Date post: | 19-Nov-2014 |
Category: |
Documents |
Upload: | farhan-akram |
View: | 8 times |
Download: | 2 times |
INTERNSHIP REPORT SUZUKI ISLAMABAD MOTORS, I-9, ISLAMABAD
Mohammad Farhan Akram
Submitted in Partial fulfillment of the requirementsFor the degree of Masters of Business Administration
At
National University of Modern Languages Islamabad, Pakistan
August, 2010
Copyright by Mohammad Farhan Akram, 2010
1
NATIONAL UNIVERSITY OF MODERN LANGUAGES, ISLAMABAD
Faculty of Management Sciences
DECLARATION
It is hereby certifies that the report has been thoroughly and carefully read and recommended to the Faculty of Management Sciences for acceptance of Final Internship Report by Mohammad Farhan Akram, 9559, session August 2008-May 2010 Morning, in partial fulfillment of the requirements for the degree of Masters of Business Administration of National University of Modern Languages Islamabad.
Dated:
Supervisor Name: _______________________
Supervisor Signature: _______________________
Panel Member Name: _______________________
Panel Member Signature: _______________________
Head of Department: ______________________
2
ACKNOLEDGEMENT
All praises for Allah Almighty, the most Merciful, Who guides me in lacerate and
congenial circumstances, without His help one cannot reach at his destination.
My sincere gratitude to Mr. Nayyer Iftikhar (Managing Director, Suzuki Islamabad
Motors) who provided me with the opportunity to work with the company for a period of
eight weeks as an internee.
Then I would like to thank Mr. Faid Gul, Mr. Adnan Satti, Mr. Abdur Rehman (NUML,
Islamabad) they guided me at every step and provided me with their valuable advice
whenever I needed that I am very grateful for their encouragement, which enabled me to
write this report.
In the end I would like to thank all the staff members of Suzuki Islamabad Motors. They
have provided me with valuable information which helped me a lot in the completion of
this report.
Thank You to all.
3
EXECUTIVE SUMMARY
Internship is like “The First Flight” for a young business graduate who is to enter his
professional life very soon. It provides a gateway to youngsters and an insight of
corporate world.
The main objective of the internship is to analyze that how the theoretical framework
differs from practical realities. Its main scope is that we get through the detailed study of
Suzuki motors.
The analysis is done about the performance of the Suzuki motors and its departments.
The report begins with the introduction of the automobile industry in Pakistan and its
main contributors. Heading forward specifically to the Suzuki motors who owns the
major share of the Pakistan’s automobile industry, the detailed explanation is given about
its products and services. More detailed analysis is done through financial analysis
statement and its performance is analyzed on the financial side that how company is
incurring profits and what is its financial position in the market.
Last but not the least internship experience is being explained with the description of
activities performed, problem faced by the company and recommendations are given to
improve its status.
The conclusion is drawn that Suzuki motors are working efficiently but they have to
arrange training sessions for their employees, reward system should be introduced in
order to increase the employee satisfaction and loyalty to the organization and also an up
gradation of computer systems are required in this way they can excel more in the market
4
TABLE OF CONTENTS
Ch No: CHAPTERS Page #01
02
03
04
INDUSTRYIndustry IntroductionBeginning of Pakistan Automobile IndustryPresent Situation of Pakistan Automobile IndustryPak Suzuki Motor Company LimitedIslamabad Auto IndustryCompetitors in Automobile IndustryFuture Outlook of Industry
SUZUKI ISLAMABAD MOTORSCompany’s IntroductionVision StatementMission StatementOrganizational StructureOrganizational DepartmentsProductsServicesSuzuki Islamabad Motors Competitors
FINANCIAL SECTION3 Year Income Statement3 Year Balance SheetFinancial Ratios AnalysisVertical AnalysisHorizontal AnalysisSwot Analysis
INTERNSHIP EXPERIENCES Duties and ResponsibilitiesMajor Responsibilities in Accounts DepartmentSkills GainedChallenges ProblemsConclusionRecommendationsReferences
0607080910121215
171819192021232829
30313233414446
484950525556596063
5
CHAPTER 1
INDUSTRY
INTRODUCTION
6
INDUSTRY INTRODUCTION:
The automotive industry rightly prides itself on being recognized as the “mother of all
industries.” In its folds it carries many different kinds of vehicles to provide mobility to
people and goods. While they may appear to be simple machines, their design and
manufacturing have much deeper roots in all the known technologies. In-depth
knowledge and skillful application of mechanical, electrical, electronics, chemical and a
host of other technologies culminate in achievement and improvement of the
manufacturing base of a country, by focusing on a single product the automobile. This
then provides an opportunity to produce a large number of goods and services for
consumption of the entire community. Use of the word “mother” for automotive industry
is therefore the most appropriate description to define the nature and importance of the
industry.
In recent years, we have witnessed that the industrialization of South East Asian countries
greatly depend on the development of their automotive industry. Similarly, automotive
industry acted as a catalyst in the overall growth of the industry in Japan and Korea and
the consequent well being of their citizens.
In the world trade, Auto Sector is one of the largest segments. It is the major driver of
economic growth and business activities. It puts multiplier impacts on the economy. Day-
7
in, day-out around 200,000 vehicles roll off the world’s assembly lines with car as the
dominant segment of the industry.
THE BEGINNING OF THE PAKISTAN AUTOMOBILE INDUSTRY:
Pakistan is basically an agrarian economy since its independence. In 1947, agriculture
contributed more than 62% towards GDP whereas contribution of manufacturing sector
toward GDP was only 7%. Pakistan inherited only 5% of the large scale industrial
facilities of British India.
First serious effort by government to develop the industry and engineering sector in
particularly was observed in 1950 when a six-year plan (First Development Plan) was
drafted to guide government investment in developing the infrastructure for auto industry,
to overcome the initial difficulties, the government, besides developing infrastructural
facilities established the Pakistan Industrial Development Corporation (PIDC) in 1950.
