Presented to:

Mr. Asad Ali

Presented by:

Mueen Hassan

Roll No. 23

BBA

Session 2010-2014

Department of Management Sciences

The Islamia University of Bahawalpur, Bahawalnagar campus.

This report is dedicated to our beloved Prophet Hazrat Muhammad (S.A.W.), the last

messenger of Almighty ALLAH, and to all those who are cause of my success. These are my

loving and respected teachers, my lovely parents, classmates and all these who were helping

hands to make me successful. I pray to Almighty ALLAH that may ALLAH make me able to

give the smallest part of my knowledge to others to infinity old age. (Ameen)

Firstly, I want to say a great thanks to Almighty ALLAH, who make me able to complete this

task and then I am very thankful to my respected teachers. I am very thankful my respected

teachers for providing such a friendly and co-operative atmosphere and guidelines not only

for the academic affairs but for all extracurricular activities and also other social and future

prospective, by sharing their remarkable experiences.

It was a pleasant and thrilling experience to work in Punjab Small Industry Corporation.

(PSIC). I pay my gratitude and thank to all these who helped me in preparing this report by

sharing their best of knowledge.

It is due to endless efforts & co-operation of seniors and fellow members at Punjab Small

Industry Corporation who provided me every favor and the last but not the least. I am really

very thankful to my beloved parents who have always been a source of inspiration for me.

Executive Summary 1

Chapter # 1

Introduction 3

History 5

Mission Statement 6

Vision Statement 7

Organization Setup 8

Location of the Offices 9

Details of Directors 10

Organogram 11

Chapter # 2

Department 13

Marketing Mix 15

HR Activities 16

Chapter # 3

SWOT Analysis 18

PEST Analysis 20

Financial Analysis 22

Limitation of the Analysis 30

Chapter # 4

Learning as Internee 32

Conclusion 32

Recommendation 33

Annexure 34

1

In this report, an attempt is made to explore functions of Punjab Small Industries

Corporation Lahore. Punjab Small Industries Corporation is making its greatest efforts to

grow, encourage and update the small industries in Punjab with the help of top accessible

capital and specialized persons. It is working with The Bank of Punjab for the development

of the small industries of the Punjab.

Today’s life is very fast and full of competition. So, only theoretical knowledge in not

enough. Practical work is necessary to stand with fast and competitive environment. So,

Practical work and research based on assignments is an integral part of our study program.

For the sake of practical experience, 6 to 8 week Internship is conducted.

So I did my six weeks Internship at Punjab Small Industries Corporation, Lahore. After that I

am writing this report to tell about the organization and its processes and also functions of

different departments.

I have divided this report in different sections. In the 1st chapter, I have gave introduction of

the organization and told about its History, Objectives, Corporate Setup, Hierarchy of the

Organization.

1After the Introduction, what about different departments and their functions. I have

discussed its different departments and their functions, marketing mix and HR activities of

PSIC. I tried to briefly discuss these Departments in accordance with their functions.

Chapter 3 contains SWOT analysis, PEST analysis and financial statements analysis which

includes both, horizontal and vertical analysis. Similarly, some ratios analysis is also given

such as Liquidity ratio some other Important Ratios.

4th chapter include what I have learnt as internee. After that, some Recommendations are

given according to analysis. In the end conclusion is given.

I have tried my level best to explain the different processes and functions of the organization,

which I have learnt as Internee. I tried to write the report in very simple manner so that a

reader can easily understand it.

2

Chapter No. 1

Introduction

1- History

2- Mission and Vision Statement

3- Organization Setup

4- Organogram

3

1.0 Introduction

The PSIC was established in 1972 as a separate body. Its main objective was to

promote and to develop the small-scale industries in the province of Punjab.

The PSIC covers the critical areas of investment promotion and provision of credits

for setting up new industries and modernization of the surviving ones. It besides supports the

communal skill center, expertise transference, management, handcrafts expansion and

scheme abilities.

PSIC’s Strategy:

To meet its stated mission and vision, PSIC will do the following activities:

1- Improve present small and lodge diligences through fermentation of expertise, funds

and commercial expansion support services.

2- Deliver superior chances to current industries by associating them with improved

marketplace Prospects.

3- Deliver provision to grow a cultured and expert work strength, and by growing the

technical and administration abilities of small businesses.

4- Encourage advanced efficiency and profits in lodge and small-scale industries.

5- Making sure the reliable developing of the small and medium scale business.

Core Functions

There are three core functions through which PSIC will achieve its strategy. The core

functions are:

I. Ensuring entrance to funding small & lodge industries

II. Cluster growth

III. Working towards developing an permitting commercial setting for small & lodge

industries

I. Ensuring entrance to funding small & lodge industries.

PSIC’s main core function from a long period is to provide short fund distribution to

small and lodge industries. In this regard, Government of Punjab allotted Rs. 1 billion for

fund distribution to small and lodge industries in earlier year. From these funds, partial was

straight distributed through PSIC whereas the other has been routed to B.O.P, by PSIC, for

loaning. For micro and small enterprises, a major control is to insufficient entrance to

funding.

Under this core function, PSIC will:

Pull through its remaining credits to small and lodge initiatives

Continue in the little period with its straight fund distribution, in line with the

Government of Punjab’s strategy

Grow a planned enterprise for long period of time with BOP (or some other

partners) to certify fund distribution over these companions, with PSIC

performing as an organizer in terms of capacity-structure of these companions.

4

II. Cluster growth Under this function of PSIC, 13 industrial clusters for sports goods and clinical tools

in Sialkot, Shahdara and Multan whereas leather and associated goods in Gujranwala &

Kasur. While woody equipment in Gujrat, Rawalpindi & Kot Addu and silver in Wazirabad

have been established until now. About 6600 enterprises have started their work until now.

