STRATEGIC MANAGEMENT

Presented To: Mr. Ghulam Ahmad Rana Presented By: Waqas Sattar Bilawal Shabbir Arham Javed Usman Ali Ch.Awais Zahid Bilal Nawaz Hassan Imtiaz 1205 1210 1215 1220 1211 1201 1225

Pak Elektron Limited (PEL)

History of PEL
Pak Elektron was setup in 1956 as a Public Limited Company with the object of initially producing transformers, switchgears, and electric motors. After the conclusion of joint venture agreement with AEG Saigol Group acquired the PEL COMPANY in October 1978 The company floated its shares to the general public and was listed on Karachi Stock Exchange (KSE) and Lahore Stock Exchange (LSE).

In 1980, Appliances Division was established

1981 it started the production of Window Type Air Conditioners with the technical collaboration of General Corporation of Japan

1987 the production of Refrigerators and Deep Freezers was started. In 2006, the Company has started manufacturing of split type air conditioners of various capacities as the customer choice has shifted from window type to split type.

The product has been well received in the market. This encourages the company to multiply its production in the coming year.

Today, PEL has become a household name. Its products are not only in great demand in the local market but the Company has started exporting its appliances division products PEL (Pak Elektron Limited) is the flag holder of the Saigol Group of Companies

KEY PEOPLE
CHIEF EXECUTIVE Mr. Mian Naseem Saigol BOARD OF DIRECTORS Mr. M. Azam Saigol Mr. Shahid Sethi Mr. Haroon Ahmad Khan Mr. M. Murad Saigol Mr. Homaeer Waheed Mr. Gull Nawaz Mr. Masood Karim Sheikh Mr. Tajammal H. Bukharee Mr. Wajahat A. Baqi

(Managing Director)

(NIT Nominee) (NBP Nominee U/S 182 of Ordinance) (NBP Nominee U/S 182 of Ordinance) (NBP Nominee U/S 182of Ordinance)

Business volume
The SAIGOL GROUP is one of the leading industrial groups in Pakistan. The Saigol Group belongs to the Saigol Family, which is an old business family and has contributed a lot towards Pakistans industrial development. Saigol Group remains a leading and forward-looking group and believes in continuous development and growth. The result is a global business activity monitored through various offices worldwide. They are serving nation in diversified business activities in the fields of Textiles. Engineering. Banking and Finance. Fuel and Energy. Trading. Automobiles.

SAIGOL GROUP OF COMPANIES

Textile Azam Textile Mills Ltd. Saritow Spinning Mills Ltd. Fuel & Energy Kohinoor Power Co. Ltd. Kohinoor Energy Ltd. Engineering Pak Elektron Ltd.1 PEL 2 Banking & Finance Union Bank Ltd. Union Leasing Ltd. Trading Saritow Pakistan Ltd. Saigol Computer Ltd. Automobiles Kohinoor Motor Works Ltd. 06-Egerton Road, Lahore 06-Egerton Road, Lahore Kohinoor Nagar, Faisalabad 06-Egerton Road, Lahore 14km, Ferozepur Road, Lahore 21 km, ferozepur road Qasoor

06-Egerton Road, Lahore 07-Egerton Road, Lahore

06-Egerton Road, Lahore 162-Shadman Colony, Lahore 07-Egerton Road, Lahore

GOALS OF PEL
Non financial goal
To add a new product to its range in every third year for increasing the sales volume To set on image as the best quality of local home appliances To set an image the best quality of local power division product

Financial goal
To obtain a real (inflation and adjusted) growth in earning per share 10%per year over time. To increase the market share of split unit to at least 20%-25%by the end of 2009.

OBJECTIVES OF PEL
The objectives and mission for which the company is established are as following: To carry on the business or businesses of manufacturing, selling, installing, maintaining designing and dealing in all kinds of electrical equipment. To carry on any business whether manufacturing or otherwise which maybe found convenient to undertake in connection with or in addition to any of these objectives mentioned above. To do all such things that are incidental for the attainment of the above objectives or any of them. To produce high quality and standard products. To produce equipment to be used in numerous projects of national importance. To secure a high share / quota of WAPDAs demand for power products.

To produce skilled workers and technicians through its apprenticeship schemes and training programs for engineers and technician

COMPANY BELIEFS
The belief of Pak Elektron Limited is the consistent attainment of quality in all facets of our operations so as to provide consultancy services with professionalism and to the satisfaction of our clients.

