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

Chapter # 1

Introduction History Mission Statement Vision Statement Organization Setup Location of the Offices Details of Directors Organogram
3 5 6 7 8 9 10 11

Chapter # 2

Department Marketing Mix HR Activities
13 15 16

Chapter # 3

SWOT Analysis PEST Analysis Financial Analysis Limitation of the Analysis
18 20 22 30

Chapter # 4

Learning as Internee Conclusion Recommendation
Annexure

32 32 33
34

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. Todays 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.

Chapter No. 1
Introduction
1234History Mission and Vision Statement Organization Setup Organogram

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. PSICs 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. II. III. Ensuring entrance to funding small & lodge industries Cluster growth Working towards developing an permitting commercial setting for small & lodge industries I.

Ensuring entrance to funding small & lodge industries. PSICs 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 Punjabs 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.

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. 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. III.

II.

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.

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: 1234Funds distribution Growth and preservation of small industrial estates Common facility centers at major clusters in Punjab 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.

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.

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

1.2 Organization Setup:

Serial Number 1 2 3 4 5 6 7 8 Region Lahore Rawalpindi Gujranwala Faisalabad Sargodha Multan Bahawalpur Dera Ghazi Khan Branches of (PSIC) 8 12 8 4 5 6 7 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.

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 1. 2. 3. 4.

Gujranwala Region

SIE- I, Gujranwala, G.T Road SIE - II, Gujranwala, Khiali By Pass Road SIE - III, Gujranwala (EPZ), G.T Road 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

 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 1 2 3 4 5 6 7 8 9 Mr. Farhan Aziz Khawaja Mr. Ashiq Aulakh Mr. Javaid Nazir Mr. Abdul Ghafoor Mr. Ch Ghulam Nabi Mrs. Shaheen Khawar Mr. Babar Nawaz Mr. Talat Ahmad Butt Mr. Tariq Mehmood Designation Managing Director

Hussain Dept. Managing Director Director (Admin. & Coordination) PS to Dep. (MD) Director(C & M) Director (P & N ) Director (Estate and Development) Director (Finance) Director (Works)

10

1.3 Organogram:

11

Chapter #. 2
Finance & Accounts Department

Expenditure Section Budget Section Audit and Pension Section Final Accounts Section

Marketing Mix of PSIC Human Resource activities

12

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.

13

 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.

14

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.

15

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. Employees Relations: HRM department work for better relationship with the organization employees as well as for better relations among employees. Employees Surveys: HRM department also conduct surveys of the employees to know their problem and to make them more motivated. Compensation and Benefits: HRM determine the compensation of the employees. It also determine extra benefits that will be given to the employees. Employees Information: It take records of each employee according to their skill. Attendance Management: It keeps the records of attendance of the employees and use these records in promotion or demotion of the employees. Leave Management: It determines the leaves of an employees. An employee cannot take more leaves that are determined by HRM department. 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.

II.

III.

IV.

V. VI.

VII.

VIII.

16

Chapter #. 3
SWOT Analysis PEST Analysis Financial Statements Analysis
Common Size analysis ( horizontal + vertical ) Ratio Analysis Profitability ratios Liquidity Ratios

17

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.

18

 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.

19

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 peoples 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.

20

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.

21

3.3 Financial statement Analysis 3.3.1 Horizontal Analysis Horizontal Analysis of Income Statement:
Figures in Pak 2004-2005 Rs. Sales 45,607,331.00 Other Income 265,528,772.00 Total revenue O/B: Stock Received during Year Other Direct Expenditure C/B: Stock Cost of Goods Sold Gross Profit Employee Related Expence Running & Administration Leave Salary, pension & Gratuity Financial Charges Depreciation Total Expenditure 311,136,103.00 21,388,595.00 33,458,243.00 2,571,322.00 23,434,324.00 33,983,836.00 11,623,495.00 132,219,905.00 2005-2006 100% 49,440,493.00 100% 234,132,773.00 100% 283,573,266.00 100% 23,415,088.00 100% 34,893,861.00 100% 1,886,236.00 100% 23,466,473.00 100% 36,728,712.00 100% 12,711,781.00 100% 163,493,137.00 10 8.4% 88.17% 91.14% 109.47% 104.29% 73.35% 100.13% 108.07% 109.36% 123.65% 2006-2007 56,297,353.00 280,874,945.00 337,172,298.00 23,352,842.00 40,708,128.00 2,619,956.00 24,865,637.00 41,815,289.00 14,482,064.00 172,084,074.00 123.43% 105.77% 108.36% 109.18% 121.66% 101.89% 106.10% 123.04% 124.59% 130.14%

