Internship report of PEL

Internship Report Submitted By Rehan Aqeel Khawaja Submitted to Human Resource PEL Internship Duration July 2, 2009 to August 13, 2009 Internship Department Finance Program MBA Institution COMSATS Institute of Information Technology, Lahore 1 COMSATS Institute of Information Technology, Lahore

DEDICATION Dedicated to my family and all those who helped me in this internship

2 COMSATS Institute of Information Technology, Lahore

Acknowledgement

I am really pleased here to acknowledge the sheer efforts of many people those who have provided me their relentless services in the completion of my Internship and my internship report. I would like to thank personally all finance staff, Mr. Mohammad Hanif, Mr. Manzoor, Mr Amjad, Mr. Tariq Jawed, Mr. Ghulam Murshad, Mr. Umar Zahid, Mr. Tayyab Sharif, Mr. Assad, Mr. Tahir Mehmood, Mr. Nadeem-ud-Din, Mr. Rashid Hanif, Mr Mohsin (CMD), Mr Hasan Raza (HR), Mr. Junaid (BOP) who from there very busy schedule helped me in many ways. May Allah bless you all.

Rehan Aqeel Khawaja

3 COMSATS Institute of Information Technology, Lahore

Table of Contents

Executive Summary…………………………………….……....5 Background of PEL…………………………………….….……6 Business Operation……………………………………………26 Learning as a Student Intern…………………………………40 Problems Encountered………………………………………..49 Other Activities…………………………………………………49 Suggestions:………………………………………….……..….49 Annexure………………………………………………………..51 Glossary…………………………………………………………52 Reference…………………………………………………....….53

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1.0 :Executive Summary

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 company was taken over by Saigol Group of  Compani Companies. es. Since Since its inceptio inception, n, the company company has always always been been contrib contributin uting g towards the advancement and development of the engineering sector in Pakistan by introducing a range of quality electrical electrical equipments and home appliances appliances and by producing hundreds of engineers, skilled workers and technicians through its apprenticeship schemes and training programs. I did my internship in the Finance department of PEL. I learned a lot during my internsh internship ip period. period. There are five section sections s in Finance Finance departm department. ent. Those are Material Material managem management ent section, section, Corporat Corporate e Finance Finance section section,, Budgeti Budgeting ng section section,, Treasury section and Accounts Receivable section. Each of the section has its own significance and importance. Each play an important role in the working of  Finance department. Material Management section deals with the raw materials being purchased and shipment. It deals with the pledging of finished as well as raw materials under the custody of different banks. PEL is currently dealing with over 15 banks. Corporate Finance deals with the leasing, loan and guarantees. It is also one of  the important parts of Finance department. Budg Budget eting ing secti section on forec forecas asts ts annua annuall sales sales,, expe expend nditu itures res and and costs costs for for the company. Treasury section allocates the funds for the whole company. Accounts Accounts receivable section deals with every type of receivables receivables the company company is dealing with. There is another independent section known as Provident Funding section in Finance department.

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2.0: Background of PEL

Vision: Vision: To exce excell in provi providin ding g engin engineer eering ing good goods s and servic services es throu through gh contin continuou uous s improvement.

Mission: Mission: •

To provide quality products and services to the complete satisfaction of  our customers and maximize returns for all stakeholders through optimal use of resources.

•

To focus on personal development of our Human Resource to meet future challenges.

•

To promo promote te good good gove govern rnanc ance, e, corpo corporat rate e value values s and a safe safe work working ing environment with a strong sense of social responsibility.

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 company was taken over by Saigol Group of  Compani Companies. es. Since Since its inceptio inception, n, the company company has always always been been contrib contributin uting g towards the advancement and development of the engineering sector in Pakistan by introducing a range of quality electrical electrical equipments and home appliances appliances and by producing hundreds of engineers, skilled workers and technicians through its apprenticeship schemes and training programmes. Awards won by PEL: Annual Environment Excellence Award-2009 Annual Environment Excellence Awards are instituted jointly by National Forum for Environ Environment ment and Health Health (NFEH) (NFEH),, United United Nations Nations Environ Environmen mentt Program Program (UNEP), Ministry of Environment, Government Government of Pakistan and the Federation Federation of  6 COMSATS Institute of Information Technology, Lahore

Pakista Pakistan n Chambers Chambers of Commerc Commerce e & Industry Industry (FPCCI) (FPCCI).. Annual Annual Environm Environment ent Excellence Awards are designed to recognize and promote the organizations which make an outstanding contribution to sustainable development. They aim to highlight policies, practices, practices, processes and products products from all sectors of business in the country, which help to achieve economic and social development without detriment to the environment and natural resources. Pak Elektron Limited (PEL) was awarded 6th Annual Environment Excellence Award for best Health, Safety and Environment performance. The Award was presented presented to Pak Elektron Limited in a graceful graceful ceremony; held on July 09, 2009 at Hotel Sheraton, Karachi. Mr. Hameed Ullah Jan Afridi, Federal Minister for  Environment, honored the ceremony by as chief guest whereas Mr. Askri Taqvi, Minist Minister er for Envir Environm onmen ent, t, Sindh Sindh presi preside ded d over. over. Javed Javed jabber jabber (Glob (Global al Vice Vice President IUCN), Dr. Kaiser Waheed (Chairman NFEH) and Naeem Qureshi (Pres (Presid ident ent NFEH NFEH)) were were also also prese present nt on the the occas occasion ion.. Mr. Yaqu Yaqub b Taba Tabasum sum (Project Manager Unit-II) received the Environment Excellence Award on behalf  of PEL. Health & Environment National Excellence Award-2008 On the basis of sound Health, Safety & Environmental performance; PEL was selected selected for 4th Health & Environmental Environmental National Excellence Award-2008. These awards are offered by Help International International Welfare Trust, Pakistan in collaboration collaboration with Corporate Social Responsibility (CSR) Association of Pakistan. The award presentation ceremony was held at Hotel Regent Plaza, Karachi on April 15, 2009. 2009. Mr. Askari Askari Taqvi, Taqvi, Minister Minister for Environ Environmen ment, t, Governm Government ent of Sindh Sindh was Chie Chieff Gues Guestt of the the cere ceremo mony ny and and Ms. Ms. Khad Khadij ija a Balk Balkhi hi,, Pres Presid iden entt of CSR CSR Association of Pakistan was the Guest of Honor at the occasion.

