PNSC - Internship Report

The Islamia University of Bahawalpuur, RYK Campus.
1

Internship Report on
Pakistan National
Shipping Corporation
(PNSC).Karachi
By:Qaim Deen BBA(Hons). Finance

T H E I S A L A MI A U N I V E R S I T Y O F B A H A W A L P U R
R A H I M Y A R K H A N C A MP U S
DE P A R T ME N T OF MA N A G E ME N T S C I E N C E S

2010

15-Aug-10


2

By:
Qaim Deen Mahar
BBA (Hons) Finance.
The Islamia University of Bahawalpur. Rahim Yar Khan Campus.

Status:
MBA from Quaid-i-Azam University Islamabad.
Spring 2011.

Contact No.
0306-3456787
0300-6714555
qaim_mahar@yahoo.com

If you need any help regarding internship in PNSC you can contact.
Thanks.


3

Executive Summary

Pakistan National Shipping Corporation was established as a result of merger of
the National Shipping Corporation (NSC) and the Pakistan Shipping Corporation
(PSC) in 1979, with effect from 1
st
January 1979.

This was done with the view to improve the performance of the shipping and
ocean transport services and to develop of the maritime shipping industry.
Pakistan National Shipping Corporation (PNSC) is an autonomous corporation,
which functions under the overall control of ministry of Ports and Shipping,
Government of Pakistan.

Pakistan National Shipping Corporation (PNSC) manages 19 subsidiary companies.
The direction and administration of the affairs of the business of the corporation
are maintained by the Board of Directors, which consist of five directors including
the Chairman, to be appointed by the federal government directors to be elected
by shareholders other than the federal government.

For the efficient running of the corporation business distributed among the
following four divisions each headed by and appointed directors;

1) Corporation affairs and admin Division
2) Commercial division
3) Ship management Division
4) Special Project and Planning Division

Under these five main directors there are 48 subdivisions or units are present.
The report will gave a detailed working of some of these departments and how
these departments are working for the overall profitability of the organization.
Financial position of the organization is becoming stronger since 2001.

Pakistan National Shipping Corporation (PNSC) has great opportunities to capture
maximum market share. The company has great future prospectus because of its
long term contract with oil refineries. Company has a sound plan of expansion in
near future.


4

Introduction


5

PNSC Introduction

Company
Profile:
Pakistan
National
Shipping
Corporation
Ticker: PNSC
Exchanges: KAR
2010 Sales: n/a
Major Industry: Transportation
Sub Industry: Shipping
Country: PAKISTAN
Employees:
Head Office:

Regional Office:
1077
PNSC Building,
Moulvi
Tamizuddin
Khan Road,
Karachi 74000
Gulberg Heights,
Lower ground
floor , Near
sherpao
bridge Gulberg ,
Lahore, Pakistan

Corporate Information:
The corporation is managed by a board of directors constituted by the Federal
Government. Five of these Directors including the Chairman are nominated by
Government (majority share holder), while, two Directors are elected by the
Shareholders. Corporation share holding as under.

a. Authorized Capital Rs. 2000 Million
b. Paid up Capital Rs. 1320.63 Million
c. Government Share 77.13%
d. PNSC Employees
Empowerment Trust
12%
e. Individuals 7.07%
f. Institutions 3.80%


6
Pakistan National Shipping Corporation is the National flag carrier managing a
fleet of 10 Vessels. The corporations head office is in Karachi. A regional office
based in Lahore caters for upcountry shipping requirements. The corporation also
have extensive overseas network of agents looking after its worldwide shipping
business.

Pakistan National Shipping Corporation (the corporation) and its subsidiary
companies (together the Group) were incorporated under the provision of
Pakistan National Shipping Corporation ordinance, 1979 and the companies
ordinance, 1984 respectively.

The Group is principally engaged in the business of shipping, including charter of
vessel, transport of cargo and other related services. It also engaged in renting
out its properties to the tenants under the long term lease agreements. Its
registered office is situated at PNSC Building Moulvi Tamizuddin Khan Road,
Karachi except for Pakistan co-operative Ship stores (Private) Limited which is
situated at 70/4, Timber Pond, N.M Reclamation Kemari, Karachi.

