Internship Report

SAMAD RUBBER WORKS (PVT.) LTD. 409 Ferozepur Road Lahore , Pakistan

Submitted To: Mr. Muhammad Fahad Javaid Lecturer, Management Sciences Department

Submitted By: Nabeel Safdar CIIT/FA08-MBE-033/LHR 22/09/2010

COMSATS Institute of Information Technology M.A Jinnah Campus, Lahore

Preface
No doubt that Allah is the main source of knowledge and wisdom. He is omnipotent as well as omniscient. It is a great Blessing of Allah that He Has enabled me because of His Holy Prophet (Peace Be upon Him) to present my humble contribution for the distribution of knowledge.

The Internship Report is the collection of observation and experience. I hope that this report will be equally important both for me and all the management students and persons making future in the field of Management Sciences.

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Acknowledgement
Countless thanks to Almighty Allah (The most merciful the most beneficial). The only creator of universe who enabled me to complete this report, in spite of various difficulties. All respects to the Holy Prophet (P.B.U.H) who enable us to recognize our greater and whose spiritual teaching guides us in every matter of the life.

I wish to record my deep sense of gratitude to my supervisor Mr. Muhammad Fahad Javaid, who through this works to encouraged me to read the available literature, think a new about the issues involved and innovate. I have enjoyed working with him & explored new ideas that he suggested from time to time.

Mr. Muhammad Fahad Javaid was very helpful through this work in various ways. I also wish to acknowledge the help, support and inspiration all the person who provide me support and guidance in our research.

I would like to express my gratitude to the Department of Business Administration for giving me the opportunity and arranging such an extensive internship program. I would also like to acknowledge my debts to those officers of Samad Rubber Works (Private) Limited (SRW), who have been extremely helpful for me, Especially Mr. Aftab Iqbal and Mr. Irfan Ahmad.

Last but not the least I must thank my parents and other family members who were all very kind and supportive for our adventure into my Internship report.

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Table of Contents

Page

Preface Acknowledgement 1. 2. Executive Summary Introduction

2.1 2.2 2.3 Purpose of the Study Methodology of Research Constraints and Limitations

ii iii 1 2
2 2 2

3.

Organization Setup and Function

3.1 3.2 Mission Background of Host Organization

3
3 4

4.

Business Operation
4.1 Organization Structure 4.1.1 Board of Directors 4.1.2 Organizational Chat 4.2 SWOT and PEST Analysis 4.2.1 SWOT Analysis 4.2.2 PEST Analysis 4.3 4.4 4.5 Brands and products Business Strategy Business Process Analysis

6
6 6 7 8 8 9 10 12 13

5.

Marketing and Sales Department

5.1 Marketing Strategy 5.1.1 Creating Sustainable Value and Market intelligence 5.1.2 New Product Launching 5.1.3 Advertising techniques 5.2 Competitive Strategy 5.2.1 Physical Distributions role in the Economy 5.3 SYSTEM OF SALES 5.3.1 Procedure of sales to distributors/parties

15
15 15 15 16 16 16 17 18 iv

5.3.2 Procedure of sales through branches 5.3.3 Procedure of sales to armed forces 5.3.4 Procedure of walk through sales: 5.3.5 Procedure of export sales: 5.4 BCG - Matrix (SRW Brands) Human Resource department activities 6.1.1. Recruitment and selection process 6.1.2 Training and development 6.1.3. Compensation and benefits 6.1.4 Performance appraisal 6.2 6.3 Assessing Current Human Resource Human Resource Information System (HRIS) 6.3.1 The Anatomy of HRIS 6.3.2 Succession Planning 6.3.3 Determine the Demand for Labor 6.3.4 predicting the Future labor supply 6.3.5 Matching Labor Demand and Supply 6.3.6 Appraisal Methods 6.3.7 Information Components of HRIS 6.3.8 Summary

21 22 25 25 26

6.

Human Resource Management

6.1

27
27 27 28 29 32 32 33 34 34 35 36 37 37 38 39

7.

Accounts and Finance Department

7.1 7.2 7.3 7.4 7.5 Books, Records and Documents System of Banks System of Finances System of Cash Financial Statements 7.5.1 Balance Sheet 7.5.2 Profit and Loss Account 7.5.3 Statement of Changes in Equity 7.5.4 Cash Flow Statement Ratio Analysis Sales Trend Analysis of Different Brands

40
40 41 42 42 43 43 44 45 46 47 51

7.6 7.7

8. 9.

Recommendations Learning as a Student Intern

9.1 9.2 Duties Accomplishments

54 55
55 55 v

9.3 9.4 9.5

New Knowledge Acquired Problem Encountered How Experience Impact my Career

56 56 56

10. 11. 12.

Index Bibliography Glossary

57 62 63

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1.

Executive Summary

The purpose of this report is to provide an overview of the 6-week Internship Program at Samad Rubber Works (Pvt.) Ltd.

Samad Rubber Works (Pvt.) Ltd. was established in 1948, has been manufacturing High Quality Products. This report describes the Business Process, Background, Organizational Structure , Marketing Strategy , Competitive Strategy of the company along with my new learning Experiences during the Internship Program.

This report mainly emphasis on Background of SRW, their Business Operation, and SWOT analysis along with PEST analysis, working of Finance department, Marketing and Sales procedures, Human Resource department and Learning as a student Intern.

During my Internship at Samad Rubber Works., I successfully completed all the task/duties that were assigned to me. During the course of employment I learned about different functions performed in an organization. I learned about

documentation requirements and record keeping for different activities and processes. This internship is not only help full for making this report but this education gives a general knowledge about business, decisions and policies. In this way I personally feel that your mind start thinking innovatively, broadly and dynamically. Facing challenges of day-to-day life is not a difficult task to handle for individual. After the completion of internship program, internship report has been prepared just in accordance with the practical exposure. I have strong belief that this report will guide and ease the readers to understand the operations at Samad Rubber Works.

I have tried my best to include all the possible information during this period so that it can be help to the management students who want to enhance their career in the field of Management Sciences.

2.
2.1

Introduction
Purpose of the Study

The pre-requisite of internship program is to make the students of MBA aware of the practical expertise and to acquaint them with the real management process. The internship program is to broaden the vision of practical experiences with theoretical knowledge as it increases ones capabilities to handle problems at various stages and the ability of decision. With an intention of grooming the best executives of the future, Department of Management Sciences has organized a comprehensive internship- training program. All of us were placed in leading organizations of business arena to gain first hand knowledge and insight into their management and working. So, when I was given the chance of selecting an organization, I opted for Samad Rubber Works (Private) Limited (SRW). As it is National Company and reflect true business practices of Pakistan. 2.2 Methodology of Research

Basically Information was gathered from two types of Sources

Secondary Data

1. Personal Observations 2. Interviews wit officers

Secondary Data

1. Various Books 2. Internet 3. Company Annual Statements

2.3

Constraints and Limitations

Due to shortage of time duration of Internship less amount of information was available. As Internee is not an employee, so accesses to sensitive documents were not available. 2

3.
3.1

Organization Setup and Function

Mission

Mission Statement
To optimize the rubber base production and pursue an aggressive exploration programmed in the most efficient manner on the local as well as international horizons through a team of professionals analyzing the latest development in the production technology on rubber based products & maintaining the highest standards of health, safety & environment protection.

3.2

Background of Host Organization

Samad Rubber Works is a private limited concern established in 1948 manufacturing a variety of rubber products as Pakistan Rubber Industry. The core business from its inception has been manufacturing of rubber products. The company started operating under the name of Samad Rubber Works (Pvt.) Ltd. in 1962.Samad Rubber Works today is considered as one of the leading quality rubber product manufacturers in Pakistan. Samad Rubber Works (Private) Limited (SRW) was incorporated in Pakistan on August 1962 as private limited Company under the Companies Act, 1913 (Now Companies Ordinance 1984). The Company is basically engaged in manufacturing and sale of rubber based products. Over the years, they have achieved excellence in development of in-house expertise for production of contact adhesive, moulded and fabricated rubber products including high-tech inflatables.