COMPANY BELIEFS: ~ Excellence in all we do.

~
~ ~ ~ ~

Ethical and moral conduct at all times and in all our relationships.
Innovations in all areas of our Designs as a mean of attaining and Sustaining leadership. Pursuit of relevant knowledge Commit ourselves to the highest standards of personal and professional integrity at all times.

Number of Total Employees

There are more than 7000 Workers who are currently working in PEL all over Pakistan.

Vision Statement

To excel in providing engineering goods and services through continuous improvement

Mission Statements

To provide quality products & services to the complete satisfaction of our customers and maximize returns for all stakeholders through optimal use of resources To focus on personal development of our employees to meet future challenges To promote good governance, corporate values and a safe working environment with a strong sense of social responsibility.

Analysis of mission statement

I. Core competency

II. Technology
III. Philosophy These are the three things which are not mansion in the mission statement of PEL.

PROPOSED MISSION STATEMENT

To provide quality products & services to the complete satisfaction of our customers all over the Pakistan and maximize returns for all stakeholders through optimal use of resources

To focus on personal development of our employees to meet future challenges

To promote good governance, corporate values and a safe working environment with a strong sense of social responsibility. Our philosophy is to give people energy efficient and reliable products in home appliances Our all across distribution network make us dominant over our competitors By using latest technology and providing innovative features in our Product

LOCATION
The head office is in Gulberg Lahore and the production unit is situated at 14-k.m. Ferozepur Road, Lahore And is spread over an area of 242 kanals and 15 Marlas of leasehold land in industrial area of Kot Lakhpat, Lahore, and presently the total covered area comes to 232,883 square feet. Factory is located on the main road where public transport is available round the clock helping in easy access to the labor and customers.

REGISTERED HEAD OFFICE

17-Aziz Avenue, Canal Bank, Gulberg-V, Lahore
Office -14 Km, Ferozepur Road. Lahore-54760

GP.D. Box No. 1614, Lahore - Pakistan.

Tel: (+92 42) 5811951-59 (9 Lines Fax: (+92 42) 5810156, 5822682 E-mail: shares@saigols.com Website Address: www.pel.com.pk

PATTERN OF SHARE HOLDING

Name Saigol Family Financial Institutions Insurance Companies Joint-stock Companies Investment Companies Modaraba Companies Foreign Investors General Public Total Percentage 54.60 13.27 3.07 1.77 0.46 0.00 0.03 26.80 100.00

Organizational Structure

PRODUCT HIERARCHY

PEL-LG Strategic Partnership

Pak Elektron Limited, held a press conference (April 21, 2009) to announce the strategic alliance between Pak Elektron Limited & LG Electronics An agreement in this regards was signed at the ceremony by Mr. Murad Saigol, Director Operations, Pak Elektron Limited & Mr. E. D. Choi, General Manager, LG electronics, Pakistan Liaison Office. Mr. Saigol announced this to be the biggest partnership in the history of home appliances and air conditioners in Pakistan and this strategic alliance will expand in the times to come. PEL has been appointed the official distributor for LG Air Conditioners, Refrigerators, Microwave ovens, washing machines and vacuum cleaners from June 2009.

The addition of LG for Pak Elektron will now mean Pak Elektron will have two leading brands, PEL and LG, in both the categories of home appliances and Air conditioners.

Main Strategies Under Taken

At corporate level

The main objective of firm to give customers satisfaction with high customer satisfaction. The PEL use grow and build strategy

Two way relationship with distributors

PEL has Strategy for introducing product in every 3 years

Political environment
Pakistan is facing the situation of great political instability and uncertainty since last couple of year. According to the economist com survey Pakistan is at the 11th number of top most vulnerable countries of the world.

Due to this problem business activates in Pakistan are severely affected. The foreign direct investment also decreased dramatically due to current insecurity.
The government decided to increase the minimum wage rate of workers from 6000Rs to 7000Rs which is increases the cost of production and inflation

 There are few incentive to the manufacture of Pakistan by the government as compare to up coming giants of china. The cost of manufacturing is high due to electricity rate and overhead. So most of the time manufacture hesitate to do manufacturing in Pakistan and prefer to import finished goods are only assemble good in Pakistan

Economic environment
Due to global environment economic crises, Pakistan is also facing a lot of problem. Although Pakistan economy is not directly hit by the crises yet the economic situation in server in Pakistan To resolve the power sector issue, removing subsidies and concurrent transfer of international oil price changes also likely to risk a further slow down in economic activities at least in the near future. In Pakistan there is a strong black economy due to the circulation of black money illegal business like smuggling Economist are expected better condition for Pakistan economy due to the loan of IMF. The consumer in Pakistan is spending most of their income of food and basic needs of life.

