WORKING CAPITAL

MANAGEMENT
PROJECT REPORT

BATOOL KHALID, MUHAMMAD

6/28/21 PEL VIRTUAL INTERNSHIP
ASLAM, SHEHLA BANO
 Acknowledgement
All thanks and praises to Allah, who is the only source of knowledge and wisdom bestowed to
mankind. First, I admit a receipt of all those who inspire and support me in a strengthened and
groomed way, what I am today. I would like to express my gratitude to those people who pray for my
success and help me throughout in study.

I would particularly like to thank, Mr. Abdul Ahad, Mr. Muhammad Imran, Rehman Nazeer,
Asadullah, Muhammad Waqas my Supervisor and each person of Finance Department whose
suggestions and cooperation enabled me to compose my efforts and learning and who have patiently
guided me in completing this task.

I would also like to thank HR Executives Mr. Ali Kamran, Miss Aliza Shabbir and Miss Khadija who
gave me the opportunity to enhance my corporate skills by appointing me as internee in PEL.

In the end, all the experience that I have gained during my stay at PEL has helped me a lot in
becoming a better-organized person and will help me in becoming an even better person in the
future. I can say this without doubt that the values that I have gained while working at PEL will be
applied to wherever I go to work in the future.

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Contents
Acknowledgement ............................................................................................................................................. 1
EXECUTIVE SUMMARY ..................................................................................................................................... 3
INTRODUCTION TO “SAIGOL GROUP” ............................................................................................................. 4
PAK ELEKTRON LIMITED (PEL) ...................................................................................................................... 5
Pak Elektron Limited Historical Overview ..................................................................................................... 5
COMPANY DESCRIPTION .................................................................................................................................. 8
Vision Statement ............................................................................................................................................. 8
Mission Statement ........................................................................................................................................... 8
Objectives of PEL ........................................................................................................................................... 8
COMPANY INFORMATION .............................................................................................................................. 10
ORGANIZATIONAL STRUCTURE .................................................................................................................... 11
Core Values ................................................................................................................................................... 12
Divisions of PEL ........................................................................................................................................... 12
PEL’S PRODUCTS ............................................................................................................................................. 13
Appliance Division........................................................................................................................................ 13
Power Division .............................................................................................................................................. 15
COMPETITOR ANALYSIS ................................................................................................................................. 16
MANAGEMENT PRINCIPLES........................................................................................................................... 16
PLANNING TOOLS AND TECHNIQUES ........................................................................................................... 18
STRATEGIC PLANNING IN PEL ....................................................................................................................... 20
PORTER’S MODEL............................................................................................................................................ 21
PEL CULTURE .................................................................................................................................................. 22
PAK ELEKTRON LTD DEPARTMENTS ........................................................................................................... 23
THINGS WE LEARN DURING INTERNSHIP PERIOD ..................................................................................... 27
WORKING CAPITAL MANAGEMENT .............................................................................................................. 36
Purpose .......................................................................................................................................................... 36
Data from annual report 2020 ....................................................................................................................... 37
Data from first quarter annual report 2021.................................................................................................... 38
RECOMMENDATIONS...................................................................................................................................... 39
CONCLUSION.................................................................................................................................................... 40

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EXECUTIVE SUMMARY
Pak Electron Limited (PEL) is the pioneer manufacturer of electrical goods in Pakistan. It was
established in 1956 with technical collaboration of M/s AEG of Germany. In October 1978, the
company was taken over by “SAIGOL GROUP” of companies. The company has always been
contributing towards the advancement and development of the engineering sector in Pakistan by
introducing wide range of quality electrical equipment and home appliances and by producing
hundreds of engineers, skilled workers and technicians through its apprenticeship Scheme and training
program.

PEL is different from other organizations because it has its own brand name and loyal customers. PEL
is different and unique organization because it has competitive edge in appliances divisions that it has
introduced “built-in-stabilizer” refrigerator first time in Pakistan. PEL has monopoly in “Dry Type”
Transformer in power division.

This report consists of brief introduction of the company, its historical overview, vision and mission
statement and objectives of the company. All the essential information of the company is also
mentioned in this report. Organization structure explains the hierarchy of whole department and its
management details. PEL higher both temporary and permanent workers. PEL has different
stakeholders who have vested interest in the company. PEL has two product divisions. AD consists of
refrigerators, deep freezers, microwave oven and washing machine etc. while PD consists of
transformers, energy meters and switch gear etc. PEL was16th company of Pakistan, which got ISO
9002 certification in 1997.

I did my six weeks’ internship at Finance Department of PEL. It has four sections. Brief introduction
of financial analysis, its objectives, importance, scope and financial tools are explained in this report.
This report also contains the process of Working capital management of PEL.

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INTRODUCTION TO “SAIGOL GROUP”
In 1948, the Saigols migrated from Calcutta and initiated their business in Lyallpur (later named to as
Faisalabad). The “SAIGOL GROUP” is one of the leading industrial groups in Pakistan. The Saigol
Group belongs to the Saigol Family, which is an old business family and has contributed a lot towards
Pakistan’s industrial development.