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Best Environmental Reporting Award Pak Elektro Elektron n Limited Limited (PEL) (PEL) was awarde awarded d the Best Best Environ Environmen mental tal Reporti Reporting ng Awar Award d for for 2008 2008 at the 7th ACCA ACCA-W -WWF WF Paki Pakista stan n Enviro Environm nment ental al Repor Reportin ting g Awards (PERA) ceremony held on Earth Day; April 22, 2009 at the Serena Hotel, Islamabad. Endo Endors rsed ed by the the

Mini Minist stry ry of Envi Envirronme onment nt and and

IUC IUCN

Paki Pakist sta an; thes these e

Envi Enviro ronm nmen enta tall Awar Awards ds were were laun launch ched ed in 2002 2002 to reco recogn gniz ize e and and rewa reward rd comp compan anies ies that that repor reportt corpor corporat ate e envir environm onment ental, al, socia sociall and and susta sustaina inabil bility ity performance to a broad range of stakeholders. The company comprises of two divisions: •

Appliances Division

•

Power Division

2.1: APPLIANCES DIVISION This Division of PEL consists of appliances manufacturing. PEL Air Conditioners PEL PEL wind window ow-t -typ ype e air air cond condit itio ione ners rs were were intr introd oduc uced ed in 1981 1981 in tech techni nica call collaboration collaboration with General Corporation of Japan. Ever since their launch, PEL air  conditioners have a leading position in the market. PEL air conditioners cooling performance performance has been tested and approved by Copeland and ITS USA. With the shift of users preference from window type to split type air conditioners, PEL has started manufacturing split type air conditioners. The PEL is currently producing 8 mode models ls of split split type type aircon aircondit dition ioners ers and curren currently tly 1 mode modell of wind window ow type type airconditioners. The PEL also produces Floorstanding Airconditioners and it is currently producing 3 models for it. The PEL won the Winner of the Consumer  Choice Award for its air conditioners. PEL Refrigerators The manufacturing of refrigerators started in 1986-87 in technical collaboration 8 COMSATS Institute of Information Technology, Lahore

with M/s IAR-SILTAL of Italy. Like the air conditioner, PEL's refrigerators are also in great demand. Today, PEL Crystal has 30% market share. Its cooling performance is tested and approved by Danfoss, Germany and its manufacturing facility is ISO 9002 certified by SGS Switzerland. The PEL is currently producing 6 models of Refrigerators. PEL Deep Freezers PEL deep freezers were introduced in 1987 in technical collaboration with M/s Ariston of Italy. Because of durability and high quality, PEL deep freezers are the preferred choice of companies like Unilever. PEL Microwave Ovens PEL is currentl currently y producin producing g two division divisions s of Microwa Microwave ve ovens. ovens. i.e. Silverli Silverline ne Ovens and Microwave Ovens. And each division contains further models. PEL Washing Machines PEL is currently producing two models of washing machines, catering to the needs of different consumers. PEL Water Dispensers PEL is currently producing two categories of water dispensers and those are Silverline and Lifestream. PEL Generators PEL is currently producing two divisions of generators, Domestic Generators and Commercial Generators. PEL is producing further four models in the category of  Domestic generators. 2.2: POWER DIVISION PEL was founded in 1956 and has since been serving the Power utilities, industries, individual customers, housing and commercial projects by providing reliable, customized and cost effective solutions. Backed by the innovative genius 9 COMSATS Institute of Information Technology, Lahore

of Saigol Group, PEL is now technology forerunner and market leader in providing new products and services to meet ever changing and technology intensive needs of its customers. Our EPC contracting division delivers custom designed and built HV and EHV grid stations, electrification of housing projects, industrial parks and optimum solutions for power utilization to all kinds of  industries and commercial customers. The company aims to maintain this competitive edge and at the same time keep striving to improve it further by continuous R&D, creating new knowledge and adapting to global developments in technology and product design. Ever increasing local market share, growing export orders, numerous successful power projects and greater than ever base of  satisfied customers are evidence to these aspirations. Works of PEL are spread at two facilities in Lahore, the historical city and cultural hub of Pakistan. The two facilities cover an area of 1,033,200 Sq ft and 614,252 Sq ft respectively. Both are equipped with latest technology, state of the art testing facilities and environment friendly production process. At the heart of  company’s operations is its human resource. PEL invests heavily on professional deve develop lopme ment, nt, skill skill impro improve veme ment nt and and well well being being of its human human resou resourc rce. e. Our  Our  employees are our most valuable asset and we keep them very dear. PEL Power Power Divisio Division n manufac manufacture tures s energy energy meters, meters, transfo transforme rmers, rs, switchge switchgears, ars, Kiosks, compact stations, shunt capacitor banks etc. All these electrical goods are manufactured under strict quality control and in accordance with international standards. PEL PEL is one of the major major electr electrica icall equip equipme ment nt suppl supplier iers s to Water Water and Power  Power  Develop Developmen mentt Authorit Authority y (WAPDA (WAPDA)) and Karach Karachii Electric Electrical al Supply Supply Corpor Corporatio ation n (KESC),

which

are

the

largest

power

utilities

in

Pakistan.

Over the years, PEL electrical equipment has been used in numerous power  projects of national importance within Pakistan. PEL has the privilege of getting its equipment approved and certified by well-reputed international consultants such as: •

Preece, Cardew and Rider, England 10 COMSATS Institute of Information Technology, Lahore

•

Harza Engineering Company, USA

•

Snam Progeti, Italy

•

Societe Dumezm, France

•

Miner & Miner International Inc. USA

•

Ensa, France

In spite of stiff competition from emerging local and multinational brands, PEL Group's appliances and electrical equipments have remained in the spotlight due to constant innovation. Strategic partnership with multinationals of repute have enabled the PEL Group to incorporate new technologies into existing product ranges, thus giving the Pakistani market access to innovative, affordable and quality products.

EPC Contracting With With restru restruct cturi uring ng of powe powerr sect sector or in Pakis Pakistan tan and and increa increase se in econ econom omic, ic, commer commercial cial and industri industrial al activity activity,, more more and more more power power utilitie utilities s and other  other  custo custome mers rs demand demanded ed high high value value packa packaged ged solut solution ions s for for their their trans transmis missio sion n system and enterprise electrification requirements. To meet this demand PEL established an Engineering Procurement and Construction division. PEL EPC Divisi Division on cons consist ists s of huma human n resour resource ce with with high high acad academ emic ic qual qualifi ifica catio tions ns and experience of local as well as global market. The EPC division delivers custom designed and built solutions in following areas. •

132kV and 220kV grid stations for power utility companies.