The Group owns 55 percent of the share capital of Pakistan co-operative Ship
stores (Private) Limited and 100 percent of the share capital of the remaining
subsidiary companies. . All the fully owned subsidiaries of the Group operate one
vessel / tanker each with the exception of Hyderabad Shipping (Private) Limited,
Karachi Shipping (Private) Limited, Lahore Shipping (Private) Limited, Lalazar
Shipping (Private) Limited, Malakand Shipping (Private) Limited, Shalamar
Shipping (Private) Limited and Sibi Shipping (Private) Li mited which currently do
not own any vessel / tanker.

Pakistan National Shipping Corporation operates in the shipping industry in
Pakistan and internationally. It engages in the charter of vessels, transportation
of cargo, and other related services, as well as in the provision of commercial,
technical, administrative, financial, and other services related to shipping to third
parties.

As of June 30, 2010, the company operated a fleet of 10 vessels, including bulk
carriers, oil tankers, and combo vessels with a total carrying capacity of 453,748
DWT. Pakistan National Shipping Corporation also involves in the rental of real
estate properties comprising commercial buildings and spaces under lease
arrangements; and management of a repair workshop. The company is
headquartered in Karachi, Pakistan.


7
The Group:
The Group consists of:

Holding company

Pakistan National Shipping Corporation

Subsidiary companies

Pakistan National Shipping Corporation (PNSC) has following Subsidiary
Companies:
1. Bolan Shipping (Private) Limited.
2. Chitral Shipping (Private) Limited.
3. Hyderabad Shipping (Private) Limited.
4. Islamabad Shipping (Private) Limited.
5. Johar Shipping (Private) Limited.
6. Kaghan Shipping (Private) Limited.
7. Karachi Shipping (Private) Limited.
8. Khairpur Shipping (Private) Limited.
9. Lahore Shipping (Private) Limited.
10. Lalazar Shipping (Private) Limited.
11. Makran Shipping (Private) Limited.
12. Malakand Shipping (Private) Limited.
13. Multan Shipping (Private) Limited.
14. Pakistan Co-operative Ship Stores (Private) Limited.
15. Quetta Shipping (Private) Limited.
16. Sargodha Shipping (Private) Limited.
17. Shalamar Shipping (Private) Limited.
18. Sibi Shipping (Private) Limited.
19. Swat Shipping (Private) Limited.

Associate:
- Muhzammadi Engineering Works (Private) Limited.


8
The Group owns 55 percent of the share capital of Pakistan Co-operative Ship
Stores (Private) Limited and 100 percent of the share capital of the remaining
eighteen subsidiary companies.

All the fully owned subsidiaries of the Group operate one vessel / tanker each
with the exception of Hyderabad Shipping (Private) Limited, Karachi Shipping
(Private) Limited, Lahore Shipping (Private) Limited, Lalazar Shipping (Private)
Limited, Malakand Shipping (Private) Limited, Shalamar Shipping (Private) Limited
and Sibi Shipping (Private) Limited which currently do not own any vessel /tanker.
Subsequent to the year end a vessel has been disposed off and a tanker has been
acquired.


9
Background:

Basically Pakistan National Shipping Corporation (PNSC) is the merger of National
Shipping Corporation (NSC) and Pakistan Shipping Corporation (PSC).

National Shipping Corporation (NSC):
The national shipping corporation (NSC) was established under the National
Shipping Corporation Ordinance, 1963, with a view to provide and efficient
shipping services. The Corporation was managed by a Board comprising of nine
directors, out of which five including the Chairman, the Managing Director and
the Financial Director were appointed by the Central Government and remaining
four were elected by the share holders, to from each Province.