Saigol Group remains a leading and forward-looking group and believes in continuous development
and growth. The result is a global business activity monitored through various offices worldwide. They
are serving nation in diversified business activities in the fields of

1. Textiles.
2. Engineering.
3. Banking and Finance.
4. Fuel and Energy.
5. Trading.
6. Automobiles.

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PAK ELEKTRON LIMITED (PEL)
Pak Elektron Limited (PEL) is the pioneer manufacturer of electrical goods in Pakistan. It was
established in 1956 in technical collaboration with M/s AEG of Germany. In October 1978, the Saigol
Group of Companies purchased major shares of Pak Elektron Limited. Since its inception, the
company has always been contributing towards the advancement and development of the engineering
sector in Pakistan by introducing a range of quality electrical equipment’s and home appliances and
by producing hundreds of engineers, skilled workers and technicians through its apprenticeship
schemes and training programs. At that juncture, the company was only manufacturing transformers
and switchgears. With the Saigols in management, PEL started expanding its product range by entering
into Air Conditioner manufacturing.

Pak Elektron Limited Historical Overview

PAK ELEKTRON LIMITED was set up in 1956 as a joint venture with one of the largest and
renowned manufacturers of electrical equipment Messer. AEG of West Germany for manufacturing
Transformers, Switchgears and Electric Motors etc. The entire job of machinery requirements and
layout of the factory building was planned and implemented by AEG who produced very well-
balanced facility for the design and manufacture of the above equipment and the commercial
production was commenced on 22 November 1956.

In 1978, the Saigol Group of Companies purchased major shares of Pak Elektron Limited. At that
juncture, the company was only manufacturing transformers and switchgears. With the Saigols in
management, PEL started expanding its product range by entering into Air Conditioner manufacturing.

1956

Incorporation of PEL

1958

Start of Commercial Production Distribution Transformers and Switch Gear in Technical

Collaboration with AEG Germany

1981

Manufacturing of Air Conditioner with Assistance of Fujitsu, Japan

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1987

Manufacturing of Refrigerators & Deep Freezer in Technical Collaboration with IARSILTAL &
ARISTON of Italy

1988

- Listing with All of Stock Exchanges

- Acquired License to Manufacture VCBs from Hitachi Japan
1992

Started Production of Energy Meters under The License from ABB USA

1994

Quality Management System Certification for Energy Meters ISO 9001 By SGS

1997

Acquire Technology from Carrier USA to Manufacture Air Conditioners

2000

Lunching of New Crystal Series Refrigerator under Technical Collaboration of Danfoss Germany

2004

Acquired Technology from GANZ Hungry to Produce Power Transformers

2006

Formal Start of EPC Business Segment of the Company

2009

- 4th CSR National Excellence Awards

- 6th Annual Environmental Excellence Award Export of Power Transformers
2010

Inauguration of New Distribution Transformer Factory by Prime Minister of Pakistan Under Technical
Assistance from Pauwels, Belgium.

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2011

Lunching of New Desire Series Refrigerators & Pre-Qualification with Saudi Electrical Company

2012

Lunch of New Arctic Series Refrigerators with New Aesthetics

2013

Successful Commissioning of 220 KV GIS Shalimar Grid Station worth Rs.1.3 Billion

2014

Lunching of New Glass Door Refrigerator with New Aesthetics

2015

Lunching of New Glass Door Mirror Series

2016

Launching of Inverter Refrigerator & Air Conditioner Series Successful Short Circuit Testing of PEL
Green Transformer

2017

Commencement of Water Dispenser Production. Launching of “Invert -o-Cool" Air Conditioners, "
Arctic Premium Plus " Deep Freezers and "Convection Series" Microwave Ovens.

2018

Launch of 4K Coloron LED Smart TV Android 6.0 Marshmallow powered by the massively
successful Android with High resolution

2019

Launch of Semi-Automatic Washing Machines with Fit-wash technology.

2020
Business collaboration with Panasonic marketing Middle East & Africa for local production and sales
of Panasonic products.
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COMPANY DESCRIPTION
Every organization has Vision and Mission Statement, which demonstrate employees, customers and
other personals related to business that where they project themselves in coming years and what they
want to achieve. It reflects company image. Vision statements and mission statements convey in a few
words, what it is that the organization exists in the world for. PEL’s vision and mission are.

Vision Statement
“To excel in providing engineering goods and services through continuous improvement”

Mission Statement
 To grow the size of the organization, develop better business practice and build-up
greater resources.
 To practice actively and consistently in Pakistan’s economic development.
 To build up better operating philosophy.
 To build a better commercial outlook for operating successfully in this competitive
environment.
 To keep pleasant working environment.
 To always maintain exclusive service standards.
 To motivate the employees by making them feel that management cares about them
by recognizing their efforts by remuneration or by promotion depending on the
individual efficiency and what he deserves.
 To create feeling of co-operation so that all employees are satisfied.
 To build up customer satisfaction.
 To provide wide range of products and services to customers.

Objectives of PEL
 The continuous improvement of all products and services through total involvement
of employees.
 The development and strengthening of joint ventures and partnerships with external
and internal customers and suppliers.

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  Providing innovative and higher quality products to achieve total customer
satisfaction by understanding their requirements and anticipating their future
expectations or needs through: Monitoring Annual Targets for quality improvement
in all areas and function of the organization. Valuing people by understanding and
drawing upon their strengths i.e. abilities and knowledge and make efforts for their
training and development.
 With a dedicated team of professionals, the company is striving to improve the
quality of life in Pakistan homes through reliable equipment for power distribution
and home appliances.
 The growth in the size of the organization develops better business practices and
builds up greater resources.
 The aspiration to capture the complete product family of the product.