The registered and works office of the Company is located at 409-Ferozpur Road, Lahore. During current year the Company hired a factory on rent to meet the production in respect of contract with Defence; the factory is located at Plot No. 02, 21-K.M. Ferozpur Road, Lahore. The Company has two branch offices in Karachi and Rawalpindi each. These branches are responsible for sales in those cities. The head office deals with the sales made to the rest of Pakistan.

The achievements of the company in different fields of rubber manufacturing have earned the company a quality name and an excellent reputation. A few distinctions of the company are given below:

a) National quality award, 1998. b) Innovation award for development of Anti Mine Shoe.

Initially the Company started its business by manufacturing rubber solutions from Neoprene adhesives with the brand name of SAMAD BOND. Later on the Company started manufacturing of other rubber products like rubber pipes, air pillows, foams, air mattress, gum boots, rubber pitches etc. Currently the Company is manufacturing rubber products for the armed forces on contract basis. Sale to armed forces varies from year to year as it is totally based on contract. 4

In prior years, the Company has started the manufacturing of non-rubber adhesive products e.g. Samad Power Glue, Samad Silicon etc. The sale of these non-rubber adhesive products is increasing every year. Currently, the Company is involved in packing and filing of Samad Power Glue, moreover the Company launched a new adhesive product Poshish Bond, which increases the sale for the year.

Company has the capability of meeting international quality standards be it BSS or ASTM or specifications laid down by the customer. However perpetually conforming to stringent military specifications for products supplied to the Pakistan Defence forces. Over the years the company has earned good repute in the highest Defence quarters of Pakistan and has received letters of appreciation for its ongoing R&D in different fields of Defence Manufacturing.

Some of the major machinery includes calendars, internal mixer, two roll open mixing mills, spreading (coating) machines, hydraulic moulding presses, autoclaves, braiding machines, power looms and a glass fiber products manufacturing facility. Employing a man power of 400 men, Samad Rubber Works has been the pioneer manufacturer of contact adhesives, rubber hoses and inflatables (including boats, life jackets) in Pakistan. Products manufactured cater primarily for 2 sectors i.e. Defence and commercial market. Five decades of experience in manufacturing quality rubber products and popular brands of adhesives, hoses and other quality rubber products have earned the company a credible name in the domestic market.

4.
4.1

Business Operation
Organization Structure

4.1.1 Board of Directors

Sr. # 1. 2.

Name Mr. Abdul Sami Mian Fazal Haq

Position Held Chief Executive/Director Director

Mr. Abdul Sami is responsible for overall administrative matter of the Company. He is directly involved in sales, production and creditors. Mr. Fazal Haq has limited involvement in the Companys affairs. These two directors are signatory for the bank cheques, and signature of any of them is enough for the payment through banks. One director can approve the documents/records maintained by the Company in absence of other director except for specific ones.

4.1.2 Organizational Chat

Board Of Directors

Accounts And Finance Manager

Marketing And Sales Manager

Human Resource Manager

Production Manager

R&D Manager

Assistant Manager

Assistant Manager

Account ant

Account ant

Clerks

Cashier

4.2

SWOT and PEST Analysis

4.2.1 SWOT Analysis

SWOT is a process that helps organization to identify the organizational factors;

1. Strengths (S) 2. Weakness (W) 3. Opportunities (O) 4. Threats (T)

Strengths

a) Samad Bond as a brand. b) Efficient Research and development department. c) Sound Financial Resources that enables it to cope with large production orders and timely deliveries. d) Talented Management & skilled workers to achieve required goals. e) Good-Will of company in the mind of Customers & Competitors

Weaknesses

a) Organizations staff is not properly motivated due to lake of promotions, incentives and less wages offered by the company especially at workers level(S-Level). b) SRW has very less advertising & promotional activities in media.

Opportunities

a) There is opportunity in market for penetration and diversification. b) To reduce per unit cost to increase the market share. c) New contracts from Defence. d) Go for Exports.

Threats

a) Inadequate & Adverse government policies. b) Economic instability is one of the worst hindrances. c) There is great Risk of political instability in country. d) Great fear of War & Terror danger always present. e) New entrants due to potential in market. f) Need Army Contracts for healthy profits for company.

4.2.2 PEST Analysis

PEST analysis stands for "Political, Economic, Social, and Technological analysis" and describes a framework of macro-environmental factors used in the

environmental scanning component of strategic management.

Political Instability

The political situation of Pakistan is not satisfactory. Due to the rapid change in the Government every government sets its own new trade policies. Government should apply sustainable policies for the beneficial of the exporters as well as the investors.

Economic Situation

The economic condition of Pakistan can also affect the foreign investors increasing inflation rate make the cost of production high and thus reduce the profit margin of the investor.

Social Situation

The change in the lifestyle of the people affects the growing demand of the SRW products. The change in the lifestyle and needs in different demographics also affect the demand of the customers. Due to all these changes SRW is performing excellent for the excellence organization as well as for the customer.

Technological Factors

Technological advancement in all the sectors of the country has changed the entire socio-economic environment. Especially in the rubber sector there is a lot of technological development. Machines and devices are installed in the SRW has made extension in its present setup by installation of well advanced technology imported from Japan China and France.

SRW has received Innovation award for development of Anti Mine Shoe. 4.3 Brands and products

Samad Bond is famous brand of Company and basic strength. Following are the rubber/non-rubber items, which are sold by the Company to the general public as well as to armed forces.

Samad Bond: 101 Ultra Paster Jet Sher kacha solution Shoe adhesive Lasting bond Gum boots Pipes Samad power glue Cushion/solution compound Life jackets Air pillow Foam Air mattress Rubber sheet Rubberised fabric Rubber boats Stone buffing 10

Mattress Rubber marking pads Rubber pitch Polo grip Rubber driving Samad silicon Floatation vest SRW Fabric nylon Rubber cover Pneumatic mattress Poshish Bond Pakka Solution Rubber fins Flotation bladder Reconnaissance boat-3 men Assault boat-6 men Assault boat-13 men Zodiac collapsible rubber boat-10 men Rubber flexible tank Self inflating mattress Tethered Balloon Pontoon floats Rubber flooring titles Items of assault crossing expedients Aluminium ladder Grapnel Fibre glass raft float Hulling rope Hauling rope Dummy weapons Inflatable life jackets Inherently buoyant life jacket Sleeping bags Weapon covers PLCE (Personal Luggage carrying Equipment) items 11

4.4

Business Strategy

Company has been focusing on a four tier business strategy; each is briefly narrated as under:

Exploring and Establishing Export Markets

The management of Company has successfully established a well diversified export market to mitigate the risk of shortfall in exports. Company has exported its high quality products in more than 23 countries across Middle East, Africa and South East Asian countries and its brand is recognized and known as the best quality product amongst the high profile buyers.

Economy of Scale with New Units

Commissioning of Company has reached a new height of scale of production. The operation has been very smooth and its capacity utilization has reached to almost 90% within a short period of three months. The management of Company is now actively pursuing the setup of grinding facilities abroad for capitalizing the vast experience of its management together with its international brand recognition. During current year the Company hired a factory on rent to meet the production in respect of contract with defence; the factory is located at Plot No. 02, 21-K.M. Ferozpur Road, Lahore. Company is also planning to make a unit in Wah Cantonment to meet the Defence needs and accomplish the projects. Cost Reduction

Without cost reduction measures and efficient operations, no company can achieve sustainable growth in its business operation in a highly competitive world. The management of Company has successfully implemented various cost reduction measures taken earlier except for the heat recovery project which is progressing according to schedule. As a result of various cost reducing measures, Company is one of the lowest cost producers of shoe adhesives in the country with hybrid technology.