The authorized capital of the Corporation was Rs. 250 million divided into 25
million and 5 million fully paid up share of Rs. 10/- each and the subscribed
capital was to be Rs. 50 million divided into 5 million shares of Rs. 10/- each. The
share of Central Government in the capital was 25% and the balance of 75% was
raised from the public in East and West Pakistan on the basis of parity. The Board
of Director of the Corporation was authorized to call for public subscribed to such
extent within the amount of Rs. 50 million and at such time as the Board thought
fit. The initial subscribed was fixed by the Board at Rs. 16 million. The Corporation
called for the capital on 4
th
May, 1964 which was in fact over-subscribed.

Pakistan Shipping Corporation (PSC):

In 1974 the Federal Government decided to take over the management and
control of entire shipping in Pakistan, including NSC through promulgation of the
Pakistan Maritime Shipping (Regulation and control) Ordinance, 1974 which later
on became an Act.

In September, 1976 the Federal Government established the Pakistan Shipping
Corporation (PSC) under the Pakistan Shipping Corporation Act, 1976, to take
charge of ten shipping companies and operate as a parallel corporation with the
National Shipping Corporation (NSC).


10
Establishment of Pakistan National Shipping Corporation (PNSC):

In 1977, the Federal Government decided amalgamates the NSC and PSC to
establish the Pakistan National Shipping Corporation. The Pakistan National
Shipping Corporation Ordinance, 1979 was promulgated with effect from 1
st

January, 1979. By This Ordinance the NSC and PSC were dissolved as of the 31
st

December, 1978.

At the time of the merger the share capital of NSC was Rs. 144,375,000 and that
of PSC was Rs. 85,124,350. Both the Corporations had 24 ships each and their
Books of Accounts had shown a profit of Rs. 28,713,000 for NSC and Rs. 823,606
for PSC.

As provided for in the PNSC Ordinance, the net worth of the business of NSC &
PSC as on 31-12-1978 was evaluated and shares were allocated to the combined
shareholders according to the principal prescribed in the Ordinance after the
valuation had been approved by the Federal Government. The share capital of
PNSC was pegged at Rs. 241,308,000.

So the Pakistan National Shipping Corporation (PNSC) is the combination of the
National Shipping Corporation (NSC) & the Pakistan Shipping Corporation (PSC).


11

VISION & MISSION STATEMENT

To develop and execute short-term long-term business plans to
ensure sustainable growth of the Corporation as the National flag
carrier and a lead player in the shipping industry.


12
Organizational Structure


13

CHAIRMAN
SA to CHAIRMAN (M)
Executive
Director
Commercial
Division
Executive
Director Finance
Division
Executive
Director Ship
Division
Finance
(GM)
Accounts (M)
Accounts (M)
Finance (DM)
Corporation
Sectt
Secratery
PNSC
CA & Shares
(M)
CA & Share
(DM)
I & C (M)
MR & S (GM)
MR & S (M) Dry
Cargo Vessel
SUPDTS. Dry
Cargo Vessels
(DMs)
Manager Tech.
Tanker (M)
Ship Store (DM)
ISM Code / TRG
(DM)
Fleet Management
(DM) (Incahrge)
SUPDTS Fleet
Dry Cargo VSLS
(DMs)
Crew Section (M)
Executive
Director Special
project &
Planning
Executive
Director
Administrative
Division
Ship Personnel
SUPDT SP
Workshop (GM)
Commercial
(GM)
Commercial
(M)
Tanker
(M)
Bills (M)
Operation
(M)
Operation
(Port CAPT)
Import/
Export (DM)
TA (East)
(M)
TA (West)
(DM)

Lahore (RR)
Estate (M)
Technical
(M)
Personnel
(M)
Admin (M)
Legal (M)
S. M. O
(DM)
Security
(DM)
Protocol
(DM)
SP & P (M)
SP & P
(DMs)
Librarian
(DM)
M. I. S (GM)
Internal Audit
(M)Report to
Board Audit
Committee
Estate
(GM)


14

CORPORATE
INFORMATION


15

CORPORATE INFORMATION

BOARD:
Brig. (R) Rashid Siddiqi
Chairman

Mrs. Rukhsana Saleem
Member

Mr. Rasheed Y. Chinoy
Member

Capt. Syed Akhlaq Hussain Abidi
Member

Mr. Khalid Idress
Member

Mr. Jahangir Siddiqui
Member

Mr. Khowaja Obaid Imran Ilyas
Member

AUDIT COMMITTEE OF THE BOARD:

Mr. Rasheed Y. Chinoy
Chairman

Mrs. Rukhsana Saleem
Member

Capt. Syed Akhlaq Hussain Abidi
Member

Mr. Khowaja Obaid Imran Ilyas
Member


16
SECRETARY:
Ms. Zainab Suleman

HEAD OFFICE:

PNSC Building, Moulvi Tamizuddin Khan Road Karachi-74000

AUDITORS:

A.F. Ferguson & Co., Chartered Accountants.
Ford Rhodes Sidat Hyder & Co., Chartered Accountants

BANKERS:
Allied Bank Limited
Bank Al-Falah Limited
Faysal Bank Limited
Habib Bank Limited
Habib Metropolitan Bank Limited
JS Bank Limited
MCB Bank Limited
National Bank of Pakistan
Meezan Bank Limited
Royal Bank of Scotland
Standard Chartered Bank
United Bank Limited


17
Board of Directors

Chairman

Mr. Rasheed Y. Chinoy Mrs. Rukhsana Saleem Mr. Khalid Idrees
Director Director Director

Capt. Syed Akhlaq Hussain Abidi Mr. Jahangir Siddqui Mr. Khowaja Obaid Imran Ilyas
Director Director Director


18
Management

Chairman

Executive Director
(Administration)
Mr. Imtiaz C. Agboatwala
Executive Director
(Finance / CFO)
Cdre.S. Mohammad Obaidullah
Executive Director
(Special Project & Planning)

Capt. Aftabuddin Siddiqui
Executive Director
(Commercial)
Mr. Zaheer Babar Quershi
Executive Director
(Ship Management)
Note:
Brig. (R) Rashid Siddiqi i s acting as Chairman and also Executive Director of Administration at the same ti me.


19

Real Estate of PNSC


20
Real Estate of PNSC:
PNSC manages three commercial buildings.

1. PNSC Building

PNSC building is situated at Moulvi tamizuddin Road. The foundation stone of
building was laid on 11
th
May 1968 and this sixteen strayed building (now PNSC
building) was completed in the year 1971 at an approximate cost of Rs.30 Million.
Huge Fire erupted in this building on Sunday 18
th
February, 2007, getting the 10
th
,
11
th
, 12th, 13th, 14
th
, 15
th
, 16th, floors. Luckily no life lost and no structural
damage occurred on the affected floors.
Unfortunately again on Sunday,19
th
August, 2007 another huge fire broke out,
this time destroying 4
th
, 5
th
, 6
th
, 7
th
, 8
th
, 9
th
floor. The Karachi Building control
authority after thorough inspection declared the Building safe. The building is
under refurbishment/renovation till now.


21

2. Muhammadi House:

This building is located at I.I. Chandigarh Road, Karachi. Different
companies have Head Offices in this building. It was constructed
in 1950 and now it is property of PNSC.


22

3. Old Rally building:

This building is located at Talpur Road off I.I. Chandigarh Road and adjacent to
City Railway station. Old Rally Building originally belongs to Chittagong
Steamship Company. When shipping was nationalized in 1974, this building was
taken over by the government. Now it is the property of PNSC.


23

Trade Areas


24

Trade Areas:

Trade Area EAST:

In the east the business of Pakistan National Shipping Corporation is precede to
the following countries:

1. Japan
2. Nepal
3. Sri Lanka
4. China
5. India
6. Indonesia
7. Thailand
8. Hong Kong
9. Philippine
10. Taiwan
11. Others

The purpose of formation of trade area east is to control all the matters of and
shipping trade in the eastern side of Pakistan.
The main countries in the east to which we have goo and strong relations in
trading are:

China (26%)
Japan (15%)
South Korea (11%)

And we have agents in east countries for the purpose of

Marketing of Pakistan National shipping corporation
Selling the Freight
Linkage with importer and exporter of Pakistan
For transportation of goods by sea
Conveying different other shipping information
Looking after all vessels


25
Accommodating cargo for our ships


26
Trade Area WEST:

When Pakistan National Shipping Corporation traded to the west area then the
region will be treated as trade area west.