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COMPANY INFORMATION
CHAIRMAN/CHIEF EXECUTIVE

Mr. Main Naseem Saigol

BOARD OF DIRECTORS

 Mr. Muhammad Murad Saigol Chief Executive Officer - Executive/Certified (DTP)

 Syed Manzar Hassan Director -
 Syed Haroon Rashid Director -
 Mr. Muhammad Kamran Saleem
 Mr. Asad Ullah Khawaja
 Ms. Azra Shoaib
 Mr. Usman Shahid
Executive/Certified (DTP)
Independent/Certified (DTP)
Director - Independent/Certified (DTP)
Director - NIT Nominee/Independent
Director - NBP Nominee U/S 164 of the Act
Director - NBP Nominee U/S 164 of the Act / Non

Executive

 Mr. Muhammad Zeid Yousuf Saigol Director - Executive/Certified (DTP)

COMPANY LEGAL ADVISOR

M/S Hassan & Hassan Advocates

AUDITORS

Rahman Sarfaraz Rahim Iqbal Rafiq

Chartered Accountants

A member of Russell Bedford International

OFFICES LOCATION
- LAHORE
- ISLAMABAD
- KARACHI
- CHINA
- AFGHANISTAN
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INTERNATIONAL PRESENCE

PEL exports to customers in following countries and has continued focus on expanding presence in
international market:

Qatar, Afghanistan, Zimbabwe, Yemen, Greece, Swaziland, Saudi, Arabia, Tanzania,

Kazakhstan, Bangladesh, Nepal and Kenya.

ORGANIZATIONAL STRUCTURE
PEL hierarchy involves, first chairperson holding the top position is the chairman. Managing director,
who report to the chairman. There are some general managers who report to the managing director.
Every manger is the head of a department. In addition, under these managers are some assistant
managers that may or may not be the heads of the section of the department. There are also senior
engineers their supervisors.

. These engineers are head in those departments related to production.

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Core Values
✔ Our Customer as our priority
✔ Profitability for the prosperity of our stakeholders that allows us to Constantly
invest, improve & succeed.
✔ Corporate Social responsibility to enrich the Lives of community where we
operate.
✔ Recognition & reward for the talented & high performing employees.
✔ Excellence in everything we do.
✔ Integrity in all our dealings.
✔ Respect for our customers and each other.

Divisions of PEL

Divisions
of PEL

Appliances Power
division division

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PEL’S PRODUCTS

Appliance Division
In 1980-1981 PEL started working in appliance division focus is to introduce consumer product. The
first product it introduces was window room conditioner. In 1986-87 it introduces refrigerators and
deep freezers. In 1993 it introduces compressors and in 1997 split air conditioners. There are other
products too like microwave ovens. PEL has strong brand image and as it is known for its quality
products it also offers products at cheaper rates than offer by its competitors. In early years PEL used
to produce all the products but now a day since it is facing production decline phase in appliance
division, PEL is only producing refrigerators.

⮚ Water Dispensers
⮚ Washing Machine
⮚ Refrigerators
⮚ Deep Freezers
⮚ LED TVs
⮚ Air Conditioners
⮚ Microwave Ovens
⮚ Small Domestic Appliances (Electric Kettle, Toaster,Sandwich Maker, Steam Iron)

Major Customers and Competitors of Appliances Division

Major Customers

For appliances, its customers are middle and elite class. But it can be vary product to product. Now
company is planning to increase its market share by minimizing its profit. As the result, PEL’s product
would be at the range of lower class too.

Competitor Analysis

Direct Competitors

The direct competitors of PEL are Dawlance, Waves, LG, and Haier etc. The Dawlance is market
leader in the refrigerator and PEL is still on second number. But in window room air conditioner
(WRAC) the PEL is market leader
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Refrigerators

Total market sale of refrigerator in 2009 was 756300 units. Last year sale was 656900 units. These
figures show 30% market growth. But the average growth was 13% to 17%. And the PEL sale growth
is 70%, which is a great achievement. In year 2019 Pel Competitor analysils are as follows

⮚ Dawlance is a market leader in refrigerator with 27% share.

⮚ PEL has 25% market share.
⮚ Haier has 24% market share.
⮚ Orient has 15% market share.
⮚ Wave have 5% Market share.
⮚ 04% shares are others.

Window AC

PEL overall has 10% market shares for this product.

● Haier has about 25% market share and stands on number one.
● Digital world 20% market share.
● Orient has 15% market share.
● Dawlance has 10% market shares
● PEL has 10% market shares.
● And rest of the manufacturers have 20% market share

Indirect Competitors

The indirect competitors for PEL in this industry are.

Samsung, Orient, Mitsubishi, Sabro, Nobel and Others Chinese brands available in the market. The
PEL has no big threat from all these companies. But the Sabro pioneer for introducing the split air
conditioner in Pakistan. Now days the Sabro has lost its market share to other companies for the
business of Split AC.

Competitive Advantage in Appliances Division

PEL has introduces “built-in-stabilizer” refrigerator first time in Pakistan.

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Power Division
PEL’s Power Division Manufactures Transformers, Switch Gears, Energy Meters, Shunt, and
Capacitors etc. of highest quality and is according to international standards they are checked by
Danfoss Company of Germany for their quality. PEL is one of the major electrical equipment suppliers
to Water and Power Development Authority (WAPDA) and Karachi Electrical Supply Corporation
(KESC), which are the largest power companies in Pakistan.