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Future Outlook

Current situation posed serious doubts for stable and sustained developmental and infrastructural projects in the country. Safe and secure environment is of pivotal importance for new investments. Entrepreneurs both local and foreigners pay high importance to conducive and safe working place. On going war like situation in Northern parts of our country and severe security concerns in other areas of the country is hampering the overall economic activities. In addition liquidity crisis, increasing electricity tariff, power shedding and still higher cost of financing are serious impediments to economic growth in the country. Going forward, spending by Govt. under annual PSDP is reportedly much less than budgeted for the first quarter of FY 2010. In export markets, specially, in Gulf region the competition is getting stiff after capacity additions by a few Gulf States. Company is also planning to make a unit in Wah Cantonment to meet the Defence needs and accomplish the projects.

4.5

Business Process Analysis

The Company has five ways of system of sales, which are the following:

1. To distributors/parties; 2. Through branches; 3. To armed forces; 4. To walk through customers; and 5. Through export.

The Company has two branch offices in Karachi and Rawalpindi each. These branches are responsible for sales in those cities. The head office deals with the sales made to the rest of Pakistan. To facilitate its branch customers the Company authorized its branch managers to obtain order and deposit amount in the Companys bank accounts received from the customers.

The Company purchases local & imported material and different procedures are applied for both types of material. 1. Local Purchase 2. Imported Material 13

Local Purchase

The department of Store, the Incharge of whom is Mr. Naeem Ishaq (Manager Purchase & Stores), is responsible for all types of purchases and imports . Numerous items are purchased by this department, the list of which can be obtained during the annual stock taking. These goods not only include material but also stores and spares.

Imported Material

Numerous items are imported by the Company to fulfil the requirements of material it needs for production of different items. The Company imports the materials from around the world, but mostly from Taiwan and Japan. Mr. Naeem Ishaq, being manger purchase, deals the matters related to imports.

Production

Production is carried out under the supervision of Mr. Manzoor Ahmed (Manager Production Dept.) and Mr. Aslam (Deputy Manager Production). After receipt of order for sales, costing is made by Mr. Shakeel (Costing Executive) in consultation with Mr. Manzoor and incharge of respective sub-department of Productive Dept. Consultation is also made with Mr. Sami for costing of defence products.

Mr. Aslam is responsible for the production of foams. Adhesives are produced under the supervision of Mr. Abdul Basit. Mr. Rafiq is responsible for the production of hoses. Defence items are critically supervised by Mr. Manzoor. After completion of production, goods are transferred to Packing Dept., from where; these are forwarded to Finished Goods Dept. for dispatch to customers.

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5.

Marketing and Sales Department

Samad Rubber Works is a well established fully rubber based manufacturing company of just the right size: not too large so, that management is closely involved with day to day operations , and big enough to provide the full range of products that their principals expect. The company is fully equipped to serve the immediate and long term marketing and distribution objectives of its principals.

Every new product entrusted to their care is handled just like a new baby nourished along its initial stages, seen through its teething problems and guided through lifes many pitfalls. And have the skill know how and resources to create a leader.

I think, few, if any of the competitors can match the experience or the companys rich historical legacy strong and stable. All this has been achieved by developing a dedicated team of highly motivated professionals fully aware of todays supply chain management needs. 5.1 Marketing Strategy

The company ensures width, depth, and merchandizing of brands at all potential outlets, ensuring equitable feedback to Principals, Achievement of Targets and adequate investment levels as per Principals requirements.

5.1.1 Creating Sustainable Value and Market intelligence

The company keeps up-to-date information about the current Market trends, the competitors strategies, weaknesses and strengths. Samad Rubber Works on regular basis gives feed back to companys management and suggestions to improve their efficiency and Brand image.

5.1.2 New Product Launching

The company puts all its resources for the success of the new Brands launched in the market and also become part of the promotional activities.

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5.1.3 Advertising techniques

Mostly advertising by company used is BTL (Below the Line) such as use of hoardings, display at shops and free gifts. Company generally does not use ATL (Above the Line) Techniques. This is due to low budget that company ignores print and electronic media for advertisements.

5.2

Competitive Strategy

Providing customers with satisfying products is important but not enough for successful marketing strategies. These products also must be available in adequate quantities in accessible locations at the times and when customers desire them. This article explains the key role of distribution channel. Special emphasis is placed on the role of distributors and on physical distribution.

In Pakistan, for very long, it was a sellers market and therefore, channel of distribution edit not present great deal of problems. In a host of the cases, most of the industries followed very conservative patterns of distribution and the consumers or customers had to search the product. The situation has changed now and a customer has wider exposure and choice and hence it is important that the product must choose the right channel for the maximum coverage and exposure.

5.2.1 Physical Distributions role in the Economy

The rising affluence of consumers has given rise to National and International markets for goods and services. Literally thousands of new products has been introduced during this century, which are sold and distributed to customers to in every corner of the world. Business firms have greatly increased in size and complexity to meet the challenges of expanded markets and the proliferation of new products. Multiplant operations have replaced single plant production. The distribution of products from point of origin to point of consumption has enormously important component of the GNP of industrialized nations. As a significant component of GNP, distribution has impact on the rate of inflation, interest rates, productivity, energy cost, availability and consumerism. In a study by the National Council of Physical Distribution 16

There are different channels of distribution available to manufactures:

a) Selling direct to consumers by door to door visits b) Sale depots chain stores like Bata or Service shoes stores in Pakistan. The principle underlying is to make it convenient for consumers to procure their requirements. c) Catalogue selling, where all products are detailed and pictured in catalogues and consumers place orders by mail or phone and products are delivered accordingly. d) Selling by manufactures direct to retail or specialized outlets, from where the consumers buy like beverages companies. e) Selling to whole sale trade with or with out getting involved in direct distribution to retail trade. This channel is of greater advantage to the manufacturers when the turnover reaches such a large volume that it appears less feasible for one distributor to handle. This system has problems like as it is difficult in implementation of uniform sale policies, as different dealers have different natures and sometimes they are not of size reasonable enough to be able to provide professional services. f) Selling through exclusive distributors, either one for the country or one for each town and region. This is practiced by pharmaceutical companies which want extensive coverage with out getting involved in it themselves, , thus being left with adequate time and resources to concentrate on quality aspects of products and its sale promotions.

5.3

SYSTEM OF SALES

The Company has five ways of system of sales, which are the following:

1. To distributors/parties; 2. Through branches; 3. To armed forces; 4. To walk through customers; and 5. Through export.

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The Company has two branch offices in Karachi and Rawalpindi each. These branches are responsible for sales in those cities. The head office deals with the sales made to the rest of Pakistan. To facilitate its branch customers the Company authorized its branch managers to obtain order and deposit amount in the Companys bank accounts received from the customers. During current year the Company issued 5602 sales tax invoices.