Following Countries are included in Trade Area West:

Persian Gulf
European Countries
African Region
USA
Canada
Others


27

PNSC Ships


28

PNSC Ships:

FLEET:

S. NO Vessel DWT Built Origin IMO Tonnage Length Breadth
1 KAGHAN 65716 1986 JAPAN 8513015 36, 098 225.78 32.26

COMBIES:

1 BOLAN 18144 1980 JAPAN 7822108 12,395 153.00 23.00
2 ISLAMABAD 18204 1983 PAKISTAN 7822706 12,395 153.01 23.00
3 MULTAN 18257 1980 JAPAN 7822093 12,395 153.01 23.00
4 SARGODHA 18242 1980 JAPAN 7822017 12,395 153.01 23.00

TANKERS:

1 JOHAR 86803 1985 SPAIN 7917393 49,688 243.80 39.35
2 SWAT 86593 1985 SPAIN 1917408 49,601 243.80 39.35
3 QUETTA 107215 2003 Japan 9270555 58,118 246.80 42.00
4 LAHORE 107018 2003 Japan 9277541 58,157 246.80 42.00
5 KARACHI 107081 2003 Japan 9257814 58,127 246.80 42.00


29
COMBIES:

M.V. BOLAN

SPECIFICATIONS

Call Sign
AQOM
IMO Number
7822108
Gross Tonnage
12395
Summer deadweight
18144
Summer draught
9.745 m
Length overall
153.0 m
Breadth
23.0 m
Built
KAWASAKI KOBE JAPAN - 1980
Cargo gear
CRANES SWL 25 TS x 2 , VELLE DERRICKS DWL 22
TS x 5


30

M.V. SARGODHA

SPECIFICATIONS

Call Sign
AQOK
IMO Number
7822017
Gross Tonnage
12395
Summer deadweight
18242
Summer draught
9.745 m
Length overall
153.01 m
Breadth
23.0m
Built
OSHIMA JAPAN - 1980
Cargo gear
TS x 5


31
M.V. ISLAMABAD

SPECIFICATIONS

Call Sign
AQPE
IMO Number
7822706
Gross Tonnage
12395
Summer deadweight
18204
Summer draught
9.745 m
Length overall
153.01 m
Breadth
23.0 m
Built
KARACHI SHIPYARD PAKISTAN-1983
Cargo gear
TS x 5


32
M.V. MULTAN

SPECIFICATIONS

Call Sign
AQOP
IMO Number
7822093
Gross Tonnage
12395
Summer deadweight
18257
Summer draught
9.745
Length overall
153.01 m
Breadth
23.0 m
Built
MITUI JAMANO JAPAN - 1980
Cargo gear CRANES SWL 25 TS x 2 , VELLE DERRICKS DWL
22 TS x 5


33
Tankers:

M.V. SWAT

SPECIFICATIONS

Call Sign
AQPU
IMO Number
7917408
Gross Tonnage
49601
Summer deadweight
86593
Summer draught
13.113 m
Length overall
243.8 m
Breadth
39.35 m
Built
ASTILLEROS Y TALLERES DEL NORESTE, S.A.(ASTANO),EL
FEROL NOV,1985
Cargo gear
DERRICKS SWL 15 x 2 , PROVISION DERRICKS SWL 5 x 2


34
M.V. JOHAR

SPECIFICATIONS

Call Sign
AQPV
IMO Number
7917393
Gross Tonnage
49688
Summer deadweight
86803
Summer draught
13.113 m
Length overall
243.80 m
Breadth
39.35 m
Built
ASTILLEROS Y TALLERES DEL NORESTE, S.A.(ASTANO),EL
FEROL NOV,1985
Cargo gear
DERRICKS SWL 15 x 2 , PROVISION DERRICKS SWL 5 x 2


