Pel Company History

Pel caller-up HistoryPak Elektron was setup in 1956 as a Public Limited bon ton with the object of initially producing transformers, switchgears, and electric motors. AEG experts and pixel personnel carried expose the de subscribe and w be of this equipment jointly. aft(prenominal) the conclusion of joint venture agreement with AEG Saigol Group acquired the pixel companion in October 1978. The guild floated its copes to the general public and was listed on Karachi Stock vary (KSE) and Lahore Stock Exchange (LSE).In 1980, dodges Division was established and in 1981 its starts the everyplacelapion of Window Type Air Conditi geniusrs with the technical collaboration of General fraternity of Japan. This logical argument conditioner was rise up received in the trade for its step. Subsequently in 1987 the convergenceion of Refrigerators and Deep Freezers was started.In 1993 the telephoner has started the assembly of Compressors for Refrigerators and Deep Freezers unde r technical collaboration with Messrs. NECCHI COMPRESSORI of Italy.It was in early 70s that picture element became known in overseas merchandises due to its timber. The company started its export to countries c ar Saudi Arabia, Abu Dhabi, Qatar etc. Later on pel supplied galvanic equipments to various an otherwisewise(prenominal) countries in the Middle East, Far East and Africa with great success.1.2 VisionTo providing engineering equitables and run by dint of continuous im tellment1.3 Mission StatementTo translate quality products services to the complete satisfaction of our guests and maximize returns for all stakeholders through optimal use of resources, To focus on personal growment of our employees to meet forthcoming day challenges, To promote good governance, corporate values and a safe functional environment with a dependable sense of social responsibilityCHAPTER NO 2BUSINESS OPERATIONSThis chapter has been divided in five naval discussion portionali sation, function one described the product in which pel deal. In min section business organization effect summary argon given. In section ternion SWOT analysis is given. In poop section future strategy is given. In fifth section competitive analysis is given.2.1 organizational Structure2.1 Division of pixelThere atomic number 18 dickens discussion section of pel author DivisionAppliances DivisionThis division is comprised for four come aparts.2.1.1 Power DivisionThe most tycoonful revenue generating business unit of PAK Elektron, produces Transformers, Switchgears and postcode Meters for the public sector much(prenominal) as KESC Karachi Electric Supply Corporation, LESCO and PESCO. They provide these third productsProduction TransformersProduction SwitchgearsProduction energy MetersDuring the year 2006, pel retained its market leadership in the Power Equipment market, increasing its market sh be from 33% in 2005 to 36% in 2006 in the switchgear market and to a fault brinytained sh atomic number 18 of 35% in 2006 as well in the energy meters market. picture elements leadership in the Power Equipment market is largely due to its muscular Research and Development knowledge and utmost product quality.2.1.1.1 Production Transformers pixel has vast experience in design and manufacturing of example and special purpose transformers up to 33kV and up to 6000kVA ratings. pixels transformers perplex been successfully graphic symbol tested for Impulse voltage and short circuit tests at KEMA, (Holland), HVSC Lab, Rawat (Pakistan), flavor (Pakistan) and UET (Pakistan).2.1.1.2 Production Energy MetersA nonher successful and most bureauful plane section of power division is its energy meter output department that manufactures Electro-mechanical Energy Meters under license from ABB-USA.The quality of pel meters has been sensible by KEMA Laboratories (Holland) and conforms to IEC 521, SGS Yarsley, and U.K, has certified PEL Energy Meter plant for ISO 9002. future(a) types of meters atomic number 18 constructElectro mechanicalSingle phase one-third phase_ institutionalize committed dormant /DIGITALSingle frameThree Phase Directed connected2.1.1.3 Production SwitchgearsSwitchgears are one of the highly technical and specialize power products of PEL. They are produced for indoor and outdoor installations complying with multinational installation standards. A major customer for this product is WAPDA. The troupe provides one year later gross gross revenue service warranty to WAPDA, KESC and other customers. In Switchgear, PEL enjoys market share of 33 % go competitors are Alstom, Siemens and Fico.2.1.1.4 Power TransformersOwing to big result in power sector, demand for power transformers is also maturement proportionately for all ratings from 66KV to500 KV. PEL has stepped into this activity by starting the manufacturing of 132 KV transformers, being the most demanded rating, and for these purposes has formed a strategies partnership by