Presented To Dr.Liaqat Ali Principal, Hailey College of Commerce University of the Punjab EMCO Industries Ltd Internship Report Presented By Abdullah Jawad Roll No.: 477 8th semester B.com Honors Session: 2006-2010 Hailey College of Commerce Hailey College of Commerce University of the Punjab Letter of Transmittal 26 September 2010 Prof. Hafiz Abdul Rasheed Hailey College of Commerce University of the Punjab, Lahore. Subject: Submission of the internship report. Dear Sir I feel immense pleasure in presenting to your good self, the internship report as part of our course requirement. I found this report to be truly challenging in many aspects, indeed very interesting in relation to the various interpretational and engrossing exercises. Writing this report itself was truly comprehensive learning experience. The report covers some background and introduction of Emco Industries. It covers analysis of financial ratios of two recent years and includes SWOT analysis. It also covers the details of skills acquired during the internship period and conclusions and recommendations. I have tried my level best to complete the repo rt with respect to the desired requirements. However, if any explaining is required, I would be honored to oblige. Yours sincerely Abdullah Jawad Roll No.: 477 8th semester B.com Honors 2006-2010 Hailey College of Commerce Abdullah Jawad (477) 1 Acknowledgement I am very grateful to Accounts Manager Mr. Rizwan for giving me the opportunity to do the internship. I am also thankful to the employees of Emco Industries for their cooperation. They have been very helpful in teaching me different procedures of relevant information in as much details as possible. They never hesitated or did not feel disturbed when I asked questions. It was a great opportunity to do internship in such an organization. The experiences I have gathered will be very beneficial in my career. Abdullah Jawad (477) 2 Table of Contents Acknowledgement ................................ ................................ ................................ ......................... 2 Table of Contents ................................ ................................ ................................ ........................... 3 List of Illustrations................................ ................................ ................................ .......................... 5 Executive Summary ................................ ................................ ................................ ........................ 6 Historical Overview/Introduction ................................ ................................ ................................ ... 7 Group................................ ................................ ................................ ................................ ........... 10 Vision ................................ ................................ ................................ ................................ ........... 12 Objectives ................................ ................................ ................................ ................................ .... 13 Mission Statement ................................ ................................ ................................ ....................... 13 ORGANIZATION STRUCTURE................................ ................................ ................................ ......... 14 Registered / Head Office ................................ ................................ ................................ .............. 16 COMMENTS ON ORGANIZATIONAL ................................ ................................ .............................. 18 Products................................ ................................ ................................ ................................ ....... 19 Projects ................................ ................................ ................................ ................................ ........ 25 Technical specifications................................ ................................ ................................ ................ 26 Test reports ................................ ................................ ................................ .............................. 27 Initial Dealers ................................ ................................ ................................ ........................... 27 Laboratory ................................ ................................ ................................ ................................ ... 28 Quality Control................................ ................................ ................................ ............................. 30 Competitive Advantage of Emco Tiles................................ ................................ ........................... 32 SWOT Analysis ................................ ................................ ................................ ............................. 33 Strengths:................................ ................................ ................................ ................................ . 33 Weaknesses ................................ ................................ ................................ ............................. 33 Opportunities ................................ ................................ ................................ ........................... 34 Threats ................................ ................................ ................................ ................................ ..... 34 PEST Analysis ................................ ................................ ................................ ............................... 35 Ratio Analysis................................ ................................ ................................ ............................... 41 Current Ratio................................ ................................ ................................ ............................ 41 Debt Ratio ................................ ................................ ................................ ................................ 42 Debt/Equity Ratio ................................ ................................ ................................ ..................... 43 Return on Assets (ROA) ................................ ................................ ................................ ............ 44 Abdullah Jawad (477) 3 RETURN ON INVESTMENT (ROI)................................ ................................ ................................ 45 RETURN ON Equity (ROE)................................ ................................ ................................ .......... 46 Operating Cash Flow or Sales Ratio................................ ................................ ........................... 47 Net Worth ................................ ................................ ................................ ................................ 48 Financial Statements ................................ ................................ ................................ .................... 49 Balance Sheet................................ ................................ ................ Error! Bookmark not defined. Profit and Loss Account ................................ ................................ ................................ ............ 51 STATEMENT OF CHANGES IN EQUITY................................ ................................ ........................ 52 CASH FLOW STATEMENT ................................ ................................ ................................ .......... 53 Skills Acquired during the Internship Program................................ ................................ .............. 54 Purchase Department................................ ................................ ................................ ............... 54 Cash & Bank Department ................................ ................................ ................................ ......... 57 Display Centre ................................ ................................ ................................ .......................... 59 Inventory Department................................ ................................ ................................ .............. 59 Marketing Department................................ ................................ ................................ ............. 59 Sales Department: ................................ ................................ ................................ .................... 61 Recommendations ................................ ................................ ................................ ....................... 63 Conclusion ................................ ................................ ................................ ................................ ... 65 Bibliography ................................ ................................ ................................ ................................ . 66 Abdullah Jawad (477) 4 List of Illustrations Tables Table 1 Current Ratio................................ ................................ ................................ ....... 41 Table 2 Debt Ratio ................................ ................................ ................................ ........... 42 Table 3 Debt to Equity Ratio ................................ ................................ ............................ 43 Table 4 Return on Assets ................................ ................................ ................................ . 44 Table 5 Return on Investment................................ ................................ .......................... 45 Table 6 Return on Equity ................................ ................................ ................................ . 46 Table 7 Sales Ratio ................................ ................................ ................................ ........... 47 Table 8 Net Worth ................................ ................................ ................................ ........... 48 Table 9 Balance Sheet................................ ................................ ................................ ...... 49 Table 10 Profit and Loss Statement................................ ................................ .................. 51 Table 11 Statement of Changes in Equity................................ ................................ ......... 52 Table 12 Cash Flow Statement................................ ................................ ......................... 53 Figures Figure 1 current Ratio ................................ ................................ ................................ ...... 41 Figure 2 Debt Ratio ................................ ................................ ................................ .......... 42 Figure 3 Debt/Equty Ratio................................ ................................ ................................ 43 Figure 4 Return on Assets ................................ ................................ ................................ 44 Figure 5 Return on Investment ................................ ................................ ........................ 45 Figure 6 Return on Equity ................................ ................................ ................................ 46 Figure 7 Sales Ratio................................ ................................ ................................ .......... 47 Figure 8Net Worth................................ ................................ ................................ ........... 48 Figure 9 Brand Associations ................................ ................................ ............................. 61 Abdullah Jawad (477) 5 Executive Summary As per the requirement for the B.com honors degree in Hailey College of commerce, University of the Punjab Lahore, I took up internship at Emco Industries Lahore. The duration of internship was 6 weeks. This report is based on the experience and knowledge which I gained during my internship at Emco industries. First I have discussed about the introduction of the company. Emco Industries Limited, a publicly listed company, was established in 1931 and has been involved in trading of electrical goods. In 1951, a very modest beginning was made by setting up a small facility located in the basement of the offices of The Imperial Electric Company (Pvt.) Ltd., for the production of electrical accessories. After that I have explained the groups on which company is consisted, which include Emco Industries Limited, The Imperial Electric Co. (Pvt.) Limited, ICC (Pvt.) Limited, ICC Textiles Limited, and Arabian Electric Transmission Line Construction Co. Then vision and mission statements are given and also its objectives. Organizational structure is explained and its corporate structure along with offices. Emco¶s products are mainly divided into two parts that are Insulators and Ceramic tiles. Both types are explained in details. There are different types of insulators which are given in the report. Ceramic tiles are also in different de signs, sizes and types. Types and sizes of tiles are also mentioned in this section. Company has worked on different projects which are explained. Then information about technical specifications, test reports, dealers and quality control is given. Then situational issues are explained which include competitor¶s analysis, its competitive advantage, SWOT analysis, and PEST analysis in a precise manner. 4 P¶s of Marketing is explained in terms of the company strategies. Then I have conducted ratio analysis of Emco Industries in some details with bar charts. The analysis is done by comparing two years financial statements; year 2008 and year 2009. Each ratio is compared and then interpreted in details. Then Skills acquired during the program is explained. I worked in accounting and marketing department and what I learned from staff and procedures is explained in the report. Abdullah Jawad (477) 6 Historical Overview/Introduction The parent company, The Imperial Electric Company (Pvt.) Ltd., was established in 1931 and has been involved in trading of electrical goods. Soon after the creation of Pakistan, the needs for import substitution was felt and the sponsors of the parent company made the decision to establish a small manufacturing unit for electrical goods. In 1951, a very modest beginning was made by setting up a small facility located in the basement of the offices of The Imperial Electric Company (Pvt.) Ltd., for the production of electrical accessories. With single minded initiative and efforts of Late Mr. AtaurRehman (the former Managing Director), the facilities were continuously upgraded and a full fledged facility was established in Lahore, Pakistan by 1954 under the same name of Electrical Equipment Manufacturing Co. Ltd. (EMCO). The first comprehensive Insulator Manufacturing Plant was in operation with the active participation, know -how and machinery coming from Japan and France. Keeping pace with the ever increasing and diversified demand of Insulators for national utilities and electrical industries in Pakistan , it was decided in 1965 to expand the facilities to produce all types of insulators including those required for extra high tension lines. At this stage, Associated Engineers (Pvt.) Ltd., joined hands with The Imperial Electric Company (Pvt.) Ltd. (IEC) to further expand EMCO. The new plant located at Lahore Sheikhupura Road, Lahore was commissioned in 1968 under the guidance of competent and seasoned engineers of NGK Insulators, Japan. Since electrical ceramics is a very highly specialized industry, requiring skill, experience, and time tested formulae and proven knowhow, EMCO signed a technical collaboration agreement for fifteen years with NGK, Japan, who are the world's largest and most renowned manufacturers of insulators. With the active support of the personnel from NGK and Pakistani engineers, EMCO was producing quality insulators using mostly local raw materials. The plant is now manned by a team of highly qualified and experienced Pakistani engineer¶sapart form over 600 technicians and workers. The company has a present installed annual capacity for the production of 6000 tons of insulators which is being upgraded to 7500 tons by the end of 2006. Abdullah Jawad (477) 7 With the untiring efforts of the present Chairman, Mr. S. A.Mannan and the late Managing Director, Mr. AttaurRehman, the company continued to be one of the best facilities manufacturing quality insulators in the world. In 1983, the company was listed on the Stock Exchanges of Pakistan as a Public Ltd., company and was renamed as EMCO Industries Limite d. In addition to electric porcelain, EMCO runs a full fledged department for the production of chemical porcelain such as acid proof lining bricks, ranching rings, saddles and special refractories. This line is now fully developed to cater to the requirements of beverage factories, milk plants, chemical, edible oil, fertilizer industries, for acid proof wares. EMCO, in 1995, signed a licensing agreement with M/S. SIEMENS, Germany to manufacture Surge Arresters from 66kv to 420kv (max. system voltage). EMCO, in 2005, signed a know-how contract with M/S. HAPAM B.V., Netherlands, for the manufacturing of Disconnecting Switches. EMCO firmly believes in a continuous research and development programmed to keep abreast with ever-diversifying requirements of porcelain insulators, chemical porcelain and ceramic tiles. The normal production of insulators requires rigid quality control, with limited performance tolerances allowable. Considerable efforts, as such, are directed towards the production of insulators with better performance characteristics and EMCO has all the in -house testing facilities for this purpose. Moreover, our progress and development is benefited by the rich experience gathered from NGK of Japan. EMCO is still the only unit for manufacturing high tension insulators in Pakistan and is not only supplying the entire requirement of the country, but is also exporting to developing and developed countries all over the world. Having achieved an enviable position in the field of electric ceramics, EMCO, in 1983 decided to broad-base their manufacturing activities and utilize their long experience in ceramics by adding an ultra modern plant for the manufacturing of decorative WALL TILES with an annual capacity of 700,000 square meters. The entire