Social Environment
Now a days people are becoming more price conscious due to inflation and crises of Pakistan. Their primary focus on food and daily use good and thus people have lessened their interest in electronic good. Now consumer prefers the split air conditioner over window air conditioner because split ACs are considered as energy severs.

That is why window ACs are almost obsolete because of high consumption and split ACs are becoming more popular because of low electricity.
In countries like Pakistan the usage of air conditioner is great because of extended summer season of nearly 8 month. The company are becoming more socially responsible these days as they have introduce CFC free refrigerant, anti bacterial and dust filter.

Technological environment
With the introduction of spilt air conditioner, it made the air conditioner more affordable and easy to install and maintain. The efficiency of air conditioner depends upon its outer unit. The bigger is the outer unit the more efficient will its inner unit. In split air conditioner the rotator compressor are used which are soundless and do not heat up in extreme situation. Companies are introducing refrigerator with cool bank which remain working for 5 hours even after switch off. The multinational national companies are using information technology to coordinate and communicate with in companies as well as extreme parties. The electronic management system are used to reduce the cost of handling the inventory order.

Legal
Legal factors include description law employment law, and earth and safety. These factors can affect how a company operates, its costs, and the demand for its products

Bargaining power of supplier

The bargaining power of supplier is low because of availability of a number of chines brand in the market.

Bargaining power of buyer

The bargaining power of the buyer is high because They have choice of different in the market

They have choice of models and features

They have choice of product in different prices

Threats of substitute
Threats of substitutes high because

The gas generators and ups are the substitute of Pels diesel and petrol generator
The major substitute of air conditioners are Room air cooler

The room air coolers are available at are low price starting from 6000
Electric fans are also very cost effective and its major company GFC fans ,Younas fans Royal fans

Threats of new Entrants

PEL has low level of threats of new entrants in the industry as the electronics industry has different barrier to entry

Requires huge capital to get entry in the industry

High manufacturing costs

High advertisement cost

High cost of raw material

Rivalry among competitors

There is intense competition with in the industry to capture the market in term of share of market. The companies are introducing product with new and advance technology to attract and capture the customers. They are using advertisement and technology as a weapon to increase market share in related market.

Description
CRITICAL SUCCESS FACTOR Weights Rates

PEL
Weighted average score

HAIER
Rate Weighted average score

DAWLANCE
Rate Weighted average score

Strong brand 0.25 name Strong dealers 0.2 network Product quality 0.12 Customer services Strong management Strong home appliances Total 0.14 0.09 0.2 1

4 2 3 4 2 4

1 0.4 0.36 0.56 0.18 0.8 3.32

3 2 3 3 3 2

0.75 0.4 0.36 0.42 0.27 0.4 2.6

4 4 3 3 2 3

1 0.8 0.36 0.56 0.18 0.6 3.5

strength

weight

rate

Average weight score

image Strong brand

Strong dealer network

0.15
0.12

4
3

0.6
0.36

Good product quality Firm grip home appliances

Strong management

0.14 0.10
0.11

4 4
3

0.56 0.4
0.33

Distribution of authority
Free customer services weakness Financial problem Lack of advertisement System variation Lock of product range

0.07
0.09

3
3

0.21
0.27

0.03 0.09 0.07 0.02

1 1 2 1

0.03 0.09 0.14 0.02

Less utilization of capacity

Total

0.01
1

0.01
3.02

Opportunities

weights

rates

Weighted average score

Exploration of market Increase product range Export opportunity

Threats Tough competition Slow growth rate

0.25 0.15 0.17

3 3 3

0.75 0.45 0.51

0.12 0.13

4 3

0.48 0.39

Instable government
High tax rate Total

0.08
0.10 1

2
3

0.16
0.3 3.04

IFE = 3.04 EFE = 3.02 The strategy for PEL to

growth and build

STAR: Star is a business unit that has large market share in fast growing industry. Such unit requires more investment to generate more cash. If due to more investment it will become successful and become cash cow and it will reach at maturity stage. Refrigerator of PEL is the product having high market share and high annual growth rate.