39,087,336.00 57,144,871.00

40,478,747.00 100% 100% 79,352,368.00

103.55% 138.86%

47,036,011.00 52,548,074.00

120.33% 91.95%

176,769,892.00

100% 115,471,807.00

65.32%

91,686,888.00

51.86%

21,024,462.00 426,246,466.00

100% 22,473,484.00 100% 421,269,543.00

106.89% 98.83%

24,441,110.00 387,796,157.00

116.25% 90.97%

Net Profit

(149,094,199.00) 100%

(174,424,989.00) (116.98%)

(92,439,148.00)

(62.00%)

22

 Horizontal Analysis of Balance Sheet:

Figures in Pak Rs. Current Assets: Debtors-Estates Debtors - Other units Advances & Deposits Interest Receivable Cash & Bank Other receivable & prepayments Stock Total Current Assets Long Term Assets: Fixed assets Long term loans Investments Capital Works in Progress Inter PSIC Adjustments 2004-05 2005-06 2006-07

19,162,806.00 3,286,377.00 34,753,645.00 215,900,665.00 512,708,518.00 253,279,507.00 23,434,324.00

100% 100% 100% 100% 100% 100% 100%

32,167,742.00 3,520,276.00 46,876,158.00 290,169,796.00 698,054,233.00 221,699,751.00 23,466,473.00

167.86% 22,000,668.00 107.11% 3,731,354.00 134.88% 64,429,533.00 134.39% 387,739,074.00 136.15% 1,081,144,981.00 87.53% 210,694,137.00 100.13% 24,867,937.00

114.80% 113.54% 185.38% 179.59% 210.86% 83.18% 106.11% 168.9%

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

373,939,243.00 1,094,439,901.00 268,425,065.00 110,314,949.00 364,771,194.00

100% 100% 100% 100% 100%

400,294,519.00 987,979,478.00 268,525,090.00 165,888,509.00 360,337,985.00

107.04% 90.27% 100.03% 150.37% 98.78%

531,343,202.00 936,593,418.00 268,425,065.00 172,131,243.00 319,241,829.00

142.09% 85.57% 100% 156.03% 87.51%

Total LT Assets 2,211,890,352.00 100% 2,183,025,581.00 98.69% Total Assets Current Liabilities: Loan Scheme Expenses payable Adv Deposits & Sundry Accounts payable Total C. Liabilities

2,227,734,757.00

100.71% 122.84%

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

799,520.00 8,113,263.00 15,093,572.00 306,033,124.00

100% 100% 100% 100%

1,644,429.00 5,388,368.00 19,178,534.00 327,469,372.00

205.67% 1,153,162.00 66.41% 6,090,908.00 127.06% 30,642,993.00 107.00% 350,584,109.00

144.23% 75.07% 203.02% 114.55%

330,039,479.00

100%

353,680,703.00

107.16%

388,471,172.00

117.70%

23

Long Term Liabilities Land Recovery Government Loan Loan for CSSI Scheme Long Term Provisions Total LT Liabilities Total Liabilities Net Assets

1,062,163,796.00 100% 1,175,121,820.00 110.63% 1,275,553,091.00 396,452,187.00 100% 411,870,687.00 103.88% 713,667,687.00 545,454,546.00 100% 436,363,638.00 80.06% 327,272,730.00 1,226,009,196.00

120.09% 180.01% 60.00% 106.17%

1,154,715,657.00 100% 1,247,112,011.00 108.00%

3,158,786,186.00 100% 3,270,468,156.00 103.53%

3,542,502,704.00

112.14%

3,488,825,665.00 100% 3,624,148,859.00 103.87% (214,409,471.00) (100%) (125,168,849.00) (58.37%)

3,930,973,876.00 91,368,565.00

112.67% 42.61%

Financed By: Govt. Funds Retained Earnings/losses Total Equity 304,905,857.00 100% (519,315,328.00) (100%) (214,409,471.00) (100%) 378,704,857.00 124.20% 420,430,857.00 (503,873,706.00) (97.02%) (329,062,292.0) 137.88% (63.36)%

(125,168,849.00) (58.37%)

91,368,565.00

42.61%

24

3.3.2 Vertical Analysis Vertical Analysis of Income Statement:

Figures in Pak Rs. Sales Other Income Total revenue O/B: Stock Recieved during the Year Other Direct Expenditure C/B: Stock Cost of Goods Sold Gross Profit Employee Related Expence Running & Administration Leave Salary, pension & Gratuity Financial Charges Depreciation Total Expenditure Net Profit 2004-2005 2005-2006 2006-2007