machinery for the manufacture of tiles was supplied by world renowned machinery manufacturers from Germany and Italy. This plant was commissioned in 1985. Another plant for Floor Tiles having an annual capacity of 1,000,000 square meters was commissioned in late 1991. The machinery and know-how was Abdullah Jawad (477) 8 supplied by SACMI of Italy and the plant is producing comprehensive range of Floor and Facing Tiles according to international standards. In 1996, the need was felt to increase the production of the Wall Tile and s ubsequently an agreement was signed with an Italian Company to supply machinery and equipment to increase the output of the Wall Tile plant form 700,000 to 1,500,000 square meters per annum. This expanded facility was completed in 1997. Currently the overall production capacity of both plants is 2,500,000 square meters. EMCO is the largest ceramic complex in Pakistan producing over 30,000 tons of ceramics material annually. Abdullah Jawad (477) 9 Group The parent company Imperial Electric Company (Pvt .) Ltd. was established in 1931 and the group now consists of the following companies Emco Industries Limited Established in the year 1954. Commonly known as ³EMCO´, they produce all types and sizes of high and low voltage porcelain insulators and other porcelain products inclu ding high voltage switchgear equipment. The plant was set up with the technical collaboration of NGK Insulators Limited of Japan. EMCO is meeting Pakistan¶s entire demand for insulators and also export to a number of countries in Middle East, Africa and Europe. EMCO also produces Wall and Floor tiles. The Imperial Electric Co. (Pvt.) Limited Established in the year 1931. They are leading OEM of Diesel Generating Sets (5 ~ 750 KVA). They are also engaged in the indenting and sale of power generation, transmission and distribution equipment and other industrial materials. They represent the world's most renowned manufacturers which includes Copper weld, Puma Power Plants, Alcoa, Foster Wheeler and Mirrlees Blackstone. ICC (Pvt.) Limited Established in the year 1958. The company is engaged in design, supply of materials and construction of transmission lines, substations, industrial plants, process equipment and pre stressed concrete pole plants. ICC Textiles Limited Established in the year 1990 The modern weaving plant is producing premium quality grey fabric, primarily for the export market. It has an annual capacity to produce 40 million Abdullah Jawad (477) 10 square meters of grey fabric based on middle range cotton and cotton polyester blends. The plant is equipped with 100 SulzerRuti Projectile P7100 weaving machines and 72 high speed air jet JAT 710 weaving machines of various widths from Toyota, Japan, along with complete European back process and ancillary equipment. Arabian Electric Transmission Line Construction Co. Established in the year 1998 Commonly known as AETCON, was established as a joint venture between ICC (Pvt.) Ltd., (Lahore, Pakistan) and Tamimi Company (Dammam, Saudi Arabia) for the construction of High Voltage Transmission Lines and Sub -stations on Turnkey basis.AETCON is presently registered in Abu Dhabi and Kingdom of Saudi Arabia. Abdullah Jawad (477) 11 Vision While enhancing our Brand as a Market Leader, Focusing our Human Capital, continues to delight our Customers in the field of Building Materials, Offering Best Quality Innovative Products at Prices Be-Fitting Stile Brand. Improving Efficiency, Conserving Energy and being Envir onmental Friendly.Taking into account the Stakeholders Interest. Abdullah Jawad (477) 12 Objectives ³Making our customers winners by constantly exceeding their expectations.´ Mission Statement Our Mission is to maintain our position as the leader in the tile industry in Pakistan and for this purpose we will continue to focus on: y We are committed to quality products and will provide our customers with innovative sizes, designs and color scheme that they will be delighted to have and shall provide them with excellent servic es to earn their loyalty We shall treat our employees fairly and shall provide conducive working environment for them to learn and to grow with the company The company shall earn adequate profits for its progress and growth and for providing reasonable ret urn to its stakeholder y y Abdullah Jawad (477) 13 ORGANIZATION STRUCTURE Company Major Industry Sub Industry Country Employees EMCO Industries Electronic Products Ceramic Tiles PAKISTAN 1200 Corporate Information Management Team S.A. Mannan Chairman Tariq Rehman Managing Director HarisNoorani Director Marketing SuhailMannan Director Production Salem Rehman Operative Director AhsanMannan Operative Director Abdullah Jawad (477) 14 MumtazHussain General Manager Plant(Insulator & Tile) Mansoor Jamal Butt Chief Financial Officer General Manager Marketing (Tile Division) AttiurRehmanQureshi Manager (S&M) Insulators Auditors Chartered Accountants A. F. Ferguson & Co. Abdullah Jawad (477) 15 Registered / Head Office Head Office 119-E/1, Hali Road, Gulberg-III, Lahore.P.O.Box No.36 Phone: (092) (42) 3587 2181 - 84 Fax: (092) (42) 3587 2191 Email:
[email protected] Factory Tile Division 19-Km, Lahore Sheikhupura Road, Lahore. Phone: (092) (42) 7970293-4, 7970195 Fax: (092) (42) 7970593 Email:
[email protected] Factory Insulator Division 19-Km, Lahore Sheikhupura Road, Lahore. Phone: (092) (42) 7970293-4, 7970195 Fax: (092) (42) 7970592 Email:
[email protected] Regional Office Islamabad Plot No.269-A, Street No.6, I-9/3, Industrial Area, Islamabad, Pakistan Phone: (092) (51) 443-1719/21 Fax: (092) (51) 443-0348 Email:
[email protected] Regional Office Karachi 45-C.P & Berar Housing Society Block 7 & 8, Amir Khusroo Road, Karachi. Phone: (092) (21) 454 9827 - 9 Fax: (092) (21) 454 9861 Email:
[email protected] Regional Office Lahore 204-Ferozpur Road, Behind Rehmanpura Bus Stop, Lahore, Pakistan. Abdullah Jawad (477) 16 Phone: (092) (42) 753-2802 - 3 Fax: (092) (42) 753-2801 Email:
[email protected] Display Centre Lahore 204-Ferozpur Road, Behind Rehmanpura Bus Stop, Lahore, Pakistan. Phone: (092) (42) 753-2802 - 3 Fax: (092) (42) 753-2801 Email:
[email protected] Abdullah Jawad (477) 17 COMMENTS ON ORGANIZATIONAL STRUCTURE The authority in the organization flows from top to bottom and decisions are highly centralized. Due to centralized decisions there is employee empowerment and authority is not delegated so freely. Most of the decisions at the top level of management and there is less involvement by the first managers. As there is functional departmentalization in the organization therefore effective evaluation of each department output can be made and there is an efficient use of resources. SPECIALIZATION Every individual in the organization has required qualification in his special field therefore whole organization seems to be highly specialized. PROFESSIONALISM Professionalism is high in the organization, whole staff requires highest degrees and every individual contributes in the efficient working of the organization. Abdullah Jawad (477) 18 Products Emco industries have two types of products. 1. Insulators 2. Ceramic Tiles Insulators Suspension Insulators Aero Form Insulators Fog Type Insulators Normal Insulators Pin Type Insulators Normal Pin Type Insulators Post Insulators Line Post Insulators Station Post Insulators Transformer Bushings Transformer Bushing Surge Arrestor 11KV 132KV Dropout Cutout Insulator Cutout Insulator Shackle Insulator Shackle Insulator Guy Strain Insulator Abdullah Jawad (477) 19 Guy Strain Insulator Long Rod Insulator Disconnect Switches Suspension Insulators Normal Insulators Aero Form Insulators Fog Type Insulators Abdullah Jawad (477) 20 Pin Type Insulators Normal Pin Type Insulators B.S. Standard Type Transformer Bushings Transformer Bushing Surge Arrestor 11KV Abdullah Jawad (477) 21 132KV Dropout Cutout Insulator Cutout Insulator Shackle Insulator Abdullah Jawad (477) 22 Guy Strain Insulator Long Rod Insulator Abdullah Jawad (477) 23 Ceramic Tiles TRJ-805-006 Traditional Series Size: 20 x 20 CM TXB-008-107 Prints & Effects Size: 30 x 30 CM Types y y y y y y y y y y y y y Geometric Series Hala Series Plain Deep Base Plain pastel Base Prints and Effects Rustic Series(Floor Tiles) Semi Matt ± Granallia Semi Matt ±Plain Semi Matt ±Shaded Semi Matt ±Texture Texture Dark Base Texture Light Base Traditional Series Sizes y 20x20 cm y 25x25 cm y 25x33 cm y 30x30 cm y 38x38 cm Abdullah Jawad (477) 24 Projects Project : MALL ROAD UNDER PASS NesPak Lahore, Pakistan. This project was designed by EMCO. Emco tiles 30x30 cm are installed on both sides of walls. Project : PACE PAKISTAN LTD. Emco Main Boulevard Gulberg, Lahore, Pakistan. Emco tiles 30x30 cm installed in all shops of three floors & wall tiles installed in different washrooms. Project : SAHARA FOR LIFE TRUST SughraShafi Hospital Narowal, Pakistan. Emco tiles 20x25cm & 20x20 cm installed in major parts of the hospital. Project : ISLAMIC UNIVERSITY Higher Education Commission Islamabad, Pakistan. Emco tiles both glazed & matt 20x20 cm installed in various parts of the university. Abdullah Jawad (477) 25 Technical specifications Technical specifications of glazed floor tile according to European standard norms en-177 group BII, A