5.3.1 Procedure of sales to distributors/parties:

Procedure of sales through distributors/parties is as follows: a) The Company has twenty seven (27) distributors and more than 950 parties in head office ledger. Distribution is allowed at the discretion of Main Abdul Sami (Chief Executive). Most of the distributors are doing business with the Company for more than twenty years. b) The terms of credit sales vary with party to party. It ranges from 03 to 15 days but in some cases it extends to two months. No discount is allowed in case of early payment or any penalty charge for the late payments. c) The orders are received by Mr. Abdul Basit (Manager Sales Dept.) or by Mr. Asghar (Marketing Officer). All orders are placed by the customers verbally to them. In case of large companies such as BATA Pak. Ltd., Service Indust. Ltd., Nestle and Haleeb etc., written purchase orders are received by the Company. d) The Sales and Marketing Department have up-to-date awareness about the level of finished goods held, which is provided by Mr. Abdul Basit (Manager Sales Dept.). He finalizes the orders received from the customers in consultation with Mr. Kashan Ali (Asstt. Finished Goods Dept.). A Production/Sales Planning Sheet is prepared by Mr. Abdul Basit & Mr. Kashan Ali keeping in view the availability of finished goods, and raw material if production is to be made. Quantity required by the customers/branches through sales orders is not fully supplied. It is supplied in parts considering all the clients at a specific point of time mutually agreed. e) In case of shortage of finished goods, Mr. Kashan informs Production Dept. for the required quantity of items to be manufactured within specified time. A copy of planning sheet is forwarded to the Production Dept. Entry is also

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made in the registers maintained by both Depts., i.e. Production and Finished Goods. f) On the availability of goods, the Finished Goods Department (F.G. Dept.) prepares Daily Production Report which is counter signed by Production Dept. F. G. Dept. reconciles it with Registers maintained by production Dept. and F.G. Dept. and Mr. Khalid Butt (Asstt. F.G. Dept.) signs the register of Production Dept., whereas F.G. Dept. register is signed by Production Dept. g) On the availability of goods, Sales Department issues Daily Despatch Report to the Finished Goods Department for despatch of goods to the customers. Normally this report is sent to the Finished Goods Department a day before on which goods are to be despatched. This report is unsigned and is discarded after few days. h) The F.G. Dept Prepares Monthly Production Report in triplicate from the register maintained by them, duplicate and triplicate is forwarded to Production Dept and Accounts Dept. respectively. Mr. Abdul Basit (Manager Sales Dept.) reconciles the production of whole month with the despatch data maintained in his personal computer. F.G. Dept. also prepares monthly Stock Position of Finished Goods sheet in duplicate, a copy of which is forwarded to Accounts Dept. for up-dation of stock of inished goods on monthly basis i) In Finished Goods Store, Mr. Rafique (In-charge) and Mr. Kashan (Asstt. Incharge) are responsible for all despatches. j) Storekeeper of F.G. Dept., at the time of despatch of goods, prepares Gate Pass-Outwards in triplicate. One copy is forwarded to gatekeeper, while other is to the Accounts Department for preparing sales tax invoice and third copy is retained for store record purpose. k) Mr. Muzammil (Acct. Asstt.) is responsible for preparation/maintenance of Sales Invoices and Mr. Kaleem (Acct. Asstt.) is responsible to maintain Supply and Stock registers. Everyday Mr. Muzammil prepares the required number of sales tax invoices and posts the entries in computerized software and maintains the vouchers under his the supervision. l) Two copies of Sales Tax Invoices are sent to the customers along with the goods. Out of those two, one copy is retained by the customer while the other is used for acknowledgment purpose, which afterwards placed in partys file.

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m) Vouchers, first prepared by Mr. Sajjad (Acct. Asstt.), checked by Mr. Abid Ali (Accountant) and verified by Mr. Irfan Riaz and Mr. Amir Subhan, and the same vouchers finally approved by a director. n) The transportation charges are borne by the Company. In case of sales returns, transportation charges are borne by distributors themselves. o) Few clients bear the charges of transportation on behalf of the Company, however, afterwards they are issued credit note. p) Discount is allowed to the distributors and parties at the discretion of the top management and manager Marketing and Sales Dept. q) The Company provides discounts on gross sales to its distributors on the following rates and on following items. Sr.# 1. 2. 3. 4. 5. 6. 7. Item Samad Bond 101 Samad Ultra SPG 0.5 gms SPG 2.0 gms Silicon Samad Jet Poshish Bond Rate of discount % 7.0 5.0 8.5 12.0 3.7 5.0 5.0

The procedure for sales return for distributor/party is as follows:

i. Goods can be returned by the customers within six months from the date of sales. For few distributors, this period can be increased to nine months. ii. Mr. M. Ali (Gate Keeper) enters the returned goods in a register. iii. After entering into the register, the goods are moved to the related section of production department. iv. The supervisor of that section prepares the report for those goods regarding its condition and sends to Mr. Abdul Basit. v. Mr. Abdul Basit then approves the quantity of the goods to be despatched again to the customers as a replacement. vi. Same procedure for the documentation is applied for despatch of goods as mentioned above. vii. No entry is made for items received by the Company for the replacement purpose. 20

5.3.2 Procedure of sales through branches:

The Company has appointed Mr. Moin Chisti and Mr. Zaheer Chisti in Karachi and Rawalpindi respectively, as Branch Manager. Both managers are eligible to get certain percentage of commission, which varies item to item. The rate of commission remains fixed normally for a single year.

Following are the items, which are dispatched to the branches along with the rate of commission (on receipt of sales) and discount thereon;

Sr. #

Items

Commission % Karachi Rawalpindi 6 6 6 6 6 6 6

Discount % Karachi 8 Rawalpindi -

1. 2. 3. 4. 5. 6. 7.

Samad Bond Tube (40 g, 80 g) Samad Bond Tin Samad Bond Ultra Samad Power Glue (02 g) Gum Boots Samad Silicon Pipes

8 7 5 7 7 -

a) There are almost 435 parties in Karachi and 599 in Rawalpindi. Discount allowed to parties ranges from 5% to 13%. b) Branch managers are responsible and authorized to deal with the parties and there are no direct connections of the Company with the parties of branches. Head office only maintains the ledgers of those parties. c) Branch managers verbally receive the orders from the parties and inform the head office for total demand. d) The head office after arranging the required goods despatches it to the branches. e) Builty charges for the goods to be despatched are borne by the Company. f) No receiving is obtained when these goods are despatched to branches. g) The procedure of despatch of goods from the Company is same as for the distributors except that the Stock Transfer Note (STN) is sent to the branches instead of sales tax invoice. Sales tax invoices are prepared by branches themselves.

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h) Its the responsibility of the branch managers to collect the amount from the parties. i) For some parties, with whom the Company has long-term relations; discount is given according to the instructions from the top management or manager Marketing and Sales Dept. j) Branches pay the transportation charges for the goods to be delivered to the customers. k) The branch managers send packet after every two or three days, which contains Sales Tax Invoices, Receipt Slips, Expenses Vouchers with evidences, Deposit Slips to bank, Account Statement (depicts the daily receipts and payments), Daily Stock Report and Daily Progress Report (from Rawalpindi only). The branch managers also send detail of receipts from the customers and deposits made in the bank account of the Company. l) These packets are received by Accounts Department where Mr. Sajjad (Acct. Asstt.) posts the entries accordingly for all the sales and expenses. m) Mr. Muzammal receives sales tax invoices and updates respective records. n) The branch managers send monthly report of receipts from the sales to the head office, for the purpose of commission payable to them by the Company. o) For transportation charges, along with Commission Details, they also send detail supported with vouchers for the allowable expenses as per Companys instructions. p) Mr. Sajjad prepares the same detail of commission, which is afterwards checked by Mr. Irfan Riaz (Asstt. Manager Finance) and approved by both Mr. Amir Subhan (Manager Fin.) and Mr. Abdul Basit (Manager Sales & Marketing). q) No sales returns are made in the branches.

5.3.3 Procedure of sales to armed forces:

Following is a procedure of sales to armed forces: a) Information regarding tenders received by the Company from two ways: i) The Company is registered with Director General Defence Purchase (DGDP); this department issues the fortnightly bulletin which contains the advertisement for tenders.