⮚ Power Transformers
⮚ Grid Stations
⮚ Distribution Transformers
⮚ Energy Meters
⮚ Switchgears
⮚ EPC

Major Customers and Competitors of Power Division

Major Customers

- WAPDA
- KESC
- DISCOS
Major Competitors

⮚ Siemens (Pakistan) Engineering Company Limited, Karachi

⮚ Climax Limited Gujranwala
⮚ Transformer Power (Private) Limited, Lahore
⮚ Elmetec (Private) Limited, Lahore

Major Competitors for Energy Meters

⮚ Syed Bhais (Private) Limited, Lahore

⮚ Escorts Pakistan Limited, Lahore
⮚ Telephone Industries of Pakistan, Haripur

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COMPETITOR ANALYSIS
Power Transformers

Pak Elektron limited is Market leader in transformer production and distribution holding 81% market
shares in year 2019. Pak Elektron has only one Competitor in generating Pawer transformer that is
Heavy Electrical Complex holding 19% market shares

Distribution Transformers

Pak Elektron is Also market leader in production of Distribution transformers holding 31% market
shares. In Distribution Transformers its competitors in year 2019 are;

⮚ Transfo Power holding 24% Market Shares

⮚ Hamad and Co. holding 10% Market Shares
⮚ JF industry holding 8% Market Shares
⮚ Elemtec holding 05% Market Shares
⮚ Others holding 22% Market Shares

MANAGEMENT PRINCIPLES
Planning Process

It is the first responsibility of management. planning is the very important tool as to plan resources
setting the goals and making implementation plans all are the part of achieving specific goals that
every company have of their own.

Creation of Goals

PEL is a profit-making organization as it is its mission to increase profit and wealth maximization for
the stake holders for achieving its missions there are several sub goals which it wants to achieve. it is
the strategy of PEL to first create overall plans. For long term projects its first emphasize is to choose
those projects that have good returns.

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Making of Plan

Higher management level is responsible for making plans either they are short term or long term. Top
level management in the head office set the goals for the management and to attain these goals
management make plans and procedures. The all short term and long-term plans are made by the
higher-level management. These goals are for every department. Some of them may belong to specific
department and some are for all departments. So, in order to achieve them every department set their
sub goals and make plans to achieve them.

Conversion of Plan

Conversion of plans is made in the written document. Managers create it and the plan and procedures
along with implementation plan is written in it.

Communication

Communication of plans that is in written documentation to all the departments is now the next step.
Some plans as I described earlier are specific to certain department are communicated to those specific
ones. The flow of information is from high level management to subordinate individuals working in
the organization for awareness of employees in the organization as well as in departments.

Implementation

Plan is implemented on the date specified in the written document made by management and been
send to all departments for implementation.

Achievement of Goals

After implementation of plans by all departments, they achieve their department’s goals which are part
of the major goals. So, the major goals are achieved by integrating these all goals which at the end
become source of achieving higher level management goals given to them by head office.

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PLANNING TOOLS AND TECHNIQUES
Organizing

Organizing is dealing with all resources of the PEL. Financial resources for projects that in return give
large profits and along with organizing human resource planning that will corporate with these projects
and carried them out. There basic purpose to utilize maximum profits in efficient way by reducing cost
in order to create profit maximization. Main purpose is to allocate human resources making teams for
achieving goals assigning them task to carry out their duties and using different techniques to make
the performance efficient and achieve the goals more efficiently.

Human Resource Planning

Human resource department deals with all the tasks related to the humans. Humans mean the
employees and all the working staff. To increase the overall performance of the company in human
resource department there are many procedures for personnel development. That take from the hiring
of employees their all needs which keep them retain in the organization and make them feel that they
are getting and for what they are giving to PEL. The major tasks of HR department are:

⮚ Recruitment & Selection

⮚ Training/Learning & Development
⮚ Orientation
⮚ Compensation and Benefits

Recruitment

Recruitment is the hiring new employees.

Selection

Selection of employees is also done in HR department. Selection is based on some criteria in which
job description and specifications are first written and then employees are selected according to the
requirement. The techniques used for selection are interviews in PEL there is some problem regarding
selection that everyone who want to work here needs reference of any one already been employed in
PEL. There is proper panel is for taking interviews and there are stages of it.

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Orientation

PEL always arranges orientation session for newcomers like new employees, trainers and internees
etc. in our internship program an orientation for internees also occurred and held my one of the
employees of HR department. In the orientation all the rules and regulation along with moral values
and ethics of the PEL are told. In PEL the employees are introduced to their work unit and rules and
procedures of the organization such as work hours, pay procedures, overtime requirements. This also
includes HR policies and benefits.

Compensation and Benefits

PEL also provides compensation and benefits to its employees based on some cultural events and other
events like on good working performances. Like when were in PEL there was the event of Eid-ul-fitar
PEL give bonuses to its all employees along with greeting cards in both electronic and print form. PEL
also gives us free transportation and medical facilities to most of its employees.

Leading

PEL is one of the leading companies in PAKISTAN due to its excellence in electronic products.

Leadership Style

In leadership style it applies Ibrahim Maslow hierarchy of needs.