•

132kV and 11kV substations for industrial and commercial customers.

•

Integration of private captive power generation plants into utility network for

sale

of

their

surplus

power

to

utility

companies. •

Electrification of housing projects and industrial parks.

Services include: •

Engineering

•

Project Management

•

Project Execution

•

Turnkey or customized projects 11 COMSATS Institute of Information Technology, Lahore

•

Technical support and solution

Our turnkey power supply systems give you unique value added services. In addition to employing its own resources, PEL keeps a well managed supply chain of internationally renowned manufacturers manufacturers and service providers to complete complete the project scope. As such, the end product is a reliable, high quality and price-wise most optimum solution.

Projects completed 1. 132/11kV 132/11kV AIS Satellite Town substation, substation, Rawalpindi Rawalpindi Pakistan Pakistan 2. 132/11k 132/11kV V GIS DHA substati substation on Islamabad Islamabad-Pa -Pakist kistan an 3. 132/11k 132/11kV V AIS Ghuinke Ghuinke substation substation,, Sialkot-Pa Sialkot-Pakist kistan an 4. 132/11k 132/11kV V AIS Kamra Kamra substation substation,, Attock-Pak Attock-Pakista istan n 5. External Electrification Electrification of Askari Askari Villas Villas Phase-II, Phase-II, Lahore-Pakistan Lahore-Pakistan 6. Kohinoor City Faisalabad Faisalabad (Electrific (Electrification ation & Networking) Networking) 7. Supply, supervis supervision ion of installation installation and and testing testing of MV and and LV equipment equipment for  for  external electrification of DHA Phase-6 Lahore-Pakistan 8. Exter External nal Electr Electrifi ificat cation ion of Natio Nationa nall Unive Univers rsity ity of Scien Science ce & Techn Technolo ology gy (NUST) Islamabad-Pakistan 9. External electrification electrification of Iqbal Avenue Avenue housing housing society society Lahore-Pa Lahore-Pakistan kistan Projects under construction 1. 132/11kV 132/11kV GIS GIS Sheranwala Sheranwala Gate substation, substation, Lahore-Pak Lahore-Pakistan istan 2. 220kV 220kV Dadu Dadu grid statio station n Extensio Extension n Dadu Dadu – Pakistan Pakistan 3. 132/11kV 132/11kV FIEDMC AIS substation substation Faisalabad-Pakista Faisalabad-Pakistan n 4. Electrification Electrification of 4 small towns (Mangla Dam raising project) 5. Underground Underground external electrification electrification of DHA DHA Ph-8 Ph-8 Lahore-Pakis Lahore-Pakistan tan 6. Exter External nal elect electrif rifica icatio tion n of House House Build Buildin ing g Finan Finance ce Corpo Corporat ration ion Lahor LahoreePakistan 7. External electrification electrification of of DHA DHA Homes Homes Complex Complex Lahore-Pakistan Lahore-Pakistan

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Power Transformers Extensive Extensive experience experience and success in manufacturing manufacturing distribution transformers led to the establishment of power transformer division in 2005. Since its birth the divisi division on has has produ produce ced d transf transform ormer ers s of rating ratings s 31/40 31/40MVA MVA,, 20/2 20/26MV 6MVA, A, and and 10/13MVA for ratings up to 132 KV. In order to provide its customers the best of  technology and products of international competence, PEL has combined its techn technic ical al exper expertis tise e with with GANZ GANZ,, a renow renowne ned d and and expe experie rience nced d Hung Hungar arian ian transformer  manufacturer. PEL is also exporting Power Transformer to International customers for their  special requirements and specifications. PEL power transformers are equipped with best transformer accessories like OLTC from MR (Germany), High Voltage Bushing from PASSONI & VILLA (Italy), Buchholz Relay from EMB (Germany), insulation material from WEIDMANN (Switzerland), silicon steel from THYSSEN (Germa (Germany), ny), and cooling cooling fans from SCHORM SCHORMANN ANN (Germa (Germany). ny). Material Material of the windings is usually 99.99% pure electrolytic copper. Multiple conductors as well as CTC are used in winding. The magnetic cores are manufactured from cold rolled grain oriented (CRGO) steel sheets. A robust clamping structure, jointing technique and cutting and mitering of laminations ensure low no load losses. The steel sheets in the core limbs and in the yokes are clamped together by glassepoxy bands. Tank is constructed with boiler steel plates welded together and a cover plate bolted on top. Strength is ensured by stiffeners. Earthing terminals are attached to both sides of tank. Measuring Instruments are installed on cover plate. Surface protection is done by the process of sand blasting and by applying weather  resistant paint. Tap changers are in accordance with IEC standards. Usually motorized On-Load tap changers are provided for voltage regulation. Off- Load tap tap chan changer gers s can can be insta installe lled d on reque request st.. The The diver diverter ter switc switch h is placed placed in hermetically sealed oil filled chamber in order to avoid contamination of oil in main tank. Distribution Transformers PEL made made distribu distribution tion transfor transformer mers’ s’ range range include includes s oil immerse immersed d core type transfor transformers mers,, Dry type (VP impregna impregnated ted)) transfo transforme rmers rs and autotran autotransfor sformer mers. s. 13 COMSATS Institute of Information Technology, Lahore

These transformers transformers are tailor made for various ratings. IEC or national standards standards are followed. We offer distribution transformers voltage up to 33 kV and ratings up to 30 MVA. PEL offers transformer tanks with corrugated walls, detachable radiators and tubular arrangement. The corrugated tanks have a better cooling efficiency, since the fins are expandable. Tanks are hermetically sealed where possible. In order  to meet meet soph sophis isti tica cate ted d requ requir irem emen ents ts of cust custom omer ers s PEL PEL has has also also star starte ted d manufacturing transformers with foil winding. Foil winding efficiently uses space whic which h resu result lts s in size size redu reduct ctio ion. n. It has has bett better er heat heat diss dissip ipat atio ion n and and also also increases potential to withstand short circuit current. PEL transformers are available for various applications: •

Distribution Transformers (Pole /Pad Mounted)

