which showed a 33% increase in 2009.
This is one major concern for the company as it has reduced its
market worth for 2 consecutive years, which has dented upon the
reputation of the company. Moreover, investors are not ready to
invest because of the reasons mentioned above; hence the
company needs to revive the trust of the investors by effectively
managing its resources and assets.
No. of Employees:
Future outlook:
Freight Revenue
Rs. In Million
Operating expenses
Rs. In Million
Operating Profit
Rs. In Million
No. of Voyages
Cargo Handled
Freight in Million Tons
Financial Analysis
Financial Analysis:
Financial analysis is the most important part of the internship
report. It enables us to know the financial position of the
company. That’s why I applied the financial ratios to know the
current and previous financial condition of the Pakistan National
Shipping Corporation. So the analysis of financial statement is
also the part of this internship report.
Liquidity Ratios:
Current Ratio:
Interpretation:
Current ratio of PNSC tells that company is in strong position to
pay its short term obligation. In 2005 and 2006 the current ratio
was low but still it was strong. And now the current ratio is 5.44 it
means that company can pay very easily its short term
obligation.
Interpretation:
Asset turnover ratio shows that sales/revenue are how much
percent of the Assets. If this ratio increases it is good for the
business. If we see in PNSC case, we can see that in previous few
years the revenue was decreasing as compared to the assets but
in 2009 again it increases to 0.62. This means that revenue is 62
percent of the total assets of Pakistan National Shipping
Corporation. It can be called good because the assets of PNSC are
very large.
Interpretation:
This ratio tells that how much equity is involved in the assets that
are purchased or acquired. We can see that in assets the equity
is present in a large amount. Mostly PNSC didn’t take loans to
acquire any asset. It is purchased by equity portion. This
condition is good for PNSC as it is a government company. As a
result PNSC avoid from giving any interest to the banks.
The equity portion has an increasing trend in the few last year as
you can see above. PNSC should maintain it.
Profitability Ratios:
40.00%
35.00%
30.00%
25.00%
20.00% G.P %
15.00%
10.00%
5.00%
0.00%
2005 2006 2007 2008 2009
Interpretation:
Gross profit is that profit which comes after deducting the cost of
goods sold or expenditure. When gross profit is high it is
expected that the operating and net profit will also be high. The
gross profit margin of PNSC was high in 2005 as compared to
other 5 years. In 2009 the gross profit was 26.69 percent of total
revenue earned. It means that CGS was 73% of the total
revenue. So the total CGS should be decreased to enhance the
gross profit margin. It varies because the COGS of PNSC vary
along with the total revenue.
Interpretation:
Operating profit comes after deducting operating expenses. In
last 5 years operating profit was high in the year of 2005 because
the gross profit in that year was high. When operating profit
comes we deduct tax and interest. In this condition PNSC’s
operating profit margin is looking good. But still less than the
2008 operating profit margin. Operating profit in 2009 is 27% of
the total revenue. It varies in these 5 years because the
operating expenses vary along with revenue.
Interpretation:
Net profit comes when all the expenses, costs, interests, and
taxes are deducted from the sales revenue. Net profit margin
tells that how much percent of the total revenue, net margin is.
The net profit margin of PNSC was high in 2005 and 20 % in
2009. Net margin is in decreasing trend from 2008. It should go
upward so it is quite good that net profit is 20 percent of the total
revenue. PNSC should maintain it and try to increase it in next
year.
Return on Assets:
Interpretation:
This ratio tells that how much percent is earned on the assets.
We can see that in 2005, 21.28% was earned on every rupee and
in 2009 this ratio was 12.58 %. Reason is that earning available
on common stock holders has been changed but minor. But the
assets of the PNSC have changed their value, that’s why return
on assets is fluctuating in these 5 years.
Return on Equity:
Interpretation:
This ratio tells whether the company is a good investment. As
ROE increases, the company becomes more attractive to
potential investors. Generally, improving net income will also
improve shareholders’ equity as the profits will become retained
earnings. Return on equity is on decreasing trend so the PNSC
should look that what they had to do. In 2005 it was 46% but now
it is only 14% so there must be some corrections.
Debt Ratio:
Debt Ratio:
Interpretation:
Debt Ratio tells that how much percent of the assets debt is
payable by the company. PNSC has a decreasing trend for getting
loans. It basically uses equity for acquiring assets. In 2005 debt
ratio was 21% and in 2009 it was 10 %. So PNSC has to pay low
level of debt. And it is good for the business of PNSC.
Solvency ratios:
The leverage or solvency ratios are used to analyze the financial
structure of a firm and its capacity to comply with its long term
obligations.
Leverage Ratio:
Interpretation:
This ratio tells that total liabilities are how much percent of the
stock holder equity. As we can see that the total liabilities are
consistently decreasing year to year as a result the leverage or
solvency ratio is also decreasing. It means that the total liabilities
are decreasing. PNSC operate the business by the equity. Now
liabilities are 12 % of the total equity. And these liabilities are
current liabilities that remain in every business.
Interpretation:
This ratio tells that how much percent short term liabilities are
the part of total liabilities. As PNSC didn’t take much loans that
are of long term nature, that’s why this ratio is continuously
increasing. PNSC is also willing to pay its long term
payments/liabilities. The short term debt ratio was 56 % in 2005
it mean that current liabilities were near to half of the total
liabilities. But in 2009 short term or current liabilities were near
to 90% and only 10% were long term loans.
Capitalization Ratio:
Interpretation:
This ratio tells that long term debt is how much percent to the
share holder equity. So in PNSC long term debt was 20 % in 2005
but now it is only 1.38%. Reason is that PNSC operate by equity
not taking loans rather it pays all the long term loans. Its equity is
increasing year to year and long term loan is decreasing year to
year that’s why capitalization ratio is decreasing from previous
year.
Investment Ratios:
Interpretation:
Price earnings ratio tells that on how much investment on shares
we are earning Rs.1. in 2008 on each 23 rupees we were earning
Rs.1. In 2009 on each Rs. 2.64 we are earning rupee 1. Reason is
that in 2008 the market price of share was high and Earning per
share was low. But in 2009 e earning per share increases to
17.51 as a result price earnings ratio come to 2.64.
Earnings per Share:
Interpretation:
Earnings per share in 2005 were highest among the upcoming
years. Reason was that at that time earning available for share
holder was high. As a result per share earnings were high. Then
in 2006 earnings available for share holder decrease as a result
earning per share also decreases. In 2009 again earning available
for share holder goes high as a result again EPS increases to Rs.
17.51.
SWOT Analysis
SWOT Analysis:
Strength:
Pakistan National shipping Corporation has following strengths:
Weakness:
Opportunity:
Threats:
Suggestion &
Recommendations
Limitations
During my internship program at PNSC I face some certain
problems that come under the limitations head. These problems
and matters are following
Conclusion
Private sector is not allowed to play any part in the shipping
sector due to which Pakistan National Shipping Corporation
enjoys absolute monopoly in Pakistan.
Pakistan National Shipping Corporation and its subsidiary
companies were incorporated under the provision of Pakistan
National Shipping Corporation Ordinance, 1979and the
Companies Ordinance, 1984 respectively. The board of directors
consist five directors appointed by Federal government and two
directors appointed by the shareholders.
The company has invested in new vessels and dispatched the old
ones. This shows that the new vessels can be used effectively to
show better performance in future and earn higher revenues.
Annexure