Cash Cow: It is the business unit sometimes known as problem child. It has a large market share and low annual growth. Each cash cow requires little investment and it generates more cash that can be used for investment purpose in other business units. For cash cow the strategy is called HOLD, you must preserve market Split air conditioners is the product of PEL having high market share and low annual growth rate. Question Mark: It is the business unit that has a low market share and high annual growth. These business unit requires resources to grow market share but if they succeeded that will become STAR. For question mark the strategy is called BUILD, you try to make up the market share. Washing machine and microwave oven are the products of PEL having low market share but high annual growth Dog: Dog is the business unit that has small market share as well as low annual market growth rate. A company normally would be unwise to invest substantial funds in SBUs in this category. Marketing strategies for dogs are intended to maximize any potential profits by minimizing expenditures or to promote a differential advantage to build market share and the company can diverts or liquidate the dog product Deep freezer is the product of PEL having low market share plus low annual growth share.

SPACE MATRIX Financial stability Return on investment High working capital Profitability . Industry stability Growth rate Increase in demand . Competitor advantage Quality product Market share -4 -3/2 +5 +5/2 5 +4 +5 +4/3 4.25

.
Environment stability Unemployment Advance technology . -2 -5/2

-3.5

-3.5

IS+CA
5+ (-3.5) =1.5 FS+CS 4.25+ (-3.5) =0.75

STRENGTHS S
PEL 1. 2. 3. 4. 5. Strong brand image Strong dealer network Good product quality and service Number 2 in refrigerators in Pakistan Firm grip in home appliances 1. 1.

WEAKNESSES W
Financial Problems Lack of advertisement

1. 1.

System variations Lack of Product range

1. OPPORTUNITIES O 1. 1. Exploration of market in Pakistan Increase in product range 1. 1. Export opportunity THREATS T PEL facing tough competition. Mostly companies Give High Credit in market and get current market Slow growth rate in Pakistan Instability of government Tax department 1. SO STRATEGIES Start a campaign to increase the product range ( s1,s3,o2) Firm should focus on international market (s1,s2, s3,o3) ST STRATEGIES Let customers know companys Product Quality and Achievements. (s3,o1) Provide the product in market at credit to enhance the market share (S2, S4, S5, T2,) 1.

Less Utilization of capacity WO STRATEGIES Increase advertising for gaining new markets (w2,o1) Product range to be increased with variety (w4,w5,o1,02,03)

1.

1. 2. 3. 4. 5.

1.

1. 2.

WT STRATEGIES Use the advertisement and by increasing product range remove some pressure of competition. (W2, W4, T1)

2.

QUANTITATIVE STRATEGIC POSITION MATRIX

Marketing Development strengths weights Attractive score 4 3 2 2 1 2 3 4 2 2 Total attractive score 0.6 0.39 0.38 0.12 0.04 0.10 0.54 0.6 0.04 0.06 2.87 Marketing penetration Attractive score Total attractive score 0.3 0.26 0.57 0.18 0.04 0.1 0.54 0.45 0.02 0.06 2.52

Product quality Strong brand name Strong brand image

weaknesses Financial problem Lack of advertisement Less utilize of capacity opportunities Explore market Increase product range threats Tough competition Slow growth

0.15 0.13 0.19

0.06 0.04 0.05 0.18 0.15 0.02 0.03 1

2 2 3
3 1 2 3 3 1 2

COMPETITOR ANALYSIS
In this modern word, it is very hard to survive in the market due to swear competition between the companies. Every existing product in the market has its substitute or similar product. Competitors are the companies that satisfy the same customer needs and wants. To explain the competition we can classify the competitors in two ways which are given below: Direct competitors Indirect competitors

DIRECT COMPETITORS
The direct competitors of PEL are Dawlance, Waves, LG, and Haier etc. The Dawlance is market leader in the refrigerator and PEL is still on second number. But in window room air conditioner (WRAC) the PEL is market leader
REFRIGERATORS: Total market sale of refrigerator in 2006 is 2924905 units. Last year sale was 2091779 units. These figures show 30% market growth. But this is not the exact figure of growth rate it varies from year to year. DAWLANCE is a market leader in refrigerator with 46% share. PEL has 38% market share Waves has 10% market share. 6% shares are others

 WINDOW AIR CONDITIONERS:

PEL is a market leader with a market share of about 60% in local manufacturing industry. And overall has 35% market shares for this product. LG has about 32% market share and stands on number two. And rest of the manufacturers have 23% marker share.
SPLIT AIR CONDITIONERS: The main competitor of PEL in Split air conditioner is DAWLANCE. Other competitors are MITSUBISHI and HAIER MICROWAVE OVEN:

In case of Microwave Oven DAWLANCE is the main competitor of PEL. But the company claims to be the leader in this product line.