signing the two agreements. Based on the demand prospect of Power Transformers for WAPDA, KESC and other projects, PELs market share is initially tar labored to be 20%, growing in five days.2.1.2 Appliances DivisionThe Appliances Division of PEL is the pioneer manufacturer of galvanising goods in Pakistan. The Divisions product portfolio comprises of air-conditioners, refrigerators, televisions, microwave ovens, and split air-conditions. PEL is one of the three leading players in the home appliances market.The Company is engaged in the manufacturing and/or trade of the following home appliances.The Companys Appliances Division contri howevered signifi bathtly to its gross revenue in 2005-06. The main lands for this growth are increase in market sizes on with PELs strong brand image accompanied with its extensive dealership communicate spread nationwide with over one thousand outlets and an after gross sales service net travel with over 100 kit and boodlehops.Another major reason for the increasing growth in the home appliances market is the easy approach dexterity of consumer funding at lower interest rates. PEL itself is tangled in selling its products through a marketing wing for sales against consumer financing. handiness of Chinese products at very competitive prices has not proven to be that big a threat to the local anaesthetic industry. This is because of the change quality of the local products and cost efficiencies due to economies in product and raw material purchases in that locationfore making the local products competitive with the Chinese imports.In 2005-06, the Appliances Division contri buted round 53%to the Companys sales whereas the Power Division made up the stay 47%. Refrigerators and Split air conditioners were the main source of revenue in the Appliances Division, whereas transformers and energy meters are the main revenue drivers in the Power Division.The Appliance Division accounted for 44% of Net gross revenue during the year ended June thirtieth 2007. Refrigerators and Split air conditioners were the main source of revenue in the Appliances. The Company is engaged in the manufacturing and/or marketing of the following home appliances.Manufacturing commerceRefrigerators Microwave OvensAir Conditioners (Split) Conditioners (Window)Deep Freezer Floor Standing ACsGenerators backwash Machines2.2 Business Process Analysis (Industrial Analysis)2.2.1 TransformersPEL has vast experience in design and manufacturing of standard and special purpose transformers. New technical designs for improved efficiency and quality against special orders of non-standard transformers are continuously being explored. These transformers are available for various applications. Distribution Transformers Auto Transformers Furnace Transformers Welding TransformersTransformers are normally supplied in a catamenia of 3 4 months after the recognise of orders from respective distribution companies of WAPDA and varied furnish time for surreptitious customers. The Company provides one year after sales service warranty to WAPDA, KESC and private sector customers.2.2.2 Energy MetersPEL manufactures three types of energy meters Single Phase and Poly Phase. The electro-mechanical energy meters are manufactured under license from ABB of USA. The quality of PEL meters has been certified by KEMA Laboratories of Holland. PEL meters are superior than others due to their ability to lower revenue losses through accurate precise operation and reduction of maintenance expenses.Single Phase energy meters provide maintenance-free operations over a long result and accurate measurement of electrical energy.Poly Phase energy meters improve load cognitive process and precision accuracy. The meters contract minimum maintenance and can withstand abuse from surges and magnetic tampering.Three phase digital electronic meter with dual tariff capacitance recently launched and supplies to WAPDA has begun this year.Energy meter orders from WAPDA are received annually and their supply period is 9 -10 months. Energy meters to KESC are supplied in a period of 3 4 months. The Company provides one year after sales service warranty to WAPDA, KESC and another(prenominal)s.2.2.3 SwitchgearsSwitchgears are one of the highly technical and specialized power products of PEL. They are produced for indoor and outdoor installations complying with international installation standards. A major customer for this product is WAPDA. The Company provides one year after sales service warranty to WAPDA, KESC and other customers.2.2.4 RefrigeratorsPEL Refrigerators were introduced in 1987 with features much(prenominal)(prenominal) as VCM (Vinyl Coated Metal) coating stylish finishing and auto debilitate systems. PEL refrigerators carry compressor made by Danfoss of Germany.The low noise compressor is extremely silent and keeps the refrigerator running smoothly. Further more(prenominal), the compre ssor is resilient to