CHARACTERISTICS REQUIRED VALUES VALUES OF EMCO PRODUTS 0.4% 2.5% 0.15% 0.25% TEST ACCORDING TO EUROPEAN NORM EN - 98 EN - 98 EN - 98 EN - 98 Length & Width Thickness Straightness of Sides Rectangularity Surface Flatness (a) Deviation From Centre Curvature Surface Flatness (b) Edge Curvature 0.5% 5.0% 0.5% 0.6% 0.5% 0.2% EN - 98 0.5% Minimum 95% will 0.25% EN - 98 Surface Quality be free from visible defects Av.3<6 Individual Maximum 6.6 ¡Ý 95% EN - 98 Av.3<4 Individual Maximum 4.5 EN - 98 Water Absorption Abdullah Jawad (477) 26 Test reports Analytical/test reports of ceramics wall tiles by P.C.S.I.R Test Water Absorption 13% 2% Results Dimensions Thickness 6.5 mm Dimensions Rectangularity Surface Flatness Centre Curvature Surface Flatness Edge Curvature Surface Quality Modulus Rupture 0.2% 0.2% 0.2% >95% 215 Kg/Cm Initial Dealers Dealer Name MAGOON SONS City Lahor e 85FEROZEPUR ROAD ICHRA 186M.I.SANITAR Lahor Y STORE e FEROZEPUR ROAD OPP GALAXY CINEMA A.H.TRADER Lahor S e 172H.COMMERCIA L ZONE, 57303015728839 MR.IMRAN MALIK 75754945 MR.IDREES Address Phone Fax Contact Name 37531490 3758751 MR.TANVEER -1 7 , MR.ALI Abdullah Jawad (477) 27 Laboratory EMCO maintains a well equipped laboratory where fundamental research for development and routine quality control tests are carried out. Following are the quality control tests performed in laboratory on Raw Materials, Porcelain Bodies, Glazes, Cement and Plaster of Paris . Raw Materials * Visual Check * Refractoriness * Particle Size * pH * Viscosity * Chemical Analysis Porcelain Bodies * Particle Size * Water Content * Viscosity & Temperature * pH * Cake Hardness * Foreign Substance * Shrinkage * Sintering * Refractoriness * Chemical Analysis * Thermal Shock Resistance * Thermal Expansion * Mechanical Strength * Dielectric Strength Glazes * Particle Size Abdullah Jawad (477) 28 * Water Content * Viscosity * Color & Gloss * Refractoriness * Thermal Expansion * Chemical Analysis * High Temperature Fluidity * Body & Glaze Matching * Electrical Conductivity Cement * Flow Value * Mixing Ratio * Setting Time * Tensile Strength * Compressive Strength * Thermal Expansion Plaster of Paris * Mixing Ratio * Setting Time * Tensile Strength * Expansion * Sieve Analysis Abdullah Jawad (477) 29 Quality Control EMCO has a very strict quality system and checks are kept at a number of stations of the manufacturing process. The system of quality assurance is according to ISO 9001. Situation Issues Competitor¶s analysis Sonex Tiles. National Tiles. Unorganized local manufacturers. Imported Brands. Sonex Tiles Sonex Tiles is a big competitor of Emco Tiles. It is also located in Gujranwala. Sonex Tiles is a new player in the market and it only produces Floor Tiles. While Emco Tiles produce both Wall and Floor Tiles which is a competitive edge of it over Sonex Tiles. Also Sonex Tiles have less design s and colors as compare to Emco Tiles. The strategy of Sonex Tiles is that are doing a direct competition with Emco Tiles only in Floor Tiles category but also try to capture those segments which is not targeted by Emco Tiles by producing some low price low quality products for low end market segment. They have a distribution network in all over the Pakistan. They distribute their product through selected dealers in different parts of the country. National Tiles National Tiles is also a major Player in Pakistan Tiles industry. But it only manufactures wall tiles. It is located in Karachi and it is mostly competing with Emco Tiles in Sindh areas and only in Wall Tiles category. National Tiles mainly target the Sindh market due to low competition in Sindh Market. Unorganized Local Manufacturers One of the main competitors of Emco Tiles is the Unorganized Local manufacturers. Although these small local manufacturers have less capacity of Abdullah Jawad (477) 30 production as compare to the Emco Tiles. But they produce low quality with low prices. So by offering low prices they become a big threat to big manufacturers. These local manufacturers attract the customers who are more price sensitive as compared to quality. Also these small local m anufacturers distribute their products to a large number of retailers with some incentive due to their low prices. So by offering low quality products and cheaper products these local manufacturers are able to capture the market share from the big manufact urers. Imported Brands Some niche segment of market is also captured by importers. In addition small quantity of some multinational brands is available local market. These brands are imported from Spain, Italy, as well as from UK and USA. These brands are mostly targeted in Lahore and Karachi and they target high end segment of the market. ChineseManufacturers: China is also a big competitor of Emco Tiles. By offering low prices with low quality as compared to Emco Tiles China is able to capture the market share. China was one of the major threats to the local manufacturers until Government imposes anti dumping duties on Chinese manufacturers. But still China is competing in the market through its distribution in al l over the country and still a big threat for local manufactures. Abdullah Jawad (477) 31 Competitive Advantage of Emco Tiles (1) Emco Tiles produce high quality and high standards products which other competitors can not match. (2) Emco Tiles Produce waste range of designs styles and colors range which other competitors can not produce. (3) They have latest Italian technological plant due to which their production capacity is more than 25000 Sq. /meter per day which is another competitive advantage of Emco Tiles over its competitors. Market Segmentation Emco Tiles has segmented the target market on the basis of the need of customers. They have divided the market into low to high end market. But they are mostly focus on high end market segment. They produce different type of tiles with different price ranges. Especially for high end market segment they produce high quality products with high prices and for middle end market segment they produce products with relatively low prices and low quality as compared to the high end market. So Emco Tiles produce different quality products with different prices for different market segments. Target Market Now Tiles have become an essential part for the decoration of our residential and commercial buildings. So our target market is that people who can afford and who want to make their lives worth living by using these tiles and who focus on beauty as well as luxury and style and design. So company main target market is upper middle class and elite class because lower middle class and poor class customers can not buy tiles. Intended Positioning The positioning which Emco Tiles want to produce in the mind of customers is that they will provide them high quality and stylish products to improve their life style and make their life easy and beautiful. Abdullah Jawad (477) 32 SWOT Analysis Strengths: (1) One of the main strength of Emco Tiles is their latest technological imported plant which is highly computerized. (2) One of the strength of Emco Tiles is their highly professionals and skilled foreign employees who are working there for more that 13 years. (3) One of the strength of Emco Tiles is its production capacity. It can produce more that 25000 Sq. /meter per day which is the highest as co mpared to the local competitors. Emco Tiles has the capacity to meet the huge demand. (4) They have a computerized system through which communication between different departments can be done faster. (5) They have their own Research and Development department and they always try to seek the new opportunities to improve the quality and bringing new innovations. (6) They have a big distribution network all over the Pakistan. They have good and long term relationships with their dealers. (7) One of their strength is their loyal and highly skilled labors. (8) They can produce waste range of designs, styles and colors which is one of the major strength of Emco Tiles. Weaknesses (1) One weakness of Emco Tiles is the maintenance and repairing of its manufacturing plant. Once there is a problem in plant then it requires a whole day for repairing and again become in working positions so it could be another weakness of Emco tiles. (2) The another weakness of Emco tiles is that networking system because there whole internal communication based on networking so if there could be any problem in main server so their whole communication will stop or break down so if Abdullah Jawad (477) 33 there is any problem or fault in main server it could be another weakness of the Emco tiles. (3) As company divides whole Pakistan into different zones sop if there is miss communication between each zone and company and if it effects their supply chain process than its could be another weakness of th e company. Opportunities (1) One of the big opportunities for Emco Tiles is the growing rate of construction which increases the demand for tiles. So that¶s why Emco Tiles is planning to expand their production capacity to meet the future demand. (2) One opportunity for Emco Tiles is that Government imposed anti dumping duties on Chinese Tiles which restrict Chinese manufacturers to export the tiles in Pakistani