•

Auto Transformers

•

Furnace Transformers

•

Welding Transformers

•

Chokes for furnace Transformers

•

Any other special requirement

Dry Type Transformer  Introduction The demand of electricity in Pakistan has been increasing rapidly in the last few years. There is a mushroom growth in the high rise buildings, shopping areas, CNG and petrol stations, residential colonies, etc. Due to the scarcity of space in cities, installation of conventional oil type transformers in such congested and populated areas is always a big safety risk. The developed as well as many developing countries are installing dry type transformers as a solution for  ensuring safety in such scenarios. Types of Dry Type Transformers There are primarily two main manufacturing techniques for dry type transformers; Cast Resin and Vacuum Pressure Impregnated (VPI) with their own typical features. The main difference is their insulation class; Cast Resin is Class F (155°C) and VPI is Class H (180°C). The Vacuum Pressure Impregnated 14 COMSATS Institute of Information Technology, Lahore

transformers not only offers in-build safety feature but there are many other  advantages of using these transformers such as improved reliability, reduced losses, minimal maintenance, enhanced overloading capability etc. Energy Meters PEL is currently producing the following type of energy meters: •

Single Phase Static Energy Meters Single Phase Electromechanical Energy Meters

•

Poly Phase Static Energy Meters

•

Poly Phase Electromechanical Energy Meters

•

Switchgears The The switc switchge hgears ars are basic basical ally ly the pane panels ls throu through gh which which the the other other electr electric ic equipments equipments can be handled. They are mostly used in industries. industries. PEL is currently producing switchgears for MV equipments and LV equipments.

The main Customers of PEL The customers of PEL can be categorized in two categories i.e. home consumers and industrial consumers. Home consumers are the common individuals who mostly purchase the home appliances. The industrial consumers are as follows: •

LESCO

•

GEPCO

•

FESCO

•

IESCO PESCO

•

MEPCO

•

HESCO

•

QESCO

•

KESC

•

AJK Electricity Department

•

The buyers other than these electric supply companies are the independently working companies. 2.3: The Departments of PEL The departments which are currently in operation at PEL are as follows: Common Departments: 15 COMSATS Institute of Information Technology, Lahore

•

HR & D

•

IR & A

•

Finance

•

IT

•

FP & Commercial

•

Accounts

Marketing and Sales: Marketing AD • •

Marketing PD

•

CMD

CSD Production Department: •

•

Production AD

•

Production PD

Customer Service Department (CSD) CSD is a custome customerr service service departmen departmentt under under the Marketing Marketing Head. Head. Where Where the after after sale sale servi service ce is provi provide ded d to satis satisfy fy custo custome mers rs having having proble problem m in their  their  appliances. PEL is well known for their customer care service. Credit Control Department (D&C) D&C is a credit control department department under the Marketing Marketing Head. A responsibility responsibility of  this department is to maintain record for all the credit transactions. Dispatch Dispatch Dispatch is another department department under the Marketing Head. In this department department all the things are maintained which are send out of the factory or to dealers.

16 COMSATS Institute of Information Technology, Lahore

Consumer Marketing Department (CMD)

This departmen departmentt is basical basically ly under under the marketi marketing ng departm department ent.. At the start this department did not exist in the hierarchy but with the passage of time and with the success of easy installment scheme, this department came into being. The reason is that in the start this department’s target market was Lahore and its workforce had only 8 persons and now after 2 years of its establishment it has covers major cities of Pakistan and it has workforce of 45 and they are recruiting more to cover these areas fully. There are many regional offices in major cities for example in Multan, Sahiwal, Karac Karachi hi,, Hyder Hyderab abad ad,, Faisa Faisalab labad, ad, Gujra Gujranw nwala ala,, Hattar Hattar,, Rawa Rawalpi lpind ndi, i, Sialk Sialkot, ot, Bahawalpur, Sukker, Sargodha and AJK (Azad Jammu Kashmir) and the headoffice is in the factory that is Consumer Marketing Department. This scheme is well received so its now on expansion. This scheme is only in big cities cities.. The The target target mark market et of this this schem scheme e is Gover Governm nment ent emplo employe yees es or the the emp employe loyees es of

thos those e

comp compan anie ies, s,

whic which h

have ave

sign signed ed

Memo Memora rand ndum um of 

Understanding (MOU) with the bank who is financing. Why so? It is because those Govt. offices make sure to the bank that their employee’s salary will go to their hands after the deduction of installment of the bank and MOU also make sure that employees who got financing will get salary after deduction of bank’s installment. Askari Bank Limited is financing the PEL employees and Soneri Bank and Bank of Punjab to the others employees of Govt. or company which has been signed MOU with the bank. 17 COMSATS Institute of Information Technology, Lahore

Human Resource Department Human Resource Department is the most important and key department of every organization. It not only deals with the employees of the organization but also help in management of the affairs of the company. PEL PEL has has a full full fled fledge ge HR Depa Depart rtme ment nt know known n as HR&A HR&A or admi admini nist stra rati tion on department with the staff strength of 38 employees. The GM is the top executive in the HR department and there is one manager of HR to facilitate the work of  G.M. and 2 personnel and an admin officer. HR Department’s activities are spread over the whole organization. The following areas come under direct supervision of HR department at PEL.



Hiring and right sizing of employees



Training and development



Compensation system



Security and fire fighting



Gate supervision



Telephone exchange



Fair price shops



Canteen supervision



Dispensary and health care

As the security in the company like PEL is very much important so there is 24hour arrangement of security by three shifts in charges headed by a security 18 COMSATS Institute of Information Technology, Lahore

officer. He is also responsible for the fire fighting activities and for the placement and checking of all the fire fighting equipments. For the purpose of security and for the visitors there are two gates under the supervision of a supervisors with two gate assistants who are responsible for all the in and out transport and movement activities in the organization. There is a telephone exchange in the organization having a facility of 13 lines. The organization is providing the basic necessities to the workers e.g. flour, ghee, sugar etc. from the fair price shop at very controlled price and quality. Because this is part of fringe benefits that are provided to the employees. There is a fair price supervisor who is responsible for the purchase and distribution. PEL is also providing the facility of mess to the workers and as well as officer. Mess is provided at very nominal charges. Mess supervisor is responsible for the purchases and cooking. There is not a particular hospital in PEL but there is a dispensary with two dispensers and one senior dispenser. For the medical check ups and for any detailed curves the employees are sent to social security hospital. Finance Department Finance Management Management is the lifeblood of any industry. If this area of corporate activitie activities s is improper improperly ly handled, handled, a company company may lead insolvency insolvency despite despite having having all the resour resources ces and oppor opportun tuniti ities. es. There Therefor fore e prope properr financ financial ial

19 COMSATS Institute of Information Technology, Lahore

mana managem gement ent is vital vital for every every busine business ss conce concern rn and and PEL is not lackin lacking g behind over here. At PEL finance department for both division (Appliance and Power) is separate but but their their proce procedur dure e are same. same. To contr control ol both both anot another her depa departm rtmen ents ts calle called d “Finance Center” is established. Functions of finance are: 

Perf Perfor orm m as a work workst stat atio ion n and and as an inte integr grat ated ed circ circui uitt amon amongs gstt all all department of the company.