Maslow’s Hierarchy of Needs

The PEL attempts to change their organization and management practices according to the Maslow’s
Hierarchy. The basic human needs according to the Maslow’s hierarchy are:

✔ Physiological needs
✔ Safety needs
✔ Social needs
✔ Self-esteem needs
✔ Self-actualization.

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The PEL motivates its employees by fulfilling their three basic needs by providing them with monetary
incentives, status and position. The PEL provides them with medical facility, lunch facility, and
advance salary payment facility.

The social needs of the employees are fulfilled by teamwork. For example, at least two people handle
a single task. These teams are creating social groups among the employees.

Controlling

PEL is using two methods for controlling Bureaucratic and other is clan control. Both strategies are
applied. It applies friendly behavior but still regulate the companies according to rules and regulation.

STRATEGIC PLANNING IN PEL

Cost leadership:

PEL aim is to become low-cost leader in Appliances sectors that is why PEL is providing effective
services in low cost than another Competitor.

Differentiation:

PEL strategy is to provide unique services to its customers in Appliances sectors to make itself
valuable for its customers.

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PORTER’S MODEL

Threat of
substitute

Bargaining Bargaining
power of
uyer
PEL power of
suppliers

New
entrants

The outcome of the research was that PEL has lost its competitive edge when it comes to other brands.
I shall now discuss why is this so in the light of the Porter’s Five Forces Model. These five forces are
following.

1. The risk of new entry by potential competitors

2. Rivalry among established firms
3. The bargaining power of the buyer
4. The bargaining power of the supplier.
5. The threat of substitute products

I. Rivalry among Competitor

There is intense competition within the industry to capture the market in term of share of market. The
companies are introducing product with new and advance Technology to attract and capture the
customers. They are using advertisement and Technology as a weapon to increase market share in
related market.

II. Bargaining Power of Supplier

The bargaining power of supplier is low because of availability of several china’s brand in the market.
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III. Bargaining Power of Buyer

The bargaining power of the buyer is high because,

⮚ They have choice of different in the market

⮚ they have choice of models and features
⮚ they have choice of product in different prices

IV. Threats of Substitute

Threats of substitutes high because

⮚ the gas generators and ups are the substitute of Pel’s diesel and petrol generator
⮚ the major substitute of air conditioners is Room air cooler

The Room Air Coolers are available at are low price starting from 6000.

Electric Fans are also very cost effective and its major company GFC fans, Younas fans, Royal fans.

V. Threats of new Entrants

PEL has low level of threats of new entrants in the industry as the electronics industry has different
barrier to entry requires huge capital to get entry in the industry.

❖ High manufacturing costs.

❖ High advertisement cost.
❖ High cost of raw material.

PEL CULTURE
In our Company Quality is the Subject of Management at all Levels. We focus on continuous
improvement in our Systems thus establishing Good Management Practices, we are committed to and
making continuous efforts in developing and strengthening our internal and external customers and
suppliers. Employees training & development and their participation are the KEY forces which are
increasing our Organization's Capabilities thus making it more competitive and fast-growing
Company.

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Top management is not only tremendously improving our Working Environment but also investing in
improving internal Communication Network for better Teamwork. Continuous Up gradation in
production facility/equipment in the pursuit of State-of-the-art production technology reflects
management Vision and commitment for Quality. Over fifty years of manufacturing experience with
cooperative and dedicated employees coupled with performance-based system and Data Analysis
enable management to take Preventive Actions before things really go wrong. One of the Mission of
organization is to promote good governance and corporate values with a strong sense of social
responsibility.

PAK ELEKTRON LTD DEPARTMENTS

Every department has its own role and serving either one or both power and appliance division. Some
brief notes on the major departments that are directly link with these divisions are given below:

1. Human Resource Department,

2. Finance Department
3. Research and Development
4. Sales Department
5. Customer Service Center Department
6. Distribution Department
7. Production Department
8. Information Department
9. Procurement Department
10. Manufacturing (PD & AD)
11. Maintenance Department
12. Imports Department
13. Export Department
14. Marketing (AD & PD)
15. Accounts Department

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Functions Performed by Departments

1. Human Resource Department

Major tasks of human resource departments are recruitment, selection, orientation and training of
employees. They are responsible for recruiting employees for both divisions along with their salary
packages incentives promotions transfers according their performance, experience, qualification etc.
they take into accounts the needs of their personnel as the human resource is the only tool in the hand
of businessman. So, they make such environment to make fell their employees they are working in the
friendly environment. This is also the mission of the PEL the personal development of the employees
to meet the future goals and challenges. So, it is only possible when employees have the right to share
their opinions, suggestions, problems and needs to their managers. PEL is working on many projects.
The recent project is the new division project power division so the recruiting the best and qualified
employees is also the responsibility of PEL.

2. Finance Department

Finance department provide money for the working of the organization. PEL Company’s department
borrows loan mainly from national bank and settle terms and conditioned of the interest and time
period of returning the load with it. When the sale is made the company firstly returns the loan with
interest.

3. Research and Development

This is the most important department regarding the future of company as a market leader this
department is constantly in-touch with market to know about customer preferences and specification
for products. After thorough analysis of customer expectations this department then gives its
recommendations to the top management to being changes in the product for market success. This
department conducts surveys in market to get information. This department is also responsible for
bringing new technologies in the products.

4. Sales Department

Sales department is responsible for making sales of the product. This department generally takes orders
from the market, gives information to the credit control department. Area credit control department

24 | P a g e
gives information to the head office. Head office discuss situation with the finance department and
then at last finance department gives authority to area credit control department to settle term and
conditions with dealers.