So, it can be said one the most effective projects taken by PSIC.

III. Working towards developing an permitting commercial setting for small &

lodge industries

PSIC is making census and survey of small, lodge and domestic manufacturing

businesses. These census are very vital as no other organization is collecting such valuable

data for this purpose.

This Core function encompass:

PSIC will appraise annual census method and will change it as required.

It will play a main character in leading policy creativities for making an assisting

policy location for development of businesses.

It will work with Bank of Punjab as well as with other companions such as Punjab

Economic Research Institute to discover the chances of subcontracting data gathering

task to those institutes.

1.0.1 Issuance of Loan In 1984 (PSIC) started monetary support to Small and Lodge Industries directly and

indirectly. Up till now (PSIC) has distributed 3926 Million rupees under 13 loaning schemes.

The loan limit was from Rs. 25000 to Rs. 3,000,000 and 19056 persons directly got the aids.

The recovery rate of (PSIC) is 90% which shows that all loans were properly used.

1.0.2 Re-activation of small industry Advisory Services (S.I.A.S) Punjab Small Industry Corporation has restarted the S.I.A.S in its Head Office, 5th

floor, LDA Plaza, Egerton Road Lahore. The basic objective of S.I.A.S is to deliver statistics

about (PSIC) accomplishments and about commercial, mechanical training institution,

producers of diverse small manufacturer and house hold devices.

This Cell will help out all those persons who want to launch their own commercial set

up but not have info of their own business set up but not have information of their

requirements and also not sure about establishment cost of their requirements and also not

sure about establishment cost of their required projects. For this purpose 2 books of cost

estimates of different small scale industries and businesses have been uploaded on (PSIC)

website. In future the functioning of SIAS will be extended from head office level to all

regional offices level.

5

1.0.3 Objectives:

The main Objective of PSIC is to promote small and cottage industries through

market driven industrial and credit provision, donating to employment generation and

socioeconomic uplift of the province. So, to support the small and cottage industries, PSIC

has carried out the following activities over the years:

1- Funds distribution

2- Growth and preservation of small industrial estates

3- Common facility centers at major clusters in Punjab

4- Handcraft growth, acquisition and sale through factories

1.1 History of PSIC:

For the development of small level industries in Pakistan, an organization by the name

of West Pakistan Small Industries Corporation was established by the Government in 1965. It

worked for the growth of small and cottage industries until East Pakistan separate from West

Pakistan. In 1972, when West Pakistan Small Industries Corporation was dissolved, then as

an effect of its closure, Punjab Small Industries Corporation was established. The Punjab

Small Industries Corporation Bill, 1973 was approved through the Regional Assembly on

July 13, 1973 and circulated as an Act of Regional Legislature of Punjab on August 12, 1973.

Punjab small industry has 48 years magnificent past in the form of funds, structure, expertise,

mechanical provision and other resources specifically in these:

1. Metallic production growth center in Sialkot.

2. Institution of Stoneware Growth and Pots at Lahore & Gujrat.

3. Institution of Pelt Expertise & Light Manufacturing Facility in Gujranwala.

4. Silver Growth and Public services for isolated zone in Wazirabad.

5. Sports Goods Service by a center in Sialkot.

6. Formation of 3 vital and innovator industrial estates at Gujranwala, Sialkot and

Gujrat.

PSIC contributed its extraordinary part in economy of the Pakistan in last years. It has

introduce many loan schemes, Develop cluster & craft growth center in different areas of the

Punjab. It also established Information Technology centers to meet the prerequisite of the

modern age. It has also introduced ten loans schemes for un-employed persons. These

schemes play a vital role in generation of employment in the Punjab.

22 industrial estates have been established which are located in Bahawalpur,

Khanewal, Mianchanu, Multan, Gujranwala, Jehlum, Rewalpindi, Gojar Khan, Texla,

Mianwali, Sargodha, Kasur, Sambrial, Chakwal and Lahore. The total area of all these

industrial estates is 1845 acres which were divided in 6834 plots from 05 marla to 04 kenals

out of which 6774 plots have been allotted to Small Scale industrialists and Skilled Persons

who are providing employment opportunities to more than 55000 persons.

6

The basic mission of the Punjab small industry corporation is:

The support of small, micro and cottage zone of the Punjab by creating capable and

efficient, thus transporting socio-economic power to people of the province of Punjab.

7

PSIC will work for the development of small and medium scale sector in a new way that is:

It is reasonable, advanced and differentiated

It contributes sufficiently to the gross products of the Punjab

It provides better labor income and increase the life standard of the people

It is environmentally and publicly yielding

It generates products that has superior value along them

It hires a huge number of expert and enthused workforces

It is high technological and efficient

It has broad connections with markets

8

1.2 Organization Setup:

Serial Number Region Branches of (PSIC)

1 Lahore 8

2 Rawalpindi 12

3 Gujranwala 8

4 Faisalabad 4

5 Sargodha 5

6 Multan 6

7 Bahawalpur 7

8 Dera Ghazi Khan 7

(PSIC) has established 08 Directorate in its Head Office, 08 Regional Offices t

divisional level and 31, District Development Offices at district level to achieve its objectives

for easy access to un-employed skilled persons and small industrialists. Now 1313 employees

of (PSIC) are using their skills and abilities for the promotion and development of Small

Scale Industries in the Province of Punjab.