fluctuations in voltage level, thitherby proving to be a more durable product.PEL is actively involved in the manufacturing and trading of refrigerators, which is a major source of consistent growth. The refrigerators business contributes to 48% of the Companys sales and this trend is expected continue in years to come (which is reflected in the figures for 2005-06 in the table below).2.3 SWOT Analysis2.3.1 StrengthsPEL has the following strengths and is in more competitive position in these areas than its competitors. Following are the main strong points of PEL.2.3.1.1 Strong Brand ImagePEL has created the strong brand image in the mind of the customers through higher(prenominal)(prenominal) quality and low price. The customers of the PEL of all time prefer to buy the PEL home appliances like WRAC split AC and refrigerators whenever they commanded to buy.2.3.1.2 Strong bargainer NetworkIt is also the plus point for the PEL that it has also genuine the strong dealer network in the market. The dealers are continuously stressful to sell the PEL appliance to the customers because they know there are high margin in the PEL products. They can make it more capital after selling the PEL products. The management of PEL also provides more incentives to their dealers than their competitors2.3.1. 3 Free Customer ServicePEL provides free customer service for one year to its customers. So the customers always buy the PEL products due to its free service and it becomes loyal customer for the PEL. PEL always provides help to their customers for repWRAC, Refrigerators and other items. PEL always limit efforts to satisfy the customers.2.3.1. 4 M Arket Leader In WRAC (Window Room Air Conditioner)It is another strong point that PEL is a market leader in WRAC. The windowpane room air conditioner is more demanded by the customers than its competitors air conditioners because it has more lastingness in operating systems and cools the room in few minute s. PEL always strives to provide the innovative features in WRAC. PEL air conditioner is cheaper and has a higher quality than others WRAC. Thats why customers always purchase the PEL window air conditioner.2.3.1.5 Leader In Power DivisionIn Pakistan the PEL is most leader in power division. Almost all power division are provided by PEL to wapda.2.3.2 WeaknessesOvercome on these weaknesses so it can become a market leader in the home appliance. manage other companies PEL has round weaknesses in operating the business. If PEL loses some(prenominal) competitive edge in the following points2.3.2.1 Lack Of AdvertisementPEL was a very lack of advertisement according to other appliances companies. So it is a big weakness of PEL.2.3.2.2 Lack Of Product RangePEL has introduced more products of consumer items but there are more submits to rise sassy consumer items like PEL washing Machines, Vacuum cleaner and other items. Due to lack of product Range, Company cannot earn more pull in because consumers have high demand of these products and they say that if company is investing in these products then we can keep all PEL items and we never need to keep others company products.2.3.2.3 Financial ProblemsSometimes PEL faces the pecuniary problems because its stocks are so much piled up in the stores that create the problem of exchange flow because when the stocks are not sold and the production is in work for 24 hours a day than the company faces much(prenominal) problems.2.3.3 OpportunitiesFor the PEL there are more opportunities for expansion the business. If PEL heartyize that opportunities then it go awaying be more fruitful and put onable for the company.2.3.3.1 Exploration of Market In PakistanPEL has the opportunity to explore the market in all over the Pakistan. Even though PEL introduce its products in all cities of Pakistan but there are so many places that have the capacity to hook on the PELs products.2.3.3.2 Increase in Product RangeIt is the m ain opportunity for the PEL that it can increase its product range that testament be a more profitable for the company. There are more needs to develop new consumer items like PEL washing Machines, Vacuum cleaner and other items. Due to lack of product Range, Company cannot earn more profit because consumers have high demand of these products.2.3.3.3 Export OpportunityPEL Company has also the opportunity to export their products in other international countries like UAE, SAUDI ARABIA, and other Arabic and African countries.2.3.4 ThreatsPEL Company in such a competitive era has many threats as well. These threats are for the present situations and future. Company should make its policies and strategies according to these threats. So following are the main threats for the PEL2.3.4.1 Strong CompetitionThere is very strong competition for the home appliance in the market. So every company tries to come in the number 1 position for achieving the maximum shares in the market.2.3.4.2 Chin as