market with low prices. So now their cost increases and they forced to sell the tiles at higher price which is relatively equal to local tiles. (3) The Government reduces the taxes on exports of tiles and also increasing demand in foreign market provides an opportunity for Emco Tiles to increase its sales by exporting its tiles. Threats (1) One of the threats for Emco Tiles in local market is huge amount of tiles supply from unorganized local manufacturers. This is a threat for reduction in market share of Emco Tiles. (2) One of the threats for Emco Tiles is low entry barriers in the industry. Because of the growing potential of the industry it becomes an attractive industry for new entrants. These new players can capture the market share. (3) One of the threats for Emco Tiles is price wars from the main competitors in the industry. To capture the market share the local competitors their prices to catch the more customers and can reduce the market share. Abdullah Jawad (477) 34 PEST Analysis Political factors The political factors have a huge influence upon the regulati on of business. In Pakistan political environment is not stable. It is very dynamic which affects the business industries. Government policies are changed during regular intervals of time. This political instability affects the tiles industry also. In case of Emco Tiles when the incident of Benazir Bhutto¶s death happen. Then during that time their material was destroyed by the political workers. Their vehicles were destroyed when they were on the road for distributing the final product. So due to this poli tical incident Emco Tiles bears a financial loss. Government also has some rules and regulation for the environment pollution. Emco Tiles claims that they do not pollute the environment during the manufacturing process of the tiles. The wastage is managed in sophisticated manner that it does not pollute the environment. Emco Tiles is the first tile manufacturer in Pakistan which submits the application to National Tariff Commission against the dumping of Chinese tiles manufacturers. The result was that Government imposed anti dumping duties on Chinese tiles which also shows that Government wants to promote and save its local Tiles industry. Economical Factors Marketers need to consider the state of a trading economy in the short and long terms. Due to economic growth in Pakistan the Tiles industry in Pakistan is growing. There is a big increase in the construction in the country. The Tiles industry in Pakistan is in growth stage. Government does not finance enough money in the Tiles industry to make it more attractive industry. The raw material which is used in Tiles manufacturing is founded in the province on NWFP and Balochistan. Mining of the raw material in these areas is done on primitive techniques including uncontrolled blasts. In majority of the mines basic machinery and equipment¶s are not available. This not only led to wastage but also to low production of raw material which directly affects the Tiles industry. Government does not pay much attention on this which really affects the efficiency of Tiles industry. Abdullah Jawad (477) 35 Socio cultural Factors The social and cultural influence on business varies from country to country. It is very important these factors are considered. These factors are: (1) Income level (2) Population growth rate (3) Labor mobility (4) Life style changes (5) Fashion (6) Living condition In Pakistan demographic factors like income level of people is increasing. Due to which their buying power increases. Also the population is increasing which results in the construction increase which also results in the increase in dema nd of tiles in the country. Also there is a good availability of labor which is a really favorable condition for tile industry. Now the people in Pakistan are moving towards change. Their life style is changing. Now it is becoming a fashion to decorate their homes with beautiful and stylish tiles to give a beautiful look to their homes. This result is the increase in the demand of tiles in country. The living condition of people is changing. The rural people are moving towards urbanization and their living conditions are becoming better and better . Technological Factors Technology is a very important factor for an industry. It is vital for competitive advantage for a firm. For technology the following points should be considered: (1) Does technology allows products to be made cheaply and better quality? Ans: In Pakistan the technology in Tiles industry does not change very quickly. In Emco Tiles they use their Italian manufacturing plant for producing good quality products at affordable prices. This technology is their competitive advantage. Abdullah Jawad (477) 36 (2) Does technology offers consumers and businesses more innovative products? Ans: Emco Tiles use their new technological plant to produce more innovative products. Emco Tiles produce new styles with lot of colors and they produce more innovative products. (3) Does technology offers companies a new way to communicate with consumers? Ans: Technology changes in the media industry in Pakistan allow the companies to adopt the new ways of communication with the customers. Now there are new and advanced medium for communicating the message like digital signboards and now advertisement can be done through new cable channels. These new local cable channel are watched every where. So we can say that new technology offers new and affective ways of communication. 4 Ps Product Emco Granite Tile is an ideal medium for coverage of floors and walls in the interior as well as exteriors in a practical cost effective and durable manner. It is like impossible to list all the applications of Emco Granite Tile but to mention a few here are some areas of the application: (1) Residential It is used in boundary walls gate pillars, can porches, home lobbies, lounges drawing and dining, living, bed and bath rooms, kitchens and staircases. (2) Commercial It is used in offices, showrooms, shops, plazas, shopping malls, hotels, restaurants, airports, railways and bus stations, hospitals and clinic, sport complexes and swimming pools. (3) Industrial Abdullah Jawad (477) 37 It is used in floor covering of all sorts of industrial uni ts, ware houses, workshops, and depots. (4) Public Places It is also used in pathways, footpaths, parking lots, and gas stations. Qualities of product Emco Granite Tiles are completely homogenized which means that the color the texture and the veins run throughout the thickness of the body just like the natural stone. Unlike what is available in the market in the name of granite, the colors, design and textures of ceramic granite are not superficial. So from the years of research and latest Italian technology Emco Granite Tile is a gift for those people for those who want to upgrade their life style opt for today¶s most modern material to make their life more beautiful. No Stain It is easy to clean and offers complete chemical resistance due to extremely compact homogenous superior surface. Scratch Resistance Its solid and compact body protects tile from scratches 13 0% Absorption No pores through out the tile thickness, extremely compact. This is even true for areas that have been subject to abrasion. Max Range Color Sizes It offers a big list of different sizes and colors. Maximum Strength It is pressed by hydraulic pressure with force into compact uniform tile. Dried and fired at a temperature of 1250C bringing them into one solid and compact body. Abdullah Jawad (477) 38 Fine Edges Cutting of these hard tiles is done by special diamond blades. That makes lying of tiles very easy and adds beauty to architecture. Price Emco Tiles sets relatively high prices for their products as compare to the competitors. Prices are sets according to the good quality of the product. The product with good quality has high prices while the product with normal quality has relatively low prices. In local market their prices are relatively high than other competitors. Their high prices reflect their good quality. They have a complete range of product line and the prices vary between different product types. Placement Emco Tiles has big distribution network in all over the country. They have divided the local market into different zones, like Lahore zone, Gujranwala zone, Multan zone, etc. Each zone has its own head office and is responsible for marketing activities in that zone. Emco Tiles distribute the product through its dealers in different cities. These dealers work with Emco Tiles on agreement basis. Each dealer is given target sales. After achieving a target sales discounts are offered to these dealers. These dealers only sell Emco Tiles products. However these dealers also sell the product to the small local retailers which sell multiband under one roof. These retailers may have some cheaper brand as well as some imported brands. Now Emco Tiles has started to establish its own display centers in major cities. These display centers have not products to sell but just work as to show and provides the information about the product. Promotion Emco Tiles use different promotion tools to promote their product. Like Advertising, Exhibitions and Seminars. Advertisement