5. Customer Service Center Department

CSD is a customer service department under the marketing head. Where the after-sale service is
provided to satisfy customers having problem in appliances. PEL is well known for their customer
care service. This department is very much important for the company because it makes the good will
of the company. It provides services to the customers who have their clams and makes the customer
loyal. It’s also gives the feedback to the head office to provide the required spare parts.

6. Production Department

Production department is involved only producing the products. This department purchases raw
material from the suppliers. Passes the raw material through various dyes machines. Modeling
machines from the assembly line according to the required shapes of the products.

7. Distribution Department

This department distributes the final products from the production department to the dealers and then
ultimately to the consumers. This department only responsible for distributing the products according
to the requirement and demand of the product

8. Information Technology Department

This era is of IT, without giving importance to IT no organization can succeed. They are working very
hard to improve all system. After updating “MIS” system and “Oracle” they become more efficient
and effective Buying is one of the most important department, it purchases all raw material which is
used in production process

9. Manufacturing (PD & AD)

All the manufacturing concerns aspects controlled by this department.

10. Maintenance Department

The main purpose of this department is to ensure quality and maintenance of machinery.

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 11. Imports Department

Import department controls all imported materials. They also have all knowledge about their important
importers and the products they imported.

12. Export Department

This department controls and deals all exports to other countries, i.e., Bangladesh, Afghanistan and
few other countries of Africa.

13. Marketing (AD & PD)

In this department all the sales and marketing campaign are designed, marketing research is conducted,
and competitors’ information is also studied to make their plans according to them. They are working
very hard to make their brand name famous. For Power/Instrument Transformers and Switchgears

14. Accounts Department

Pak Elektron has a big accounts department that records daily transactions of both appliances and
power division that prepares financial statements such as Balance sheets, Income Statements, Cash
Flow Statements, etc.

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THINGS WE LEARN DURING INTERNSHIP PERIOD
Financing refers to the methods and types of funding a business uses to sustain and grow its
operations.

Use facility provided by the bank or else pay back the 100% loan. As the bank pays on our behalf, two
conditions are for maturity date: penal charge or mark-up. If you are penalized then a double interest
rate is applied. If the days exceed over 180, it will charge a high mark-up.

Short-term Financing

A loan obtains by PEL for less than 1 year is called short term loan. PEL normally gets this type of
loan to meet its short-term working capital requirements. In this type of loan PRL give Charge to
SECP against its short-term assets.

Long-term Financing

A loan obtains by PEL for more than one year is called long term loan. This type of loan is obtained
by PEL to meet its long-term working capital requirements or to give extension to its long-term assets.
in long-term loan bank charge from PEL against its long-term assets.

To obtain a long-term loan PEL get tenders from the bank and chose a bank that offers PEL less
markup rate. With this tender bank also inform the PEL of its payment process

Finance against Imported Merchandise (FIM)

This is a short-term loan extended to an importer for the retirement of the LC at sight against the
pledge of imported merchandise. The validity of this finance is capped maximum of up to 180 days
and the customer is at liberty, either to adjust it in a lump sum or tranches, within the validity of the
finance period.

Cash Finance:

Advances against goods can traders for their trading activities, manufacturers and producers for their
requirements of raw materials, etc. The purpose of this loan is to facilitate the borrower to hold on to
the goods for a short period, by creating a pledge in favor of the Bank.

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Finance against trust receipt (FATR):

FATR is a type of import financing offered to FBL customers. In FATR deals, the imported goods are
released to the importer based on a trust receipt. This is a short-term facility for financing imported
goods.

Salient Features

• Available for the retirement of Sight LC or procurement of commodities

• Should be adjusted within 6 months (maximum)

• Secured through trust receipt signed by the borrower.

• Mark-up to be paid on a monthly or quarterly basis as per agreement.

• Then Bank ask for a mortgage or charge,

Finance Against Packing Credit: (FAPC)

Packing credit is pre-shipment finance given by the bank to procure raw materials and arranging goods
ready for export. Banks provide packing credit against the stock of raw materials or finished goods
also in certain cases.

When we have to complete an order of 50 million and the company have less to invest in the order.
So, the company decides to take financing from the bank. This loan is called FAPC.

Running/overdraft facility

Banks offer overdraft facilities over a pre-determined limit, which may differ for every borrower. An
overdraft limit account is a running account in which you can deposit/ withdraw an amount anytime
up to the specified limit. If you get an overdraft account sanctioned from the bank then you will receive
the requested overdraft amount just like you receive a loan amount from the bank, If you are pre-
approved for the overdraft facility, whenever you need funds, you can withdraw from your bank
account and it will go into overdraft.

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Letter of Credit: (LC)

Letter of credit is an assurance given by the buyer’s bank to remit the amount to the seller through the
seller’s bank on maturity, as per the terms and conditions of the document based on the contractual
agreement between buyer and seller.

● A certificate of origin is a document declaring in which country a commodity or good was

manufactured. The certificate of origin contains information regarding the product, its
destination, and the country of export. For example, a good may be marked "Made in Pakistan"
or "Made in China".

● The exporter, which is actually to check whether the quality and other specifications are exactly
what the exporter shared, also issues the certificate of quality and weight or not.