ProductChinas products are another threat for the Pakistani companies because these products are cheaper than the Pakistani products. An even china product not well in quality but it is comparatively in low prices than the consumers home appliance that are manufactured by the indigenous company.2.3.4.3 Price WarAs there is stiff competition in the home appliance market that will cause the price war. So every company reduces the prices of its products to increase the sales. It will not only reduce the profit margin of the company but also reduce the quality of products. So price war is the main threats for all the companies, which are operating in these products.2.3.4.4 Instability Of GovernmentThe rapid changes in governments will become threats for the companies because every government adopts its own policies for the industries. So it increases the uncertainty for the investors who want to invest heavy pith in their new projects.2.4 Future Strategy PEL is one of the most wide ly recognized brands in the domestic refrigerator market. It is the second largest local manufacturer and one of the leading brands. For the past four years the Companys market share growth averaged 2% per annum. With continuous efforts in RD, PEL is concentrating on quality of product and cost minimization. The Company is considering technical collaboration for value addition through planned capital uptakes. Increased sales of manufactured refrigerators coupled with sales of split air conditioners are the major factors contributing growth in the appliances business. Other products are also being introduced as a part of Companys strategy to broaden its product range. 2.5 Competitive AnalysisThe prices are have-to doe with PEL is charging reasonable prices to its customer for all of its microwaves comparatively from others. Prices charged by National, which is a multinational firm, are very higher in par with others because it uses special Japanese parts in its microwaves and ens ures high quality and performance and only rich class attests interest in National Products. accord to the retailers information, people are satisfied with the prices charged by PAK Elektron but unchanging their preferences go along with Dawlence microwaves because of its highly created awareness.CHAPTER NO 3LEARNING AS STUDENTThis chapter has been divided into four sections In section one, I have discussed my duties as a internee during internship, In the second section, I mentioned accomplishments, In the third section I briefed my problems which I faced during internship and in the last and fourth section I offered that how this internship experience impact on my carrier.3.1 Learning and DutiesIn finance department there are three sections.Corporate sectionLeasing and pledgeBudgeting3.1.1 Corporate characterIn corporate finance I worked in antithetical units. Firstly, I learned that how letter of credit works in PEL.3.1.1.1 L.C SectionI started functional for the earn of Cr edit Section. They gave me an understructure and shared important points. Mr. Asad, cured Executive supervised me in this section.Letter of Credit A document issued mostly by a financial institution, used primarily in trade finance, which usually provides an permanent compensation undertaking.The letter of credit can also be source of repair for a transaction, meaning that redeem the letter of credit will contain an exporter. Letters of credit are used primarily in international trade transactions of significant value, for deals between a supplier in one country and a customer in another. In such cases the International Chamber of Commerce Uniform Customs and Practice for infotainment Credits applies.The parties to a letter of credit are usually a beneficiary who is to receive the money, the issuing pious platitude of whom the applicant is a client, and the advising rely of whom the beneficiary is a client.There are different types of LCa) L.C at visual modality In L.C at sight, Our Company opens an L.C in a vernacular which provides a ascertain to the exporter that he will pay the due amount.Now, the exporter takes these documents to his imprecate and inquires the border building to give him money so that he can start working on the required contract. When he fulfills the contract, he goes to his bank and provides the required documents to prove that he has fulfilled the contract. Now his bank sends these documents to our bank and our bank ask us to confirm the clarity of the documents and if modify then these documents are called cleared documents. Then lastly we will pay the bank the due amount.b) manipulation L.C In usance L.C the contract between the two parties require the importer to pay in a longer term e.g. 3 or 6 months after receiving the material from exporter. Our bank will pay the contract amount after the agreed period.c) INLAND LCIn land LC means LC open in a same country.3.1.1.2 GuaranteesI started working on the