Bahauddin Zakariya University Multan: Institute of Banking and Finance

Report
On
INSTITUTE OF BANKING AND FINANCE
BAHAUDDIN ZAKARIYA UNIVERSITY

MULTAN
Institute of Banking & Finance (BZU Multan)

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Submitted To:
Sir Khalid Sultan Anjum
Submitted By:
Muhammad Yousuf Razzaq

Roll No. MBKM 14-01
MBA(B&F) Morning
6th Semester

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DEDICATION
The Best Dedication to all those who have supported, encouraged, challenged, and inspired me.
And specially to my Beloved Parents, honorable teachers and friends for all their guidance, love
& attention which has made it possible for me to make it up to this point and as well as the
Supervisor Sir Khalid Sultan Anjum who bestowed me with the courage, the commitment and
the awareness to follow the best possible route, by their unmatchable style and by best possible
training.
Also I devote the work of this term report to respectable and honorable Management of Institute
of Banking and Finance (BZU) who taught and supported me in developing my personality as a
competent professional.

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DECLARATION
I, Muhammad Yousuf Razzaq student of Institute of Banking & Finance MBA 2014-17
enrolment No. MBKM 14-01, states that I have completed my term report on PTCL (Pakistan).
I humbly declare that this report is based on the work, carried by me and no part of it has been
presented previously for any higher degree.
The information submitted is true & original to the best of my knowledge.
……………………………..
Muhammad Yousuf Razzaq
MBKM 14-01
MBA (Banking & Finance)
6th Semester (Morning)
Institute of Banking & Finance
(BZU) Multan

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ACKNOWLEDGMENT
First, all praises & thanks to Almighty ALLAH that I avail this opportunity for completing this
period of report, then I pay all my respect and praises to the greatest man of universe, Holy Prophet
Muhammad ( PBUH ) for whom all this universe was created.
I am greatly thankful to my prestigious Institute of Banking and Finance (BZU) that made this
learning opportunity a part of our education, especially, coordinator Sir Khalid Sultan Anjum
who did not only guided me he also helps me a lot during completion of this term report.
I would like to mention Names Salman Malik & Naseem Akbar whose encouragement, guidance
and support from the initial to the final level enabled me to develop an understanding of my
projects at every step during this period.
Lastly, I offer my regards and blessings to all of those who supported me in any respect during the
completion of the report.

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EXECUTIVE SUMMARY
I have done my work on PTCL Multan. The main reason of choosing PTCL for project purpose
was to gain experience. Here, I got little bit information about telecom sector that how it operates
in Pakistan history of telecom sector in Pakistan and how it spread all over domestic as well as
international level.
Different products and services provided by PTCL include wire land as well as wireless internet
base services and technologies smart TV, EVO, 3G & 4G, corporate sector services as PTCL
provide platform to larger companies to connect at international level as well as domestic northern
areas by adopting its services. Here I prepared financial ratios of PTCL.
I also learned about different types of Strategic Management of the PTCL like, Business Strategies
& Finance or Credit management strategies.
At end I have closed by analyzing companies’ strengths weakness opportunities and threats and
PEST Analysis of the company than give them some recommendations.

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Table of Contents
Chapter No. 1 .............................................................................................................................................. 10
Introduction of Telecom Industry ........................................................................................................... 10
Background and History of PTCL ............................................................................................................. 10
Vision................................................................................................................................................... 12
Mission ................................................................................................................................................ 12
Company Financial Structure .................................................................................................................. 13
Financial Principle of the Company ........................................................................................................ 13
Market Standing & Ranking of the Company with its Market-shares .................................................... 14
Chapter No. 2 .............................................................................................................................................. 15
Systematic and Integrated Risk Management System ........................................................................... 16
Financial Risk Management .................................................................................................................... 16
Based on the Balance Sheet Information ........................................................................................... 16
Chapter No. 3 .............................................................................................................................................. 18
Financial Statements ............................................................................................................................... 18
STATEMENT OF FINANCIAL POSITION ................................................................................................ 18
STATEMENT OF PROFIT AND LOSS...................................................................................................... 21
Ratios Analysis of the Financial Statements ........................................................................................... 22
Liquidity Ratios .................................................................................................................................... 22
Current Ratio ................................................................................................................................... 22
Quick Ratio ...................................................................................................................................... 23
Working Capital............................................................................................................................... 23
Financial Leverage (Debt) Ratios......................................................................................................... 24
Debt to Equity Ratio ........................................................................................................................ 24
Debt to Assets ................................................................................................................................. 24
Coverage ratio ................................................................................................................................. 24
Activity ratios ...................................................................................................................................... 25
Receivables Turnover Ratio ............................................................................................................ 25
Days’ Sales in Account Receivable .................................................................................................. 26
Asset Turnover Ratio ....................................................................................................................... 26

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Profitability ratio ................................................................................................................................. 27
Gross margin ratio........................................................................................................................... 27
Net profit margin ratio .................................................................................................................... 27
Operating Margin Ratio .................................................................................................................. 28
Return on Assets ............................................................................................................................. 28
Earnings per Share .......................................................................................................................... 29
Fixed Assets Turnover Ratio ............................................................................................................ 29
Return on Equity Ratio .................................................................................................................... 29
Return on Capital Employed ........................................................................................................... 30
Chapter No. 4 .............................................................................................................................................. 31
STATEGIC MANAGEMENT OF PTCL ......................................................................................................... 31
How it works in ptcl ............................................................................................................................ 31
ORGANIZATIONAL MANAGEMENT CYCLE .......................................................................................... 32
TYPES OF ORGANIZATION STRATEGY ..................................................................................................... 32
Business strategies .............................................................................................................................. 32
FOCUS STRATEGY ................................................................................................................................ 33
FUNCTIONAL STRATEGY ...................................................................................................................... 33
Financial Aspects ............................................................................................................................. 34
Liquidity Position............................................................................................................................. 34
Leverage Position ............................................................................................................................ 34
STRATEGIC MANAGEMENT IN TODAY’S ENVIORMENT OF PTCL ........................................................ 34
Finance or Credit System of the Organization .................................................................................... 35
Chapter No. 5 .............................................................................................................................................. 36
PEST ANALYSIS ........................................................................................................................................ 36
Political Factor..................................................................................................................................... 36
Economical Factor ............................................................................................................................... 36
Social-Cultural Factor .......................................................................................................................... 36
Technological Factor ........................................................................................................................... 36
Chapter No. 6 .............................................................................................................................................. 37
SWOT ANALYSIS OF PTCL ........................................................................................................................ 37