Arrange monetary resources / funds at favorable prices and at proper  time.



Allocate resources / funds throughout the organization.



Deal with banks, investment firms, modarabas, government departments of Appliance and power division calculate and keep employees salaries record.



Carr Carry y out out fina finall audi auditi ting ng of fina financ ncia iall reco record rds s prep prepar ared ed by Acco Accoun unts ts department of Appliances and power division.

Income Tax /Sales Tex Recording The Finance Center prepares and keeps up to date record of income tax & Sales Tax deductible at source on the payments made to its buyers i.e. WAPDA and others, income tax/sales tax deductible on the salaries / wages or on sales of its employees/dealers and tax payable to the government on the company’s profit.

20 COMSATS Institute of Information Technology, Lahore

Employees Salary Recording Controlled Controlled by Account Officer, Officer, this section is responsible for keeping three types of emplo employee yee’s ’s salar salaries ies recor record. d. These These record records s perta pertain in to worke workers, rs, staff staff and and officers / managers. When a person joints the organization he needs to submit a joining report to HR&A for verification. Only those employees are eligible for salaries that have salary authorization and appointment letter issued by HR&A department. Every month HR and A department send an absentees report to salary controller of  Finan Finance ce Cente Center. r. This This list list cont contain ains s names names of those those emplo employe yees es who who were were on unauthorized leave. The salary controller deducts required amount of money for  unauthorized leave. No salary is deducted if casual / sick / earned leave is properly applied for. The monthly salary record of each employee is entered in the permanent master  file of computer. Necessary changes are made if any increment is observed in the employee’s salary. Administration (IR & A) Key responsibilities are: 

Maintenance of Attendance



Maintenance of Stores



Check the material in & out from the factory



Maintenance of factory 21 COMSATS Institute of Information Technology, Lahore



Provide assistance to all departments regarding material

Procurement PEL has state of the art methods of production and they also outsource the products and raw material not only from Pakistan but also from Asia, America, Europe, and Africa. So for this purpose PEL has two different departments for  procurement, which are:



Local Procurement



Foreign Procurement

Local Procurement Local Procurement department is responsible for all the raw materials that are required for making various products products in the factory. It includes from nails to large metal sheets. At the start of each financial year they receive a major plan from the management, management, which highlights all the raw material required for each product. Dates and maximum time limit for raw material requirement is also mention in this major plan. Now procurement team makes small benchmarks and milestones from the major  raw material required plan in order to ease them for remembering the required time time limit limit and and also also remin reminds ds financ finance e depa departm rtment ent to arra arrang nge e finan finance ce for for such such purchases.

22 COMSATS Institute of Information Technology, Lahore

Foreign Procurement Responsibilities and duties are same as Local procurement but they vary in the dimension that, they have to arrange the raw material from abroad. They also receive same plan as local procurement procurement for the whole financial year and develop milestones to carry out the plan execution properly. The skill of this department is to purchase the raw material in the optimum cost that that best best sati satisf sfy y the the need need of prod produc ucti tion on depa depart rtme ment nt and and also also to fina financ nce e department in quality as well as in monetary terms respectively. Internal Audit The The inte intern rnal al audi auditt depa depart rtme ment nt is made made to keep keep reco record rd and and trac track k of each each department. The main responsibilities of this Dept are as follows: 

How things are working in each department?



Avoiding of illegal use of company resources.



Creating a check and balance procedures for each department.



Keeping track for misuse of responsibilities.



Indicating unnecessary usage of Budget allocation.

Information Technology Department IT department’s key responsibilities are as follows:

23 COMSATS Institute of Information Technology, Lahore



Troubleshooting and problems facing in computers.



Installing and deletion of software’s.



Right protection and issuance.



Developed and maintain internal network.



Developed and maintain domain of each person.



Create and enhance internal software’s running currently.



Hardware and all software issues.

Production Production Production department’s key responsibility is to develop and create products that are required for the specific department. They also receive a major plan for the whole financial year that indicates the number and models of each brand and the deadline time for each lot. PEL’s production production department is comprised of different unit units s acco accord rdin ing g to the the prod produc ucts ts.. Foll Follow owin ing g are are the the name names s of prod produc ucti tion on department:



Refrigerators Production Department.



Transformers And Switchgears Production Department



Electricity Meters Production Department.

Accounts Department The Accounts Department looks after the financial matters. Accounts department for both power and appliances division have similar functions as below.

24 COMSATS Institute of Information Technology, Lahore

Functions This particular department has the responsibility to prepare and keep an upto date record of following: 

Financial keep of daily, including the income statement and balance sheet.



Book keeping of daily monetary transactions.



Production maintenance reports



Cost data on labor, materials and overheads.



Remittances and loans



Expense reimbursement



Tax statement



Fina Financ ncia iall deal deals s with with the the bank banks, s, leas leasin ing g comp compan anie ies, s, moda modara raba ba companie companies, s, DFIs and other other governme government nt agencies agencies through through Finance Finance Center.

The The fina financ nce e depa depart rtme ment nt main mainta tain ins s reco record rd of all all its its expe expens nses es thro throug ugh h vouc vouche hers rs.. Gene Genera rall lly y the the foll follow owin ing g type types s of vouc vouche hers rs are are used used for for this this purpose.



Cash payment vouchers for cash transactions recording.