The main objective of PIDC was to play the pioneering role of establishing such
industries which the private enterprise was unable to undertake either because they were
technologically complex, needed large capital or were less profitable. These steps results
in growth of the industrial sector resulting 56.62 % growth of the manufacturing sector
from 1949-1955. Investment in the automobile industry in Pakistan started in the mid-50
when Kandawalla Industries established its units for assembling buses and trucks, the
company's name was later changed to Naya Daur Motors.
8
National Motors took the indigenization when it came out in the 60's and was said to
have reached above 80% deletion of the Bedford lorries and trucks before it closed down.
Kandawalla Motors on its part came up with ‘Nishan’, a jeep copied on the pattern of
Willeys Jeep of USA by the Pakistan Army, it was said that the project was successful
but was killed before the commercial production could begin.
PRESENT SITUATION OF AUTOMOBILE INDUSTRY IN
PAKISTAN
It is indeed heartening that the mother has once again smiled at Pakistan. Fortunately the
last 3 years have witnessed phenomenal growth in the industry in terms of technological
advancements and production/sales volumes with the local contents rising as high as
90%. The industry is already employing 120,000 people, contributing more than 12
billion Rupees to GDP, contributing more than Rs. 30 billion to the national exchequer in
terms of duties and taxes, attracted investment worth Rs. 52 billion including a
substantial foreign investment.
Today the customers have choice to pick from a wide range of products including
motorcycles, trucks, buses and cars of premier Japanese and Korean brands at
internationally competitive prices which has only become possible due to local contents
and availability of highly productive and inexpensive human resources. In Pakistan the
automobile components manufacturing industry consists of mainly units producing
9
original components for assembly and units produce reconditioned and original
components for local use.
There are more than 800 vendors in the country with a total investment of over eight
billion rupees; they are engaged in the manufacturing of original components for the
assembly operation as well as producing reconditioned and original components for sale
in the local market.
They manufacture and supply the local car assemblers with auto parts such as pistons,
engine valves, gaskets, camshafts, shock-absorbers, struts, steering mechanism, cylinder
head, wheel hubs, brake drums, wheels, bumpers, instruments and instrument panels,
gears of all types, radiators, cylinder liners, blinkers, lights, doors and door locks as well
as auto air conditioners.
PAK SUZUKI MOTOR COMPANY LIMITED-PSMC
In Year 2009 the demand for automobile was sluggish .The industry for cars and light
commercial vehicles experienced 29% decline in the sales volume. The industry sold
107,768 units during the year against 151,517 units last year. The demand has depressed
during the year due to cost push inflation resulting from depreciation of Pak rupee,
limited financing by banks/leasing companies and general economics recession. Suzuki
product remain popular .Despite sluggish market demand for automobile, Pak Suzuki
remain market leader with 48% market share. The company launched new 1300cc car
(SWIFT) in January 2010. This has been well accepted by the customers. Imported used
10
cars do not really pose any threats to Suzuki products. Availability of spare parts at
economics prices and reliable after sales service are the strength of Suzuki products. The
export of Suzuki Ravi pickup to Bangladesh and exports of sheet metal parts of Suzuki
Cultus to Europe going well.
As we can see in the chart above the year 2009 revenues decreased like 20 % of the
previous years but the projected revenue of the year 2010 in exceeding all previous years.
Despite of the sluggish demand the projected revenues of the company depict the high
hopes of the management.
The Pak Suzuki Motors Company’s major revenues are collective from the Authorized
dealerships across the country. So if the PSMC (Pak Suzuki Motors Company Limited)
continues to meet the customer’s requirements it will also enable the dealerships to work
in profitability because the dealership’s profitability (Suzuki Islamabad Motors, I-9
Islamabad) is directly related with the production of PSMC (Pak Suzuki Motors
Company Limited) as per customer and societal demands.
11
ISLAMABAD AUTO INDUSTRY:
Islamabad the capital of Pakistan has millions of auto vehicles running on its roads each
day and night. For meeting the requirements of people of Pakistan, the major players of
the Pakistani Automobile Industry (Suzuki, Toyota, Nissan, Mitsubishi, and Daihatsu etc)
have developed and established their dealerships with the local businessmen. The
industry has provided the showrooms with their vehicles in various sectors of Islamabad.
Most of them are located in the Industrial Area of Sector I-9, Islamabad.
As Islamabad is considered to be a city of rich people so the industry players are putting
their special efforts on the availability of their vehicles to the customers. They also
interact with their customers through their authorized dealerships located at various
places in the city.
COMPETITIORS IN AUTOMOBILE INDUSTRY
The Automobile industry has been an active and growing field in Pakistan for a long
time, however not as much established to figure in the prominent list of the top
automotive industries. Despite significant production volumes, transfer or technology
remains low. Most cars in the country have dual fuel options and run on CNG
(Compressed Natural Gas) which is more affordable than petrol in the country.
12
There are only three major passenger car assemblers in the market; Pak Suzuki Motor
Company, Indus Motors and Atlas Honda. Paksuzuki has an almost complete monopoly
in the small car segment as it faces almost no competition other than the single odd
Daihatsu Cuore produced by Indus Motors. In the Subcompact Sedan segment Toyota
Corolla, Honda Civic, Honda City, and the Nissan Sunny are currently the only cars in
production. There are still no locally made SUV (Support Utility Vehicle) , Mid or Full
sized sedans available.
As of 2010, Pakistan has not adopted any automotive emission or safety standards.
Therefore, most cars manufactured and sold in the country are still carburettor based and
do not meet any international emission standards. Many locally made cars such as Suzuki
Mehran, Suzuki Cultus, Suzuki Ravi, Suzuki Bolan, Daihatsu Cuore, etc are globally
obsolete cars from the 1970s or 1980s which are no longer produced or sold in any
country other than Pakistan.