9

1.2.1 Location of the offices

Lahore Region

1. SIE - I, Lahore, Kot Lakpth

2. SIE - II, Sunder, Lahore

3. SIE - Kasur, G.T Road

Rawalpindi Region

1. SIE - Jhelum, G.T Road

2. MIE, Gujjar Khan, G.T Road

3. MIE, Chakwal, Pindi Road

Gujranwala Region

1. SIE- I, Gujranwala, G.T Road

2. SIE - II, Gujranwala, Khiali By Pass Road

3. SIE - III, Gujranwala (EPZ), G.T Road

4. SIE, Gujrat, G.T Road

5. SIE, Daska, Sialkot Road

6. SIE - I, Sialkot, Ugoki Road

7. SIE - II, Sialkot (EPZ), Wazirabad Road

Faisalabad Region

1. SIE, Faisalabad, Sargodha Road

Sargodha Region

1. SIE, Sargodha, Lahore Road

10

Multan Region

1. SIE, Mian Channu, G.T Road

2. SIE, Khanewal, Multan Road

3. SIE, Bahawalpur, Multan Road

1.2.2 Details of Directors (Head Office)

Index Number Name Designation

1 Mr. Farhan Aziz Khawaja Managing Director

2 Mr. Ashiq Hussain

Aulakh

Dept. Managing Director

3 Mr. Javaid Nazir Director (Admin. & Coordination)

4 Mr. Abdul Ghafoor PS to Dep. (MD)

5 Mr. Ch Ghulam Nabi Director(C & M)

6 Mrs. Shaheen Khawar Director (P & N )

7 Mr. Babar Nawaz Director (Estate and Development)

8 Mr. Talat Ahmad Butt Director (Finance)

9 Mr. Tariq Mehmood Director (Works)

11

1.3 Organogram:

12

Chapter #. 2

Finance & Accounts Department

Expenditure Section

Budget Section

Audit and Pension Section

Final Accounts Section

Marketing Mix of PSIC

Human Resource activities

13

2.1 Major Functions & Duties of Department of Finance & Accounts

The Department is overseen by Mrs. Shaheen Khawar. The Department consisting

of 4 further departments which are control by Joint Directors. The department of Finance

and Accounts is consisted 65 Employees. In all departments of Finance and Accounts

different duties are performed. And the duties and functions is control by the joint directors

of Expenditure, Budget, Audit and Pension, and Final Accounts. Further function of each

section is following below.

Expenditure Department The Expenditure department is controlled by the Joint Director of Expenditure d Department.

Major Function of the expenditure department is as under.

Functions of Expenditure Department

Funds of Regional Offices

All funds are approved and discuss in the expenditure department

Pre-audit Internal audit is also done in the expenditure department and this department critically see the

financial statements.

Head Office Payments

The payment is approved which is use for the head office use.

Prepare Ledger

The ledger is prepared of all head office and regional office accounts.

Loan Schemes

The loan schemes are also see here.

Investments Schemes

All schemes of the investment which is by the (PSIC) are discuss here.

Budget Department

Functions of the Budget Department

Grants and Loans

All grants and loans for the development and non-development projects of the (PSIC).

Budget of (PSIC)

Budget of the (PSIC) head office and the regional office is declared.

14

Income & Expenditure The budget department is also examining the income and expenditure.

Reconciliation of funds

In the budget department the funds is also checked in the department.

Audit & Pension Department Functions of Audit and pension department

Commercial Audit The audit of the funds and projects and the financial statements.

Pension

Functions of Pension Section

Preparation of Pension Accounts

The pension account of the individual employees is prepared and maintains it.

Pension Calculation

The pension of employees is calculated finally.

Verification of the Pension

The pension amount is also verified by the Pension Section

Medical Allowance

Medical allowance for the employees and the retirees.

Final Account Department

Function of final Account is as under

Accounting Instructions

The Final accounts issue the instruction which is followed by the (PSIC) head office and the

regional offices.

Financial Statement

The financial Statements are also prepared.

Evaluation of Financial Statements

The financial statements are evaluated and check the errors and mistakes.

15

2.2 Marketing Mix of PSIC:

There is no formal marketing mix of PSIC as its government organization that is

established for growth and development of small industries in the Punjab. PSIC has the basic

motive of the development of small estates and profit is its secondary purpose. However, its

general marketing mix can be seen as mentioned below:

1. Product:

The basic product of the PSIC is loan to the small industries and estates. It gives loans

to those small industries who are facing finance problem in their development. So, we can

say that loan is the product/service of the PSIC.

2. Price:

Its product price to customers is very low comparing to other commercial institutions

that give loans to people. PSIC charge interest rate below 15% that is quite low form other

commercial institutions that charge about 15 % to 20%. Moreover, PSIC have very easy

conditions for loan for small industries and estates.

3. Place:

PSIC is offering its loan schemes all over the Punjab province. Any small industry of

province of Punjab can get loan from the PSIC on very easy conditions.

4. Promotion:

There is no formal promotion of loans. However, when PSIC launches new schemes,

it give ads in some newspaper and few T.V channels. It also promote old schemes after few

months but it promote old loan schemes rarely.

16

2.3 HR Activities of PSIC:

Although there is HRM department in PSIC but basic human resources activities are

determined by the government of the Punjab. Government of the Punjab give instructions

regarding to important human resource activities of PSIC. HRM department control these

activities. Some the HR activities of PSIC are given below:

I. Recruitment and Selection:

HRM department recruit new person and select them. However final selection of high

level post is approved by government of the Punjab. Low level recruitment is done by

the HRM of the PSIC.

II. Employees Relations:

HRM department work for better relationship with the organization employees as well

as for better relations among employees.

III. Employees Surveys:

HRM department also conduct surveys of the employees to know their problem and to

make them more motivated.