Purchase vouchers



Bank payment vouchers



Journal vouchers for general expenses. 25 COMSATS Institute of Information Technology, Lahore

3.0: Business Operation 3.1: Organizational Structure See annexure 1 at the end 3.2: SWOT Analysis The strengths, weaknesses, opportunities and threats of PEL are discussed below: Strengths PEL has the following strengths and is in more competitive position in these areas than its competitors. Following are the main strong points of PEL:



Strong brand image



Strong dealer network



Strong quality, sale and service



Market leader in WRAC



Number 2 in refrigerators in Pakistan



Strong grip in home appliances



Strong Management



Distribution of Authority



Strong research and development department



Free customer service

26 COMSATS Institute of Information Technology, Lahore

Strong Brand Image PEL has created the strong brand image in the mind of the customers through higher quality and low price. The customers of the PEL always prefer to buy the PEL PEL home home appli applianc ances es like like WRAC WRAC split split AC and and refrig refrigera erator tors s whene wheneve verr they they wanted to buy. PEL is a popular company in Pakistan and every one knows about the PEL products and its brand. That’s why PEL selling of WRAC are very high in the market than the competitors selling. Strong Dealer Network It is also the plus point for the PEL that it has also developed the strong dealer  network in the market. The dealers are always trying to sell the PEL appliance to the customers because they know there are high margin in the PEL products. They can get more money after selling the PEL products. The management of  PEL PEL also also provid provides es more more incent incentive ives s to their their deale dealers rs than than their their comp competi etitor tors. s. Deale Dealers rs are are very very consc consciou ious s abou aboutt the PEL PEL produ products cts and and always always guide guide the customer in buying the PEL appliances and tell them the more qualities of PEL products than others products. Strong Quality, Sale and Service PEL is also in a strong position that it provides the superior quality to your  customers. It makes sense in the mind of the customers that PEL products are better in quality than the other companies’ products. PEL also provides the after  sale service to their customers which delight the customers satisfaction. It is another way to advertise the products because because when customer is highly satisfied 27 COMSATS Institute of Information Technology, Lahore

then he tells the other ten persons that they should buy the PEL products. It is the free publicity of PEL products that PEL Company gains. Market leader in WRAC (Window Room Air Conditioner) It is another strong point that PEL is a market leader in WRAC. The window room air conditioner is more demanded by the customers than its competitor’s air  conditioners because it has more durability in operating systems and cools the room in few minutes. PEL always strives to provide the innovative features in WRAC. PEL air conditioner is cheaper and has a higher quality than others WRAC. That’s why customers always purchase the PEL window air conditioner. Number 2 in Refrigerators in Pakistan After After the Dawlanc Dawlance e refrige refrigerato rators rs PEL has a second second positio position n in refriger refrigerator ators s market. PEL always continuously strives to pursue the strategies strategies adopted by the competitors. As a consequence the price war starts among the companies so each each com company pany redu reduce ces s the the pric prices es and and try try to incr increa ease se the the sale sales s of its its refrigerators. PEL is also making efforts for the quality improvements than its competitor Dawlance. Strong Grip in Home Appliance So PEL is one of the companies, which is having a strong grip in the home appliance i.e. WRAC, Refrigerators, micro way Owen etc that is a strong point for  the the comp compan any. y. PEL PEL is pene penetra tratin ting g the the marke markett by introd introduc ucing ing the the new new home home appliance like Split Air conditioner and always trying to get the maximum shares in the home appliance market. 28 COMSATS Institute of Information Technology, Lahore

Strong Management It is another plus point that PEL has a strong management. Its employees are more competent and fully skill and knowledge. They always cooperate the top management in achieving the goals that are assigned to them. Employees are well aware about the company objectives and so they are committed to the development of company. Distribution of Authority Top management of PEL delegates the power to the subordinates for achieving the marketing objectives in a specified time period. So every manager has an authority that use in achieving the Goals. He can easily handle the complaints of  customers and try to satisfy them. So it is a strong point for the PEL because there is decentralization of powers. Strong Research and Development Department PEL has a strong research and development department that is continuously trying to develop new features for the products. R&D department spends huge amount amount of money money for the developm development ent of product. product. R&D makes makes research research for  introducing the new product and asks the customers what they want extra in our  prod product ucts. s. For For this this purpo purpose se they they hire hire the the highly highly qual qualifi ified ed emplo employe yees es in R&D R&D department. That is another strong position of PEL.

29 COMSATS Institute of Information Technology, Lahore

Free Customer Service PEL PEL provi provides des free free cust custom omer er servic service e for for one year year to its cust custom omers ers.. So the 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  repairing the WRAC, Refrigerators and other items. PEL always make efforts to satisfy the customers. Public Limited Company Although PEL is owned by the SAIGOL GROUP but its shares can be purchased and sold in stock exchange market. So every one who is interested in purchasing the shares of PEL he can purchase. It is also called public limited company. So people are more interested in buying the PEL products. Weaknesses Like other companies PEL has some weaknesses in operating the business. If PEL overcome on these weaknesses then it can become a market leader in the home appliance. PEL loose some competitive edge in the following points: 

Lack of advertisement



System variations



Lack of Product range



Less Utilization of capacity



Financial Problems

30 COMSATS Institute of Information Technology, Lahore

Lack of Advertisement It is a second major weakness of PEL that it never makes advertising on TV. That creates hurdle in selling the products and customers cannot know the changes, which are made in products by the company time to time. Company is not in a position that it made advertising of all their products on a wide range because of  its high high cash cash requi require reme ment nt towa towards rds the the produ producti ction on side. side. Due Due to this this probl problem em company always make efforts to develop strong relationships with dealers. System Variations It is also the main weakness of PEL that there are rapidly a change in polices of  selling the products. That’s creates problems for the selling team how to sell the products to the dealers because the top management requires the urgent amount of money. So selling team sells the products sometimes on hard cash that will reduce the prices of products that gives the benefits to the dealers and creates problems for the management. Lack of Product Range PEL has introduced more products of consumer items but 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 and they say that if  company is investing in these products then we can keep all PEL items and we never need to keep other’s company products.

31 COMSATS Institute of Information Technology, Lahore

Less Utilization of Capacity Due to lack of finance a company cannot utilize all its resources on its full capacity. It increases the cost of products per unit that decreases the profit marg margin in of each each cons consum umer er item. item. Some Sometim times es comp compan any y cann cannot ot alloc allocate ate the the resou resourc rces es accor accordin ding g to the requir requirem ement ents s of prod product uction ion depar departm tmen entt that’ that’s s becomes the problem for the complete utilization of resources. For the company it is also the main point of weakness. Financial Problems Sometimes PEL faces the financial problems because its stocks are so much piled up in the stores that create the problem of cash flow because when the stocks are not sold and the production is in process for 24 hours a day than the company faces such problems. So company aggressively research the sources of cash and stress the dealers to sell the PEL’s products to the end consumers. Company sometimes sells their products on advance bases to the dealers and gives them high margin of profit. That’s why a company is facing the financial problems and company never pays attention on the alternative resources that will help in reducing the stocks. That is a customer demand and due to this it is the main weakness of company. Opportunities For the PEL there are more opportunities for expansion the business. If PEL reali realize ze that that oppor opportu tunit nities ies then then it will will be more more fruitf fruitful ul and and profi profita table ble for for the company. Even if company does not take advantage of these opportunities then 32 COMSATS Institute of Information Technology, Lahore

it will loose its competitive position and high profit. Its competitors will give PEL tough time to pursuing the opportunities that are adopted by them. Following are the opportunities for the PEL.