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Strengths ............................................................................................................................................. 37
Weaknesses: ....................................................................................................................................... 38
Opportunities: ..................................................................................................................................... 39
Threats: ............................................................................................................................................... 40
Chapter No. 7 .............................................................................................................................................. 41
CONCLUSIONS & RECOMMENDATION ................................................................................................... 41
Conclusion: .......................................................................................................................................... 41
Recommendations: ............................................................................................................................. 41
References: ............................................................................................................................................. 42

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Chapter No. 1
Introduction of Telecom Industry

Since the independence of Pakistan, basic telecom services were being provided by a monopolist,
previously called as Telephone and Telegraph department (T&T). The department was being run
by the government and played multiple roles as regulator, policy maker, operator,
and service provider in the country. The T & T department was later converted into a corporation.
Although the corporation was earning huge profits from the services, it was re-investing the same
profits into the sector for the provision of more telecom service but the investment was not enough.
Further, with the technological advancement, more and more telecom services
were becoming available but there was not enough money available with the corporation to
install new telecom systems for the provision of modern services. Resultantly, a digital divide
prevailed in Pakistan keeping it behind its neighbors and other comparable countries in terms of
telecom access. The Telecom Sector has contributed 2 percent towards the overall GDP growth
with revenues of over PKR 235bn.
Background and History of PTCL

Pakistan Telecommunication Corporation (PTC) has established in December 1990, taking over
operations and functions from Pakistan Telephone and Telegraph Department under Pakistan
Telecommunication Corporation Act 1991.PTCL operates in one of the most dynamic, deregulated
and competitive markets in the world; Pakistan with a population of 165 million people is a fast
growing economy with relatively low penetration of Information Communication Technology
(ICT) services. PTCL intends to be the leading ICT provider in the region by achieving customers'
satisfaction and maximizing shareholders' value and as such PTCL perceives its future as a
customer centric organization enhancing its infrastructure and investing in people. This coincided
with the Government's competitive policy, encouraging private sector Participation and resulting
in award of licenses for cellular, card-operated payphones, paging and, lately, data communication
services. In 1994, the PTCL becomes the company limited (Pakistan Telecommunication
Company Limited) by issued six million vouchers exchangeable into 600 million shares of the
PTCL in two separate placements. Each had a par value of Rs. 10 per share. These vouchers were
converted into PTCL shares in mid-1996In 1995, Pakistan Telecommunication (Reorganization)
Ordinance formed the basis for PTCL monopoly over basic telephony in the country. The
provisions of the Ordinance were lent permanence in October 1996 through Pakistan
Telecommunication (Reorganization) Act. The same year, Pakistan Telecommunication Company
Limited was formed and listed on all stock exchanges of Pakistan PTCL launched its mobile and

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data services subsidiaries in 2001 by the name of UFONE and PAKNET respectively. None of the
brands made it to the top slots in the respective competitions. Lately, however, UFONE had
increased its market share in the cellular sector. The PAKNET brand has effectively dissolved over
the period of time. A recent DSL service launched by PTCL reflects this by the introduction of a
new brand name and operation of the service being directly supervised by PTCL.
Pakistan Telecommunication Company Limited had exclusive rights to provide basic telecom
services in Pakistan till the end of year 2002. With the announcement of Deregulation Policy by
the Government of Pakistan in 2003, PTA has issued licenses for basic telephony to the private
sector in Pakistan who will be competing PTCL, the incumbent. From the humble beginnings of
Posts & Telegraph Department in 1947 and establishment of Pakistan Telephone& Telegraph
Department in 1962, to this very day, ours is a story of commitment and vision. The year 2006-07
in the telecom sector was marked by the phenomenal growth in the mobile sector in Pakistan,
which doubled its subscriber base to 60 million. The density increased from 26% to 40%, helping
to spread the benefits of communication technology across the country. PTCL’s mobile phone
subsidiary UFONE’s subscriber base grew by more than 87%, from 7.49 million to 14 million.
The year also witnessed the entry of major telecom companies, most notably China Telecom and
SingTel, into market. The privatization of the company was completed in the 2006, following the
purchaser of26% ‘B’ class ordinary shares by Etisalat International Pakistan L.L.C. EIP took over
management control on 12th on April 2006.In short PTCL has been working vigorously to meet
the dual challenge of telecom development and socio-economic uplift of the country. This is
characterized by a clearer appreciation of ongoing telecom scenario wherein convergence of
technologies continuously changes the shape of the sector.
1947 Posts & Telegraph Dept. established

1962 Pakistan Telegraph & Telephone Deptt.
1990-91 Pakistan Telecom Corporation
ALIS: 850,000
Waiting list: 900,000 Expansion Program of 900,000 lines initiated
(500,000 lines by Private Sector Participation
400,000 lines PTC/GOP own resources).
1995 About 5 % of PTSL assets transferred to PTA, FAB & NTC

1996 PTCL Formed listed on all Stock Exchanges of Pakistan
1998 Mobile & Internet subsidiaries established
2000 Telecom Policy Finalized

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2003 Telecom Deregulation Policy Announced
2005 26 & Shares by Etisalat UAE through open bidding
2013 26% Etisalat and 62% State owned corporations and 12% public shares
Vision
“To be the leading Information and Communication Technology Service Provider in the region by
achieving customers' satisfaction and maximizing shareholders' value”
Mission
 To achieve our vision by having:
 An organizational environment that fosters professionalism, motivation and quality
 An environment that is cost effective and quality conscious
 Services that are based on the most optimum technology
 "Quality" and "Time" conscious customer service
 Sustained growth in earnings and profitability
Name of Company
Pakistan Telecommunication Company Limited
Monogram:
Slogan
“Hello to the Future”
Industry
Telecommuncation.