35
M.T. QUETTA

SPECIFICATIONS

Call Sign
AQQB
IMO Number
9270555
Gross Tonnage
58,118 mt
Summer Deadweight
107,215 mt
Summer Draught
14.798 m
Length Overall
246.80 m
Breadth
42.00 m
Built
Imabari Shipbuilding Co. Ltd., Japan 2003.
Cargo Gear
Cranes SWL 15 TS x 1


36
M.T.LAHORE

SPECIFICATIONS

Call Sign
AQQC
IMO Number
9277541
Gross Tonnage
58,157 MT
Summer Deadweight
107,018 MT
Summer Draught
14.798 m
Length Overall
246.80 m
Breadth
42.00 m
Built
Cargo Gear


37
M.T.KARACHI

SPECIFICATIONS

Call Sign
AQQD
IMO Number
9257814
Gross Tonnage
58,127 MT
Summer Deadweight
107,081 MT
Summer Draught
14.798 m
Length Overall
246.80 m
Breadth
42.00 m
Built
Cargo Gear


38
Bulk carrier:
M.V.KAGHAN

SPECIFICATIONS

Call Sign
AQPY
IMO Number
8513015
Gross Tonnage
36098.00
Summer deadweight
65716
Summer draught
12.82 m
Length overall
225.78 m
Breadth
32.26 m
Built
NAMURA SHIP BUILDING CO.,
JAPAN-1986
Cargo gear
GEARLESS


39

Division and Departments


40

Division and Departments

The Management of Pakistan National Shipping Corporation establishes division
and Departments to facilitate conduct of the duties.

So following division and Departments are established.

Commercial division
Finance Division
Ship Management division
Administrative Division
Special Project& Planning Division
Internal Audit Department

Commercial Division:

Commercial Division is headed by Executive Director if Commercial Division that
is Capt. Aftabuddin Siddiqui.

This Department has following sub Sections.

Trade Area (West)
Trade Area (East)
Chartering Department
Tanker Section
Container Logistics section
Regional Office Lahore
Operations
Bill Section


41
Finance Division:

Finance Division is headed by Executive Director of Finance that is Mr. Imtiaz C.
Agboatwala. Finance Division is under his control & he manages all the affairs of
Finance Department in Pakistan National Shipping Corporation.

The Finance Division is divided in four major sub Sections:

Finance
Insurance and Claim
Corporation Secretariat
Corporate Affairs and shares

I will explain only Finance and Insurance & Claim Department later.

Ship Management division:

This Division deals only with the affaire of Ship. This division is headed by Ship
Executive Director of Ship Management that is Mr. Zaheer Babar Quershi.
All the issues that are related to the Ship like Vessel Management, Crew
management, Repair and Maintenance of Ship etc are handled under this
division.

In this Ship Management division following head are included:

Fleet Management
Bunker section
Workshop
Repairs & Maintenance
ISM Code/ Training section
Ship Personnel
Stores Supply Depot


42
Administrative Division:

Administrative division is headed by Brig. (R) Rashid Siddiqi, Executive Director of
Administration and also he is the Chairman of Pakistan National Shipping
Corporation.

Administration Division covers the following areas:

Personnel
Administration
Estate
Security
Public Relations
Legal sections
Medical sections
Contributory provident fund functions

Special Project& Planning Division:

Special Project& Planning Division is headed by Cdre. S. Mohammad Obaidullah,
Executive Director of Special Project& Planning Division.

This Division has the following sections:

Special Projects
Planning
Management Information System


43
Internal Audit Department:

Internal audit department is headed by Manager of Internal audit, reporting
direct to the Board audit Committee.

Internal Audit is the main internal control process of any organization. The main
functions of the internal audit are to examine the financial transactions according
to laws, regulations, policies and accounting standards.

Pre Audit:

In pre audit all the transactions are verified before its enforceability, just for
minimizing risk of frauds and mistakes.

In pre audit we check following list of titles:

Volume of amount involve in transaction
Party details
Deadline for maturity of contracts
Signature of guarantors if any
Bank Guarantees if any
Chairman Authority to sign the document of transaction

After all examination it will be passed for enforceability.