45,607,331.00 14.66% 265,528,772.00 85.34% 311,136,103.00 100% 21,388,595.00 33,458,243.00 2,571,322.00 23,434,324.00 33,983,836.00 11,623,495.00 6.87% 10.75% 0.83%% 7.53% 10.92% 3.74%

49,440,493.00 234,132,773.00 283,573,266.00 23,415,088.00 34,893,861.00 1,886,236.00 23,466,473.00 36,728,712.00 12,711,781.00 163,493,137.00 40,478,747.00 79,352,368.00

17.43% 82.57% 100% 8.26 % 12.30% 0.67% 8.28 % 12.95% 4.48% 57.65% 14.27% 27.98%

56,297,353.00 280,874,945.00 337,172,298.00 23,352,842.00 40,708,128.00 2,619,956.00 24,865,637.00 41,815,289.00 14,482,064.00 172,084,074.00 47,036,011.00 52,548,074.00

16.70% 83.30% 100% 6.92% 12.07%% 0.78% 7.37 % 12.40% 4.30% 51.04% 13.95% 15.58%

132,219,905.00 42.50% 39,087,336.00 57,144,871.00 12.56% 18.37%

176,769,892.00 56.81% 21,024,462.00 6.76%%

115,471,807.00 22,473,484.00 421,269,543.00

40.72% 7.92% 148.55%

91,686,888.00 24,441,110.00 387,796,157.00

27.19% 7.25% 115.01%

426,246,466.00 137%

(149,094,199.00) (47.92%)

(174,424,989.00) (61.51%)

(92,439,148.00)

(27.41%)

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 Vertical Analysis of Balance Sheet:

Figures in Pak Rs. Current Assets: Debtors-Estates Debtors - Other units Advances & Deposits Interest Receivable Cash & Bank Other receivable & prepayments Stock Total Current Assets Long Term Assets: Fixed assets Long term loans Investments Capital Works in Progress Inter PSIC Adjustments Total LT Assets Total Assets Current Liabilities: Loan Scheme Expenses payable Adv Deposits & Sundry Accounts payable Total C. Liabilities Long Term Liabilities Land Recovery Government Loan Loan for CSSI Scheme Long Term Provisions 2004-05 19,162,806.00 3,286,377.00 34,753,645.00 215,900,665.00 512,708,518.00 253,279,507.00 23,434,324.00 0.59%% 0.10% 1.06% 6.59% 15.65% 7.73% 0.72% 2005-06 32,167,742.00 3,520,276.00 46,876,158.00 290,169,796.00 698,054,233.00 221,699,751.00 23,466,473.00 1,315,954,429.00 0.91% 0.11% 1.34% 8.29% 19.95 6.33% 0.68% 37.61% 2006-07 22,000,668.00 3,731,354.00 64,429,533.00 387,739,074.00 1,081,144,981.00 210,694,137.00 24,867,937.00 1,794,607,684.00 0.55% 0.09% 1.60% 9.64% 26.87% 5.25% 0.62% 44.62%

1,062,525,842.00 32.44%

373,939,243.00 1,094,439,901.00 268,425,065.00 110,314,949.00 364,771,194.00

11.44% 33.42% 8.19% 3.37% 11.14%

400,294,519.00 987,979,478.00 268,525,090.00 165,888,509.00 360,337,985.00

11.44% 28.24% 7.67% 4.75% 10.29%

531,343,202.00 936,593,418.00 268,425,065.00 172,131,243.00 319,241,829.00

13.20% 23.29% 6.67% 4.28% 7.94%

2,211,890,352.00 67.56% 3,274,416,194.00 100%

2,183,025,581.00 3,498,980,010.00

62.39% 100%

2,227,734,757.00 4,022,342,441.00

55.38% 100%

799,520.00 8,113,263.00 15,093,572.00 306,033,124.00 330,039,479.00

0.03% 0.24% 0.46% 9.34% 10.07%

1,644,429.00 5,388,368.00 19,178,534.00 327,469,372.00 353,680,703.00

0.06% 0.15% 0.54% 9.35% 10.10%

1,153,162.00 6,090,908.00 30,642,993.00 350,584,109.00 388,471,172.00

0.03% 0.16% 0.76% 8.71% 9.66%

1,062,163,796.00 32.44% 396,452,187.00 12.11% 545,454,546.00 16.65% 1,154,715,657.00 35.27%