List of currently assembled passenger vehicles:-
1. Suzuki Mehran
2. Suzuki Alto
3. Suzuki Cultus
4. Suzuki Ravi
5. Suzuki Bolan
13
6. Suzuki Liana
7. Toyota Corolla
8. Honda Civic
9. Honda City
10. Nissan Sunny
11. Daihatsu Cuore
AUTOMOBILE ASSEMBLERS IN PAKISTAN
The following are the automobile assemblers in Pakistan
Adam Motors
Al-Ghazi Tractors
Atlas Honda
Audi
Dewan Farooque Motors (including BMW Pakistan)
Dongfeng Motor Corporation
Ghani Automobile Industries
Ghandhara Industries
Ghandhara Nissan
Hinopak Motors
Hyundai Motors
14
Indus Motors Company
Master Motors
Millat Tractors
Pak Suzuki
Sigma Motors
S.N. Kawasaki
Volvo Pakistan Limited (VPL Limited)
TCM Automobiles
FUTURE OUTLOOK AUTOMOBILE INDUSTRY IN PAKISTAN
The Automobile industry has been an active and growing field in Pakistan for a long
time, however not as much established to figure in the prominent list of the top
automotive industries.
Surprisingly, despite its large size in terms of production volume, only a few car models
are assembled in the country and customers have a very small variety of vehicles to
choose from. The lack of competition in the auto industry due to the dominance of a few
players, and restrictions on imports in the form of heavy duties has resulted in very high
prices of Cars in the country.
Most cars in the country have dual fuel options and run on CNG (Compressed Natural
Gas) which is more affordable than petrol in the country. Despite deteriorating air quality
in various Pakistani cities reaching dangerous levels, Most cars produced in Pakistan still
utilize decades old carburetor based engines which have been phased out the world over
15
for quite some time. While the world is now focusing on implementing Euro V emission
standards, Pakistan has failed to adopt even Euro II emission standards as of December
2009. It has missed the earlier deadline, which was July 1, 2008 for Euro-II compliance
in the case of petrol and a new deadline was set on July 1, 2009, which has yet been
missed again.
But on the other hand Pakistan has the right target market and potential to match new
product development, innovation and global strategies of the world automakers for Asian
markets. The need in Pakistan is to take a positive step towards creating a long-term
industry friendly policy to encourage local production. Joint ventures are taking place
between Pakistani, Korean and Singaporean companies to undertake urban planning and
handle traffic problems. The government approach in the construction of a network of
highways will provide an impetus to local production.
16
CHAPTER 2
17
SUZUKI
MOTORS
ISLAMABAD
COMPANY’S INTRODUCTION:
Suzuki Islamabad Motors, which is located in I-9 Industrial Area of Islamabad, is the
authorized dealer of Pakistan Suzuki Motor Company owned by Mr.Iftikhar Nayyer and
his son Mr. Nayyer Iftikhar who is a well known business man of a the city Islamabad.
Mr. Nayyer Iftikhar is working on the post of Managing Director (M.D.) for the company
and his father Mr Iftikhar Nayyer owns the post of Chairman of the Suzuki Islamabad
18
Motors. The dealership was acquired from Pakistan Suzuki Motors in year 2006 and from
that year the business is running successfully and providing the products of PSMC (Pak
Suzuki Motors Company Limited) to its customers here in the region of Islamabad.
MAP:
VISION STATEMENT
“To be excellent all around”
MISSION STATEMENT19
“To provide our principal’s products to their customers in
Islamabad region, and act as an efficient agent between the industry
and the ultimate consumer.”
ORGANIZATIONAL STRUCTURE
20
The flow of information starts from The Chairman Mr. Iftikhar Nayyer which then
reaches The Manager Director Mr. Nayyer Iftikhar. The Managing Director of the
controls the company as a head of all 4 departments of the organization. The information
then floats down to the concerned departments i.e., Finance, Service, Sales and Body
Shop.
ORGANIZATIONAL DEPARTMENTS:
The Chairman
Managing Director
Finance Service Sales and Marketing Body Shop
Finance Manager
Service Manager Sales Manager Body Shop Manager
S U P P O R T I N G S T A F F
21
FINANCE DEPARTMENT:
The Finance Department is headed by Mr. Nayyer Iftikhar who is holding dual position
in the organization i.e., The Managing Director and the head of Finance Department. He
looks after the financial matters of the company as the head of finance and looks after the
smooth running of the business as the Managing Director. His supporting staff in finance
department includes Mr. Mohammad Khan & Ms. Beenish. The head of Finance
department reports to the Chairman.
SERVICE DEPARTMENT:
The service department is managed by Mr. Basharat Hussain. He is working with the
organization for more than 2 years now. Service department of the organization includes
all the maintenance services that are being provided to the customers. The supporting
staff of the Mr. Basharat Hussain includes a foreman, service advisor, warranty advisor
and labors. The Service Manager, reports to the Managing Director.
SALES & MARKETING DEPARTMENT:
Sales & Marketing department of the organization is headed by Mr. Kazafi. His service
for the organization comprises of 4 years. The supporting staff includes Mr. Tayyab
Abbasi, Mr. Junaid Zia & Ms. Sumera Sarwar. This department is responsible for
developing the business and increasing the sales of the organization. The department has
also hired agents to work on behalf as B.D.O. (Business Development Officer).
22
BODY SHOP:
The body shop department is headed by Mr. Rameez Khan. His service for the
organization comprises of 3 and a half years. The major responsibility of this department
is to provide body parts installation and delivery of the vehicle to the customers. This
department comprises of a foreman and various laboring individuals.