IV. Compensation and Benefits:

HRM determine the compensation of the employees. It also determine extra benefits

that will be given to the employees.

V. Employees Information:

It take records of each employee according to their skill.

VI. Attendance Management:

It keeps the records of attendance of the employees and use these records in

promotion or demotion of the employees.

VII. Leave Management:

It determines the leaves of an employees. An employee cannot take more leaves that

are determined by HRM department.

VIII. Performance Management:

One of the basic function that HRM department performs is the performance

management of the employees. It measure performance of each of the employee and

then take action that are necessary for improvement.

17

Chapter #. 3

SWOT Analysis

PEST Analysis

Financial Statements Analysis

Common Size analysis ( horizontal + vertical )

Ratio Analysis

Profitability ratios

Liquidity Ratios

18

3.1 SWOT Analysis

Strengths

Political Support

Political support is very important for any organization success and the (PSIC) have Govt.

support.

Successful History

The (PSIC) is established in 1973 and it has a successful history from 1973.

Initiative Projects

In (PSIC) new projects are started such as Mechanical Tandoor, Rickshaw Schemes etc. All

these Projects have very initiative for the unemployed youth.

Loan Recovery

The loan which is given by (PSIC) to small industries is recovered 90% in the 2011-12.

Skilled Employee

The employee of (PSIC) is motivated and skilled the Managing Director distributes laptops,

fax machines, and printers among the employees and directorate.

Weaknesses

Marketing Campaigns

In adequate marketing campaigns of new projects and handicrafts shops.

Technological Advancement

In (PSIC) most work is done manually there is no use of the advance technology.

19

Opportunities

Growth the Economy

They have an opportunity for the (PSIC) to support the Small industry sector and the result is

the growth of economy is possible.

Clear Vision

The vision of the (PSIC) is clear and it is an opportunity for (PSIC) and through which the

growth of economy is possible.

Threats

Financial Losses

PSIC is bearing financial losses from 2004 to 2007 that is great threat for PSIC.

Non-performing loans

Some Small industries that get loans from PSIC are not using these loans for the growth of

business but they are using these loans for their personal work.

20

3.2 PEST Analysis

In PEST analysis we see four variables which are Political, Economic, Social, and

Technological.

I. Political

The political condition is also affect out the organization on the same way political

instability is harmful for industries and when new Govt. take position they were make new

policies which is follow by the industries, the industries is play vital role for the boost of any

economy same way in the Pakistan Political instability is harmful for industrial sector. And

(PSIC) is also affect out by the policies of the Govt. now this Govt. is stable and (PSIC) is in

well Position.

II. Economical

Economical variable is very important; industry may a backbone of any economy and

contribute in growth of economy and (PSIC) is also contribute in economy and provide

direction and facilitate the industrial sector.

III. Social Cultural Factors

Social culture factors also affect the business. They show in which people behave in

country. Socio-cultural factors like customs, traditions, tastes, preferences, buying and

consumption habit of people, their language, beliefs and values affect the business. So, PSIC

also operates under this social environment and it is also affected by this factor.

These factor are changing continuously people’s life style, their behavior,

consumption pattern etc. is changing and also creating opportunities and threat for every

organization.

Change in lifestyle

Life style of Pakistan is changing rapidly. They are demanding high class

products. They have become more advanced. People want everything car, mobile.

21

Population

Increase in population is one of the important factor, which affect every

organization. So PSIC would open their branches after looking into the population

demographics of the area. About 70% of population is below 35 years of age. They are in the

prime earning stage and this can increase the earning of PSIC.

IV. Technological

Technology is very important for the success and failure of the organization and in (PSIC)

Advance technology is less used. The cost of (PSIC) work is increased.

22

3.3 Financial statement Analysis

3.3.1 Horizontal Analysis

Horizontal Analysis of Income Statement:

Figures in Pak

Rs.

2004-2005 2005-2006 2006-2007

Sales 45,607,331.00 100% 49,440,493.00 10 8.4% 56,297,353.00 123.43%

Other Income 265,528,772.00 100% 234,132,773.00 88.17% 280,874,945.00 105.77%

Total revenue 311,136,103.00 100% 283,573,266.00 91.14% 337,172,298.00 108.36%

O/B: Stock

21,388,595.00 100%

23,415,088.00 109.47%

23,352,842.00 109.18%

Received

during Year

33,458,243.00 100% 34,893,861.00 104.29% 40,708,128.00 121.66%

Other Direct

Expenditure

2,571,322.00 100% 1,886,236.00 73.35% 2,619,956.00 101.89%

C/B: Stock 23,434,324.00 100% 23,466,473.00 100.13% 24,865,637.00 106.10%

Cost of Goods

Sold

33,983,836.00 100% 36,728,712.00 108.07%

41,815,289.00 123.04%

Gross Profit 11,623,495.00 100% 12,711,781.00 109.36% 14,482,064.00 124.59%

Employee

Related

Expence

132,219,905.00 100% 163,493,137.00 123.65% 172,084,074.00 130.14%

Running &

Administration

39,087,336.00

100%

40,478,747.00 103.55% 47,036,011.00 120.33%

Leave Salary,

pension &

Gratuity

57,144,871.00 100% 79,352,368.00 138.86% 52,548,074.00 91.95%

Financial

Charges

176,769,892.00 100% 115,471,807.00 65.32% 91,686,888.00 51.86%

Depreciation 21,024,462.00 100% 22,473,484.00 106.89% 24,441,110.00 116.25%

Total

Expenditure

426,246,466.00 100% 421,269,543.00 98.83% 387,796,157.00 90.97%

Net Profit (149,094,199.00) 100% (174,424,989.00) (116.98%) (92,439,148.00) (62.00%)

23

Horizontal Analysis of Balance Sheet:

Figures in Pak

Rs.