They use advertisement as a promotion tool. This advertising is done through TV, bill boards and they also sponsor some sporting activities. Abdullah Jawad (477) 39 Exhibitions Emco Tiles also takes participation in different industrial exhibitions all over the country. Their representatives give a presentation there and provide the information about the brand. Seminars Emco Tiles also held some seminars for providing the information. In these seminars business customers are invited. Like Builders and contractors. In these seminars the information about the brand is provided to the customers. Abdullah Jawad (477) 40 Ratio Analysis Current Ratio Current Ratio = Current Assets / Current Liabilities Table 1 Current Ratio Years Total Current Assets Total Current Liabilities CurrentRatio 2009 921,010,488 1,041,022,555 0.884717131 2008 774,980,994 918,914,833 0.84336542 Current Ratio 0.9 0.88 0.86 0.84 0.82 2008 2009 Figure 1 current Ratio Interpretation The ratio is mainly used to give an idea of the company's ability to pay back its short-term liabilities (debt and payables) with its short-term assets (cash, inventory, receivables). From above information it can be seen that, in year 2008, this ratio was 84.33% but in year 2009 it hasIncrease to 88.47 %. It shows that in 2009 the more capable the company is of paying its obligationsthan 2008. Abdullah Jawad (477) 41 Debt Ratio Debt Ratio = Total Debts / Total Assets Table 2 Debt Ratio Years Total Debts Total Assets Debt Ratio 2009 1,611,828,498 2,141,815,571 0.752552 2008 1,503,032,423 1,924,953,449 0.780815 Debt Ratio 0.8 0.78 0.76 0.74 0.72 2008 2009 Figure 2 Debt Ratio Interpretation Debt ratio basically shows that, how much assets are financed by the debt. It shows that how much an investor is protected in case of default. From above information it can be seen that, in year 2008, this ratio was 78.08% but in year 2009 it has decreased to 75.26 %. It shows less debt financing as compared to previous year. Abdullah Jawad (477) 42 Debt/Equity Ratio Debt/Equity Ratio = Total Debts / Total Equity Table 3 Debt to Equity Ratio Years Total Debts Total Equity Debt/Equity Ratio 2009 1,611,828,498 118,541,189 13.5972 2008 1,503,032,423 -15,857,979 -94.7808 Debt/Equity Ratio 2009 2008 -100 -50 0 50 Figure 3 Debt/Equity Ratio Interpretation This ratio is an alternative to the debt ratio. One of these ratios can be used by the investor. It shows the basic ratio between debt and equity. A high debt/equity ratio generally means that a company has been aggressive in financing its growth with debt. This can result in volatile earnings as a result of the additional interest expense. From above information it¶s obvious that, in year 2008, this ratio is -94.7808 and this year it has increased to 13.5972. As this ratio increased rapidly, it shows increase in debt financing as compared to equity. Abdullah Jawad (477) 43 Return on Assets (ROA) Return on Assets= Net profit after tax / Total Assets Table 4 Return on Assets Years Net Profit After Tax Total Assets Return on Assets 2009 -81,218,669 2,141,815,571 -0.03792 2008 -13,826,860 1,924,953,449 -0.00718 Return on Assets 2009 2008 -0.04 -0.03 -0.02 -0.01 0 Figure 4 Return on Assets Interpretation This ratio shows the efficiency of the total assets, means how much efficiently the company using its assets to earn its net profit. Company has been running into losses because its expenses and costs are too high and income is very low. This ratio has slightly increased in year 2009 as compared to the previous year. Abdullah Jawad (477) 44 RETURN ON INVESTMENT (ROI) Return on Investment = Net profit after tax / Investments Table 5 Return on Investment Years Net Profit After Tax Investment Return on Investment 2009 -81,218,669 23,290,309 -3.48723 2008 -13,826,860 14,526,699 -0.951824 Return on Investment 2009 -4 2008 -3 -2 -1 0 Figure 5 Return on Investment Interpretation This ratio shows the return or net profit on the investments. Means how much profit the EMCO is making in terms of investments, rather than total profit. In this ratio analysis it is observed that ROI is decreasing rapidly due to increase in loss after tax and also investments as compared to previous year which shows the poor performance of the company during the current year. Abdullah Jawad (477) 45 RETURN ON Equity (ROE) Return on Equity = Net profit after tax / Total Equity Table 6 Return on Equity Years Net Profit After Tax Total Equity Return on Equity 2009 -81,218,669 118,541,189 -0.685151462 2008 -13,826,860 -15,857,979 0.871918168 Return on Equity 2009 008 -1 -0.5 0 0.5 1 Figure 6 Return on Equity Interpretation This ratio shows the profit in terms of equity.This loss has increased in year 2009 as compared to the year 2008. The result is becauseloss has increased in year 2009 which shows the inefficient operations an allocation of resources, as a result, the return on the equity is de creased. Abdullah Jawad (477) 46 Operating Cash Flow or Sales Ratio Operating Cash Flow or Sales = Operating Cash Flow / Net Sales Table 7 Sales Ratio Years Operating Cash Flow Net Sales Sales Ratio 2009 18,455,165 1,550,427,563 0.011903275 2008 -13,959,669 1,260,415,348 -0.011075451 Sales ratio 2009 2008 -0.015 -0.01 -0.005 0 0.005 0.01 0.015 Figure 7 Sales Ratio Interpretation A measure of how well current liabilities are covered by the cash flow generated from a company's operations. The operating cash flow ratio can gauge a company's liquidity in the short term. Emco¶s sales ratio in 2009 has increased significantly as compared to year 2008. This increase has occurred because there is a significant increase in both net sales and operating cash flow and so th e sales ratio has increased. Abdullah Jawad (477) 47 Net Worth Net Worth= Total Assets ± Total Liabilities Table 8 Net Worth Years Total Assets Total Liabilities Net Worth 2009 2,141,815,571 1,611,828,498 529,987,073 2008 1,924,953,449 1,503,032,423 421,921,026 Net Worth 0,000,000 5,000,000 Interpretation This is the amount by which assets exceed liabilities. This term can be applied to companies and individuals. In 2008 Emco¶s net worth was 421,921,026 while in 2009 it has increased to 529,987,073. Both company¶s total assets and total liabilities have increased however assets have more increment as compared to liabilities and as a result the difference between total assets and liabilities increased so n et worth also increased. Abdullah Jawad (477) ¡ 0 2008 2009 Figure 8Net Worth 48 Financial Statements Table 9 Balance Sheet 2009 Rupees 2008 Rupees EQUITY AND LIABILITIES C PI L ND RESERVES Authorized Capital 40000000 (200: 40000000) ordinary shares of RS. 10 each Issued, subscribed and paid up capital 35000000 (2008: 15333333) ordinary shares of Rs. 10 each Reserves Accumulated Loss ¢ ¢£ £ ¢ 400,000,000 400,000,000 350,000,000 153,333,330 129,898,526 129,898,526 -361,357,337 -299,089,835 118,541,189 -15,857,979 SURPLUS ON REV LU ION O PROPER Y, PL N ND EQUIPMEN NON-CURREN LI BILI ES Long term loans from directors Long term inances Long term morabaha Liabilities against assets subject to inance lease Deffered liabilites Deffered taxation ¦ ¥ £ ¢ £ ¤¥ ¤ £ CURREN LI BILI ES Current porion o long term liabilites Short term borrowings from related parties- unsecured Finances under mark-up arrangements -secured Trade and other payables Accrued mark-up on loans and other payables 83,131,432 17,324,801 558,086,289 317,183,765 65,296,268 100,958,465 52,226,754 544,813,779 193,702,191 27,213,644 CON IGENCIES ND COMMI MEN S Abdullah Jawad (477) ¥ £ £ ¥¤ ¤ 411,445,884 437,779,005 74,570,569 428,301,887 16,315,641 23,986,703 27,631,143 570,805,943 171,175,969 330,914,966 13,212,297 23,520,540 45,293,818 584,117,590 £ ¢ ¢ 1,041,022,555 918,914,833 2,141,815,571 1,924,953,449 49 ASSETS NON-CURRENT ASSETS Property, plant and equipment ssets subject to inance lease Intangible asset Capital work in progress Long term deposits Long term loans 1,160,830,877 39,869,002 3,345,300 7,265,266 7,218,688 2,275,750 905,453,375 32,879,427 3,717,000 201,123,950 4,604,423 2,194,280 Abdullah Jawad (477) § 1,220,804,883 1,149,972,455 CURRENT ASSETS Stores, spares and loose tools Stock in trade trade debts Loans, advances, deposits, prepayments and other recievables Taxatio - net Cash and back balances 96,558,665 437,345,036 278,969,594 30,231,265 19,288,567 58,617,361 921,010,488 106,128,537 361,827,225 225,486,523 39,015,627 3,937,814 38,585,268 774,980,994 2,141,815,571 1,924,953,449 50 Profit and Loss Account For the year ended June 30, 2009 Table 10 Profit and Loss Statement ¨ # i i r tio expe e Di tributio nd se ing costs Other oper ting expences " ! ! Other oper ting inco e Profit fro oper tion Fin nce cost (Loss) before t xation Taxation (Loss) for the year ! ! ! ! (Loss) per share-Basic and di uted Abdullah Jawad (477) ! Go profi Sales Co of oo o 1,550,427,563 1,283,504,802 266,922,761 1,260,415,348 993,257,611 267,157,737 -70,423,678 -116,582,550 -4,288,856 -191,295,084 75,627,677 6,408,767 -62,459,439 -112,525,165 -2,329,900 -177,314,504 89,843,233 6,612,664 82,036,444 96,455,897 -185,187,067 112038878 -103,150,623 21,931,954 -81,218,669 -15,582,981 1,756,121 -13,826,860 -2 00 Rupee © ¨ 00 Rupee -1 51 STATEMENT OF CHANGES IN EQUITY FOR THE YEAR ENDED