23
PRODUCTS
Suzuki Islamabad Motors sales following vehicle products of Paksuzuki Motor Company
Limited-PSMC:
Swift (1300cc)
Price: Rs. 1,049,000/-
The European inspired exterior gives
Swift a distinctive look. A unique
stylish and design that turns a head
where you go. The spirited engine makes
for exhilarating drive and gives you
ultimate freedom where the road takes you.Colors: Pearl Red, Graphite Grey, Solid white,Indigo, Silky Silver, Aqua Blue, Eminent Blue
Liana (1300 &1600cc)
Price: Rs. 1,230,000/-
The Suzuki Liana available in 1300 cc manual transmission and 1600cc automatic transmissiontakes you out of ordinary and into the realm. Liana is entirely different car, its style; dimension and comfort will inspire you to see every day as an open door to a new age.
24
Cultus (1000cc)
Price: Rs. 897,000/-
Cultus is the blend of space and craft.
Its trim body Conceals ample space &
flexblity for both passenger and storage.
Cultus ensures everyone, exceptional
Value and quality.
Colors: Pearl Red, Graphite Grey, Solid white,
Indigo, Silky Silver, Aqua Blue, Eminent Blue
Mehran (800cc)
Price: Rs. 514,000
Unrivalled in its class, Mehran is Pakistan’s
largest selling car. More smart features like
head turning lamp, matching front grill and a
two spoke steering wheel gives it the tidy look.
Functional economy, peak performance or
unmatched fuel efficiency, Mehran VXR is the
leader.
Colors: Pearl Red, Graphite Grey, Solid white,
Silky Silver, Eminent Blue
25
APV (1500cc)
Price: Rs. 1,775,000
APV 1500 cc (Imported) The New APV gives
you everything you ever wanted in your
vehicle. Spacious interior for comfort, tough
engine to carry large loads and plenty of room
for passengers to enjoy a comfortable day long
ride.
Colors: Pearl Red, Graphite Grey, Solid white,
Indigo, Silky Silver, Aqua Blue, Eminent Blue
Bolan Van
Price: Rs. 609,000The Suzuki Bolan Hi-roof gives you everythingyou ever wanted in a van. Spacious interior forcomfort, tough engine to carry large loads andplenty of room for passengers to enjoy a comfort-able day long ride. Air-conditioned model
26
Ravi (800cc)
Price: Rs. 489,000
RAVI Pick Up 800cc Suzuki Ravi is the
veritable cargo vehicle with an amazing
capacity for load bearing and durability.
Undoubtedly, the unrivalled commercial
vehicle in its class, Ravi is the bread winner
for millions in Pakistan. This light
commercial vehicle referred to as the mini
revolution, replaced the animal-drawn
vehicles in Pakistan.
Colors: Pearl Red, Solid white, Silky SilverJimmy (1300cc)Price: Rs. 1,850,000
Jimmy 4x4 Jeep 1300cc imported steady,
sturdy and smart with new white tread brings
you the ultimate pleasure of a real 4-wheel
drive.
Alto 1000 cc Price: Rs. 680,000 /-
Smooth-riding comfort. Functional and easy
to use. Sharp looks. Offering maximum
efficiency and powered by a 1.0-litre engine
delivering peppy acceleration and responsive
performance, the Alto fully responds to
today’s driving needs in smart and stylish
fashion. An exciting set of new features now
27
make the Alto even more stylish, more
convenient and more comfortable.
LUBRICANTS
Shell Automobile Lubricant:Price Ranging from: Rs. 600 - 3000
Caltex Automobile Lubricant:Price Ranging from: Rs. 800 - 3000
PSO Auto Lubricants:Price Ranging from: Rs. 600 – 5000
Attock Petroleum Auto Lubricants:
Price Ranging from: Rs. 800 – 4000
28
SERVICES
Denting
Painting
Maintenance
29
SUZUKI MOTOR’S ISLAMABAD COMPETITORS
SUZUKI FEDERAL MOTORS:
Plot No. 8-Khayaban-e-Suharwardhy, Sector G-6-1/1, Islamabad.
SUZUKI AZIM MOTORS:
94-B, Street No. 7, I-10/3, Islamabad
30
CHAPTER 3
FINANCIAL
SECTION
31
3 YEAR INCOME STATEMENT
ITEM 2008 2009 2010REVENUE:Commission from saleFrom Labor ServicesFrom LubricantsFrom Used Cars
Rs.8,850,0004,880,0001,050,0007,470,000
Rs.5,500,0004,220,000
770,6506,885,357
Rs.7,575,340
5,360,2221,185,9675,540,657
Total Revenue 22,250,000 17,376,007 19,662,186Less: Cost of Sales 12,390,000 9,350,000 10,520,666Gross Profit 9,860,000 8,026,007 9,141,520Less:SalariesAdmin ExpensesGeneral ExpensesFreight ExpenseDepreciation UtilitiesTotal Expenses:
1,112,000550,320532,491
1,536,689322,000804,000
3,857,500
1,210,000520,900490,556
1,480,058322,000915,430
4,938,944
1,150,000510,963390,365
1,658,657306,640
1,005,5625,022,187
EBT 6,002,500 3,087,063 4,119,333Less: Taxes @ 35 % 2,100,875 1,080,472 1,441,766Net Profit 3,901,625 2,006,591 2,677,567
32
3 YEAR BALANCE SHEET OF THE
COMPANY:
ITEM 2008 2009 2010ASSETS:
CURRENT ASSETS:Cash/BankAccounts Receivable Prepaid ExpensesAutomobiles Inventory Current Assets
FIXED ASSETS:LandBuilding (Less: Depreciation)Furniture Fixtures & Computers (Less: Depreciation)Tools and EquipmentFixed Assets
Rs.
5,000,0002,500,000
500,00014,000,000___180,00022,180,000
8,000,0004,885,000
685,000
_2,400,00015,970,000
Rs.
6,500,0002,153,000
350,0009,000,000
___380,00018,383,000
8,000,0004,770,000
670,000
_2,208,00015,648,000
Rs.