Exploration of market in Pakistan



Increase in product range



Export opportunity



Increase in production capacity

Exploration of Market in Pakistan PEL 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 absorb the PEL’s products. These places are tribal areas in NWFP and northern areas of Punjab and NWFP, central area of  SIND. If company introduces their products in these areas then it can get a large amount of profit and increase its market shares. Increase in Product Range It is the main opportunity for the PEL that it can increase its product range that will 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 Due to lack lack of produ product ct Range Range,, Compa Company ny canno cannott earn earn more more profit profit becau because se consu consume mers rs have have high high dema demand nd of these these produ products cts.. If PEL PEL does does not not take take this this

33 COMSATS Institute of Information Technology, Lahore

opportunity opportunity then it will loose high margin of profit and market share. It will reduce the fixed cost and increase the efficiency of the employees. Export Opportunity PEL PEL Comp Compan any y has has also also the the oppo opport rtun unit ity y to expo export rt thei theirr prod produc ucts ts in othe other  r  international countries like UAE, SAUDI ARABIA, and other Arabic and African countries. It will not only reduce the dependence on one market but also increase the market shares and profits. It will also help the company to spread the fixed cost on all of its production that will reduce the total cost and company will enjoy the high profit. Increase in Production Line Company can also increase its production line at the maximum level that will increase the efficiency of the employees and also will reduce the total cost. Some Someti time mes s

com company pany

cann cannot ot

allo alloca cate te

the the

reso resour urce ces s

acco accord rdin ing g

to

the the

requ require ireme ments nts of produ product ction ion depa departm rtmen entt that’ that’s s becom becomes es the prob problem lem for the the complete utilization of resources. Company should look the market conditions then it will produce their products. Threats PEL 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 PEL:

34 COMSATS Institute of Information Technology, Lahore



Strong competition



China’s product introduction in the market



Price war 



Slow growth rate in Pakistan



Instability of government



Tax department



World Trade Organization



Investors

Strong Competition There 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. market. Every company adopts different strategies for selling of the prod product ucts. s. It reduc reduces es the the profi profitt marg margin in of each each compa company ny and and incre increase ase the bargaining power of the buyers who will demand higher quality of products and lower cost. That is the main threat for the PEL Company. China’s Product China’s products are another threat for the Pakistani companies because these products are cheaper than the Pakistani products. An even china product not well in qual quality ity but it is compar comparat ative ively ly in low low price prices s than than the cons consum umer’ er’s s home home appliance that are manufactured by the indigenous company. China products

35 COMSATS Institute of Information Technology, Lahore

stress the indigenous companies to lower the quality and prices that will not be profitable in the long run. Price war: As 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. Slow Growth Rate in Pakistan There is also slow growth rate of home appliance in Pakistan that will increase the stocks of the company. It becomes the burden for the company that how to sell these stocks. Its main reason is that purchasing power of the buyer is very low and it has no income to buy the expensive the home appliance. It is also becoming a main threat for all the companies. Instability of Government The The rapid rapid chang changes es in gover governm nmen ents ts will will becom become e threat threats s for the compa companie nies s beca because use every every govern governme ment nt adopt adopts s its own polic policies ies for for the the indust industrie ries. s. So it increases the uncertainty for the investors who want to invest heavy amount in their their new new proje projects cts.. That’ That’s s beco become me the the major major threat threat for the comp compan anies ies and and decreases decreases the profitability. profitability. Due to fear of politically instability companies will also not invest the heavy amounts.

36 COMSATS Institute of Information Technology, Lahore

Tax Department Tax department is another major threats for the companies that will restrain the business expansion. There is more complicated tax procedure for the companies, which which are inter interest ested ed to incre increase ase the the invest investme ment nt in their their busi busines nesse ses. s. A tax tax department department also asks the company from where it receives the money and where this money will spend. Due to fear of heavy taxes companies would not like to invest the heavy amount. World trade Organization World trade organization will give the permission in 2005 to each company of  home appliance to export their products after paying less duties or duty free products products.. That That will will increase increase the pressure pressures s for the indigeno indigenous us compan companies ies to reduce the prices and increase the quality. It will increase the competition among the foreign companies and indigenous companies. But our companies also run unde underr uncer uncertai tainty nty cond conditi ition ons. s. This This will will decr decreas ease e the the mora morale le of indige indigenou nous s companies. 3.3: Marketing Strategy Marketing strategy of PEL is that it focuses mostly on middle class people. The other competitors like LG, Samsung, Dawlance etc have higher process of their  products. PEL products have comparatively lower prices. Now we will discuss the 4 Ps of PEL Product: PEL has a wide range of products catering to different needs of the society. Like it has appliances division and power division. The PEL product are of high quality. They have innovative designs. The product detail is discussed above. 37 COMSATS Institute of Information Technology, Lahore

Price: The price of the PEL products are affordable and less as comparative to its competitors. It keeps its prices low specially for the appliances division, because it focuses on the middle class people. Place: PEL has a strong dealers network. PEL products are easily available throughout Pakistan. PEL products are also available in the newly opened mega stores like mackro, hyperstar etc. DISTRIBUTION CHANNELS Producer

Agent

Wholesaler

Retailer

Customer  Customer 

Promotion PEL mostly advertis advertise e its product products s through through electron electronic ic media media like for example example through TV channels. No doubt the TV advertisements of PEL are less frequent as compared to its competitors. But still it has great brand awareness among people. PEL also uses print media for its advertisements.

3.4: Competitive Strategy •

The competitive strategy of PEL is that it has a wide range of products and at low prices.

•

PEL focuses on cost leadership strategy in its power division appliances. i.e. the prices of its power division appliances are high but they are of very high quality. PEL has a competitive advantage of its brand name.