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Company Financial Structure
The office of the Director General (Finance) controls all financial activities and system of PTCL.
All financing decisions, capital budgeting decisions and processing on real and financial assets are
major responsibilities of finance department of PTCL. Necessary future plans and projects are
analyzed and selected as per their positive results i.e; (Investment decision) installation of new
telephone exchanges and lines.
Lending and borrowing decisions are also made as per loans, interest rates, time period and lending
agencies and banks etc.
Necessary sanctions of write-off and depreciation rate are also issued by the finance department.
Finance department also plays a vital role in coordination, with dividend policy matters, internal
and external auditors and share registrars. Pensions, insurance, preparation of budget and taxation
dealings are also important factors of PTCL finance department.
Budget Wing
Budgeting is the most effective instrument to exercise quality control over the financial resources
of an organization and their better utilization. A budget is a comprehensive financial plan setting
forth the expected route for achieving the financial & operational goals of an organization. The
companies engaged in large-scale business essentially have a budget department to carry out
budgeting for the coming financial year.
Various functions performed by Budget Dept. of PTCL are:
 Allocation of funds to different head of accounts.
 Disbursement of funds or physical transfer of funds to different heads of accounts.
 Receive and analyze budget reports.
 Recommended actions designed to improve efficiency where necessary.
Financial Principle of the Company

The accounting system of PTCL is to comply with requirements of companies’ ordinance, 1984
and approved Accounting standards comprise of such IASs as notified under the provision of the
companies ordinance 1984. International Accounting Standards (IAS), as applicable in Pakistan
in all respects. Wherever the requirements of the company’s ordinance 1984 of directives
issued by the securities and exchange commission of Pakistan differ with the requirements of
these standards. Generally accounts are prepared and maintained on government pattern as well
as commercial pattern on accrual basis of bills receivable and bills payable and also are exhibited
the profit and loss account and balance sheet showing the assets and liabilities.

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The revised cash account current (ACE-40) Performa is based on double entry system which
indicates the debit and credit under each head of account via cash/bank shows the balance in hand
ceiling cash and direct payment and the closing balance. All Drawing and Disbursing Officers
furnish commercial accounts at Lahore, where all items are separated analyzed and noted in
necessary books for preparation of financial statements.
In the Accounting system of organization, proper books of Accounts have been kept by the
company as required by the companies’ ordinance, 1984. The balance sheet and the profit and
loss account together with the notes thereon have been drawn up in conformity with the
company’s ordinance, 1984. The balance sheet, profit and loss account, cash flow statement and
statement of changes in equity together matches with approved accounting standards as applicable
in Pakistan, and give the information required by the companies ordinance 1984 in the manner
so required and respectively give a true and fair view of the state of the company’s affairs as at
June 30 of every year and of the profit, its cash flows and changes in equity for the year then ended.
Market Standing & Ranking of the Company with its

Market-shares
Current PTCL Network
 Installed capacity: 5273091
 Working connections: 4,405,161
 Countries on ISD: 242
 Customer service centers: 154
These are few basic facts about PTCL network. So taking over from posts & Telegraph Department
in 1947 to now providing sate of art technology it is really big achievement.
PTCL Ranked as Most Preferred Broadband Operator in Pakistan
Pakistan Telecommunication Company Limited (PTCL) has been ranked as the number one
broadband operator in Pakistan and also the fixed line telephony service provider. This survey was
revealed by the Best Buy Award research survey conducted by the Swiss organization ICERTIAS.
ICERTIAS– International Certification Association– supports consumers in finding better quality
products and services on the market which are deserving of their attention and their money. It also
measures consumers experience, opinion, and perception in terms of best value for money.
Customers in Pakistan have ranked PTCL Broadband internet as their most preferred choice. The
Best Buy Award survey measures customer experience relative to price-quality ratio and best value
for money. As PTCL always offers amazing offers to its cutomers.

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The research conducted in Pakistan regarding best Broadband Operator include about 50 different
non-economic and economic categories in sectors such as retail, food, telecommunications and
finance etc.
PTCL is the largest ICT services provider in Pakistan, including fixed line voice telephony,
broadband internet, digital television and corporate solutions for organizations. The company has
revolutionized the broadband eco-system of the country by providing high-speed fixed and
wireless broadband services at affordable rates nationwide. It manages and operates around 2000
telephone exchanges across the country, providing the largest fixed-line network

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Chapter No. 2
Systematic and Integrated Risk Management System

Risk management is a critical element of corporate governance and in the liberalized markets,
when businesses are exposed to a variety of risks, conventional reactive approach is neither
sufficient nor relevant anymore. These risks include financial risks, risk of losing subscribers
confidence, risk of losing credibility with private sector partners, risk of unwarranted and illegal
external interference and above all, risk of failure in view of all these risks.
It is to be seen whether our public sector telecom entities incorporate risk management explicitly
in their governance processes, or do these entities include risk management into strategic and
business planning processes. Governance-specific information on these entities is rarely available
through their Annual Reports of PTCL, and little information that is readily available suggests that
these organizations do not explicitly identify and asses their key risks or they do not have any risk
management strategy or policy in place. The absence of a risk management system leads to
inefficiencies in prioritizing and allocating resources to manage risk.
Financial Risk Management

The financial risk is defined as any fluctuation in the cash flows, financial results and the
company's value due to the influence of different types of factors; mainly market ones, such as:
interest rates, exchange rates, commodity and stock prices.
financing risk of PTCL including three components:
1. capital structure risk arising by using debt capital to finance part of the company’s assets;
2. liquidity risk connected with the ability of the company to pay its short term liabilities by
using assets that can be quickly converted into cash (current assets);
3. long-term stability risk connected with the sources of finance used to buy long-term assets
(fixed assets) and long-term insolvency risk.
Based on the Balance Sheet Information

Using balance sheet information to assess the financial risk The first element of the financial
statement is the balance sheet presenting the PTCL financial position at a single point of time,
including company's assets and the liability and equity claims against those assets. Basic elements
of the balance sheet are presented in table.