5,200,0002,300,000
375,00018,450,000___420,00026,745,000
8,000,0004,655,000
655,000
_2,031,36015,341,360
TOTAL ASSETS 38,150,000 34,031,000 42,086,360LIABILITIES:
CURRENT LIABILITES:Notes PayableAccounts PayableOther short term liabilitiesCurrent Liability
CAPITAL: Owner’s EquityAdd: Retained Earnings
7,000,0004,500,000
12,500,00024,000,000
10,248,3753,901,625
14,150,000
5,900,0003,200,000
11,000,00020,100,000
11,924,4092,006,591
13,931,000
6,350,0003,800,000
_3,000,00023,150,000
16,268,793_2,677,56718,936,360
TOTAL LIABILITIES 38,150,000 34,031,000 42,086,360
33
FINANCIAL RATIOS & TREND ANALYSIS:
LIQUIDITY RATIOS
CURRENT RATIO:
Current Assets / Current Liabilities
YEAR RATIO2008 0.92 2009 0.91 2010 1.15
INTERPRETATION:
An indication of a company's ability to meet short-term debt obligations; the higher the
ratio, the more liquid the company is. Here in Year 2008 the ratio was 0.92 : 1 which
means the company has Rs. 0.92 to pay off their short term liabilities of Rs. 1. In year
2009 it reduced 0.1 but in year 2010 it increased to 1.15, this means the company has Rs.
1.15 assets to pay off their short term liabilities of Rs. 1
34
Current Ratio
0
0.2
0.4
0.6
0.8
1
1.2
1.4
1 2 3
Year
Rat
io Series1
QUICK RATIO:
Quick Assets / Current Liabilities
YEAR RATIO2008 0.892009 0.872010 1.12
ACKNOWLEDGEMENT
Quick Assets = Current Assets – (Inventory + Prepaid Expenses)
INTERPRETATION:
The Quick Assets are those which can be converted into cash with in the period of 90
days. This ratio also means that the company has quick assets in order to pay off their
liabilities. The situation here is the same, in the first two years i.e., 2008 and 2009 the
company has Rs. 0.89 and 0.87 quick assets to pay off their short term liabilities but in
year 2010 the ratio increased to 1.12 means now the company has Rs. 1.12 quick assets to
pay off their short term liabilities of Rs. 1
35
0
0.2
0.4
0.6
0.8
1
1.2
1 2 3
Rat
io
Year
Quick Ration
Series1
PROFITABILITY RATIO
NET PROFIT MARGIN:
Net Profit / Sales*100
YEAR RATIO2008 17 %2009 11.54 %2010 13.61 %
INTERPRETATION:
Net Profit Margin Ratio tells us about the percentage of Net Profit in the amount of Sales.
In this case in year 2008 the N.P Margin was 17 % that means it was the percentage of
Net Profit in the amount of Sale. In the next year it reduced to 11.54 % and in third year it
went to 13.61 %
36
0
2
4
6
8
10
12
14
16
18
1 2 3
Pe
rcen
tag
e
Year
Net Profit Margin
Series1
GROSS PROFIT MARGIN:
Gross Profit / Sales * 100
YEAR RATIO2008 44.31 %2009 46.19 %2010 46.58 %
INTERPRETATION:
Gross Profit Margin Ratio tells us about the percentage of Gross Profit in amount of
Sales. In this case in year 2008 the G.P Margin was 44.31 % that means it was the
percentage of Gross Profit in the amount of Revenue. In the next year it increased to
46.19 % and in year 2010 it goes 3 year high at 46.58 %.
37
43
43.5
44
44.5
45
45.5
46
46.5
47
1 2 3
Per
cen
tag
e
Year
Gross Profit Margin
Series1
ACTIVITY ANALYSIS RATIOS :
ASSETS TURNOVER RATIO:
Sales / Total Assets
YEAR RATIO2008 0.58 times2009 0.51 Times2010 0.46 Times
INTERPRETATION:
The asset turnover ratio calculates the total revenue for every dollar of assets a company
owns. Here in this case, in year 2008 the ratio was 0.58 : 1 which means that by utilizing
Rs. 1 Assets the company generates Rs. 0.58 in year 2009 it reduced to Rs. 0.51 and in
year 2010 it reduced to Rs. 0.46
38
0
0.1
0.2
0.3
0.4
0.5
0.6
0.7
1 2 3
Rat
io
Year
Assets Turnover Ratio
Series1
ACCOUNTS RECEIVABLE TURNOVER:
Sales / Av. Accounts Receivable
YEAR RATIO2009 7 Times2010 8 Times
INTERPRETATION:
By maintaining accounts receivable, firms are indirectly extending interest-free loans to
their clients. This is the ratio of the number of times that accounts receivable amount is
collected throughout the year. A high accounts receivable turnover ratio indicates a tight
credit policy. A low or declining accounts receivable turnover ratio indicates a collection
problem, part of which may be due to bad debts. Here in this case, in year 2009 the
accounts receivable were collected 7 times and in year 2010 the company collected them
8 times
39
6.5
7
7.5
8
8.5
9
1 2
Rat
io
Year
Accounts Receivable Turnover
Series1
RETURN ON ASSETS:
Net income / Sales x Sales / Average Total Assets
YEAR RATIO2009 5.5 %2010 7 %
INTERPRETATION:
An indicator of how profitable a company is relative to its total assets. ROA gives an
idea as to how efficient management is at using its assets to generate earnings. So in year
2009 the return on the assets were 5.5 % and in year 2010 it increase to 7%
40
0
1
2
3
4
5
6
7
8
1 2
Rat
i
Year
Return on Assets (R.O.A)
Series1
RATIO ANALYSIS:
RATIO 2007 2008 2009
Current Ratio 0.92 0.91 1.15
Quick Ratio 0.89 0.87 1.12
N.P Margin 17% 11.54% 13.61%
G.P Margin 44.31% 46.19% 46.58%
Assets T/O 0.58 0.51 0.46
A/R T/O - 7 8
R.O.A - 5.5% 7%
41
VERTICAL ANALYSIS
Vertical analysis is the procedure of preparing and presenting common size
statements. Common size statement is one that shows the items appearing on it in
percentage form.