2004-05 2005-06 2006-07

Current Assets:

Debtors-Estates 19,162,806.00 100% 32,167,742.00 167.86% 22,000,668.00 114.80%

Debtors - Other

units

3,286,377.00 100% 3,520,276.00 107.11% 3,731,354.00 113.54%

Advances &

Deposits

34,753,645.00 100% 46,876,158.00 134.88% 64,429,533.00 185.38%

Interest

Receivable

215,900,665.00 100% 290,169,796.00 134.39% 387,739,074.00 179.59%

Cash & Bank 512,708,518.00 100% 698,054,233.00 136.15% 1,081,144,981.00 210.86%

Other receivable

& prepayments

253,279,507.00 100% 221,699,751.00 87.53% 210,694,137.00 83.18%

Stock 23,434,324.00 100% 23,466,473.00 100.13% 24,867,937.00 106.11%

Total Current

Assets

1,062,525,842.00 100% 1,315,954,429.00 123.85% 1,794,607,684.00 168.9%

Long Term

Assets:

Fixed assets 373,939,243.00 100% 400,294,519.00 107.04% 531,343,202.00 142.09%

Long term loans 1,094,439,901.00 100% 987,979,478.00 90.27% 936,593,418.00 85.57%

Investments 268,425,065.00 100% 268,525,090.00 100.03% 268,425,065.00 100%

Capital Works in

Progress

110,314,949.00 100%

165,888,509.00 150.37%

172,131,243.00 156.03%

Inter PSIC

Adjustments

364,771,194.00 100% 360,337,985.00 98.78% 319,241,829.00 87.51%

Total LT Assets 2,211,890,352.00 100% 2,183,025,581.00 98.69% 2,227,734,757.00 100.71%

Total Assets 3,274,416,194.00 100% 3,498,980,010.00 106.85% 4,022,342,441.00 122.84%

Current

Liabilities:

Loan Scheme 799,520.00 100% 1,644,429.00 205.67% 1,153,162.00 144.23%

Expenses

payable

8,113,263.00 100% 5,388,368.00 66.41% 6,090,908.00 75.07%

Adv Deposits &

Sundry

15,093,572.00 100% 19,178,534.00 127.06% 30,642,993.00 203.02%

Accounts

payable

306,033,124.00 100% 327,469,372.00 107.00% 350,584,109.00 114.55%

Total C.

Liabilities

330,039,479.00 100% 353,680,703.00 107.16% 388,471,172.00 117.70%

24

Long Term

Liabilities

Land Recovery 1,062,163,796.00 100% 1,175,121,820.00 110.63% 1,275,553,091.00 120.09%

Government

Loan

396,452,187.00 100% 411,870,687.00 103.88% 713,667,687.00 180.01%

Loan for CSSI

Scheme

545,454,546.00 100% 436,363,638.00 80.06% 327,272,730.00 60.00%

Long Term

Provisions

1,154,715,657.00 100% 1,247,112,011.00 108.00% 1,226,009,196.00 106.17%

Total LT

Liabilities

3,158,786,186.00 100% 3,270,468,156.00 103.53% 3,542,502,704.00 112.14%

Total Liabilities 3,488,825,665.00 100% 3,624,148,859.00 103.87% 3,930,973,876.00 112.67%

Net Assets (214,409,471.00)

(100%)

(125,168,849.00) (58.37%) 91,368,565.00 42.61%

Financed By:

Govt. Funds 304,905,857.00 100% 378,704,857.00 124.20% 420,430,857.00 137.88%

Retained

Earnings/losses

(519,315,328.00)

(100%)

(503,873,706.00) (97.02%) (329,062,292.0) (63.36)%

Total Equity (214,409,471.00)

(100%)

(125,168,849.00) (58.37%) 91,368,565.00 42.61%

25

3.3.2 Vertical Analysis

Vertical Analysis of Income Statement:

Figures in Pak

Rs.

2004-2005 2005-2006 2006-2007

Sales 45,607,331.00 14.66% 49,440,493.00 17.43% 56,297,353.00 16.70%

Other Income 265,528,772.00 85.34% 234,132,773.00 82.57% 280,874,945.00 83.30%

Total revenue 311,136,103.00 100% 283,573,266.00 100% 337,172,298.00 100%

O/B: Stock

21,388,595.00 6.87%

23,415,088.00 8.26 %

23,352,842.00 6.92%

Recieved during

the Year

33,458,243.00 10.75% 34,893,861.00 12.30% 40,708,128.00 12.07%%

Other Direct

Expenditure

2,571,322.00 0.83%% 1,886,236.00 0.67% 2,619,956.00 0.78%

C/B: Stock 23,434,324.00 7.53% 23,466,473.00 8.28 % 24,865,637.00 7.37 %

Cost of Goods

Sold

33,983,836.00 10.92% 36,728,712.00 12.95%

41,815,289.00 12.40%

Gross Profit 11,623,495.00 3.74% 12,711,781.00 4.48% 14,482,064.00 4.30%

Employee

Related Expence

132,219,905.00 42.50% 163,493,137.00 57.65% 172,084,074.00 51.04%

Running &

Administration

39,087,336.00 12.56%

40,478,747.00 14.27% 47,036,011.00 13.95%

Leave Salary,

pension &

Gratuity

57,144,871.00 18.37% 79,352,368.00 27.98% 52,548,074.00 15.58%

Financial Charges

176,769,892.00 56.81% 115,471,807.00 40.72% 91,686,888.00 27.19%

Depreciation 21,024,462.00 6.76%% 22,473,484.00 7.92% 24,441,110.00 7.25%

Total

Expenditure

426,246,466.00 137% 421,269,543.00 148.55% 387,796,157.00 115.01%

Net Profit (149,094,199.00) (47.92%) (174,424,989.00) (61.51%) (92,439,148.00) (27.41%)