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By using balance sheet information the three components of the financial risk can be identified
and analyzed: capital structure risk, liquidity risk and insolvency risk

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Chapter No. 3
Financial Statements
STATEMENT OF FINANCIAL POSITION
AS AT DECEMBER 31,
2016 2015 2014
Rs ‘000’ Rs ‘000’ Rs ‘000’
Equity and liabilities
Equity
Share capital and reserves
Share capital 51,000,000 51,000,000 51,000,000
Revenue reserves
Insurance reserve 2,621,288 2,416,078 2,196,770
General reserve 27,497,072 30,500,000 30,500,000
Unappropriated profit 1,894,739 2,302,282 8,117,782
32,013,099 35,218,360 40,814,552
Unrealized gain on available for sale - - 329,039

investments
83,013,099 86,218,360 92,143,591
Liabilities
Non-current liabilities

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Long term security deposits 553,049 552,122 549,256
Deferred income tax 4,737,260 5,754,847 2,676,026
Employees retirement benefits 24,068,008 32,111,859 33,011,258
Deferred government grants 8,594,920 8,926,403 6,848,180
37,953,237 47,345,231 43,084,720
Current liabilities
Trade and other payables 59,142,912 46,814,183 44,345,349
Total equity and liabilities 180,109,248 180,377,774 179,573,660
STATEMENT OF FINANCIAL POSITION

AS AT DECEMBER 31,
2016 2015 2014
Rs ‘000’ Rs ‘000’ Rs ‘000’
Assets
Non-current assets
Fixed assets
Property, plant and equipment 94,779,483 94,912,046 94,452,061
Intangible assets 2,332,789 2,539,060 4,826,422
97,112,272 97,451,106 99,278,483

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Long term investments 7,977,300 7,977,300 7,791,296
Long term loans and advances 2,152,757 2,261,126 2,794,106
Investment in finance lease 38,513 96,113 84,398
107,280,842 107,785,645 109,948,283
Current assets
Stores, spares and loose tools 2,742,794 2,940,425 2,872,542
Trade debts 14,227,974 14,304,039 15,758,805
Loans and advances 676,556 1,593,099 4,136,133
Investment in finance lease 53,030 52,255 28,305
Accrued interest 231,902 128,174 344,801
Recoverable from tax authorities 14,550,698 18,179,032 16,366,457
Receivable from the Government of 2,164,072 2,164,072 2,164,072

Pakistan
Prepayments and other receivables 8,279,236 4,982,082 4,994,327
Short term investments 24,000,000 26,038,803 18,441,389
Cash and bank balances 5,902,144 2,210,148 4,518,546
72,828,406 72,592,129 69,625,377
Total assets 180,109,248 180,377,774 179,573,660

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STATEMENT OF PROFIT AND LOSS
AS AT DECEMBER 31,
2016 2015 2014
Rs ‘000’ Rs ‘000’ Rs ‘000’
Revenue 71,420,100 75,751,975 81,512,598
Cost of services (50,358,343) (53,783,589) (55,682,723)
Gross profit 21,061,757 21,968,386 25,829,875
Administrative and general expenses (8,770,136) (9,782,258) (9,857,639)
Selling and marketing expenses (3,129,868) (3,514,400) (3,290,137)
Voluntary separation scheme cost (8,174,536)
Operating profit 9,161,753 8,671,728 4,507,563
Voluntary separation scheme cost (4,601,379) -
Other income 5,834,131 4,917,762 4,706,389
Finance costs (193,708) (317,376) (295,193)
Loss of property, plant and equipment (907,230)

due to fire
Profit before tax 10,200,797 13,272,114 8,011,529
Provision for income tax (3,366,263) (4,512,519) (2,804,035)

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Profit for the year 6,834,534 8,759,595 5,207,494
Earnings per share 1.34 1.72 1.02
Ratios Analysis of the Financial Statements

Financial ratios are mathematical comparisons of financial statement accounts or categories. These
relationships between the financial statement accounts help investors, creditors, and internal
company management understand how well a business is performing and areas of needing
improvement. Ratios are just a raw computation of financial position and performance.
Liquidity Ratios
The term liquidity means the extent of quick convertibility of assets in to money for paying
obligation of short-term nature.
Current Ratio
Show the firm ability to meet the current liability with its current assets.
Formula:
Current Assets
Current Ratio =
Current Liability
2016 2015 2014
Current Ratios 1.23 1.55 1.57
Interpretation
The current ratio helps investors and creditors understand the liquidity of a company and how
easily that company will be able to pay off its current liabilities. This ratio expresses a firm's current
debt in terms of current assets. A higher current ratio is always more favorable than a lower current
ratio because it shows the company can more easily make current debt payments.
The PTCL has ability 1.23 times to pay its current obligation with its current assets in 2016 but
last two year the PTCL current ratio is high (2014: 1.57 times and 2015: 1.57 times) because the
PTCL payable increased in 2105 and decreased in 2016.

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Quick Ratio
The quick ratio or acid test ratio is a liquidity ratio that measures the ability of a company to pay its
current liabilities when they come due with only quick assets. Quick assets are current assets that
can be converted to cash within 90 days or in the short-term. Cash, cash equivalents, short-term
investments or marketable securities, and current accounts receivable are considered quick assets.
Formula:
Quick assets
Quick ratio =Current liability
2016 2015 2014
Quick Ratio
1.19 1.49 1.51
Interpretation
If a firm has enough quick assets to cover its total current liabilities, the firm will be able to pay
off its obligations without having to sell off any long-term or capital assets.
The PTCL has liquidity position is not good and the PTCL has ability in 2016 is 1.19 times to pay
current obligation with its quick assets (not include Inventory) with compare year 2014.
Working Capital
The capital of a business that is used in its day-to-day trading operations, calculated as the current
assets minus the current liabilities.
Formula:
Working Capital = Current Assets – Current Liabilities
2016 2015 2014
Working 13685494 25777946 25280028

Capital
Interpretation
Determines if a company can meet its current obligations with its current assets; and how much
excess or deficiency there is. The company working position is good one.