INCOME STATEMENT
ITEM 2008 2009 2010Net Revenue 100 % 100 % 100 %Cost of Sales 55.68 53.81 53.51Gross Profit 44.32 46.19 46.49Salaries 5 6.96 5.85Admin Expenses 2.47 3.00 2.60General Expenses 2.39 2.82 1.99Freight Expense 6.9 8.52 8.44Depreciation 1.44 1.85 1.56Utilities 3.61 5.27 5.11EBT 27 17.77 25.54Taxes 9.44 6.22 7.33Net Profit 17.53 11.55 13.62
An application of the vertical analysis idea is to place all items on the income statement
in percentage form in terms of sales. Here we can see that the revenue is kept 100 % in all
three years and the percentages of various other items are determined in respect of total
revenue. If we see the item Cost of Sales in all three years, in year 2008 it was 55.68 %
of sales, in year 2009 it reduced to 53.81% of Revenue and in slightly moved down in
year 2010 to 53.51% of sales of the respective years. If we take Gross Profit in year 2008,
2009 and in year 2010 it was 44.32%, 46.19% and 46.49% of Revenue. By subtracting all
the operating expenses we come to net profit in year 2008, 2009 and in year 2010 the net
profit was 17.53%, 11.55% and 13.62 % of Net Revenue
42
BALANCE SHEET
One application of the vertical analysis idea is to state the separate assets of a company as
percentages of total sales.
ITEM 2008 2009 2010Current Assets 58.14 54.01 63.54Non Current Assets 41.86 45.99 36.46
Total Assets 100 % 100 % 100 %Current Liability 62.90 59.06 55.00Owner’s Equity 26.86 35.04 38.65Retained Earnings 10.24 5.90 6.35
Total Liabilities 100% 100% 100%
While working in Balance Sheet with Vertical Analysis we keep Total Assets and Total
Liabilities as 100 % and we take out the relative importance of the Current and Non
Current Assets in the company financial statements.
YEAR 2008:
In this year the current assets were 58.14 % of Total Assets where as the Non Current
Assets of the company were 41.86 % of Total Assets i.e., 100 % The Current Liabilities
Owner Equity and Retained Earning were 62.90 %, 26.86% and 10.24% of Total
Liabilities.
43
YEAR 2009:
In this year the current assets reduced to 54.01% as compared to Year 2008, Non current
assets increased to 45.99 % as compared to Year 2008. And in year 2009 Current assets
and Non Current assets were 54.01% and 45.99 %. Current Liability also decreased to
59.06 as compared to year 2008. Owner’s equity increased and retained earning were
reduced as it was mentioned in the introduction that in year 2009 the automobile industry
faced some depression hence it reduced the company’s retained earnings.
YEAR 2010:
In this year we can witness the increasing of Current Assets as compared to previous year
and reduction of Non Current Assets. Current Liability also decreased and a slight
increase in the owner’s equity and increase in the retained earning can be seen as the
demand for the cars in year 2010 increased.
44
HORIZONTAL ANALYSIS
Comparison of two or more year's financial data is known as horizontal analysis. In this
analysis we keep one year as base and we examine the changed of the respective items in
the next years.
ITEM 2008 2009 2010Net Revenue 100 % (0.22) (0.12)Cost of Sales 100 (0.25) (0.15)Gross Profit 100 (0.19) (0.07)Salaries 100 0.09 0.03Admin Expenses 100 (0.05) (0.07)General Expenses 100 (0.08) (0.27)Freight Expense 100 (0.04) 0.08Depreciation 100 0.00 (0.05)Utilities 100 0.14 0.25EBT 100 (0.49) (0.31)Taxes 100 (0.49) (0.31)Net Profit 100 (0.49) (0.31)
In this analysis year 2008 is being kept as base and we see the relative changed in the
next years by keeping it a base. If we assume that the revenue of the year 2008 is 100 %
in year 2009 it reduced by -0.22 % and in year 2010 the reduction of Net Revenue as
compared to year 2008 is by -12% and same goes for the rest of the items.
45
BALANCE SHEET
ITEM 2008 2009 2010Current Assets 100 % (0.17) 0.21Non Current Assets 100 (0.02) (0.04)
Total Assets 100 (0.11) 0.10Current Liability 100 (0.16) (0.04)Owner’s Equity 100 0.16 0.59Retained Earnings 100 (0.49) (0.31)
Total Liabilities 100 (0.11) 0.10
Same concept is being followed here in Balance Sheet, 2008 year was kept as base year
and the relative changes are being observed from here. For instance, Current assets were
100 % in year 2008 the reduction in year 2009 was by 17 % and in year 2010 the increase
was by 0.21 % of the base year amount and same goes for rest of the items.
46
SWOT ANALYSIS
STRENGTHS:
Suzuki motors have following strengths over other companies of same industry.
Highest Market Share
Low Price Vehicles
Highly Innovative and deep product link
Well Managed and highly competitive staff
Easy availability of spare parts
Public demand for Suzuki cars.
47
WEAKNESSES:
Increasing Accounts Receivable
Lack of training of employees
Reflect economic crises
OPPORTUNITIES:
Increasing Demand for Cars
Provision of cheap services
Opportunity to improve skills
THREATS:
Uncertain economic competition.
Political instability.
Increase in cost expenditure of car assembling and making
Growing global technological advancement.
Change in preferences of customers.