26

Vertical Analysis of Balance Sheet:

Figures in Pak Rs. 2004-05 2005-06 2006-07

Current Assets:

Debtors-Estates 19,162,806.00 0.59%% 32,167,742.00 0.91% 22,000,668.00 0.55%

Debtors - Other units 3,286,377.00 0.10% 3,520,276.00 0.11% 3,731,354.00 0.09%

Advances & Deposits 34,753,645.00 1.06% 46,876,158.00 1.34% 64,429,533.00 1.60%

Interest Receivable 215,900,665.00 6.59% 290,169,796.00 8.29% 387,739,074.00 9.64%

Cash & Bank 512,708,518.00 15.65% 698,054,233.00 19.95 1,081,144,981.00 26.87%

Other receivable &

prepayments

253,279,507.00 7.73% 221,699,751.00 6.33% 210,694,137.00 5.25%

Stock 23,434,324.00 0.72% 23,466,473.00 0.68% 24,867,937.00 0.62%

Total Current

Assets

1,062,525,842.00 32.44% 1,315,954,429.00 37.61% 1,794,607,684.00 44.62%

Long Term Assets:

Fixed assets 373,939,243.00 11.44% 400,294,519.00 11.44% 531,343,202.00 13.20%

Long term loans 1,094,439,901.00 33.42% 987,979,478.00 28.24% 936,593,418.00 23.29%

Investments 268,425,065.00 8.19% 268,525,090.00 7.67% 268,425,065.00 6.67%

Capital Works in

Progress

110,314,949.00 3.37%

165,888,509.00 4.75%

172,131,243.00 4.28%

Inter PSIC

Adjustments

364,771,194.00 11.14% 360,337,985.00 10.29% 319,241,829.00 7.94%

Total LT Assets 2,211,890,352.00 67.56% 2,183,025,581.00 62.39% 2,227,734,757.00 55.38%

Total Assets 3,274,416,194.00 100% 3,498,980,010.00 100% 4,022,342,441.00 100%

Current Liabilities:

Loan Scheme 799,520.00 0.03% 1,644,429.00 0.06% 1,153,162.00 0.03%

Expenses payable 8,113,263.00 0.24% 5,388,368.00 0.15% 6,090,908.00 0.16%

Adv Deposits &

Sundry

15,093,572.00 0.46% 19,178,534.00 0.54% 30,642,993.00 0.76%

Accounts payable 306,033,124.00 9.34% 327,469,372.00 9.35% 350,584,109.00 8.71%

Total C. Liabilities 330,039,479.00 10.07% 353,680,703.00 10.10% 388,471,172.00 9.66%

Long Term

Liabilities

Land Recovery 1,062,163,796.00 32.44% 1,175,121,820.00 33.58% 1,275,553,091.00 31.71%

Government Loan 396,452,187.00 12.11% 411,870,687.00 11.77% 713,667,687.00 17.75%

Loan for CSSI

Scheme

545,454,546.00 16.65% 436,363,638.00 12.47% 327,272,730.00 8.14%

Long Term

Provisions

1,154,715,657.00 35.27% 1,247,112,011.00 35.65% 1,226,009,196.00 30.47%

27

Total LT Liabilities 3,158,786,186.00 96.47% 3,270,468,156.00 93.47% 3,542,502,704.00 88.07%

Total Liabilities 3,488,825,665.00 106.54% 3,624,148,859.00 103.57% 3,930,973,876.00 97.73%

Net Assets (214,409,471.00) (6.54%) (125,168,849.00) (3.57%) 91,368,565.00 2.27%

Financed By:

Govt. Funds 304,905,857.00 9.31% 378,704,857.00 10.82% 420,430,857.00 10.45%

Retained

Earnings/losses

(519,315,328.00) (15.85%) (503,873,706.00) (14.40%) (329,062,292.00) (8.18%)

Total Equity (214,409,471.00) (6.54%) (125,168,849.00) (3.57%) 91,368,565.00 2.27%

28

Ratio Analysis: Profitability Ratio

Ratio

Formula used 2004-05 2005-06 2006-07

Gross Profit Ratio Gross

Profit/sales or

income

11,623,495.00

311,136,103.00

=3.73%

12,711,781.00

283,573,266.00

=4.48%

14,482,064.00

337,172,298.00

=4.29%

Net Profit Ratio Net

Profit/Income

(149,094,199.00)

311,136,103.00

= -47.92%

(174,424,989.00)

283,573,266.00

= -61.51%

( 92,439,148.00)

337,172,298.00

= -27.42%

Return on Assets Net Profit after

Tax/total Assets

(149,094,199.00)

3,274,416,194.00

= -4.55%

(174,424,989.00)

3,498,980,010.00

= - 4.99%

( 92,439,148.00)

4,022,342,441.00

= -2.30%

Asset Turn Over

Ratio

Sales / total

assets

45,607,331.00

3,274,416,194.0

= 0.01

49,440,493.00

3,498,980,010.00

= 0.01

56,297,353.00

4,022,342,441.00

= 0.01

Explanation: Gross Profit Ratio

Gross profit ration indicate the association of between gross profit net sales.