● Pre-shipment Inspection certificate also issues, this certification verifies that the product
conforms to the relevant standard by testing and inspecting before shipment from the exporting
county.

● A fumigation certificate is a document that serves as confirmation that any fruit or vegetable
used in a cargo shipment has been fumigated and useable till a defined date.

● Certificates of Insurance cover the importer/exporter for any possible damage to the goods
while in transit.

Types of LC:

Revocable: can be altered at any time by the issuing bank/buyer without informing the seller. Not
used frequently, no shield to the seller.

Irrevocable: Without the consent of the seller, no alteration can be made by anyone.

Transferable: As the name says, it is transferable to the next supplier in a chain, and that allows the
beneficiary to provide its documents. The beneficiary is only an intermediary for an actual supplier.

Confirmed: When the advising bank also guarantees the payment to the beneficiary, it is called
confirmed LC.

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DISCOs: (Distribution Company)
It’s a company under Pakistan Electric Power Company (PEPCO) and is responsible for the
distribution of electricity in their respective allocated areas.
Following are the distribution companies (DISCOs) operating in Pakistan:
- Faisalabad Electric Supply Company (FESCO)
- Gujranwala Electric Power Company (GEPCO)
- Hyderabad Electric Supply Company (HESCO)
- Sukkur Electric Power Company (SEPCO)
- Islamabad Electric Supply Company (IESCO)
- Karachi Electric Supply Company (KESC) (now privately owned)
- Lahore Electric Supply Company (LESCO)
- Multan Electric Power Company (MEPCO)
- Peshawar Electric Power Company (PESCO)
- Quetta Electric Supply Company (QESCO)
- Tribal Electric Supply Company (TESCO)
When the company gets an order, the company goes to open an inland LC. Bank involves in LC. Banks
of both parties (company & customer) get involved. Both have security now. Banks set their margin.
Normally banks set a 10% margin.
Loan payback must be in 180 days, otherwise, the company will be penalized. Normally markup rate
in companies is 6% + K (KIBOR rate). KIBOR rate is currently 7.5%. So, 8.5% will charge by the
bank.

TYPES OF GUARANTEE:

1. Bid bond
2. Advance payment guarantee
3. Performance bond
4. Letter of guarantee
5. The standby letter of credit

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LETTER OF GUARANTEE:

A letter of guarantee is a document issued by your bank that ensures your supplier gets paid for the
goods or services it provides to your company if your company itself can’t pay. In that case, your bank
will pay your supplier up to a specified amount. It’s a non-funded liability.

Some facilities are taken for the company’s permanent working capital or the expansion of our fixed
assets. So, for this expansion company takes long-term facility.

Long-term Facilities:

● More than one year

● Examples: Cars, machinery or land and building lease
● Lease is a long-term loan. Islamic term is Ijarah.

These long-term loans are to run our permanent working capital. Banks looks up the details and gives
a facility offer letter for that loan. For example, If a company asks for a 5 year tender for that loan, the
bank count one year for a grass period, and in the remaining 4 years company has to pay back principal
payment in equal installments. In 1st grace period, the company will only pay the mark-up or profit to
the bank.

Project Tendering

Project tendering is the process by which bids are invited from interested construction contractors to
carry out specific packages of construction work.

Budgeting

The Project Budget is a tool used by project managers to estimate the total cost of a project. A project
budget template includes a detailed estimate of all costs that are likely to be incurred before the project
is completed.

Process of Investment Decision

1. Check risk and return

2. How much is the profit?
3. The payback period should be less

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 4. Calculate NPV
5. Compare IRR
Flow chart of material to its destination.

1. To be shipped
2. High sea
3. Karachi clearance
4. Karachi port
5. in centric (4 to 6 days)
6. Lahore dry port
7. In the PEL
Profit

Sale price – cost price

Selection of Tender

1. Check adds on the website/newspaper

2. Interested companies purchased its documents

3. BOQs (bill of quantities) terms of condition on which the tender should be fulfill

4. Pick that BOQs

5. Make a budget for it

6. Calculate cost budget

7. Approach vender

8. Calculate extra cost

9. Calculate your companies administration cost

10. Calculate all the labor cost

11. Set sale price

12. Add profit

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 13. Present the budget for bidding

Real-Time Gross Settlement

Transaction between two banks on the same day.

Payment Process

Normally bank payment process consists of a grass period and a normal period

In the grass period bank ask for paying only its markup this grads period normally consist of one year.
After this period Company must pay principal markup with an equal amount in the given period.

Pattern of RTGS

S# Bank Branch Br # A/C / IBAN Title of A/C Amount

Cheque

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Deposit Slip

Types of Payments:
PEL handles following payments on daily basis:

● For raw material

● Pledge finish goods ( purchased )
● Payment for markup
● FIM
● FATR
● Using material
● Insurance premium
● Employee cost
● Welfare expense
● Utility bills
● Lease payments
● Tender participation fees
● Testing fees
● Advertisement payment
● Custom duties
● Traveling expense

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DATA ANALYSIS TECHNIQUES

VLOOKUP & HLOOKUP:

LOOKUP and related functions are commonly used for business analytics in Excel as a way of slicing
and dicing data for analysis. The LOOKUP functions in Excel are VLOOKUP and HLOOKUP.
VLOOKUP allows you to search a data range that is set up vertically. HLOOKUP is the same function
but looks up data in terms of rows instead of columns.