1,175,121,820.00 33.58% 411,870,687.00 11.77% 436,363,638.00 12.47% 1,247,112,011.00 35.65%

1,275,553,091.00 713,667,687.00 327,272,730.00 1,226,009,196.00

31.71% 17.75% 8.14% 30.47%

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Total LT Liabilities Total Liabilities Net Assets Financed By: Govt. Funds Retained Earnings/losses Total Equity

3,158,786,186.00 96.47% 3,488,825,665.00 106.54% (214,409,471.00) (6.54%)

3,270,468,156.00 93.47% 3,624,148,859.00 103.57% (125,168,849.00) (3.57%)

3,542,502,704.00 3,930,973,876.00 91,368,565.00

88.07% 97.73% 2.27%

304,905,857.00 9.31% 378,704,857.00 10.82% 420,430,857.00 (519,315,328.00) (15.85%) (503,873,706.00) (14.40%) (329,062,292.00)

10.45% (8.18%)

(214,409,471.00) (6.54%)

(125,168,849.00) (3.57%)

91,368,565.00

2.27%

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Ratio Analysis:
Ratio Gross Profit Ratio Profitability Ratio Formula used Gross Profit/sales income 2004-05 11,623,495.00 or 311,136,103.00 =3.73% Net Profit Ratio Net Profit/Income (149,094,199.00) 311,136,103.00 = -47.92% (149,094,199.00) 283,573,266.00 =4.48% (174,424,989.00) 283,573,266.00 = -61.51% (174,424,989.00) 337,172,298.00 =4.29% ( 92,439,148.00) 337,172,298.00 = -27.42% ( 92,439,148.00) 2005-06 12,711,781.00 2006-07 14,482,064.00

Return on Assets

Net Profit after Tax/total Assets

3,274,416,194.00 3,498,980,010.00 4,022,342,441.00 = -4.55% 45,607,331.00 3,274,416,194.0 = 0.01 = - 4.99% 49,440,493.00 = -2.30% 56,297,353.00

Asset Turn Over Sales / total Ratio assets

3,498,980,010.00 4,022,342,441.00 = 0.01 = 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.

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Liquidity:

Ratio Net Working Capital

Formula used Current assets current liabilities

2004-05

2005-06

2006-07 1,794,607,684.00 388,471,172.00 = 1406136512 1,794,607,684.00 388,471,172.00 = 4.62 1406136512 4,022,342,441.00 = 0.35

1,062,525,842.00 1,315,954,429.00 330,039,479.00 353,680,703.00 = 732486363 = 962273726 1,062,525,842.00 1,315,954,429.00 330,039,479.00 = 3.22 353,680,703.00 = 3.72 962273726

Current Ratio

current assets / current liabilities

Net Working Capital Ratio

Net working capital / total assets

732486363

3,274,416,194.00 3,498,980,010.00 = 0.22 = 0.28

1,062,525,842.00 1,315,954,429.00- 1,794,607,684.00Acid Test (Quick (Current Assets- - 23434324 23,466,473.00 24,867,937.00 Ratio) Inventory)/Current Liabilities 330,039,479.00 353,680,703.00 388,471,172.00 = 3.15 = 3.65 = 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.

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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. Its 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.

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Chapter #. 4
Learning as Internee Recommendations Conclusion

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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, its 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 employees 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.

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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.

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Annexure
Income Statement Balance Sheet Cash inflow and out flow Experience Letter

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Income Statement of (PSIC)

Figures in Pak Rs. 2004-05 45,607,331.00 Sales 265,528,772.00 Other income Total revenue 311,136,103.00 21,388,595.00 O/B: Stock 33,458,243.00 Received during the Year 2,571,322.00 Other Direct Expenditure 23,434,324.00 C/B: Stock Cost of Goods Sold Gross Profit 33,983,836.00 11,623,495.00 132,219,905.00 Employee Related Expense 39,087,336.00 Running & Administration 57,144,871.00 Leave Salary, pension & gratuity 176,769,892.00 Financial Charges 21,024,462.00 Depreciation Total Expenditure Net Loss 426,246,466.00 22,473,484.00 421,269,543.00 24,441,110.00 387,796,157.00 115,471,807.00 91,686,888.00 79,352,368.00 52,548,074.00 40,478,747.00 47,036,011.00 23,466,473.00 36,728,712.00 12,711,781.00 163,493,137.00 24,865,637.00 41,815,289.00 14,482,064.00 172,084,074.00 1,886,236.00 2,619,956.00 34,893,861.00 40,708,128.00 234,132,773.00 283,573,266.00 23,415,088.00 280,874,945.00 337,172,298.00 23,352,842.00 2005-06 49,440,493.00 2006-07 56,297,353.00