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Financial Leverage (Debt) Ratios
Debt to Equity Ratio
The debt to equity ratio is a financial, liquidity ratio that compares a company's total debt to total
equity. The debt to equity ratio shows the percentage of company financing that comes from
creditors and investors.
Formula:
Total Liability
Debt to Equity ratio= Total Equity
2016 2015 2014
Debt to Equity 1.16 1.09 0.94

Ratio
Interpretation
This ratio indicate that on which extent debt financing used relative to equity financing. Debt can
magnify the return and risk and this ratio increasing continuously from 2014 to 2016.
Debt to Assets
Debt to Assets is show the percentage of the firm assets that are supported by debt financing.
Formula:
Total Liability
Debt to Assets Ratio = x 100
Total Assets
2016 2015 2014
Debt to Assets 51.28% 49.01% 47.20%

Ratio
Interpretation
The PTCL assets support 51.28% by debt funds and 49.62% assets are supported by investor funds
in 2015. Last year, the PTCL has assets supported by 49.01% by debt funds. So, the PTCL should
try to minimize the debt funds and increasing the investor funds.
Coverage ratio
The ratio that relate the financial charges of the firm to its ability to cover them
Interest coverage ratio

It show the firm`s ability to meet its interest payment and avoid bankruptcy

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Formula
Profit before interest and tax

Interest coverage ratio = Interest
2016 2015 2014
Interest 47.3 27.3 56.00

Coverage Ratio
Interpretation
The PTCL has 47 times ability to meet its interest obligation in 2016. Last year, the PTCL has 27.3
times ability to pay its interest obligation. So, the PTCL has managed finance cost.
Activity ratios
Ratios is measure how effectively the firm is using its assets.
Receivables Turnover Ratio

The receivable turnover (RT) ratio provides insight into the quality of the firm’s receivables and
how successful the firm is in its collections
Formula:
Net Annual Credit Sales
Receivables Turnover = Average Account Receivable
Opening A/R +Ending A/R
Average Account Receivable = 2
2016 2015 2014
Account 5.01 5.04 4.75

Receivables
Turnover
Interpretation
Since the receivables turnover ratio measures a business' ability to efficiently collect itsreceivables,
it only makes sense that a higher ratio would be more favorable. Higher ratios mean that
companies are collecting their receivables more frequently throughout the year.

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Days’ Sales in Account Receivable
The average numbers of days that it took to collect the average amount of accounts receivable
during the year.
Formula:
365days / account receivable turnover in a year
2016 2015 2014
Days sales in 72.85/ days 72.42 / days 76.84 / days

A/C
Receivables
Interpretation
The days sales outstanding formula shows investors and creditors how well companies' can collect
cash from their customers. It has decreased from previous year, which is a good sign for them. Its
mean we are not giving the relaxation to our customer. So, the PTCL is managed the collection
department and credit policy, if collection period is too high then it is negative impact on sale
volume.
Asset Turnover Ratio

The asset turnover ratio is an efficiency ratio that measures a company's ability to generate sales
from its assets by comparing net sales with average total assets. In other words, this ratio shows
how efficiently a company can use its assets to generate sales.
Formula
Net Sale
Assets turnover ratio = Average Total Assets
2016 2015 2014
Assets 0.396 0.42 0.45

Turnover
Ratio
Interpretation
The PTCL use its assets to generate sale is 0.39 times in 2016. It means that the PTCL generate
Rs.0.39 of sale of every rupee invested in assets. Last year, the PTCL assets turnover is 0.44 times.
In 2016, the PTCL is not efficiently use of its assets to generate sale.

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Profitability ratio
The term profitability, mean the profit earning capacity of any business activity. Profitability ratio
is to measure the overall efficiency or performance of a business.
Gross margin ratio

Gross margin ratio is profitability ratio that compares the gross margin of a business to the net
sales. This ratio measures how profitable a company sells its inventory or merchandise.
Formula
GROSS PROFIT
GROSS PROFIT = X 100
Net sale
2016 2015 2014
Gross Profit 29.5% 29.0% 31.7%
Interpretation
The PTCL earned gross margin 29.5% in 2015, but last year (2015) the PTCL earned gross profit
29%. Higher ratios mean the company is selling their inventory at a higher profit percentage.
Net profit margin ratio

Net profit ratio indicate that the firm ability after taking all account of all expense and income tax.
Formula:
Net profit
Net profit margin ratio = x100
Net sale
2016 2015 2014
Net profit 9.57 11.56 6.39

Margin Ratio
Interpretation
The PTCL earned net profit 9.57% in 2015, but last year (2015) the PTCL earned net profit 11.5%.
The net profit not increased because the PTCL increase the voluntary separation scheme cost
(employee benefit) in 2016.

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Operating Margin Ratio
The operating margin ratio, also known as the operating profit margin, is a profitability ratio that
measures what percentage of total revenues is made up by operating income.
Formula
The operating margin formula is calculated by dividing the operating income by the net sales
during a period.
Operating margin ratio = operating profit / net sales
Years 2016 2015 2014
Ratios 12.83% 11.45% 15.56%
Analysis
A higher operating margin is more favorable compared with a lower ratio because this shows that
the company is making enough money from its ongoing operations to pay for its variable costs as
well as its fixed costs.
Return on Assets
Return on Assets is tells that how well a company use its assets to generate income.
Formula:
Net profit
Return on Assets = x 100
Total Assets
2016 2015 2014
Return on 3.8% 4.9% 2.9%

Assets
Interpretation
The PTCL is get return on assets 4.9% in 2015 and increased from the last year, because the PTCL
has reduce the voluntary separation scheme cost (employee benefits) in 2014. ROA shows how
efficiently a company can convert the money used to purchase assets into net income or profits.

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Earnings per Share
Expresses the corporation’s net income after taxes on a per share of common stock basis.
2016 2015 2014
1.34 1.72 1.02
Fixed Assets Turnover Ratio

Fixed assets turnover ratio is an activity ratio that measures how successfully a company is
utilizing its fixed assets in generating revenue.
Formula
Fixed assets turnover ratio = net sales / fixed assets
2015 2014 2013
Return on 12.696,133/181,908,478 7,212,079/156,948,722 7,428,170/152,519,860

Assets
0.82 0.87 0.99
Return on Equity Ratio

The return on equity ratio or ROE is a profitability ratio that measures the ability of a firm to
generate profits from its shareholders investments in the company.
Formula
The return on equity ratio formula is calculated by dividing net income by average shareholder's
equity.
Return on equity = net income/average shareholders equity
Years 2016 2015 2014
Ratios 8.08 9.82 5.40
Analysis
Return on equity measures how efficiently a firm can use the money from shareholders to generate
profits and grow the company. Unlike other return on investment ratios, ROE is a profitability
ratio from the investor's point of view—not the company. The company generate more
income in 2015 than the 2014.

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Return on Capital Employed
Return on capital employed or ROCE is a profitability ratio that measures how efficiently a
company can generate profits from its capital employed by comparing net operating profit to
capital employed.
Formula
Return on capital employed formula is calculated by dividing net operating profit or EBIT by the
employed capital.
Return on capital employed = net operating profit / capital employed
Years 2016 2015 2014
Ratios 7.51 6.66 9.32
The return on capital employed ratio shows how much profit each dollar of employed capital
generates. Obviously, a higher ratio would be more favorable because it means that more dollars
of profits are generated by each dollar of capital employed.