Post Audit:

Post audit examines the after affects of transactions settlement. It is confirmed
that funds are reached to the real party or the loan that was acquired is
consumed at right place.


44
Commercial Division/Department:

Commercial department of PNSC is the backbone of the organization.
Commercial department performs worldwide and chartering operations.
The basic function of commercial department is to promote and enhance fleet
and cargo trading. The commercial division deals with normal daily business
related to the organization.
The commercial Department is sub divided in 5 main categories

1. Trading
2. Chartering
3. Tanker Line
4. Containers
5. Bills

1. Trading:

Trading can be sub divided in two regions:

Trade Area East
Trade Area west

Trade Area EAST:

In the east the business of Pakistan National Shipping Corporation is precede to
the following countries:

12. Japan
13. Nepal
14. Sri Lanka
15. China
16. India
17. Indonesia
18. Thailand
19. Hong Kong
20. Philippine
21. Taiwan
22. Other


45
The purpose of formation of trade area east is to control all the matters of and
shipping trade in the eastern side of Pakistan.
The main countries in the east to which we have goo and strong relations in
trading are:

China (26%)
Japan (15%)
South Korea (11%)

And we have agents in east countries for the purpose of

Marketing of Pakistan National shipping corporation
Selling the Freight
Linkage with importer and exporter of Pakistan
For transportation of goods by sea
Conveying different other shipping information
Looking after all vessels
Accommodating cargo for our ships

Trade Area WEST:

When Pakistan National Shipping Corporation traded to the west area then the
region will be treated as trade area west.

Following Countries are included in Trade Area West:

Persian Gulf
European Countries
African Region
USA
Canada
Others

Most of the time Oil is imported by PNSC oil tankers.


46
2. Chartering:

Most of the tome a party or parties charter the ships for the voyage and freight is
received to PNSC. Two types of contracts can be done when chartering ships that
are:

Time charter
Voyage charter

In Time Charter the main thing is focused is time. In this case the ship is chartered
for a specific time period, no matter how many voyages are completed.

In Voyage Charter the freight is taken on the voyages that are completed or
made. Freight is due on every voyage that is made.

There can be one or more parties that can be involved in acquiring or taking ship,
cargo or tanker by time or voyage charter.

Mostly in case of voyage charter 90% of the freight that should be paid is
normally paid in advance.

In case of time charter 100% full amount is paid at advance before going to
voyage.

2. Tanker Line:

Tanker Line is related to Liquid cargo. The need of Government of Pakistans
crude oil is normally carried through PNSC.

The following Companies need Crude oil:

Pak Arab Limited
National Refinery Limited
Pakistan Refinery


47

In a month 10 tankers fulfill the demand of the above companies.
Major exporters of oil are following:

Saudi Arabia
United Arab Ammarat
Iran

Most of the oil is imported from Saudi Arabia region.

Name of the PNSC Tankers are:

Johar
Swat
Lalazar

3. Containers:

Containers are the Boxes that load goods have some specific sizes.

There are three types of Boxes:

Dry cargo ( 20 Fitters & 40 Fitter dry boxes including open top )
Bagged cargo
Drums

4. Bills:

This section of commercial department deals with the recovery of freight and
other tariff charges regarding contracted dealings.

They also provide special services to military of Pakistan. Items of military are
provided to authorize dealers. Bills have to be sent to listed dealers for payments.


48

Working on Various
Departments


49

Finance Department:

The Finance Department is divided into several sections. Each section is directed
its own Assistant Manager and these AMs are directed by their respective Deputy
Managers. Sections are listed below:

1. Freight Section
2. Port Section
3. Assets Section
4. Spares Section
5. Insurance & Claim Section
6. Payrolls Section
7. Remittance Section
8. Tax Section
9. Bill Section
10. Cash Section
11. Book Keeping Section
12. Afloat Section
13. Mess Committee Section
14. Workshop Section
15. Store Account Cell Section

I will provide detail of some of the sections of Finance Department where I have
spend some time or the sections that were visited by me during my Internship in
Pakistan National shipping Corporation.