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ii)

The Director Procurement (DP) of armed forces contacts with the Company and inform them regarding tender in case of repeat order.

b) In case of tender submitted by DGDP for repeat order, Company files the document/quotation to them and in other case to the DP of army/navy/air force. c) A bidder, who offers the lowest value along with the quality required by the armed forces, wins the tender. d) Agreement/contract is made and signed by both parties. On the behalf of the Company Mr. Abdul Sami signs the documents being the authorized signatory (for contracts and bills) in consultation with Mr. Manzoor (Manager Production Dept.). Costing is carried out by Mr. Shakeel (Costing Executive) in consultation with Mr. Manzoor. e) Mr. Abdul Sami informs to the Production Department regarding contract requirements. f) A sealed sample is received from army to prepare the same (advance sample) by the Company which is forwarded to army within 45 days. g) After approval of advance sample, Production Department starts the production to complete the job within the stipulated time. h) The date of completion of job is written on the agreement, which could be different from the date required in the tender. i) After production, the goods are kept in Bound Rooms/Offer Rooms. Manager production informs Mr. Sarwar Sheikh (Company Secretary) regarding completion of production. A list in duplicate is provided by Production Dept. to inform Mr. Sarwar Sheikh regarding completion of production. j) Mr. Sarwar Sheikh communicates to concerned department of Defence through Advance Notice for commencements of inspection. k) Inspection is made by the person appointed by Defence Department. He locks and seals the Bound Room and takes sample with him. Later on, next team of inspectors checks 5% of the whole stock. On third visit, the inspectors inspect 100% items. Finally, a Col. Rank army officer checks on random basis which is called Control Sample. l) Rejected quantity is again put into process and inspection process is conducted again. m) Inspection Note (IN) is issued to the Company by the ASID (Army Store Inspection Depot). 23

n) The goods are despatched by the Company according to the terms written in the agreement. o) The procedure of preparation of Gate Outwards Pass and Sales Tax Invoice at the time of delivery of goods is the same as mentioned above. p) Normally the Company sends the goods to Lahore Railway Station or to the place as per agreement, where the Armed Forces has office. MCN (Military Credit Note) is issued to the Company. q) From railway station one copy of RR (Railway Receipt) is received by the Company after loading of goods in railway carriages. r) Company sends the copies of following to CMA (Combined Military Accounts) through bank and bills around 80-90% of the total value of a contract: i) ii) iii) iv) v) Inspection Note Military Credit Note. Railway Receipt Sales tax registration certificate. Income tax exemption certificate.

Along with, Form - DPL-15 for the purpose of warranty given by the Company for the products supplied to the Armed Forces, is attached. s) This 80-90% bill is discounted from the bank (MCB, Shadman Branch.) t) The bank discounts 75% of this 80-90% and credits the account of the Company. u) CMA issues CRV (Consignment Received Report) to the Company after receiving the goods. v) The issue of CRV means that the Company is now eligible to receive the balance payment of 10-20%. w) Approximately, it takes one month for the whole process i.e. from the despatch of goods to issue of CRV. x) Liquidated Damages (LD) charges for late delivery are borne by the Company at the rate of 2% p.m. (maximum limit is 10%) on the total cost of the goods. y) Price reduction charges can also be borne by the Company if ASID reports that quality of goods is not up to mark. z) Warranty is provided by the Company for free of charge replacement of faulty materials or bad workmanship.

24

5.3.4 Procedure of walk through sales:

Following is a procedure of walk through sales: a) Such type of sale is very minimal, and it can only be made with the approval of directors or Manager Sales and Marketing. b) No limitation of quantity is fixed for such sales. c) The process of preparation of gate pass and sales tax invoices are the same as for the rest of the types of sales. d) Receiving of goods can be obtained on a gate pass or on sales tax invoice. e) Mr. Muzammal after preparing the sales tax invoice sends it to the Accounts Department for recording sales transaction.

5.3.5 Procedure of export sales: Company also exports its products. Following is the procedure of export sales:

a) Mr. Abdul Basit contacts with the party or party contacts him for the purpose of export sales. b) After this Mr. Abdul Basit consults with Mr. Abdul Sami for his approval. c) If Mr. Abdul Sami approves the deal, then Mr. Abdul Basit forwards the information to Mr. Sheikh Sarwar. d) He sends Performa Invoice to the Client. e) The Company receives the amount in form of TT/demand draft/bank cheque. f) The instrument is deposited in the bank. g) The Company submit Form-E (form for export purpose) to the State Bank of Pakistan through bank containing all information regarding export to be made. h) Advance Payment Form also submitted to a bank containing the information regarding amount received from the party. i) The Company meanwhile contacts the forwarder for the shipment of goods. j) Goods are manufactured and despatch to the party, the navigation mode could be through shipping, by land or by air. k) The Company maintains the copies of following at the time of export of goods: i) Form E. ii) Advance Payment Form. iii) Commercial Invoice. iv) Packing List v) Certificate of origin, and 25

vi) Bill of lading/shipping

l) When goods are despatched by the Company, at the port, above-mentioned documents are submitted to the Custom department. m) Finally Mr. Sarwar Sheikh sends commercial invoice, packing list, certificate of origin and bill of lading/shipping to the party. Both through fax and by courier.

5.4

BCG - MATRIX (SRW Brands)

High

Low

Defense Items
MARKET GROWTH

Samad Power Glue

High Star Samd Bond, Hose Pipes Low ??

Water proof Foam

Cash Cow MARKET SHARE

Dog

26

6.

Human Resource Management

Human Resource Management is an essential part for any organization. Moreover, development of this department is the first step, the ground on which the future of the company depends. It is essential for every single business unit. It is people, not technology who create the company.

Every organization has its own policies and strategies by which they control the functions of their departments. Similarly, Samad also have own policies and strategies by which they control all the functions of their departments. Samad Rubber Works (Pvt.) Ltd. HR department is also conducting all the practices of HRM like Job analysis and design of work, recruitment and selection, training and development, performance appraisals, compensation, employee relationships, staff welfare and some other things like that. These all practices are conducted by own policies and strategies. HR department not make decisions related of its own department, they also conduct in companys decision. 6.1 Human Resource department activities

1. Recruitment and Selection 2. Training and development 3. Compensation & Benefits 4. Performance Evaluation / Employee relationship

6.1.1. Recruitment and selection process

Samad Rubber Works (Pvt.) Ltd. recruitment process is well established first of all They give ads in news papers, company website etc. Once they receive an application form, from candidates with required documents and C V.

a) Application is received by the HR department and forward to the related department. b) After approval of manager of related department, an applicant has to meet the MD for final interview/approval. c) If the candidate is hired by the Company than HR department maintains his 27

personal file. This personal file includes the following: i ii Copy of identity card; Application for job;

iii Appointment letter; iv Outstanding performance/promotion letter; v Qualification documents.

d) The successful candidates are assigned by temporary number, for staff its TS and for worker its TW. e) The probationary period for staff is six months whereas, for worker, it is nine months. Permanent employees number is issued to an employee when he gets the letter from the management. f) Employees are issued a swap card for the daily attendance purpose. g) All facilities are given to the temporary employees, which are provided to permanent employees, like fair price shop etc.

6.1.2 Training and development

Staffing and training

The Samad Rubber Works has always believed that education is a powerful force in improving the quality of life and creating opportunity for people and their families around the world. The HRD at Samad Rubber Works (Pvt.) Ltd. provides training to employees under the following categories; a) Basic Orientation: b) Development Courses/ Local Training:

Planning and Forecasting

The process of deciding what positions the firm will have to fill, and how to fill them. Samad Rubber Works (Pvt.) Ltd. HR department involves in company strategic planning and they also make sufficient planning for hiring new employees in the future. We forecast for the expected employees needs in the organization. We forecast of employees on the change technology and increasing in productivity.

28

After planning we send this report to the head office for approval. If we get approval from the head office then we start recruitment process.

Job analysis and designing

Samad Rubber Works (Pvt.) Ltd. company HR department check its own job description and job analysis in which they get the information about employees work activities, human behavior, performance standard, job context and human requirements and also other information related to this conduct. HR department of Samad Rubber Works (Pvt.) Ltd. used this information for Recruiting, selection, compensation, performance appraisal, training, and employees relationship.

6.1.3. Compensation and benefits

Objective of compensation

According to HR department compensation objective is to improve performance of employees and convey a message to employees that company is loyal with employees.