INDIRECT COMPETITORS

The indirect competitors for PEL in this industry are Samsung, Orient, Mitsubishi, Sabro, Nobel and others Chinese brands available in the market. The PEL has no big threat from all these companies. But the Sabro pioneer for introducing the split air conditioner in Pakistan.

BUSINESS DIVISIONS
PEL is organized in two business divisions:

1. 2.

Appliances Division Power Division

APPLIANCES DIVISION:
PELs Appliances Division is the flag carrier of the Saigol Group involved in home appliances manufacturing. Air conditioners. Refrigerator

Deep freezers
Microwave oven

Washing machine
Generators.

PEL Air Conditioners: PEL window-type air conditioners were introduced in 1981 in technical collaboration with General Corporation of Japan. Ever since their launch, PEL air conditioners have a leading position in the market. PEL air conditioners cooling performance has been tested and approved by Copeland and ITS USA. With the shift of users preference from window type to split type air conditioners, PEL has started manufacturing split type air conditioners. PEL Refrigerators: The manufacturing of refrigerators started in 1986-87 in technical collaboration with M/s IAR-SILTAL of Italy. Like the air conditioner, PEL's refrigerators are also in great demand. Today, PEL Crystal has 30% market share. Its cooling performance is tested and approved by Danfoss, Germany and its manufacturing facility is ISO 9002 certified by SGS Switzerland

POWER DIVISION
PEL Power Division manufactures

Energy meters
Transformers

Switchgears
Kiosks

Compact stations
Shunt capacitor banks

Energy meters
Generators

1. All these electrical goods are manufactured under strict quality control and in accordance with international standards. 2. PEL is one of the major electrical equipment suppliers to Water and Power Development Authority (WAPDA) and Karachi Electrical Supply Corporation (KESC), which are the largest power utilities in Pakistan. 3. Over the years, PEL electrical equipment has had been used in numerous power projects of national importance within Pakistan.

4. In spite of stiff competition from emerging local and multinational brands, PEL Group's appliances and electrical equipment's have remained in the spotlight due to constant innovation. 5. Strategic partnership with multinationals of repute have enabled the PEL Group to incorporate new technologies into existing product ranges, thus giving the Pakistani market access to innovative, affordable and quality products

 Brand Name Strong Dealer Network Quality Products Best Sales Services

Strengths

Market leader in WRAC

Number 2 in Refrigerators in Pakistan

Strong Management Team

Distribution of Authority Research and Development Department Free Customer Service

Brand Name: PEL has created a strong brand image in the mind of the customers through higher quality and low prices. The customers of PEL always prefer its home appliances like Window AC, split AC and refrigerators, during the time of purchase. PEL is a popular company in Pakistan and every one knows about the PEL products and its brand name. Thats why PEL is a market leader when it comes to Window AC. Strong Dealer Network: It is also the plus point for PEL that it has developed a strong dealer network in the market. The dealers always try to sell the PEL products to the customers because, the company for its products, gives them a high margin. The management of PEL also provides more incentives to their dealers than their competitors. Dealers are very conscious about the PEL products and always guide the customer in buying the PEL products. Quality Products: PEL is also in a strong position because it provides superior quality products to customers. So it gives an edge to company over its competitors. Due to best quality, guarantee of products of PEL is more than its competitors.

Best Sales Services: PEL provides the after sale service to customers which increases the customers satisfaction. The biggest strength of services department is that it handles a complaint within 24 hours in any part of the country, that helps in increasing the satisfaction level of customers.

Market leader in WRAC (Window Room Air Conditioner): It is also strength of PEL that it is a market leader in WRAC. Costumer always gives preference to PEL in window AC market because of low price, high quality and durability. Number Two in Refrigerators in Pakistan: After the Dawlance refrigerators, PEL has the second position in the refrigerators market. PEL is gradually coming up in refrigerator market and increasing its market share. Due to improved quality, innovative features and good sales services PEL is becoming the first choice for customers.