ERP:

● Commonly used ERP software nowadays is SAP & ORACLE.

● PEL also uses ORACLE ERP software.
● The benefit of ERP is we can access data anywhere at any time. It gives us data in an integrated
form. It allows us to link data with any other organization.
● This software is web-based.
● There are three fields in ERP:
- Yellow: Mandatory fields
- White: It makes your reporting fruitful
- Grey: Informative fields, which we do not edit.
● Accounting entries are defined on the back end of the ERP. You don’t need to put any general
entries.

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WORKING CAPITAL MANAGEMENT
Working capital management is a business tool that helps companies effectively make use of current
assets, helping companies to maintain sufficient cash flow to meet short-term goals and obligations.

Types of Working Capital

There are different types of working capital.

1. Permanent Working Capital

2. Temporary Working Capital
3. Gross & Net Working Capital
4. Negative Working Capital
5. Reserve Working Capital
6. Regular Working Capital
7. Seasonal Working Capital
8. Special Working Capital

Purpose

- By effectively managing working capital, companies can free up cash that would otherwise be
trapped on their balance sheets. As a result, they may be able to reduce the need for external
borrowing, expand their businesses, fund mergers or acquisitions, or invest in R&D.
- Net working capital of a firm is used to cover all of a company's short-term expenses, which
are due within one year.
- Working capital is the difference between a company's current assets and current liabilities.
Working capital = Current assets – current liabilities
- Working capital is used to purchase inventory, pay short-term debt, and day-to-day operating
expenses.

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Here, we are going to calculate the Working Capital of PEL.

Data from annual report 2020

Current assets Rupees ‘000’

Stores , spare parts and tools 862,124
Stock in trade 9,499,264
Trade debts 10,436,154
Construction work in process 1,066,852
Short term advances 2,637,536
Short term deposits and prepayments 1,114,164
Other receivables 366,789
Short term investments 31,881
Advance income tax 2,719,270
Cash and bank balances 552,278
Total 29,286,312

Current liabilities Rupees ‘000’

Trade and other payables 1,543,791

Unclaimed dividend 14,456

Accrued interest /mark up 372,446
Short term borrowings 10,605,608
Current portion of non-current liabilities 2,228,633

Total 14,764,934

Working capital = current assets – current liabilities

= 29,286,312 - 14,764,934
= 14,521,378

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Data from first quarter annual report 2021
Current assets Rupees ‘000’
Stores , spare parts and tools 856,900
Stock in trade 8,550,759
Trade debts 11,986,781
Construction work in process 965,967
Short term advances 2,585,214
Short term deposits and prepayments 1,164,531
Other receivables 392,250
Short term investments 25,842
Advance income tax 2,704,382
Cash and bank balances 528,010
Total 29,760,636

Current liabilities Rupees ‘000’

Trade and other payables 1,582,147
Unclaimed dividend 14,452
Accrued interest /mark up 348,105
Short term borrowings 10,554,040
Current portion of non-current liabilities 2,135,729
Total 14,634,473

Working capital = current assets – current liabilities

= 29,760,636 - 14,634,473
= 15,126,163

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RECOMMENDATIONS
After looking into different weaknesses and future threats, I recommend the following steps to PAK
Elektron Limited to cope with future problems:

 PEL must introduce a truly decentralized setup in the organization, giving everyone some
grounds for decision-making, increase employee’s involvement in day to day planning and
retain back the morale plus satisfaction of the employees.
 PEL should ensure equal incentives to all the distributors to increase their willingness to offer
more shelf space to the company.
 PEL should also consider the importance of Advertisement for its microwaves and Splits,
which plays an important role in increasing awareness, customer preferences and in
maximizing market share. It should also use some promotional tools like organizing shows,
schemes, gifts, etc.
 The company must have a monitoring and inspection network to minimize the miss-utilization
of the resources by the employees and verify the data accuracy gathered by them.
 As the brand name is a very important factor in consumer buying behavior, thus it is advised
that PEL should work on the brand image. It already has a strong brand name but it has more
to do, mainly through advertising, to compete with its direct competitors and other international
brands.
 The company must 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 their
money’s worth.
 The company takes measures to improve the quality of its products. Thus, the company is
advised to take steps towards improving the quality of its products and cosmetic features;
otherwise, it will lose many potential customers.
 PEL should also take care of the Economic & Political Factors such as inflation, government
policies while projecting the Cost of Production for future because this will help the company
in entering into fixed price contracts for the purchases of material at a single time similarly
than it will be able to charge stable prices to its customer. In addition, people will visit and stay
on the website for longer periods of time. PEL in-house website www.pelgroup.com.pk on the
other hand is more tastefully made.

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  PEL should focus on electronic media to get a competitive advantage over its competitors.
They have to increase their advertising expenditures.
 PEL should also adopt any other methodology for projecting upcoming time period sales,
which should include seasonal factors consideration in order to get accurate future estimates
rather than using that silly old average methodology.
 PEL must have to cut down on the high margins to the dealers and give more incentives to the
consumers to better compete in the market.
 The introduction of seasonal schemes can help in boosting sales.
 They should develop cost-saving strategies, this can increase their revenues.

CONCLUSION
After looking all at the above, we conclude that the company is struggling to survive and make
progress. It is producing the power & home appliances products within the country, which is better
than exporting and will result in economic growth. Employees are almost satisfied with the company’s
policies, so they are giving output/response to the organizations.

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