Suzuki motors can overcome these threats by:
1. Create awareness in the target market with cost effective media promotions.
2. Delivering benefits better than any actual or potential customer.
48
CHAPTER 4
INTERNSHIP
EXPERIENCES
49
I started working in Suzuki Islamabad Motors on 1 st June, 2010 on the post of Internee
Officer for the period of 8 weeks internship for the completion of my Masters of
Business Administration’s degree. Mr. Nayyer, Managing Director of the organization
conducted my interview on the day prior to my appointment as the Internee Officer and
as per my previous work experience and degree field I was posted in the Accounts
Department of the organization.
DUTIES AND RESPONSIBILITIES
ACCOUNTS DEPARTMENT:
I joined the Accounts section of the organization on 1st June, 2009 and worked under
supervision of Finance Head Mr. Nayyer and in collaboration with Mr. Mohammad Khan
& Ms. Beenish for the period of 8 weeks. I was responsible of recording the accounting
entries directly into the software, their posting into the ledger accounts, extracting trial
balance and making financial reports. I have worked on the accounting cycle which is
very beautifully explained in the following diagram:
50
For the purpose of completing the accounting cycle, Suzuki Islamabad uses computing
software which is named as “Sun Solaris Accounting System” in which all the accounting
functions are built-in.
MAJOR DUTIES IN ACCOUNTS DEPARTMENT:
1. Revenues when received in form cash or in cheque they are transferred into
separate collection account. All these amounts get credited in the system
automatically. For collection company uses 45813 code number, which gets
transferred into the Ledger Accounts automatically. Revenue is the main head
which comprises of many other revenue accounts like Commission from Sale of
Cars, Labor Charges, Revenues from Sale of Lubricants, Revenues from sale of
used cars etc. All of these accounts have their own sub-codes. Revenues are
recorded in their respective codes.
51
2. Expenses paid through cash or cheques are posted to the main head of expense
account i.e., General Disbursement Account code-45814. Which is comprised of
sub-account with their codes Sub-accounts are like Salaries, Commission, Admin
Expenses, General Expenses, Freight Expense, Depreciation & Utilities Expenses
etc Expenses are charged to their respective codes.
3. Petty cash is also maintained in the accounts section by the system. For this
purpose invoices are attached with the petty cash voucher having details of the
expense along with the details of payee. Now these expenses will be posted in to
the separate petty cash head code number: 92105.
4. At the month end the company obtains the ledger balances of the accounts used in
the month.
5. Using these above ledger balances the system automatically generates the income
statement and the balance sheets.
6. I was also responsible of filing up the documents in their respective files along
with the voucher and attached source documents with the signature of the
accounts head.
52
SKILLS GAINED
OFFICE WORKING SKILLS:
I had to maintain vouchers, registers, perform some other documentation, as well
as work on the system. Thus I learned manual as well as the system office
working skills.
TEAM WORK:
During my stay in the organization I have learned how to work in a team oriented
workplace. Teams work plays an important role in a modern organization. From
software engineers who collaborate to write code to the boards of directors who
gather to make strategic decisions, teams are increasingly being used worldwide
as the foundation of work.
ORGANIZATION NORMS AND VALUES:
Norms are the general expectations of a demand character for all role incumbents
of a system or subsystem. Values are more generalized ideological justifications
53
for roles and norms, and express the aspirations that allegedly inform the required
activities. During my stay in the workplace I have learned how to follow the
organization’s norms and values by aligning my self with the organization’s
norms and values. Flexibility in nature is the essence of following norms and
values of an organization.
QUALITY OUTPUT AND COMPETITIVENESS:
Today’s age is full of competition and competitiveness; I have learned that if I
want to stay in the organization and make the management happy through my
performance I should have to give quality output and stay competitive to compete
with my fellow co-workers.
INNOVATION:
Innovation is the key to success; I have learned how innovation leads to happiness
of management.
ACCOUNTING SOFTWARE:
Working in accounting software was totally new for me because previously I have
been doing all the accounting work manually. I have learned the ways how to
operate the accounting software in this organization.
54
ACCOUNTANCY SKILLS:
I have learned how to use the accountancy skills that I have learned in my study
period. That includes the whole accounting cycle.
ORGANIZATIONAL BEHAVIOR SKILLS:
I have learned how to behave in the organization which I have studied in the
subject of my final semester i.e., Organizational Behavior, the skills I have gained
during the study period were implemented and went successful.
PRESENTATION SKILLS:
Presentation skills I have gained during my study time were used by me in the
organization.
COMMUNICATION SKILLS:
Communication skills were also gained during my study time which I used in the
organization for both upward communication and downward communication.
COMPUTER AND TECHNICAL SKILLS:
Computer and technical skills I have gained from my personal experiences were
also used by me during my stay in the organization.
SELF-MANAGEMENT SKILLS:
Self-management refers to methods, skills, and strategies by which individuals
can effectively direct their own activities toward the achievement of objectives,
55
and includes goal setting, decision making, focusing, and planning. I have used
the Self Management skills in order to achieve my goals and objectives for the
period of my internship.
STRESS MANAGEMENT:
Stress Management is a topic which I have studied in my course of Organization
Behavior and I have implemented it in my course of work during my internship in
the organization.
CHALLENGES:
PRACTICAL WORK AND THE BOOKISH KNOWLEDGE:
Studies educate student about the theoretical features of practical work this is so students
face difficulties in the real life situations of the organization. So being a fresh student I
encountered different sorts of problems that were challenging for me.
ADJUSTING WITH THE EMPLOYEES:
The organization was completely a diverse one, the employees were from diverse
background on the basis of race, color and ethnicity. So I have faced major difficulty in
settling with them.
LACK OF KNOWLEDGE ABOUT THE AUTOMATED ACCOUNTING
SYSTEM:
56
The organization was using Sun Solaris Accounting System for their accountancy needs,
I had almost no knowledge regarding it. It was a biggest challenge for me to understand
the working of that system.