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

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Balance Sheet of (PSIC)

Figures in Pak Rs. 2004-05 Current Assets: Debtors-Estates 19,162,806.00 Debtors - Other units 3,286,377.00 Advances & Deposits 34,753,645.00 Interest Receivable 215,900,665.00 Cash & Bank 512,708,518.00 Other receivable & 253,279,507.00 prepayments Stock 23,434,324.00 Total Current Assets 1,062,525,842.00 Long Term Assets: Fixed assets 373,939,243.00 Long term loans 1,094,439,901.00 Investments 268,425,065.00 Capital Works in Progress 110,314,949.00 Inter (PSIC) Adjustments 364,771,194.00 2,211,890,352.00 Total Long Term Assets Total Assets Current Liabilities Loan Scheme Expenses payable Adv Deposits & Sundry Accounts payable Total Current Liabilities Long Term Liabilities Land Recovery Government Loan Loan for CSSI Scheme Long Term Provisions Total Long Term Liabilities Total Liabilities Net Assets Financed By Govt. Funds Retained Earnings/losses Total Equity 2005-06 32,167,742.00 3,520,276.00 46,876,158.00 290,169,796.00 698,054,233.00 221,699,751.00 2006-07 22,000,668.00 3,731,354.00 64,429,533.00 387,739,074.00 1,081,144,981.00 210,694,137.00

23,466,473.00 24,867,937.00 1,315,954,429.00 1,794,607,684.00 400,294,519.00 987,979,478.00 268,525,090.00 165,888,509.00 360,337,985.00 2,183,025,581.00 531,343,202.00 936,593,418.00 268,425,065.00 172,131,243.00 319,241,829.00 2,227,734,757.00

3,274,416,194.00 3,498,980,010.00 4,022,342,441.00 799,520.00 8,113,263.00 15,093,572.00 306,033,124.00 330,039,479.00 1,062,163,796.00 396,452,187.00 545,454,546.00 1,154,715,657.00 1,644,429.00 5,388,368.00 19,178,534.00 327,469,372.00 353,680,703.00 1,175,121,820.00 411,870,687.00 436,363,638.00 1,247,112,011.00 1,153,162.00 6,090,908.00 30,642,993.00 350,584,109.00 388,471,172.00 1,275,553,091.00 713,667,687.00 327,272,730.00 1,226,009,196.00

3,158,786,186.00 3,270,468,156.00 3,542,502,704.00 3,488,825,665.00 3,624,148,859.00 3,930,973,876.00 -214,409,471.00 304,905,857.00 -519,315,328.00 -214,409,471.00 -125,168,849.00 378,704,857.00 -503,873,706.00 -125,168,849.00 91,368,565.00 420,430,857.00 -329,062,292.00 91,368,565.00

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Inflow & Outflow

Figures in Pak Rs. Income Profit on PLS Mark-up Penal Mark up Misc Reciepts Processing Fee Revenue Charges Sale of form Auction Fee Total Expenditure Remission of Markup Mark-up on Govt Loan Mark up on UBL Collection Charges Bank Charges Legal Charges Advertisement Commitment Charges Printing & Stationary General Charges Repair & Maint. POL Registration fee Deficit Markup Total Net 2004-05 2,511,300.00 65,324,642.00 23,581,531.00 1,376,469.00 1,239,247.00 16,362.00 94,049,551.00 123,377,162.00 24,051,000.00 29,341,730.00 457,000.00 227,943.00 134,025.00 26,079.00 1,461.00 177,616,400.00 -83,566,849.00 2005-06 4,542,718.00 71,802,728.00 22,308,752.00 469,569.00 660,038.00 4,900.00 87,257.00 6,000.00 99,881,962.00 66,450,168.00 18,866,168.00 28,512,329.00 314,934.00 230,789.00 47,598.00 65,509.00 128,818.00 187 114,616,500.00 -14,734,538.00 2006-07 5193657 73,923,012.00 26,774,043.00 491,211.00 533,825.00 86,218.00 14,000.00 107,015,966.00 47,272,086.00 22,983,313.00 20,037,544.00 198,558.00 365,760.00 153,836.00 185,528.00 142,533.00 80,637.00 1,580.00 15,565.00 80,519.00 4,500.00 91,521,959.00 15,494,007.00

37