30 | P a g e
Chapter No. 4
STATEGIC MANAGEMENT OF PTCL
How it works in ptcl

Customer Care Initiative
To achieve the pinnacle of Excellence in Customer Service envisioned by the President/CEO the
Training and Development department has assumed the responsibility for effectively imparting
training under the Customer Care Initiative to all PTCL employees.
Implementation of ERP system in T&D:

The focus of the project is to set up and maintain the qualifications catalogs, create and evaluate
profiles for a range of objects (for example, persons and positions), evaluate career and succession
planning scenarios, set up appraisal systems, as well as plan, hold, and evaluate appraisals, create
development plans, and work through individual development planning scenarios by customizing
the functions of personnel development to meet customer requirements.
Quality Awareness Programme:

In order to create quality awareness and skills improvement of PTCL staff, a 3-year QA plan has
been made. The project is scheduled from March 2007 to December 2009. Following four types
of programmes are under the work plan:• Installation Quality Standards• Quality Auditor Course•
Companywide Quality Awareness• ‘Train the Trainer Programme’ offered to the faculty of PTCL
training centers

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ORGANIZATIONAL MANAGEMENT CYCLE
The cycle above describes the Organizational Management process at PTCL. Yellow blocks describe the
core functions of the Company performed at all levels in the Organization. Blue Blocks are the Strategic
functions which are performed at the Strategic level only.
TYPES OF ORGANIZATION STRATEGY
Business strategies
As part of the Company’s vision of maintaining and growing its position as the leading ICT service
provider and a profit leader, a five year Strategic Master Plan for the Company, with defined
corporate KPI targets, timelines and ownerships was developed by the PTCL management.
Defining yearly targets on market shares for various voice and data services, introduction of a
corporate KPI based performance measurement system, Restructuring of the organization,
formulation of IPTV, Triple Play and converged services, migration to an end to end IP based
network, Investment strategies such as Assets Management for risk diversification and improved
Return on Investments, were all part of the master plan. The five year master plan will be reviewed

32 | P a g e
and updated on an annual basis. PTCL chose August 14th, the Independence Day, to launch its
new logo and theme of ‘feel the difference’. To support the new spirit and to reinforce its
commitment, PTCL offered ‘free’ nationwide calls to the people of Pakistan. The traffic on 14th
August 2007 jumped to 4 times the level on a similar holiday to give credence to our hypotheses
that the ‘good old telephone’ Company is still the trusted landmark of the people of Pakistan. This
unprecedented response to free calls on 14th August was a heartwarming experience as it reassured
the faith of our customers in our services, making us even more aware of our responsibilities
towards putting our customer first.
The key areas of PTCL focus are;

The initiatives taken by the PTCL may not be enough for an abrupt change, however, if the
strategic focus and strategy remained correct and effective as stated above, the list of initiatives
will keep on increasing and shall lead PTCL towards leadership in all the segments it serves.
FOCUS STRATEGY
Broadband and Value Added Services

PTCL through diversification and assorted products and services could retain its fundamental
presence in the Telecom Sector. Introduction of DSL Broadband services across major cities with
plans to include more cities in times to come will enhance the revenue base of PTCL. Stiff
competition from other cable based broadband service providers and local cable operators still
persists. PTCL’s broadband services100,000 subscribers by providing services in the five largest
cities and had a decent start by adding over 10,000 subscribers within the first few months of its
operations depicting PTCL’s brand recognition.
FUNCTIONAL STRATEGY
HUMAN RESOURCE DEVELOPMENT
HR ASPECTS
The transformation from a legacy public sector organization into a responsive and competitive
enterprise in the deregulated era could not have been possible without implementing a forward
looking Human Capital development and management strategy. One of the most important
objectives of this new strategy was to optimize the workforce which was implemented by offering
the voluntary option of separating From PTCL in exchange for financial compensation. Around
29,920 employees opted to pursue other career opportunities after accepting terms of voluntary
separation from PTCL.

33 | P a g e
FUNCTIONAL STRATEGY
Financial Aspects
The structural adjustments undertaken by the company in response to the increased competition
and substitution impact of mobile expansion has adversely hit the profitability of PTCL in the short
run.
Liquidity Position
The liquidity position of the company suffered a setback in FY13. This trend has been witnessed
despite increasing current assets, as current liabilities grew more sharply. The short term
borrowings of the company have been mounting for the last few years and this has contributed to
the current trend of the current ratio. It may be noted that the company holds large amounts of cash
and bank balances compared to the other companies in the business. This may provide an edge to
the company over its competitors. Although the liquidity stance of the company is fairly
satisfactory at the moment, but a continuation of the current negative trend may spell trouble for
the company.
Leverage Position
The debt ratios showed a decreasing trend in the FY14. The debt to asset ratio of the company had
declined considerably in FY12 but the trend reversed in FY13, declining again in FY14. It IS
important to note that the company maintains a largely unleveraged capital structure, with the
current trend in debt ratios bought about largely by changes in current liabilities of the company.
STRATEGIC MANAGEMENT IN TODAY’S ENVIORMENT OF PTCL
FUTURE OF PTCL
PTCL Launches New Packages

PTCL recently launched three brand new packages for its consumers. But where every other
telecom in the country is slashing its call rates and finding other ways to make money, PTCL has
actually increased its rates! While almost brilliant in their design, the new packages can and will
inflate your telephone bill quite a bit so be prepared for a hefty setback at the end of this month if
you use your PTCL line at all.