Here Income of the PSIC has taken instead of Sales. Gross profit ratio of all the years such as

3.73 %, 4.48 % and 4.29 % are the percentage by which PSIC can reduce interest rate of the

loans given without suffering any loss.

Net Profit Ratio

The higher the net profit ratio, the more the organization is earning. But net

profit ratio of all given years is in minus which is showing that organization is going into

loss.

Return on Assets

The minus ratios of all given years showing that organization is going to loss in return

on assets.

Asset Turn Over Ratio

The higher the asset turnover ratio, the more the organization is earning revenues by

their assets. These ratios are showing that organization is earning little from their assets.

29

Liquidity:

Ratio

Formula used 2004-05 2005-06 2006-07

Net Working

Capital

Current assets -

current liabilities

1,062,525,842.00

-

330,039,479.00

= 732486363

1,315,954,429.00

-

353,680,703.00

= 962273726

1,794,607,684.00

-

388,471,172.00

= 1406136512

Current Ratio

current assets /

current liabilities

1,062,525,842.00

330,039,479.00

= 3.22

1,315,954,429.00

353,680,703.00

= 3.72

1,794,607,684.00

388,471,172.00

= 4.62

Net Working

Capital Ratio

Acid Test (Quick

Ratio)

Net working

capital / total

assets

(Current Assets-

Inventory)/Current

Liabilities

732486363

3,274,416,194.00

= 0.22

1,062,525,842.00

- 23434324

330,039,479.00

= 3.15

962273726

3,498,980,010.00

= 0.28

1,315,954,429.00-

23,466,473.00

353,680,703.00

= 3.65

1406136512

4,022,342,441.00

= 0.35

1,794,607,684.00-

24,867,937.00

388,471,172.00

= 4.56

Explanation:

Current Ratio

All the ratios of the given years are showing that PSIC has enough short term

assets to pay short term liabilities. Ratios are showing that PSIC has 3 to 4 four times more

short term assets to pay short term liabilities.

Acid Test (Quick Ratio)

It shows that PSIC has 3 to four times more short term assets than short term liabilities.

30

Limitation of the financial analysis:

As PSIC is governmental organization its financial statements are not prepared and

published regularly. Its financial statements are published when government make audit of

PSIC through some other expert company of the audit.

The financial statements that are used in this report are taken from audit report

“Financial Viability Analysis of Punjab Small Industries Corporation (PSIC)” that was done

by the “Ferguson” in November, 2009. It’s made audit of the PSIC and published financial

statements from 2003 to 2007.

After 2007, no any financial statement is available neither on internet nor on any other

sources. So, financial analysis has been done till only 2007. The financial statements after

2007 will be published when some other company will audit PSIC in the future.

31

Chapter #. 4

Learning as Internee

Recommendations

Conclusion

32

4.1 Learning as an Internee

By the grace of almighty ALLAH I have learnt many work in the Punjab

Small Industry head office I have learn how vouchers are prepared this vouchers includes the

cash voucher, general vouchers, petty vouchers. And I learn the how salary is calculated how

budget is prepared how final account worked and how internal audit of the (PSIC) internally

and how pension is calculated of employees. I learn how to enter data that was sent by sub

offices to the head office Lahore.

4.2 Conclusion By reviewing all financial statements, it’s clear that PSIC is facing financial

losses in these years. These losses are exceeding 100 million rupees every year. Govt. is

spending 200 million rupees every year to bear PSIC losses and for further growth of PSIC.

PSIC will close its operations due to heavy losses if govt. stop supporting PSIC.

If we look on PSIC projects, then its revenues are very low. On contrast, a

large amount of expenditure incurred to continue projects that is expenditures are four time

more than sales. Employees related expenditures are also three time more than its sale. PSIC

should decrease its employee’s expenditure and should increase efficiency of the workers.

The Balance sheet of PSIC also raises some other worries about liabilities of PSIC.

I. PSIC have around a billion rupees long-term liabilities that is it have to pay pension to

its employees after their retirement. PSIC have not enough revenues to pay these

liabilities in the future. Pension will also paid by government that is great burden on

government.

II. PSIC borrows money from the Punjab government for its credit arrangements. A

liability to pay interest on these loans have been established. It also not clear that

PSIC will able to pay interest on these loans to government.

III. Land recovery is also becoming liability on balance sheet. Land recovery figures are

increasing every year. This clearly tells about inefficient administration of PSIC.

33

4.3 Key recommendations

The final report made the following recommendations:

1- Credit Schemes: Distribution of funds should be made only by partner financial institution. PSIC

should firstly recover previous credits

2- Cluster Development: Cluster growth activities should be continue.

3- Estates Development: Care of previous industrial estates and growth of new one should be handover to

Punjab Industrial Development and Management Company or a new one should be

established.

4- Census & Survey: PSIC should review each census & Survey very carefully and it should make

amendments after every census & survey according to requirement of situation.

5- Handicrafts Development: Growth centers and sale shops should be assigned to new companies that will make its

growth and sale fast. The shops that have low revenues and inefficient growth centers

should be shut.

6- institutional review A new institutional review must be applied to check that PSIC is working according

to its core functions.

These recommendations can be helpful to enhance viability of PSIC. If these

recommendation are not followed then PSIC will always stay commercially non-viable and it

will continually require support from government.

Government should restructure PSIC to enhance efficiency. Government should also appraise

actual value of PSIC assets and liabilities and justify its employees base otherwise it will just

debt burden on the government.