PROBLEMS:
I have faced the following problems during my stay in the organization:
OFFICE ENVIROMENT:
The environment of the company is very political and professional jealousy also
exists in the organization.
DISTRIBUTION OF WORK:
Distribution of work is not proper. Some people are overburdened with work.
OBTAINING THE SOURCE DOCUMENTS & MISAPPROPRIATION OF
THE EXPENSES MADE:
57
The problem I have faced most is obtaining of the source documents of the
expenses made which was a major responsibility of mine. I was required to file up
the expense voucher with the source document in the file.
DELAY IN DECISION MAKING:
The company is following a semi centralized structure in the organization it takes
days to make a decision because of complex organizational structure.
EMPLOYEE PARTICIPATION IN ACR’S:
Employees were not given complete knowledge about their ACR’s. They were
not aware of the basic elements on which the ACR’s are based upon.
LOW LOYALTY OF EMPLOYEES:
The loyalty of employees was low due to lack of confidence over the employees
by the management.
LACK OF TRAINING PROGRAM:
The organization does not provide proper training to employees of service and
body shop department as they are the back bone of the second highest revenue
generation head of the company. Company also lacks training programs for their
sales staff.
LACK OF HEALTHY ENVIRONMENT:
58
In the office section the organization maintain the healthy environment for the
employees but on the other hand the situation in the workshops is opposite of it
the labor lack basic kits. First aid kits are not provided either.
OUT DATED COMPUTER SYSTEMS:
The computer systems which are in use are mostly out dated, they take lots of
time in executing the commands like printing, scanning etc.
UNFRIENDLY ENVIRONMENT OF THE MANAGEMENT:
The organization is not keeping a friendly environment with their employees; they
often complain about this system with each other, this is also reducing the
employee loyalty.
LACK OF SECURITY MEASURES:
Terrorism problems are increasing with every passing day the premises of the
organization lacks security measures.
INCREASING OPERATING EXPENSES:
Company’s Operating expenses are increasing from year 2008 to year 2010.
LACK OF REWARD SYSTEMS:
Rewards are a mean of increasing the employee’s loyalty to the organization and
the company lacks this system.
59
CONCLUSION:
From the above analysis and my working experiences in Suzuki Islamabad Motors I can
easily say that the organization is using modern day techniques in operations & in
working. As we know that no such organization in the world is free from problem. It is
the responsibility of management to cope with the problems and resolve them for the
growth of the organization. The managers realize the problems but they have not given
proper opportunity to implement their strategies in their respective departments. The top
management also has to realize the prevailing situation in the organization; they have to
listen to their employees as they are the major stakeholders of the policies which are
being implemented by the organization.
60
Upon some problems the organization also has some good aspects of it like, beautiful
premises, strong customer relations, deep product line of Pak Suzuki Motors Limited is
placed in the organization’s showroom.
During my internship I have learned many new things in spite of the knowledge gained at
university and also came to conclusion that education alone is not enough, practical
training in every field is crucial to become a successful manager.
The automobile sector is one of the fastest growing sectors of the country, but the
implication of new taxes by the government will surely going to hurt it, which will
ultimately reduce the profits of dealership businesses like Suzuki Islamabad Motors.
RECOMMENDATIONS:
Following are the recommendations to the above stated problems:
The problem of obtaining the source documents and misappropriation of expense
from can be solved by issuing the expense voucher before making the actual
expense by forecasting the expense amount and they should be paid in advance.
The delay in decision making is being caused by the complex centralized
structure of the organization. The organization can solve this matter by giving
autonomy and liberty to the managers so that they can make timely decisions
regarding their department matters.
61
The biggest problem regarding ACR’s is that the employee does not know that
which factor contributes most in his ACR, whether its punctuality, output,
obeying of orders, general behavior etc. The employees should know about the
factor that is contributing in making his ACR so the managers should let the
employees know about the contributing factor on which the ACR is based.
The loyalty of the employees was extremely low the reason was they were not
being trusted by the management. The management should put their trust on the
organization’s employees in order to gain the organizational loyalty.
Training polishes the individual’s skills and also helps them in obtaining the new
skills. For the body shop and the maintenance department the company should
appoint a well-trained instructor for the illiterate denters and painters so that he
could watch the workers and observe their problems and give proper training to
them by arranging training sessions and same should be adopted for rest of the
staff.
Environment plays vital role in the productivity of an employee, the organization
lacks the proper kits for the workers they should be provided their proper kits with
gloves and helmets and they should ensure the safety of the employees by
installing fire extinguisher in the premises especially in the work shops.
62
Most of the clerical work is being done over the computers and most of them
were out dated. The organization should scrap the previous computer systems and
replace them with new and latest ones, in order to get maximum out of it.
The environment of the organization should be made friendly with the employees
by giving them proper time, listening to their problems and solving them in the
best way the managers can.
Company is lacking the security measures, walkthrough gates should be installed
along with other metal detectors to ensure the safety of the employees as well as
the building.
The operating expenses are increasing, most of the employees waste printing
papers and other stationary items. There was no proper check and balance over it.
Company has to focus her attention towards it by implementing proper check and
balance.
The reward systems should be implemented in the organization, intrinsic or
extrinsic rewards should be given in order to gain more loyalty of the employees,
which could be gained by making a monthly prize of employee of the month
award from each department.
63
Above are the recommendations that I would make to the company. Acting upon them
will surely increase their employee satisfaction, loyalty and their interest in work also
their productivity which will ultimately increase the company’s productivity in means of
profits and also in means of the good will.
REFERENCES:
Ghani M.A Advance Accounting 3rd Edition
Sondhi Fried Analysis of financial statement 3rd Edition
Brigham & Houston Fundamental of Financial management 10th Edition
Brealey Myers Marcus Fundamental of Corporate Finance 4th Edition
Uma Sekaran Research Methods for Business 4th Edition
Fred Luthans Organizational Behavior 11th Edition.
64