JUNE 30, 2009 Table 11 Statement of Changes in Equity %$ $ $ Sha e capital Rupees Sha e P emium Ruppes Gene al ese e Ruppes Accumulaed Total Rupees loss Rupees Balance as per June 30, 2007 153,333,330 - 39,898,526 - 90,000,000 - ( o for t e year) ra f er from r l o re al at o me t- et of ro ert, Pla t a e effere taxat o - I reme tal e re at o for t e year 350,000,000 39,898,526 90,000,000 17,970,918 980,249 -361,357,337 17,970,918 980,249 118,541,189 o a of re a te a et Balance as on june 30, 2009 Abdullah Jawad (477) (' (A ( 4 1 1A 7 3 4 A4 E4 1 3 3 4 4 7 19D 34 4 7 7 4 1 9 8 2 4 '9 87 9 ' C '4 B ra f er fro r o re a at o of ro ert, Pla t a e me t- et effere taxat o - I reme tal e re at o for t e year 32,028,750 -2,692,396 2,664,543 32,028,750 -2,692,396 2,664,543 Balance as on june 30, 2008 ( 4 1 1A 7 3 4 A4 E4 1 3 3 4 4 7 19D 34 4 7 7 4 1 9 2 4 '9 7 9 ' '4 B ' '' 3 9 8 2 ' (' 6 t e @ 1 28 ' '' 3 9 8 2 6 '5 e 200 0 5 o a of re a te a et )( ( o ) for t year 1,533,330 39,898,526 90,000,000 are for ea are 196,666,670 - - $ $ $ -317,263,872 -13,826,860 34,032,016 -13,826,860 ( 9'' 1 ( @' 15 8 ' 7' 10 34 3 1 210 8 ' 7' 10 '' & '' & -299,089,835 -15,857,979 -81,218,669 196,666,670 -81,218,669 52 CASH FLOW STATEMENT FOR THE YEAR ENDED JUNE 30, 2009 Table 12 Cash Flow Statement 2009 2008 Cash f w f m pe ati g activites Ca f ow a fo o F a o a a a a a o Pa Ga a a o -term epo ts pa a o o f 194,979,795 112,350,202 -146,850,645 -105,326,014 -1,846,380 -8,864,177 -1,542,036 -6,507,188 -4,803,896 -1,182,809 -225 -2,655,883 -4,864,448 -1,773,800 18,455,165 -13,959,669 Cash f ow from vesting a i tivities purchase of property, plant and equipment Net i ncrease in long term loans Proceeds from disposal of property, plant and equipment Net cash sed i i vesti g activites Cash f w f m fi a ci g acitivities Proceeds from long term finances epayment of long term finances Proceeds from loan from directors Repayment of loan to directors Proceeds from right issue Repayment of long term mora aha Proceeds from short term loans Repayment of short term loans ease rentals paids Net cash f w f m fi a ci g activities Abdullah Jawad (477) T S R RS y T T T g T T T T RQ wR Net cash i f w/( tf w) f m pe ati g acitivities -148,866,353 -222,339,688 -359,120 -968,033 4,946,634 2,623,250 -144,278,839 -220,684,471 163,500,000 -77,089,301 1,450,000 -1,760,000 60,371,270 -7,174,998 13,100,000 -8,001,953 -11,811,761 132,583,257 168,412,345 -49,457,315 -14,350,004 61,621,212 -21,907,458 -14,346,953 129,971,827 PIIHGF PIIHGF vc f u f U c X` t c f e c`Yc f rfs c f e p fq a b b c`q `Yc f r ae cY `q gU fc U` f X U `Yd p b b b b cf e UY i h c f e U g Yg` ` f b U` f a Ye d a c Y a Y` Y X W V U b b T T `f RS RQ T RS RQ w RQ W u x t T S R RS RQ 53 Skills Acquired during the Internship Program Purchase Department I worked in Purchase Department for 4 weeks and skills acquired and knowledge gained during this period is given below. Purchase section is not physically responsible for purchase of goods; rather it keeps record and maintains the books of purchase, sanction payments. It verifies the purchases done with the help of documents like purchase orde r invoice and MRN. Documents generated in SAP software in purchase process are: PR ± Purchase Requisition PO ± Purchase Order MRN ± Material Receipt Note Purchase Requisition It is requested from any department of company to purchase goods from that department, if the goods are not present in central store of the company. Purchase requisition document contain the following information: Description of goods Bill number Units of measurement Quantity of goods Stock in store (Signed by store dept.) y y y y y Purchase Order It contains the following information: y Description of goods Abdullah Jawad (477) 54 y y y y y y Bill number Units of measurement Quantity of goods Rate Total value Discount Purchase manager sign this document. Material Receipt Note When the company receives goods from the supplier, it issues the MRN that contain the following information: y y y y Goods types Bill no Quantity P.O number The store manager signs it. Procedure of Purchase Department y y y y y y y y Objective Scope Responsibility Inaccuracies in purchase Department Issuance of purchase requisition Purchasing Information Processing of Purchase requisition Local Purchases o Petty Cash o Local Market Purchases o Emergent Purchase y Imports o Procedure for evaluation of Imported Item o Clearing and delivery Abdullah Jawad (477) 55 o Inspection of purchasing goods y y Purchase Requisition is sent to head office In head Office commercial department is responsible for local and foreign purchases. y Commercial has further two departments o For Local Purchases and o For foreign Purchases y Commercial department has a list of suppliers with whom they have been dealing before y y They request to purchase and supplier sends the quotation Purchase is performed after choosing the best alternative in terms of price, quality and delivery of goods by making comparative statements y In foreign purchase the company has to send request to the foreign suppliers y y They send quotation A document is prepared by commercial department which have different fields in it. The purpose of this is to compare different alternatives and then select the best available alternative. y y The supplier send the perfoma invoice Emco applies in bank to open L/C along with following documents o I form o Performa Invoice o Purchase Order o Insurance Cover Note y After L/C is opened goods are dispatched by the supplier with the following documents o Bill of Lading o Commercial Invoice o Packing List o Certificate of Origin o Technical Literature y These documents are sent by the supplier to his bank and bank send to our bank Abdullah Jawad (477) 56 y When shipment is arrived at our port, our bank informs us to receives the good and collect the documents. Finally payment is made by the company as per prescribed terms of payments. Harmonized code is a specific code of a product . y y Suppliers Evaluation: y y y y Objective Scope Responsibilities Procedure o Past history o Site and sample qualification o Product inspection o Logistics Economics y y y New supplier Existing Supplier Services supplier Supplier Corrective Action Re Evaluation Reference Cash & Bank Department This Department deals mostly with banking sector. Mr. Khurram is responsible for this section. Payment for more than RS.10000 has been paid through cheque. This department is responsible for m aking payment to the suppliers and daily bank transactions. Pay roll of the employees is also maintained by this department. Formulas on Excel help to remember the date of payments, Mainly cash and bank performs the following main task Payments Receipts Abdullah Jawad (477) 57 Outgoing payments When EMCO limited buy raw material or any other Material, the bill is received from the purchase section along with the purchase order and MRN (Material Receive Note). If tax is written behind the invoice, challans and cheque are typed. Along with this cheque for amount payable to the customer are also typed and processed. In case there are standing instructions by the customer to make payment in the shape of a bank draft, pay order, traveler cheque or bank transfer, instructions are given to the banks. All these documents are checked and verified by In charge cash and bank section, which after initial screening sends them to different authorities for 1 st signature as per their limits. After these signatures, tax payments are made by detaching challan and tax cheque and are deposited in banks. The remaining items are sent for 2nd signatures to the top management. Reimbursements It includes various reimbursements to company staff and payments to others. These include petty vouchers and cash vouchers. Petty voucher It includes the followings: Medical bills Telephone bills Traveling expenses Cash vouchers Other expenses like car maintenance, entertainment and miscellaneous are also approved, checked and vouchers are then prepared. All these vouchers are then checked by the departmental head according to their respective lim its. Abdullah Jawad (477) 58 Display Centre I have worked for two days on the display center at Ferozpur Road, Lahore. Customer can visit and purchase the tiles from there. About 20 employees worked out there. Different type of Tiles in different condition is available there with different prices. For example: Tiles of two color light color and dark color. Sales men use the Stock sheet to communicate to the customer about future production. Stock is updated on Daily basis.Staffis updated with factory stock and display center store stock. Customer gives us the measurement of area where he wants to install Tiles. For example Customer wants to install tiles on his bathroom Length 8 sq. feet Width 5 sq. feet Total Area: 8*5 = 40 40/10.76 = 3.72 Sq.meter Now we have the tiles in a packing of 1.5 meter So Customer requirement is about 3.72 and we provide him 4.5 meter as packing is not available in 3.72 .We gave him 3 boxes. Inventory Department I spend my first two days in inventory department. EMCO has proper system to maintain his inventory. There areeight storerooms availableat Factory. Mainly divided into two classes, Tiles Store and