•

PEL PEL has high high quali quality ty produ products cts both both in appli applianc ances es and and power power divisi division on because most of the raw materials are imported from different countries and these raw materials are of very high quality.

38 COMSATS Institute of Information Technology, Lahore

3.5: Business Process Analysis Work Flow The organizational hierarchy of Pak Elektron Ltd. has both flat and tall span of  admi admini nist stra rati tion on.. In case case of lowe lowerr leve levell of hier hierar arch chy y (the (the work worker er and and thei their  r  supervisors) the span is wide but as the level goes up, it becomes tall.

The managing director who is answerable to the Chairman holds the top position. Gener General al Manag Manager ers s are answ answera erable ble to the Manag Managing ing Direct Director or (MD) (MD) and and are are responsible for respective division, Managers are heading some departments, and Assistant Managers (AM) is leading some by Deputy Managers (DM) and other. There are senior engineers who are section in charge Supervisors and foremen report to them.

Executive level: At executive level, three to five engineers report to a manager and almost some numbers of managers’ report to a General Manager. Workers level: At workers level, usually 10 to 30 workers report to a foreman. Three to seven foremen report to a section in charge. Division of Labor: In Pak Elektron Limited (PEL), two types of employees hired •

Permanent Workers

•

Temporary Workers

Temporary workers are employed for about 6 months, and when the season concludes the temporary workers are laid off. Temporary workers are employed as helpers and assigned those jobs where skills are not required. Workers are divided into different teams based upon their skills and nature of job. The team is lead by head worker who is responsible for the work assigned to his team and directs the fellow workers to perform the assigned task. These teams are are mast master ers s of thei theirr jobs jobs.. With With in a team team,, task tasks s have have been been assi assign gned ed in a 39 COMSATS Institute of Information Technology, Lahore

sequential sequential order and every individual is assigned a specific task. This activity not only helps productivity but also helps the quality standards of the workers as each of them tries to keep an eye on the other to see that he is performing correctly because if any thing goes wrong, the blame goes to the whole group. Number of workers varies in different teams depending upon the nature of jobs.

4.0: Learning as a Student Intern

4.1: Finance Department: As an internee I did my internship in the Finance department of PEL. I learnt many things during my internship. The details are as follows:

Sections of Finance: Basically the Finance Department has further different sections. Those sections are as follows: •

Corporate Finance

•

Material Management Section

•

Treasury

•

Budgeting

•

Accounts Receivable

There is another section currently in function in Finance Department and that is Provident Funding, which is not directly related to Finance but functioning there independently. All the sections mentioned above have their respective Heads or  Managers. And the employees working there are supposed to report to their  immediate heads. Now I will discuss that what I learnt in these sections. The detail is as follows:

40 COMSATS Institute of Information Technology, Lahore

Corporate Finance This section plays a very important role in Finance Department and overall PEL’s progress. The corporate finance is further dealing with three important tasks which are Loan Handling, Leasing and Guarantees handling.

Loan Handling Section PEL PEL deal deals s with with many many bank banks s in this this rega regard rd.. Curr Curren entl tly y PEL PEL is deal dealin ing g with with approximately 15 Banks, government owned and private. Each bank gives upto specific amount of loan. PEL has its master account in the National Bank of  Pakistan. NBP can provide loan to PEL upto 4 billion Pak Rupees. The main purpose of the loan is to acquire raw materials for the company. Each bank has different policy to give loans to the company. The PEL is currently dealing with the following banks: •

National Bank of Pakistan

•

The Bank of Punjab

•

National Investment Bank

•

My Bank

•

Soneri Bank Limited

•

Bank Al-Falah Limited

•

The Bank of Khyber 

•

Meezan Bank Limited

•

Al- Barakah Islamic Bank

•

Standard Chartered Bank

•

Deutsche Bank

•

Royal Bank of Scotland

•

KASB

•

Silk Bank

•

Dawood Islamic Bank

•

Bank Islami 41 COMSATS Institute of Information Technology, Lahore

Leasing Section The company leases vehicles and different machinery and holds record for them. The leasing section is currently dealing with approximately 15 banks for leasing purposes. But mostly PEL leases cars for different purposes and mostly for its employees. The records of cars are stored in the form lots with every single detail related to car. When the company wants to lease a car it writes a letter to the concerned bank requesting it to lease a for a specific period. The company keeps the record of newly purchased cars by specifying the details such as: •

Serial Number 

•

Vehicle

•

Registration Number 

•

Chassis Number 

•

Engine Number 

•

Delivery Status

•

Price

If the company wants to terminate the leasing contract, it writes a letter to the bank requesting to terminate the contract. The bank charges extra 5% for premature termination. The company policy related to lease cars for its employees is that that,, 50% 50% disc discou ount nt is give given n to Assi Assist stan antt Mana Manage gers rs and and abov above. e. i.e. i.e. 50% 50% contributes the company and 50% is contributed by the employee. Bank gives leasing cars to the company on corporate rate which is 5%, whereas the market rate is 18-20%. Depreciation rate for the vehicles is 20% per year and 10% for  machinery.

Guarantees Handling Section: This This sectio section n handl handles es one one of the impo importa rtant nt tasks tasks which which to hand handle le differ different ent guarantees. There are basically three types of guarantees which the PEL deals with. Those are: •

Tender Bond Guarantee 42 COMSATS Institute of Information Technology, Lahore

•

Performance Bong Guarantee

•

Advance Payment Guarantee

•

Balance Payment Guarantee

•

Earnest Money/Retention Money Bank Guarantee

Now each of the guarantee is discussed below: Tender Bond Guarantee: Before participating in the bidding contract, the concerned bank on the behalf of  the company issues a tender guarantee guarantee to the beneficiary. The bank charges 2% of the total guarantee amount. The guarantees are written on stamp paper. The details of this stamp paper are: Beneficiary Sum of Bond Tender Number  Validity Name of Surety Name of Principal Date of tender opening Performance Bond Guarantee: In this guarantee, the bank on behalf of PEL, gives assurance to the purchaser  that that the the prin princi cipa pal( l(PE PEL) L) shal shalll and and will will and and trul truly y perf perfor orm m and and fulf fulfil illl all all the the undertaking, covenants, terms and conditions of the said contract during the original terms of contract. The details of this guarantee are as follows: Performance Guarantee Number: Date: Beneficiary: Sum of Bond Name of Surety Name of Principal 43 COMSATS Institute of Information Technology, Lahore