34

Annexure

Income Statement

Balance Sheet

Cash inflow and out flow

Experience Letter

35

Income Statement of (PSIC)

Figures in Pak Rs. 2004-05 2005-06 2006-07

Sales

45,607,331.00 49,440,493.00 56,297,353.00

Other income

265,528,772.00 234,132,773.00 280,874,945.00

Total revenue 311,136,103.00 283,573,266.00 337,172,298.00

O/B: Stock

21,388,595.00 23,415,088.00 23,352,842.00

Received during the Year

33,458,243.00 34,893,861.00 40,708,128.00

Other Direct Expenditure

2,571,322.00 1,886,236.00 2,619,956.00

C/B: Stock

23,434,324.00 23,466,473.00 24,865,637.00

Cost of Goods Sold 33,983,836.00 36,728,712.00 41,815,289.00

Gross Profit 11,623,495.00 12,711,781.00 14,482,064.00

Employee Related Expense

132,219,905.00 163,493,137.00 172,084,074.00

Running & Administration

39,087,336.00 40,478,747.00 47,036,011.00

Leave Salary, pension & gratuity

57,144,871.00 79,352,368.00 52,548,074.00

Financial Charges

176,769,892.00 115,471,807.00 91,686,888.00

Depreciation

21,024,462.00 22,473,484.00 24,441,110.00

Total Expenditure 426,246,466.00 421,269,543.00 387,796,157.00

Net Loss (149,094,199.00) (174,424,989.00) (92,439,148.00)

36

Balance Sheet of (PSIC)

Figures in Pak Rs. 2004-05 2005-06 2006-07

Current Assets:

Debtors-Estates 19,162,806.00 32,167,742.00 22,000,668.00

Debtors - Other units 3,286,377.00 3,520,276.00 3,731,354.00

Advances & Deposits 34,753,645.00 46,876,158.00 64,429,533.00

Interest Receivable 215,900,665.00 290,169,796.00 387,739,074.00

Cash & Bank 512,708,518.00 698,054,233.00 1,081,144,981.00

Other receivable &

prepayments 253,279,507.00 221,699,751.00 210,694,137.00

Stock 23,434,324.00 23,466,473.00 24,867,937.00

Total Current Assets 1,062,525,842.00 1,315,954,429.00 1,794,607,684.00

Long Term Assets:

Fixed assets 373,939,243.00 400,294,519.00 531,343,202.00

Long term loans 1,094,439,901.00 987,979,478.00 936,593,418.00

Investments 268,425,065.00 268,525,090.00 268,425,065.00

Capital Works in Progress 110,314,949.00 165,888,509.00 172,131,243.00

Inter (PSIC) Adjustments 364,771,194.00 360,337,985.00 319,241,829.00

Total Long Term Assets 2,211,890,352.00 2,183,025,581.00 2,227,734,757.00

Total Assets 3,274,416,194.00 3,498,980,010.00 4,022,342,441.00

Current Liabilities

Loan Scheme 799,520.00 1,644,429.00 1,153,162.00

Expenses payable 8,113,263.00 5,388,368.00 6,090,908.00

Adv Deposits & Sundry 15,093,572.00 19,178,534.00 30,642,993.00

Accounts payable 306,033,124.00 327,469,372.00 350,584,109.00

Total Current Liabilities 330,039,479.00 353,680,703.00 388,471,172.00

Long Term Liabilities

Land Recovery 1,062,163,796.00 1,175,121,820.00 1,275,553,091.00

Government Loan 396,452,187.00 411,870,687.00 713,667,687.00

Loan for CSSI Scheme 545,454,546.00 436,363,638.00 327,272,730.00

Long Term Provisions 1,154,715,657.00 1,247,112,011.00 1,226,009,196.00

Total Long Term

Liabilities 3,158,786,186.00 3,270,468,156.00 3,542,502,704.00

Total Liabilities 3,488,825,665.00 3,624,148,859.00 3,930,973,876.00

Net Assets -214,409,471.00 -125,168,849.00 91,368,565.00

Financed By

Govt. Funds 304,905,857.00 378,704,857.00 420,430,857.00

Retained Earnings/losses -519,315,328.00 -503,873,706.00 -329,062,292.00

Total Equity -214,409,471.00 -125,168,849.00 91,368,565.00

37

Inflow & Outflow

Figures in Pak Rs. 2004-05 2005-06 2006-07

Income

Profit on PLS 2,511,300.00 4,542,718.00 5193657

Mark-up 65,324,642.00 71,802,728.00 73,923,012.00

Penal Mark up 23,581,531.00 22,308,752.00 26,774,043.00

Misc Reciepts 1,376,469.00 469,569.00 491,211.00

Processing Fee 1,239,247.00 660,038.00 533,825.00

Revenue Charges - 4,900.00 -

Sale of form - 87,257.00 86,218.00

Auction Fee 16,362.00 6,000.00 14,000.00

Total 94,049,551.00 99,881,962.00 107,015,966.00

Expenditure

Remission of Markup 123,377,162.00 66,450,168.00 47,272,086.00

Mark-up on Govt Loan 24,051,000.00 18,866,168.00 22,983,313.00

Mark up on UBL 29,341,730.00 28,512,329.00 20,037,544.00

Collection Charges - 314,934.00 198,558.00

Bank Charges 457,000.00 230,789.00 365,760.00

Legal Charges 227,943.00 47,598.00 153,836.00

Advertisement 134,025.00 65,509.00 185,528.00

Commitment Charges 26,079.00 128,818.00 142,533.00

Printing & Stationary - - 80,637.00

General Charges - - 1,580.00

Repair & Maint. 1,461.00 187 15,565.00

POL - - 80,519.00

Registration fee - - 4,500.00

Deficit Markup - - -

Total 177,616,400.00 114,616,500.00 91,521,959.00

Net -83,566,849.00 -14,734,538.00 15,494,007.00