Strong Management Team: It is another plus point that PEL has a strong management. Its employees are competent, efficient, skilled and knowledge. They always cooperate with the top management in achieving of goals that are assigned to them.

Distribution of Authority: Top management of PEL delegates the power to the subordinates for achieving the marketing objectives in a specified time period. So every manager has an authority to take decisions to achieve the goals of company. In this way they save the time and react quickly.
Research and Development Department: PEL has a strong research and development department that is continuously trying to develop new features for the products. R&D department spends huge amount of money for the development of new products. Free Customer Service: PEL provides free customer service for one year to its customers. The customers who buy the PEL products become brand loyal due to this facility.

Weaknesses of PEL:
Like other companies PEL has some weaknesses. If PEL overcomes these weaknesses then it can become a market leader in home appliances. PEL looses some competitive edge in the following areas: Financial Problems Lack of advertisement System variations Lack of Product range Less Utilization of capacity

Financial problems: Sometimes PEL faces the financial problems because its stocks are so much piled up in the stores that creates problem of cash flow because when the stocks are not sold and the production is in process for 24 hours a day then the company faces such problems.

Lack of advertisement: It is a second major weakness of PEL that it is not a vigorous advertiser. Only recently has PEL invested a considerable amount in advertisement, but when we look at its competitors, PEL still has to do a lot in this sector.
System variations: It is also the main weakness of PEL that there is a rapid change in polices of selling the products. That creates problems for the selling team to sell the products to the dealers because the top management requires urgent amount of money. Thus the products are sometimes sold on hard cash that reduces the prices of products that creates problems for the management.

Lack of Product Range: PEL has introduced more products of consumer items but there are more needs to develop new consumer items like PEL washing Machines, Vacuum cleaner and other items. Less utilization of capacity: Due to lack of finance a company cannot utilize all its resources on its full capacity. It increases the cost of products per unit that decreases the profit margin of each consumer item. Sometimes, the company cannot allocate the resources according to the requirements of the production department, which later on becomes a problem for the complete utilization of resources

Opportunities for PEL:

For PEL, there are more opportunities for expansion in business. Following are the opportunities for the PEL. Exploration of market in Pakistan Increase in product range Export opportunity Increase in production capacity

Exploration of market in Pakistan: PEL has the opportunity to explore the market in all over the Pakistan. Even though PEL has introduced its products in many cities of Pakistan but there are so many places that are yet to be exploited. Increase in Product Range: PEL can increase its product range that will be more profitable for the company. There are more needs to develop new consumer items like PEL washing Machines, Vacuum cleaner and other items. Export opportunity: PEL has also the opportunity to export their products in other international countries like UAE, SAUDI ARABIA, and other Arabic and African countries. Increase in production Line: Company can also increase its production line at the maximum level that will increase the efficiency of the employees and will also reduce the total cost.

Threats for PEL

Following are the main threats for the PEL: Strong competition
Chinas product introduction in the market Price war Slow growth rate in Pakistan Instability of government Tax department World Trade Organization

Strong competition: There is very strong competition in the home appliance division. Every company adopts different strategies for selling of the products. It reduces the profit margin of each company and increases the bargaining power of the buyers who will demand higher quality of products at lower cost. Chinas product: Chinas products are another threat for the Pakistani companies because these products are cheaper than the Pakistani products. China products stress the indigenous companies to lower the quality and prices that will not be profitable in the long run. Price war: As there is stiff competition in the home appliance market that will cause the price war. Slow growth rate in Pakistan: There is also slow growth rate of home appliance in Pakistan that will increase the stocks of the company. Although, this industry is in the growth phase, but the speed of the growth is very slow.

Instability of Government: The rapid changes in governments will become a threat for the companies because every government adopts new policies for the industries. So it increasesthe uncertainty for the investors who want to invest heavy amounts in their new projects.
Tax department: Tax department is another major threat for the company that will restrain the business expansion. There is a most complicated tax procedure operating in the country that creates hurdle in the production and smooth functioning of different companies in Pakistan. World trade organization: World trade organization will give the permission in 2005 to each company of home appliance to export their products after paying less duties or duty free products. That will increase the pressures for the indigenous companies to reduce the prices and increase the quality. It will increase the competition among the foreign companies and indigenous companies.