Guarantees , Leasing, Finance against trade in and Cash Financing Section. They just gave me an introduction and shared important points. Mr. Tahir Mahmood, Senior Executive supervised me in this section.Guarantees Section Secret behind PELs success and increasing market share is its guarantees section that actively works to get every order either for appliances or for power of the company by speedily participating for the contract with the help of Tender Bonds of Guarantees.Types of GuaranteesTender guarantee ( Bid guarantee )Balance of pay guaranteeAdvance honorarium guaranteePerformance bond guarantee3.1.1.3 Long Term LoansPEL acquired a long-term lend to finance the import of machinery. Recently PEL has purchased some machinery from China for Digital Energy Meters.The process for long-term loan is explained in following.Preparation OF Feasibility Report Following points are considered while preparing the feasibility subject field.Financial StatementCost of the project. This includes o perating assets (land, building, Vehicles, furniture, capital expenditure and means of finance)Project profit and loss accountProjected contention of changes in financial position.Financial AnalysisPay back period of total investmentRatio analysisBreakeven analysisSchedulesSales forecast statementTotal production cost.Working capitalLoan quittance scheduleBank Feasibility ReportBank studies the feasibility report and prepare report and prepare its own feasibility report to come upon where it would be feasible to sanctioned loan to company or not. offer the Letter The bank, if it is satisfied with the feasibility report then send offering letter. It has,Amount sanctionedMark up rateCharge over fixed assetsTenorInstallment periodSInterest payment period tolerationIf company accepts the terms, it must respond with this period.Negotiation Negotiation between bank and company takes place to change certain conditions of offer letter and it satisfying for both parties. A second draft of the offer letter is vigilant with changes and signs of bank and CEO OF PAK ELEKTRON LIMITED.Creation of Charges A charge is created in raise of the bank to secure its loan with following documents affidavit. It is an undertaking by the company that will follow all conditions.Form 10. It contains the particulars of assets against which charge is created.All the supra documents are submitted with registrar against whom a Certificate of Registration of Mortgage is issued.Types of charges unsharedRankingPari passuLoan Repayment Schedule This schedule is prepared to show the mark up principal and total installment value for total tenure.3.1.1.4 PRE-ShipmentPre-shipment is the last section of the finance department. The pre-shipment report may be summarized in the following 5 undertakings which are as followsTenderBidding bankers acceptancePurchase orderInspection3.1.2 Leasing SectionThis section works in order to fulfill the corporate production, personnel and operational needs s uch as Machineries, Auto Mobiles and office equipments. It enters into the Buying Contracts always with the one who offers opera hat terms and conditions as well as the best Internal lay of Return to the Company.3.1.2.1 Direct LeasingIn case of auto mobiles, a bank makes the pay order and gives it to the dealer on the behalf of firm. Firm pay the prescript plus interest in installment to bank.PEL can do leasing with AL-Baraka bank. They paid approximately 15%interes on them.3.1.2.2 Indirect or Machinery LeasingMachinery is merchandise from china and other countries e.g. USA etc. incase of imported machinery PEL has an LC opened by particular bank. The LC issuing bank deals with the exporters bank and makes payment to it. In machinery dealing the import department of the company is involved. Import department informs finance that they do not have enough funds to make a lump sum payment of machinery, and then leasing ease is used. A third bank called the leasing bank (from whom P EL takes leasing facility) makes payment to issuing bank and acquires papers of the machinery. PEL then makes regular lease payments to the leasing bank and last acquires the papers of the machinery. Leasing bank also sends external auditors to PEL to verify whether the machinery is truly of the value quoted, whether it is in proper condition, durability of the machinery etc.3.1.2 Working superior FinanceThis type of loan is secured againstPledgeHypothecation3.1.2.1 PledgeIt may be constructive or actual. Constructive pledge is that in which goods are not taken by bank rather keep them in companys good own under its own security.In case of actual pledge, bank holds the possession of goods.Logistics The logistics department comprises a part of the finance department. It is headed by Mr. M. Hanif and nurture consists of a senior accounts officer, two junior executives and two accountants. The basic task carried out by the persons working in the logistics