Insulator stores , Tile store includes Clay store room , glazed material store room, Miscellaneous item store room, Raw material store room , instrument store room and Insulator also include clay store ro om ,Raw material store room etc. If any thing added to the store room, a document is prepared i.e. Material Receipt Note (send to the head office). Marketing Department I worked in Marketing Department for 2 days and skills acquired and knowledge gained du ring this period is given below. Abdullah Jawad (477) 59 EMCO has hundreds of dealers in all over Pakistan, Sales person contact to these dealers to sale out there product, whenever stock is available to Factory stock, Sales person contact with dealer and takes the order. Sales person made Factory Deliver Document. Our managers at warehouse dispatch the goods at dealers end. Factory delivery challan has been made by the managers at warehouse in the system. System automatically generates the Bill for the dealer and entry for sales is automatically done by the system. Customer can make special request on the basis of order size. Honda has the requirement to have the EMCO tiles of specific color at their franchises.At the end of the day Marketing Manager collects all the data of sales that is performed at the same day and match it with the inventory available, and if he founds any deficiency then he reports to the head office. There may be the breakage of tiles during loading unloading, Sales return by the customer and sample tiles issues. Store Manager helps the marketing manager to find out the deficiency. There is special discount if you are purchasing tiles for mosque. There are different classes of Tiles i.e. Platinum, Standard, Economy. In Platinum it is the finest quality of the tile without any minor defect this is costly than standard and Economy. Standard tiles have some minor defect for example, a little bit difference in size, color and there some minor scratches out there. This class is less costly then platinum. Economy is less costly then standard; it has some major defect like breakage of tiles from the corner, difference of color of the same style tiles or prominent scratches. A document is being generated by the marketing manager named Group wise sale, Collection and receivable¶s which incudes the whole day activities, All dealer name are mentioned out there, Total sales in Square meter, Total sales return from that particular dealer, Net sales, Collection, Discount, Freight, Free sample/ break/.defective, Bank Charges, adjustments, outstanding amount from that dealer, and Increase/decrease in receivable¶s. Abdullah Jawad (477) 60 Figure 9 Brand Associations These are the desired associations which Emco Tiles want to create in the mind of customers High quality products. Complete range of products offered (wall, floor tiles). Reliable Product. Durable Product. Waste range of colors. Waste range of designs. Stylish Product. Sales Department: Accounting for revenues and receivables will be carried out by the sales accounts section with the following objectives: Accurate reporting of revenues and receivables in the periodic financial statements. Monitoring of collections from customer. Abdullah Jawad (477) 61 Accurate accounting and reporting of sales tax and withholding tax. In order to achieve these objectives sales accounts section carry out the following tasks. Maintain and monitor accounting data in customer master files. Ensure that invoices for all sales (internal, external, export) are accurately generated on daily basis and posted to the appropriate heads of accounts. Ensure that all incoming payments for the customer are matched to the correct invoices and posted in the appropriate head of accounts. Ensures timely generation and filing of sales tax invoices. Credit note The sales accounts section is responsible for issuing of the credit note to customer. Credit note is always regenerated on the basis of an approved credit note request. Credit note can be issued for any reasons however, following are common reason for which credit note is issued: Credit note ± return of goods Defected goods return by customer Rate differential Quantity shortly received by customer Credit notes report is analyzed and reviewed by the in charge sales accounts section on daily basis. Periodic analytical review is carried out to ensure random check on validity and reliability of credit notes and related accounting entries. Debit note The sales accounts section also issue of the debit note to customer. Debit note is issued in the following cases: Rate differential Freight charges Abdullah Jawad (477) 62 Recommendations y Well we found that Emco Tiles do not focus on aggressive advertisement campaign and do selective advertisement so they should focus on mass level of advertisement and invest more on advertisement. y Emco tiles prices are comparatively high than its competitors so people some times switch to other competitors due to budget problem so they should have to adjust their prices which are relatively equal to their competitors. y As they claim that they offer vast range of colors and designs but in their display center all the range of colors and designs are not available so they have to display all the possible range of colors and designs and to over come this problem they can also go for customization. As they achieve the economy of scale and their production level is very much high than their competitors and in the peak seasons they can easily fulfill the demand so they don¶t have any problem regarding their production so they should focus on customization through which customers can select designs and colors up to their own choice, this will create brand loyalty and retention of the customers because no other competitor is offering customization facility to customers. y As company divided whole Pakistan into different zones and facing the problem of miss communication or lack of communication so company should has to improve its communication system and launch the shared information system which will connect them through all the zonal offices and suppliers and distributors also so they can communicate with each other in timely and efficient manners. y As government reduces taxes on exports of tiles in other countries and company also exporting its tiles in middle east and European countries but company should pay more attention towards exports and should find new markets and new distributors and should go to those markets where is huge potential customers and from where company can get more revenue so company should has to focus on exports because company¶s production capacity is higher than its competitors and company can also increase its Abdullah Jawad (477) 63 production capacity so that company can easily enter in new markets and fulfill the demand of those markets. y y y y Company expenses should be reduced its administrative expenses Its should also reduce its selling expenses which have bad impacts on profit Work should be equally distributed among employees Some employees are over burdened their must be fair distribution of responsibilities y Emco does not provide job security to the employees. Mostly are hired on contractual basis. More people must be employed on permanent basis/ providing job security and satisfaction. y There is no separate department for the training of new employees. There should be establishment of a separate department for the training of the new employee and a competent teaching staff should be hired for their training. y The management should develop in workers the operator ownership to encourage them and make them responsible for their work. y The worker should be given sense of teamwork and the managers should be trained to manage the team as a go od leader. y New schemes should be introduced and maximum privileges should be given to customer, so that to win money market. y y y It should also install new laser cut plant to compete its competitors New marketing strategies should be developed to attract new customer It should also increase o Television Advertising o Press Advertising o Advertising on internet specially through social networks Abdullah Jawad (477) 64 Conclusion Internship at Emco has been a great experience for me. It has opened new dimensions for me to learn new things about which I had no knowledge. The organization is going through its worst periods for past few years and its repute in the market is decreasing. Major reason behind is undue administrative and selling expenses which must be cut down as much as possible. Is must invest in more profitable businesses and should introduce new strategies to target new customers. Although company is running into losse s however by focusing on new strategies company can again gain greater marker share. For this I have also given some recommendations So finally this internship program has helped me a lot in gaining practical knowledge of job that will help me in academic as well as in practical life for future. Abdullah Jawad (477) 65 Bibliography y y y y y y y Meigs and Meigs, Principles of Accounting (11 Ed.) http://www.emcotiles.com/ http://www.scribd.com/ http://www.wikipedia.com/ Emco¶s Policies and Procedures EMCO Employees www.google.com/pk Abdullah Jawad (477) 66