Balance Sheet as at December 31, 2012 Note December 31, 2012 December 31, 2011 (Rupees in thousand) EQUITY AND LIABILITIES SHARE CAPITAL & RESERVES Authorized capital Issued, subscribed and paid up capital Reserves Un-appropriated profits 4 5 6 2,500,000 1,668,264 164,134 2,075,931 3,908,329 SURPLUS ON REVALUATION OF PROPERTY, PLANT AND EQUIPMENT 7 3,873,505 2,500,000 1,668,264 164,134 1,770,706 3,603,104 3,962,040

NON CURRENT LIABILITIES Long-term financing - secured Liabilities against assets subject to finance lease Deferred taxation Deferred income 8 9 10 11 5,587,486 33,555 1,930,107 50,037 7,601,185 CURRENT LIABILITIES Trade and other payables Interest / mark-up accrued on loans and other payables Short-term borrowings Current portion of: - long-term financing - liabilities against assets subject to finance lease 8 9 40,729 38,218 9,831,765 1,106,375 38,393 9,628,526 12 13 14 1,692,148 1,245,589 6,815,091 1,485,002 823,896 6,174,860 4,548,852 21,841 1,973,350 56,069 6,600,112

CONTINGENCIES AND COMMITMENTS

15 25,214,784 23,793,782

Note ASSETS NON-CURRENT ASSETS Property, plant and equipment Intangible assets 16 17

December 31, 2012

December 31, 2011

13,811,250 310,969 14,122,219

14,089,185 314,874 14,404,059

Long term investments

18

10,216

4,393

Long-term deposits

19

65,898

54,636

CURRENT ASSETS Stores, spares and loose tools Stock-in-trade Trade debts - unsecured Advances Trade deposits and short-term prepayments Other receivables Other financial assets Income tax refundable Cash and bank balances 26 25 20 21 22 23 24 126,792 3,789,580 5,775,681 527,751 290,799 19,662 11,663 258,174 216,349 11,016,451 109,582 4,247,023 3,746,881 625,559 227,555 17,241 7,491 187,496 161,866 9,330,694

25,214,784

23,793,782

Profit & Loss Account

Note year ended December 31, 2012 year ended December 31, 2011

(Rupees in Thousand) Revenue Sales-tax and discount Revenue - net Cost of sales Gross profit Other operating income 30 29 27 28 20,293,973 2,524,084 17,769,888 14,126,276 3,643,612 36,269 3,679,881 Distribution cost Administrative expenses Other operating expenses Finance cost 31 32 33 34 827,192 624,338 4,648 2,050,054 3,506,232 173,649 Share of Loss of Associate (Loss)/ Profit before taxation Provision for taxation (Loss)/ Profit for the year Other comprehensive income Total comprehensive (Loss)/ income for the year 114,665 35 18 (12,729) 160,920 46,245 114,665 13,723,169 2,380,339 11,342,830 10,277,948 1,064,882 37,140 1,102,022 792,803 683,115 4,838 1,413,264 2,894,020 (1,791,998) (10,162) (1,802,160) (638,698) (1,163,242) (1,163,462)

Financial
Sales Gross Net Sales Gross Profit EBITDA Financial Charges Profit before Tax Profit after Tax EPS - Basic Share Capital - Ordinary Share Capital - Preference

2012
20,294 17,770 3,646 2,917 2,051 161 115 0.59 1,219 450

2011
13,548 11,237 849 333 1,413 (1,918) (1,269) (10.95) 1,219 450

Share Holders' Equity

Long Term Loans Current Liabilities Non-current Assets Current Assets Total Assets

3,908
5,621 9,832 14,198 11,016 25,215

3,498
4,571 9,622 14,463 9,219 23,683

Production Data

2012

2011

Transformers - MVA
Switchgear - Nos

3,967
1,780

2,029
1,490

Energy Meter - Nos

Air Conditioners - Tons

264,148
919

349,611
39,565 2,660,387

Refrigerators/Deep freezers 3,042,064 Cfts

Segmentation

Geographic

Demographic

Psychographi c

Behavioral

Geographic Segmentation: PEL is doing mass market which is not limited to one county but all over the world. The main target of PEL is Pakistani market.In Pakistan,PEL is available at every city because its very famous and good product of market. Demographic Segmentation: PEL divide its market on the basis of following characteristics of population Age group: Earlier PEL used to segments its market among people age ranges from 35-----45years.But Now PEL focus between the age group ranges from 25----35 years. Gender group: For the segmentation, the company is recently focusing on young graduate girls and the latest ad of PEL reveals the fact in which famous singer Hadiqa is representing young college girl.