34 | P a g e
Finance or Credit System of the Organization
Finance is the backbone of every organization because without finance any organization can’t run
its business. It plays an important role in determining the long-term objectives and evaluating the
feasibility of the business.
Finance Wing
Split up into three major branches; Finance, Accounts & Revenue.
G.M Finance heads this department. The responsibilities of the General Manager (Finance) usually
fall in the area of financial management, preparation of annual budgets, determining the revenue
targets for the year, investor, and banker relations and controlling the Directors revenue in all the
regions.
Budget Wing
Budgeting is the most effective instrument to exercise quality control over the financial resources
of an organization and their better utilization. A budget is a comprehensive financial plan setting
forth the expected route for achieving the financial & operational goals of an organization. The
companies engaged in large-scale business essentially have a budget department to carry out
budgeting for the coming financial year.
Various functions performed by Budget Dept. of PTCL are:
 Allocation of funds to different head of accounts.
 Disbursement of funds or physical transfer of funds to different heads of accounts.
 Receive and analyze budget reports.
 Recommended actions designed to improve efficiency where necessary.
Classification of Budget
For simplicity and application, a master budget is classified into following categories:-
 Revenue Budget.
 Working Expenditure Budget.
 Capital Expenditure Budget.
The Revenue Budget consists of estimated collections under different receipts heads while
Working Expenditure Budget includes the estimated amounts to be incurred during the budgetary
period for operational needs. The capital expenditure budget is mainly developed with the consent
of Development wing and the details are given in the Annual Development Program.

35 | P a g e
Chapter No. 5
PEST ANALYSIS
It is very important that an organization considers its environment before beginning the marketing
process. Thus there are mainly four factors involved in PEST Analysis of PTCL. These are
explained Below in detail.
Political Factor
 Not much the Government Policy & Laws are giving a positive influence on the
Organization environment.
 But at the end as being the part of Government previously it has a great edge as compared
to other telecommunication organization.
 Due to Pakistan Unstable Political Environment there is a great negative effect on the
Organization. Not only on Telecommunication sector also on Others Sectors also.
Economical Factor
 The Interest rate in country is reducing in an alarming situation that is effecting directly on
the organization performance.
 As the level of Per Capita Income is not increasing as the increase in Inflation level so the
Purchasing power is very much effected the economic condition of the country also the
Organization environment.
Social-Cultural Factor
 PTCL has a great Social and Cultural benefit because it has been introducing many
packages according to customer need and wants.
 Due to organization many people are employed therefore it has a respectful status in the
mind of the peoples.
Technological Factor
 As a vast infrastructure and network PTCL are now moving along with the flow of the
Technology. Therefore introducing different categories of new product in the field of
telecommunication.
 The new product are crafted against the need of consumers and business purpose to be
active in the Race of Technology.

36 | P a g e
Chapter No. 6
SWOT ANALYSIS OF PTCL

PTCL is a big organization regarding all the departments including Finance, Operations, Human
resource etc. there are several strengths, weakness opportunities and threats of these departments,
which will be discussed as follow:
Strengths
The Biggest Foreign Exchange Earner
PTCL is the biggest source of foreign exchange for Pakistan. It earns a lot foreign exchange form
its international traffic.
Adequate Financial Resources
PTCL earns billions of Rupees as a major source of capital. These adequate financial resources
not only enable the company to copy with any unexpected event but to deploy its resources to
increase product line and services without feeling any financial difficult.
Free From Competitive Pressure
PTCL has no competitor in the market and other companies are legally not allowed enter in
competition with PTCL before 2003.So PTCL is performing its activities freely without any
pressure.
Leadership In The Market
PTCL is leading Company to provide telecom facilities in the Pakistan. PTCL aims at using the
latest technology in the field of engineering and IT for its services. It is also getting constancy
from international Companies in order to remain leader in telecom sector.
Modern Technology
PTCL is running modern technology to develop its products and services and improve the quality
of services. In this connection it has replaced the old exchanges with new digital exchanges. It has
computerized billing system. Due to this technology thousand of complaints have been reduced.
PTCL has also entered in the business of Mobile phone and Internet services.
Optional Polices and Compensation
Best and optional policies and attractive compensation packages for employees, which has really
improved their commitment, dedication and hard work towards the achievement of organization
goals.
Human Resource Development
Human resource development and employment of technology towards modern development.
Wide Distribution Channels:
Easy access to the customers at their residential localities through wide distribution channel.

37 | P a g e
Weaknesses:
Ambiguity in Strategic Direction
PTCL is doing business very well but only to that extend to which customers respond. Although
PTCL is generating revenue from its value added services but it doesn’t have any solid financial
strategic outline, which can cope the entire complex financial situation, and also ambiguity exists
in implementation strategic financial plans. Externally, PTCL has no competitors so it has no
benchmark to gauge financial performance of its different departments with those of competitors.
Seniority Bases Promotions
PTCL is leading information technology but it is not knowledge oriented so far as promotions of
its employees are concerned. Promotions of PTCL employees are seniority based. Most of
employees are concerned. Promotions of PTCL employees, who get promoted on seniority basis,
are less knowledgeable and non-professional and cannot cope with the challenges of this ever-
growing field.
Lack of Human Resources Management
PTCL has no human resources management department. It doesn’t have clear policy regarding
hiring & training of work force. In PTCL, for most of the jobs there is no job work & evaluation
of performance of employees.
Lack of Training Program
There is no proper training program to improve the skill of PTCL employees to cope with ever-
changing telecommunication sector. Less skilled & inefficient workers are creating hurdles in its
growth.
No Effective Marketing Department
There is no effective marketing department in the Organization. There is only marketing officer
working as a manager, further more marketing staff in the field region is also not available.
Ineffective Human Resource Management
PTCL has although now set up a HRM department but still it is not functioning as per the
requirement of the competitive environment. Most of the jobs have no proper job description and
specification.
Customer Dissatisfaction And Delayed Responses:
Many customer of PTCL are not satisfied with its services because of wrong billing, late delivery
of bills and delayed responses for any fault in the telephone. Some customer complains that they
received their bills in full amount although they have stayed out of the home and had not use the
telephone at all.
Absence of Company Culture
There is no inclusion or company culture and approaches among the officers of PTCL and mostly
their behavior with general public is still bureaucratic and their approach is not objective or profit-
oriented.

38 | P a g e
Opportunities:
Increasing Awareness Rate
PTCL can show its interest in educating people & increasing literality rate. In this way, PTCL will
not only fulfill its social responsibility but will also be able to increase awareness rate & it will be
help full in the expansion of PTCL business.
Skillful human resources:
PTCL can improve the skill of its manpower by providing them the opportunities of advanced
courses that will make them to cope with the ever-changing condition in field of
telecommunication.
Entering the New Market
PTCL recently is starting its mobile services hence; it will enter in the market. PTCL can expand
its business by exploring and entering in new markets in similar way.
Telecom Facilities in Rural Areas
All the value added services and digital facilities are available only in the main cities of Pakistan.
PTCL can expand its business by providing telecom facilities in rural areas, which is only possible
when adequate planning is done.
Recruitment
PTCL can also improve the human resources by the selection of competent person for different
departments and this can only possible by discouraging the corruption and favoritism.
Addition to The Product Line
Top management of Organization can make additions to its existing product line by providing
more services. In this way it can increase its revenue and customer satisfaction. This requires
market research. PTCL has already captured the industry so all kind of the opportunities are for
PTCL till the end of monopoly.