section isdaily break of f on productiondaily check on stock (materials and finished goods)controlling the production plan for the futurecontrol on orders in handMaterials imported by PEL basically remains in bank custody. The bank makes payments for these materials to the foreign suppliers and releases them to PEL as per payments by them. The bank further higher mucaddam companies/clearing agents to watch over and monitor these materials. The materials are generally store in PEL premises. Material requirement for appliances and power good manufacturing are different hence their requisition are also different. PEL uses cash financing and various other credit facility provided by the bank.Raw materials are imported using the different financing facilities. Materials are then use to make finished goods. The materials when enter the production cycle a term as work-in-process (WIP). WIP is hypothecated and loans taken against it. Then a portion of finished goods produced are further pledged and payments for ra w materials are made through it.The whole procedure must be carried out in a timely way with correct information hit at the right time from factory to material section, so that materials may be requested and obtained at the right time without delay.3.1.2.2 Hypothecation Of StockIn this the finance is given on work in process goods.3.1.3 Budgeting SectionGetting started from the first day after formal introduction of staff, MR. Masood Tahir, bus Finance PEL assigned task to Mr. Amer Khawaja (Manager Budgeting) and Sheikh Zaigham Ali (Finance Executive) Finance Budgeting section of my supervision. Forecasting for next yearHe told me management preparedSales planProduction planMaterial purchase planDirect laborF.O.H ( factory overhead)Selling expense /administrative expenseOther incomeFinancial costMr. Zaigham told me PEL has two Divisions1st Power Division, which deals in the manufacturing ofDistribution TransformersPower TransformerPower ProjectElectric metersSwitch gearssecond App liances Division includes production of Refrigerators, Deep freezer, Micro-wave Ovens, Splits AC.Trading items (Imported goods) water dispensor, washing machine, window AC, T .V, Generator.Sales course of studySales plan made by marketing department for appliance and power division. Forecasting Base on last five year sales which is approved by marketing G.M.Types of SalesExport sales ( Afghanistan , India)C.M.D ( Consumer marketing department e.g Govt employees )Corporate sales ( Institutional e.g hospitals , colleges etc )Private sales ( for bankers , G.M reference 50% discount ) metro / Makro salesProduction PlanProduction plan made mannequin wise for refrigerator, split AC, microwave oven and deep freezer.Material Purchase PlanFor material purchase PEL open L/C.Direct advertizeDecide labor quantity required.Labor rate decided.Other Income iota salesB pair goodsFinancial Costmark -up on borrowingdemrage cost ( pay extra amount after prodigious the shipment days )The beginning of every year with the help of forecasts and then latterly throughout the year they comparison it with the actual transactions of these two divisions. I did Afterwards, he showed me the budgets of both divisions which are prepared at some price and cost calculations of Transformers for him and I also did different ratio analysis based on last year results. Then, I was assigned to compare the production budget of refrigerator section of the production department with the actual results yet achieved which I performed and show to him the variances till date.3.2 Problems EncounteredThere was no such problem but at same time it was very perplexing because they mostly prefer to tell orally rather to practical work that make us ambiguous in some manner when we want to learn more and more.3.3 Accomplishmentwe were keen to know about different section of finance department specially in LC opening (letter of credit) how to get loan from banks and why made pledges. We frequently analyses the Lc.3.4 How Experience Impact On My CareerDuring my internship I learned fate of knowledge that is helpful in my future planning and future career. I learned how to interact with senior management and get their experience that is helpful in my career. Due to my internship function of regularity and punctuality.3.5 Knowledge AcquiredI had chance of acquiring a lot of new knowledge because it was my first professional experience of working real world of financial brainstorming. It was great experience that how plans and decisions are made executed. It epicurean that how risk involve in each step of decision making and how efficiently management cope up themselves with their competenciese.ConclusionIn the nutshell, I want to bring some new idea that PEL should start up some social benefit programs and try build their Goodwill by participating in the society.I found that the people while purchase for a certain item take great i