HR department manager says that employees are our assets, there for we are careful about their financial health and benefits. We give following compensation and benefits: a) Basic salary b) Bonus c) Medical Reimbursement d) Provident fund e) Social security

Benefits to the employees

a) Bonus u/c 10-C of Schedule of Industrial & Commercial Employment (S.O) Ordinance, 1968 (basic plus CLA) b) Gift bonus (basic) c) Sick leaves - 8 29

d) Casual leaves - 10 e) Earned leaves - 14 (on basic salary plus CLA) encashed at the end of year f) Group Insurance of all employees & workers below age of sixty g) E.O.B.I & Social Security h) Gratuity i) Medical for those who are not registered with social security (50% of actual expenses)

Fair Price Shop Along with other benefits the Company also provides the facility of Fare Price Shop, which has following features:

a) All employees are given 6 kgs of grains of different types every month. b) Rs.12 is deducted from the salary of every employee. c) Two slips are issued at the time when salary slips are issued. One slip is submitted by the employee at store, and second at the gate. d) Separate store issue procedures also applied for pluses purchased by the Company. e) Along with this, workers are given two packs of soap monthly without any charge.

Procedure of time record followed

a) Every employee of the Company, whether permanent or temporary, except directors, is issued a swap card for recording of time spend by employee in the Company. b) The Company has computerized system of recording the time, which helps them to calculate the exact amount of basic salary. c) Every employee has allowed the relaxation of five minutes and fifty nine seconds at the start of a day. Otherwise deduction will be made to the portion of time for which he comes late. These late charges are deducted on the gross salary. d) Overtime calculations are made by MIS department under which the computer system is installed. 30

e) This overtime should be approved by department in-charge before the start of overtime and than if this overtime is applied by the worker, than actual overtime should be approved by a director. f) Employees get overtime, which is equal to:

(Gross salary) = No. of working days x 8 hrs. (in a month) x over time hours worked

Loans a) The Company also allows provides loan facility to its employees. Following is the procedure for loan and its repayment. b) Loan is applied through application, submitted by the employees to Mr. Ashraf (Personnel Dept.). c) He stamps the application and writes date of appointment of the employee on the application. d) The loan is granted equal to the amount of gratuity of person applying or as per his reputation in the Company. e) This application is sent to the Cashier and he writes the detail of loan if already taken by the applicant before forwarding it to directors. f) Its the discretionary power of directors to accept or reject the application. g) If accepted, applicant is forwarded to Mr. Hannan to ask him to prepare the cash voucher manually. h) After this Mr. Khalid verifies the voucher with approved application and forwards it to the Cashier for payment of loan. i) Photocopy of that application is sent to Mr. Faqeer Hussain. He enters the information regarding the loan into register and forwards it to MIS Department. j) For those employees who are getting pay through bank, loan is paid to them through banking channel.

Advances
The Company has a policy to provide the facility of advances against salary to the employees fortnightly. Following is a procedure:

a) Form for application of advance is filled by the employee. 31

b) His slip is forwarded to the Cashier. c) Fortnightly, MIS Department generates the salary sheet. d) This list is send to the Cashier and he checks whether employee is eligible for advance amount for which he is applying. e) The amount is paid and receiving is obtained on the same salary sheet. f) This report afterwards is sent back to MIS Department for updating the salary record.

6.1.4 Performance appraisal

Samad Rubber Works (Pvt.) Ltd. performance appraisal is annually HR manger said that we appraise the employee due to their performance about goals of the organization .we set the goals started the year and tell the employees about the goal if the employees achieve this goal we appraise the employees.

Steps in appraising performance

The performance appraisal process contains three steps; a. Define the job b. Appraise the performance c. Provide feedback 6.2 Assessing Current Human Resource

First we make profile of organizations current employees. This includes information about the employees name ,skills , knowledge , experience, training , prior employment, current position , appraisals , salary level , languages spoken , attendance tracking , drug & health testing , promotion , dependents.

Skills/knowledge/experience:

The purpose is that to asses that whether the employees are given the jobs according to their potential or they are underemployed. And if the person has multiple skills he can performs other tasks as well rather than hiring more people.

32

Training:

If there is gap between current knowledge/skill and requirement of job or for future need this helps to select individuals for training and development , promotion and supporting organizations strategic direction.

Appraisal:

This is to keep record of the performance of the employee so that he may be promoted or get incentives on basis of his performance to keep him motivated.

Drug & Health testing:

This provides an idea of the employee whether he has some health problem or uses alcoholic products. This can affect the performance of the employee.

Make Profile

HRIS (Database)

Promotion

recruitment

compensation

Training & development

employee relation 6.3

Equal employment opportunity

Human Resource Information System (HRIS)

computerized

system

that

assists

in

the

processing

of

HRM

information.(Decenzo,Robbins)

A Human Resource Information System is a systematic procedure for collecting, storing, maintaining, retrieving, and validating data needed by an organization about its human resources, personnel activities, and organization unit characteristics.( Kovach Kenneth )

The HRIS is sometimes also referred as HUMAN RESOURCE MANAGEMENT SYSTEM (HRMS).

33

HRIS can support long range planning, with information for labor force planning, and supply and demand forecasts; staffing with information on equal employment, separations, and applicant qualifications; and development with information on training program costs and trainee work performance. HRIS can also support compensation programs with information on pay increases, salary forecasts, and pay budgets; and labor/employee relations with information on contract negotiations and employee assistance needs. In every case the purpose is to provide information that is either required by human resource stakeholders or supports human resource decisions.

6.3.1 The Anatomy of HRIS

Control Software ensures that the outputs are ones that the system seeks to achieve

Inputs

Transformation

Outputs

Employee information Company policies Other HR information etc.

New Information Accurate Relevant Consistent Comprehensive

6.3.2 Succession Planning

In addition to computerized HRIS, some organizations also generate Replacement Chart, which covers individuals in middle to upper level management positions. This ensures that another person is available to move to the higher position.

The replacement chart high lights those positions that may be vacant in the future due to retirements, promotions, transfers, resignations or death of the employee. This gives ready information to the organization to spot any skill shortage. 34

Replacement Chart looks similar to organizational chart. The people who can replace are listed beneath with the expected time in which they will be prepared to take on the needed responsibility.

Sample Replacement Chart

6.3.3 Determine the Demand for Labor

The organization must be well aware that when new human resource will be required in future in order to fulfill the goals and objectives of the organization .Organizations require diverse mix of people because , employees are not perfectly substitutable for one another in an organization . The estimates of future demand such be accurate in both qualitative and quantitative.

We should know what type of employees in terms of knowledge, skill, and experience is required by the company. Our forecast methods must allow for the recognition of specific job needs as well as the total number of vacancies.

35

6.3.4 Predicting the Future labor supply

Cashio has devised a method through which the organization can predict the future labor needed.

(Grade 17)

Promoted out 6

Entry level 1 resignation

120 people

Retirement, early

Sickness, death, layoff

Promoted in 4

Suppose in grade 17, 4 people will be promoted in and 6 will be promoted out. There should be only 120 people in this grade.So,6 will leave this grade and 4 will join which still leaves space for 2 people . This means that 2 people must be recruited to fill the vacant space.

This can give us a good idea of the vacancies available in future. Decrease in internal supply can come due to retirement, early retirement, termination, prolonged sickness, death, sabbaticals. We have only one definite data that is the retirement. It is easy to predict who is going to retire.

36

On the other hand early retirement, termination, prolonged sickness, deaths are difficult to predict .Deaths is most difficult to forecast because they are often unexpected. Layoffs are more controllable especially in short run. Sabbaticals too are reasonably to predict since most organizations policies require reasonable lead time between request and initiation of leave.