39 | P a g e
Threats:
Exchange Rate Risk
Exchange Rate Risk will cause PTCL net exchange loss on foreign loans. Devaluation of rupees
will increase the cost of production, machinery, and almost all the equipment,
imported from foreign countries. So exchange rate risk will affect the Profitability of PTCL and
also increase the risk of getting foreign loans in future.
Government Legislation
Government policies can affect the performance of PTCL. Hence government policies will be a
real threat for PTCL if they are not in favor of PTCL business activities. This can affect the
recruiting policies of PTCL.
Turnover
At the end of the monopoly, competitors will enter the industry and the completion will increase
as a result of which they will offer high pays and facilities to skill-person of the industry. This can
increase the turnover of PTCL, which can create a serious threat for the organization.
Decrease In Market Share Due To Competition
After the end of monopoly, dissatisfied customers may shift to those telecom services providers
who they think would offer better services than PTCL, and will increase customer satisfaction.
Decrease in market share would decrease the profitability of PTCL, which will be a real threat in
near future.

40 | P a g e
Chapter No. 7
CONCLUSIONS & RECOMMENDATION
Conclusion:
No doubt PTCL is enjoying monopoly but the time is came when competition will force Company
to change its policies to become favorite telecom service provider in the Market & keep its current
place & customer base.
The company maintains a leading position in Pakistan as an infrastructure provider to their telecom
operators and corporate customers of the country. It has the potential to be an instrumental agent
in Pakistan’s economic growth. PTCL has laid an Optical Fiber Access Network in the major
metropolitan centers of Pakistan and local loop services have started to be modernized and
upgraded from copper to an optical network On the Long Distance and International infrastructure
side, the capacity of two SEA-MEWE.
Employees at PTCL are quite efficient. Its employees have to bring their org among the list of
good. It also shows their loyalty, commitment to organization.
Recommendations:
 No doubt PTCL having the monopoly in providing the Land-Line Telephone connection
in Pakistan and its playing its role magnificently. In current scenario P.T.C.L has increases
its Revenue quite dramatically and probably that as soon as this organization has become
privatized it will flourish its revenue in better manner.
 PTCL should also encourage the Billing Online system that each and every customer
should have to pay his/her bill on line basis..
 The image of PTCL being leading Telecom providing is not good in the eyes of common
customer especially there are lot of complaints about the including the bogus local calls in
the monthly bills of various customers. PTCL should also provide the detail of local calls
made from any Land Line Number which would be provided in Micro level to the
customer.

41 | P a g e
References:
 www.ptcl.com.pk
 Annual report 2015
 Annual report 2014
 www.google.com
 www.wikipedia.com

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INSTITUTE OF BANKING AND FINANCE

BAHAUDDIN ZAKARIYA UNIVERSITY

Institute of Banking & Finance (BZU Multan)

Sir Khalid Sultan Anjum

Muhammad Yousuf Razzaq

Institute of Banking & Finance (BZU Multan)

Institute of Banking & Finance (BZU Multan)

The information submitted is true & original to the best of my knowledge.

Institute of Banking & Finance (BZU Multan)

Institute of Banking & Finance (BZU Multan)

Institute of Banking & Finance (BZU Multan)

Institute of Banking & Finance (BZU Multan)

Institute of Banking & Finance (BZU Multan)

Institute of Banking & Finance (BZU Multan)

Introduction of Telecom Industry

Background and History of PTCL

Institute of Banking & Finance (BZU Multan)

1947 Posts & Telegraph Dept. established

1995 About 5 % of PTSL assets transferred to PTA, FAB & NTC

Institute of Banking & Finance (BZU Multan)

Institute of Banking & Finance (BZU Multan)

Financial Principle of the Company

Institute of Banking & Finance (BZU Multan)

Market Standing & Ranking of the Company with its

PTCL Ranked as Most Preferred Broadband Operator in Pakistan

Institute of Banking & Finance (BZU Multan)

Institute of Banking & Finance (BZU Multan)

Systematic and Integrated Risk Management System

Financial Risk Management

Based on the Balance Sheet Information

Institute of Banking & Finance (BZU Multan)

Institute of Banking & Finance (BZU Multan)

Share capital and reserves

Share capital 51,000,000 51,000,000 51,000,000

Insurance reserve 2,621,288 2,416,078 2,196,770

General reserve 27,497,072 30,500,000 30,500,000

Unappropriated profit 1,894,739 2,302,282 8,117,782

32,013,099 35,218,360 40,814,552

Unrealized gain on available for sale - - 329,039

83,013,099 86,218,360 92,143,591

Institute of Banking & Finance (BZU Multan)

Deferred income tax 4,737,260 5,754,847 2,676,026

Employees retirement benefits 24,068,008 32,111,859 33,011,258

Deferred government grants 8,594,920 8,926,403 6,848,180

37,953,237 47,345,231 43,084,720

Trade and other payables 59,142,912 46,814,183 44,345,349

Total equity and liabilities 180,109,248 180,377,774 179,573,660

STATEMENT OF FINANCIAL POSITION

Property, plant and equipment 94,779,483 94,912,046 94,452,061

Intangible assets 2,332,789 2,539,060 4,826,422

97,112,272 97,451,106 99,278,483

Institute of Banking & Finance (BZU Multan)

Long term loans and advances 2,152,757 2,261,126 2,794,106

Investment in finance lease 38,513 96,113 84,398

107,280,842 107,785,645 109,948,283

Stores, spares and loose tools 2,742,794 2,940,425 2,872,542

Trade debts 14,227,974 14,304,039 15,758,805

Loans and advances 676,556 1,593,099 4,136,133

Investment in finance lease 53,030 52,255 28,305

Accrued interest 231,902 128,174 344,801

Recoverable from tax authorities 14,550,698 18,179,032 16,366,457