Psychographic Segmentation: Income group: PEL is offering its several products to different income groups of society In case of Generators, company focuses on elite class. In case of refrigerators, split air conditioners, washing machines, deep freezer. Televisions Company focus on middle class. In case of Microwave oven, the company focuses on elite and middle class.

Behavioral Segmentation:
We provide a quality product for our customers. It is purely base on local demands and needs, and we sure that our product will be appreciated by that people who are quality conscious.

MARKETING MIX
I. PRODUCT II. PRICE III. PLACE IV. PROMOTION

Product

Product is a thing that satisfies customer demands. Pel Company is very much conscious to make the products which satisfy the customer needs.

Company makes the product: According to the needs of the customer. What kind of size and model they want. What kind of features and functions they want. What kind of packaging they want.

Price

Price is very much important because its attracts the customer in first look.Pel company is very much conscious about price. Company sets the prices of the products by Analyzing the market situation. Actual cost of the product Marketing expenses of the product. Profit margin of the company. Comparison to other home appliances. Setting deal with dealers.

Place
Place plays a very important role for any companys product. If the product is not rightly placed, company will suffer from loss.

Company places its product: According to the requirement of customer and market. In more populated area of the city. Against competitors products. More convenient to the customers.

Promotion
Once company makes the product, it needs promotion for the awareness of the customers. Unless a company will not arrange for promotion a products cant succeed. Pel Company promotes its product through: Bill boards Internet News paper Brushers Television

Department Control
Finance department: Finance department provide money for the working of the organization. Pel Companys department borrows loan mainly from national bank and settle terms and conditioned of the interest and time period of returning the load with it. When the sale is made the company firstly return the loan with interest.

Human resource department: Human resource department of the Pel Company is very much conscious of hiring the employees for the company. The standards he set for hiring the new people. HRM department of the company mainly makes the external recruitment .this is usually done through news paper web sites extra.HRM department also set salaries, packages and TA, DA allowances.

Marketing department: Marketing department is the back bone of any firm. marketing department generally analyze the needs and wants of the customer. Then this department tells about the customer needs to the company which in tern launches the products according to the needs of the customers. Marketing department is responsible for making strong advertisement for the products. Sales department: Sales department is responsible for making sales of the product. This department generally takes orders from the market, gives information to the credit control department. Area credit control department gives information to the head office. Head office discuss situation with the finance department and then at last finance department gives authority to area credit control department to settle term and conditions with dealers.

Customer service center department:

This department is very much important for the company because its makes the good will of the company. Its provide services to the customers who have their clams and makes the customer loyal. Its also gives the feed back to the head office to provide the required spare parts.

Production department:
Production department is involved only producing the products. This department purchases raw material from the suppliers. Then passes the raw material from various dyes machines. Modeling machines etcfrom the assembly line according to the required shapes of the products.

In Future What Should

PEL To Do

 Increase Utilization of capacity: PEL could not make the freezer as they target. They have enough capacity to make but the less or lack of utilization of capacity they fail to meet their targets. Lack of advertisement: Other competitor companies have good marketing and advertising campaigns as I observed that near the PEL there is a great sign board of Waves.
System variations PEL should have to adopt the one system. As they are changing the system to ERP which is very good but they have to train their employee as well. Training procedure must be change. There should be the presentation to all workers.

Lack of Product range: They should have to increase their product range as their new competitor SAMSANG in appliances has a lot of product range so they also have to increase their products. To gain more competitive advantage over their competitors, PEL has to work on their distribution network The company must give more incentives to the dealers so that they remain loyal to the company and promote the products. PEL should open its internship programs on frequent basis so more and more students can get the chance to work as an internee in such a huge institute and get their relevant work experience. Introduction of seasonal schemes can help to boost sales

 Too much favoritism in PEL so there should be control and merit should be followed. There is no rotation of job work so one person is limited to his work.

PEL more focus should be on electronic media to get competitive advantage over the competitors.
They have to increase their advertising expenditures