6.3.5 Matching Labor Demand and Supply

The objective is to bring together the forecasts of future demand and supply of human resource both current and future. The result is to highlight areas where overstaffing may exist and to keep abreast of the opportunities existing in the labor market to hire qualified employees either to satisfy current needs or to stockpile potential candidates for the future.

When there is shortages go for recruitment and when there is oversupply the human resource management must undertake difficult steps to go for derecruitment.

6.3.6 Appraisal Methods

1) Evaluating Absolute Standards/Essay Appraisal:

The employees are compared to a standard and their evaluation is independent of any other employee in a work group. This process measures job traits and behavior. Included in this group are methods like critical incident appraisal, the checklist, adjective rating scale, forced choice, behaviorally anchored rating scales.

2) Relative Standards:

Evaluating an employees performance by comparing them with other employees, this method includes group order ranking, individual ranking and paired comparison.

3) Outcomes: This approach makes use of achieved performance outcomes. Employees are evaluated on how well they achieve specific set of objectives. This approach is known as goal setting more commonly referred as MBO (Management by Objective). 37

6.3.7 Information Components of HRIS:

Group 1 Basic Non-confidential Information

Employee name Organization name Work location Work phone number

Group 2 General Non-confidential Information

Information in the previous category plus: Social security number Other organization information (code, effective date)

Group 3 General Information with salary

Information in the previous category plus: Current salary, effective date, amount of last change, type of last change and reason for last change

Group 4 Confidential Information with salary

Information in the previous category plus: Other position information (position ranking) Education data

Group 5 Extended Confidential Information with salary

Information in the previous category plus: Bonus information Projected salary increase information Performance evaluation information

38

6.3.8 SUMMARY

The HRIS is a complete Human Resource Management System. It covers all the fields of Human Resource.

It has the following features:

Attendance tracking Appraisal Job history Employment history Education history Health & Drug testing Evaluation Skill and Training Payroll history Company Policies Loans , advances Incentives

39

7.
7.1

Accounts and Finance Department

Books, Records and Documents

The Company keeps its computerized accounting records in which proper ledgers are maintained along with vouchers. The vouchers are prepared by accounts department and properly checked by Mr. Abid or Mr. Aftab then verified by Manager Finance, and finally approved by the directors. The vouchers are pre-numbered.

Following are the lists of records, vouchers and documents maintained by the Company. Records Input register Output register Sales tax invoice Salary sheets Staff & workers attendance register Leave register Import request form Local Purchase order (cash) Local Purchase order (credit) L/C document files Material issue requisition Good received note Inspection report Daily statement of receipts and issue of stocks Daily account statement (branches) Bank Receipt books (in Lahore, Karachi & Rawalpindi) Cash Receipt books Rawalpindi) Daily cash statement Bank adjustment advice 40 (in Lahore, Karachi & Karachi & Rawalpindi receipt Karachi & Rawalpindi sales Vouchers Cash payment Cash receipts Bank payments Bank receipts Liability (for Purchase) Journal Sales Cheque Cancellation Bank adjustment Import purchase Karachi & Rawalpindi Cash Karachi & Rawalpindi expense

Bank receipt register Bank payment register Gate pass (outwards) Daily dispatch report Bin card (Store) Inwards Gate pass Stock register Contract files (for defence sales)

7.2

System of Banks

Mr. M. Khalid deals with the banks of the Company. All the cheque books are under his custody. Following are the people involved in the procedure starting from preparation to approval of a bank voucher:

Prepared by Sajjad Ali / M. Khalid

Checked by Abid Ali Khan

Verified by: Irfan Riaz Amir Subhan

Approved by: Director

Currently the Company is dealing with following banks. Most of the banks are inoperative.
Sr.# 1. 2. 3. 4. 5. 5. 6. 7. 8. 9. 10. 11. 12. 13. 14. 15. Bank National Bank of Pakistan National Bank of Pakistan Muslim Commercial Bank Ltd. United Bank Ltd. Karachi United Bank Ltd. Muslim Commercial Bank Ltd. Rwp. Muslim Commercial Bank Ltd. Lhr. National Bank of Pakistan Ltd. Al-Baraka Islamic Bank Al-Towfeeq Investment Bank Muslim Commercial Bank Ltd. Khi Bank Alfalah Ltd. Prime Commercial Bank Ltd. HBL, Shadman Br. Meezan Bank. Lhr. MCB Bank, Lhr. Account # CF-49-8 CF-1861-0 13471-1 1905-8 01-010-0572-7 4545-0 499-1 22-1861-0 36-00-0-00400 30-01-0-00046 7702-4 0047-01000968 06623714 8360-3 2841 1000167 Current Account Current Account Nature Cash finance Cash finance Running finance Dormant Dormant PLS PLS (for salary) Dormant Dormant Dormant Dormant Dormant Dormant

41

7.3

System of Finances

Along with the department of accounts the Company has also maintained the department of finance to fulfill the growing needs of finance requirement of the Company. Mr. Amir Subhan is Manger Finance and is responsible to look after all the financial matters of the Company.

Following are the facilities availed by the Company. All the facilities bear interest rate @ 6 months KIBOR ASK rate (average of all banks) + 3% with a floor of 12 % p.a.

Sr # 1. 2. 3. 4. 5. 6.

Facility Letter of credit (180 days) Running finance facility Finance against imported material FIM (120 days) TRF Bank guarantee (Adv. Mobilization and Performance Bond) Murabaha finance Facility (90 days)

Limit (rupees in million) 52 10 30 05 150.63 70

7.4

System of Cash

Mr. Malik M. Shaffi is a cashier of the Company. He is working with the Company for more than 36 years.

Mr. Shaffi verbally receives demand for cash payments from managers of all departments and directors of the Company on daily basis. If these demands are for following days, then he prepares the list of proposed expenditure and at the start of every day this detail is first checked by Mr. Irfan Riaz and then by Mr. Amir Subhan and finally approved by Director.

At the end of day, on daily basis, the cashier prepares a detail of total cash receipts and payments supported by vouchers and evidences. Manual cash payment vouchers are prepared by Mr. Hannan.

42

7.5

Financial Statements

7.5.1 Balance Sheet

43

7.5.2 Profit and Loss Account

44

7.5.3 Statement of Changes in Equity

45

7.5.4 Cash Flow Statement

46

7.6

Ratio Analysis 2010 2009

Gross Profit Margin

Gross Profit Net Sales

89,547,884 522,853,951 17.13%

66,706,667 392,711,319 16.99%

Gross profit of the company is 17.13 % approximately, which is same as compare to last financial year 16.99 %.

2010 Operating expense Ratio

=

2009 51,118,134 392,711,319 13.02%

Operating expense Net Sales

57,555,758 522,853,951 11.01%

Operating expense Ratio of the company is 11.01 % approximately, which is better as compare to last financial year 13.02 %.

2010

2009

Operating Income

Operating Income Net Sales

29,169,040 522,853,951 5.58% 2010

15,588,533 392,711,319 3.97% 2009

Net income as a %age of net sales

Net Income Net Sales

12,685,001 522,853,951 2.43%

2,028,204 392,711,319 0.52% 47

Net income as percentage of sales has been increased from the last year. Resultantly earning per share has also increased.

2010 Net Income - Prefferd Divideds Avg No. of share outstanding

2009

Earning per share

12,685,001 15,000

2,028,204 15,000

Rs. 845.67

135.21

Keeping in view the fair value f the share and political stability in country the earning per share of the company is very good.

2010

2009

Return on Assets

Operating income Total Assets

29,169,040 475,575,575

15,588,533 473,095,883

0.06 2010

0.03 2009

Retuen on Equtiy

Net Income Avg. Total Equity

12,685,001 99,554,984

2,028,204 86,869,983

0.13

0.02

Rate of return on the share holders equity has increased but overall it is very good.

48

2010

2009

Sales To Fixed Assets

Net Sales Net FIxed Assets

522,853,951 259,452,318

392,711,319 258,592,683

2.02

1.52

This ratio tells us the ability of the company's Fixed assets to create the profits. It is not just stagnant but variation is there upward then the downward. It shows that company's effort to utilizing assets is good and potential is there in assets.

2010

2009

Total Assets Turnover

Net Sales Total Assets

522,853,951 475,575,575

392,711,319 473,095,883

1.10

0.83

This tool is used for measuring the assets contribution towards the sales. Here company position is good but in decreasing trend, the meaning of which is that the assets contribution in sales is growing low. This ratio tells us the ability of the company's assets to create the profits. It is not just stagnant but variation is there upward then the downward. It shows that company's effort to utilizing assets is good and potential is there in assets.

2010 Total Liabilities Total Assets

2009

Debt Ratio

153,940,384 475,575,575 32%

164,145,693 473,095,883 35%

49

Debt ratio is also a good tool for the measurement of long term debt. Here .32:1, .35:1 is the position for long term. As company has I Rs to pay .32, .35 respectively which tells us the strong position and good utilization of assets against the obligations.

2010 Interest Coverage Ratio

2009

Operating Income Annual Interest Expense

29,169,040 10,708,772

15,588,533 9,858,973

2.72

1.58

Interest coverage ratio is an indicator of a company's ability to meet its interest payment obligations. Company has sufficient resources to meet its interest obligations. Current Ratio

Current Assets Rupees 216,123,257 Required Actual 1 2.21

Current Liabilities Rupees 97,814,283

: :

1 1.00

However, in exceptional cases, banks/DFIs may relax this ratio upto 0.75:1 if they are satisfied that appropriate risk mitigants have been put in place or the ratio has been adversely impacted due to the nature of the business of the borrower.

Liquid Assets are the assets which are readily convertible into cash without recourse to a court of law and mean encashment/realizable value of government securities, bank deposits, certificates of deposit, shares of listed companies which are actively traded on the stock exchange, NIT Units, certificates of mutual funds, Certificates of Investment (COI) issued by DFIs/NBFCs rated at least 'A' by a credit rating agency 50

on the approved panel of SBP, listed TFCs rated at least 'A' by a credit rating agency on approved panel of SBP and certificates of asset management companies for which there is a book maker quoting daily offer and bid rates and there is active secondary market trading. Guarantees issued by domestic and foreign banks/DFIs received as collaterals by banks/DFIs will be treated at par with Liquid Assets. Credit rating of foreign banks

7.7

Sales Trend Analysis of Different Brands

51

The graph and data shows that sales are increasing every year and it is healthy sign for Samad bond Shoe adhesive.

52

The graph and data shows that sales are increasing every year and it is healthy sign for Sher Kacha Solution.

The graph and data shows that sales are increasing every year and it is healthy sign for Jet Shoe adhesives.

53

8.

Recommendations
a) Cash handling by clerks should be more systemized. b) Reconciliation of Sales orders and dispatches against those orders must be counter checked by more than one person relating to Sales and Marketing Dept. c) Daily Progress Report sent by Rawalpindi Branch must be critically considered by Sales and Marketing Dept. and should be commented for its improvement in order to enhance sales. Karachi Branch should also prepare such kind of Report on daily basis. d) Goods Inward Pass should be prepared on the same day and at the time when goods enter into the premises of the Company. e) Purchase Requisition (PR) for packing material should also be raised. f) Import Request Form must be put on file of materials imported during the period. g) Improvement in the salary package

54

9.
9.1

Learning as a Student Intern

Duties

The main duty assigned to me was to assist Mr. Aftab Iqbal (Assistant Finance Manager).Other duties are as follows.

a) Made the closing enteries for 30/06/2010 b) Made detail of imports during the period 2009-2010 c) Calculation of income tax withheld by company on Salaries of employees d) Reconcile banks and make Bank reconciliation Statements for the month of July, 2010. e) Made report on input sales tax on purchases for the month July, 2010. f) Made report on output sales tax on Sales for the month July, 2010. 9.2 Accomplishments

During my internship I have performed different tasks. My senior in Company assigns me different tasks which I have completed.

a) Working on amortization schedule of different leasing vehicle for learning. b) Prepare the documents for enhancement of Running Finance Facility. c) Calculate Financial Ratio d) Made the depreciation schedule of Factory owned assets, leased assets & addition / deletion e) Made the closing enteries for 30/06/2010 f) Made detail of imports during the period 2009-2010 g) Markup calculation of Running Finance a/c MCB Bank Shadman colony branch a/c # 1347-1 for the period 2009-2010 h) Calculation of income tax withheld by company on Salaries of employees i) Reconcile banks and make Bank reconciliation Statements for the month of July, 2010. j) Made report on input sales tax on purchases for the month July, 2010. k) Made report on output sales tax on Sales for the month July, 2010.

55

9.3

New Knowledge Acquired

I have learned a lot of new things in this internship program. Before this internship I have no idea about the overall practices in an Organization. In every department I learned new things. Before this experience I read only theory but when I see these things practically I learned a lot of new things. The working in different departments enhances my knowledge.

An exposure of the practical way of business gave me confidence about what I learnt from my MBA I was trained there to understand the marketing strategies, planning and problem solving techniques, I am proud of Samad Rubber Works they give me chance to sit in there meetings, I am inspire of sitting with the professionals when they were discussing business activities and even they also asked me to actively participate in there discussion session.

9.4

Problem Encountered

I faced a lot of problems in my internship program. I find some difficulties in the beginning of work. But employees help me a lot to understand all the procedures. There was also sitting problem for any intern. 9.5 How Experience Impact my Career

This experience impacts my career in such way that I did practical job and I took interest in learning Organizational setup. So from all above activities I have increased of my self-knowledge and new knowledge confidence that will help me to take initiatives when I will join any organization. I really learnt more than my think in this short period. I took idea how a business can be managed. And which minor points should be kept in mind while managing activities of business. I feel Internship is necessary for practical Knowledge along with the theory and hope this internship will change my professional career.

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Index

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Bibliography 1. Dessler G. (2008) Human Resource Management 11th ed. FT prentice Hall Financial Times. 2. Horne V. and Bhaudri N. (2008) Fundamentals of Financial Management 12th ed. FT prentice Hall Financial Times 3. Kotler P. and Armstrong G. (2008) Principles of Marketing 12th ed. FT prentice Hall Financial Times 4. Robbins P. and Coutler, M. (2003) Management 9th ed. FT prentice Hall Financial Times. 5. Sosa A. and Dade M.. (2005) The Product Life Cycle, and Marketing Research 7th ed. , the McGraw-Hill Companies, Inc 6. Slack, N., Chambers, S. and Johnston, R. (2007) Operations management 11th ed. FT prentice Hall Financial Times. 7. www.samadrubber.com 8. Mr. Aamir Subhan (Finance Manager SRW) 9. Mr. Aftab Iqbal (Assistant Finance Manager SRW).

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Glossary

A ATL Above the Line, It includes Print media B BTL Below the Line C Competitive advantage a companys ability to perform in one or more ways that competitors can not or will not match. E E- Marketing company effort to inform buyers, communicate, promote and sell its products over the internet. F Fixed Costs that do not vary with production or sales revenue. M Marketing Process of planning and executing, pricing, promotion and distribution of ideas, goods and services to create exchanges that satisfy individual and organizational goals. Mission Statement that organizations develop to share with managers, employees, and (in many cases) customers. Motivation induces the employees to perform their duties efficiently by giving them different incentives or any other kind of benefits. O Organization a companys structure and policies and corporate culture. Overhead charges the companys expense like mess charges, tea charges, expense on foreign visits by the companys employees as when designer visits international trade shows etc S SRW Samad Rubber Works T Total Cost the sum of fixed and variable cost for any given level of production. TQM (Total Quality Management)an organization wide approach to continuously improving the quality of all the organizations processes, products and services.

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