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Mess Committee Section:

Mess committee is the section of Finance department which is related to mess
expenses or food expenses of all the employees that are working on the ship.
So obviously there would be expenses of food for the people that are on the ship
and going for any voyage.

Mess committee section is responsible to provide all food items that are required
to fulfill the needs of the employees that are working on the ship.

The needed amount of money for food or items will estimated on this basis
If the voyage is less than 120 days then the daily cost of food per person on ship
will be $4. And if the voyage is more than 120 days then per person cost per day
on food will be $5.5. So if the members on ship are 40 and total days of voyage
are 110 then total cost of mess will be $17600 = (40x110x4)

So all the expenses related to mess/food are handled under this section. When
the captain of the ship purchases any mess related item he sends the bill of
purchasing that food to the Mess Committee section in the PNSC Karachi, but not
immediately.

First of all when the ship is sailing for a voyage from Karachi, at that time all the
needed food items are purchased according to the need and according to the
estimated days that would be spent on the ship during voyage.

It is tried that all the needed things should be purchased from Karachi because
1
st
here these will be available on cheap rate as compared to purchasing from
another country. 2
nd
Quality will be better and 3
rd
own countrys things will be
purchased on own money so it will be better for the country that its own wealth
is coming back to its own people.

The Mess Committee section will pay that amount to the seller and food items
will be sent to the ship. The Mess Committee will charge this to the expenses
head.

It is also possible that in the ship the food items can be consumed fully before the
completion of full voyage or the specified voyage. At that time the ship need food
for its crew. So the country in which they are right at the moment, the Captain
will inform to PNSC about their need and the PNSC will ask the bank which will
be operating in that country and also will be linked with the PNSC. So the bank


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will provide the needed amount of money to the captain of the ship and required
food equipment will be purchased.

It is also possible that in that country no bank is linked with PNSC, at that time
the agent of PNSC in that country will be advised to provide the required amount
or required products to the ship or captain of the ship. Agent will provide the
required amount and food items will be purchased. And the bill will be sent to
the PNSC, PNSC will record it into its books of accounts.

If there is no agent of Pakistan National Shipping Corporation in that country at
that time London Bank will arrange the money in that country or it will arrange
an agent in that country, and the agent will provide required things or money.

The amount that will be paid to the ship will be in foreign currency. When they
will be sent vouchers to the PNSC, then it will convert it into local currency i.e. in
Rupees, and the account will be maintained.


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Insurance & Claim Department:

Insurance means to secure, covering any kind of risk of things against some
considerations. In Pakistan National Shipping Corporation insured things or goods
are vehicles, fleet, vessels, estate, buildings and machines.

In insurance and claim section there are 3 sections that are:

Hull & Machinery section
Cargo section
Miscellaneous section

Hull & Machinery section:

The functions of hull and machinery section include:

Collision, fire, breakdown of machinery claims
If there are some general or particular average claims
Premium that is annually payable to National Insurance Company.
Damages claims
Verify the deck; engine rooms repair bills and claims for normal damages
for the recovery purpose
Also arrange renewal meeting with National Insurance Company.

Cargo section:

The function of the cargo section in the insurance and claim department are as
under:

Assist and arrange annual meeting with National Insurance company
Claims for shortage of cargo
Claims for damages of cargo
Claims that arise out if chartering parties.


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Miscellaneous Insurance section:

The functions that are performed by the Miscellaneous Insurance section are as
follows:

Insurance of building, workshop, barges, office equipment and others
Workmans compensation
Stowaway cases
Smuggling cases
Repatriation /death compensation claims of afloat staff.

There are basically two type of Insurance:

Asset Insurance
Liability Insurance

Asset Insurance:

Asset insurance is also called Hull insurance. It means that if there is any loss is
done to the ship or vessel then it will be asset insurance. If a loss is done to any
vessel then National Insurance Company will give the premium to us if the vessel
is insured to NIC. All the vehicles are also insured along with the vessels.

The responsibility of the members of insurance claim department will make
specifications of the loss that has been occurred and they will send it to the NIC.
The members of the NIC will visit the vessel and see the damaged area. After that
settlement will be made and transaction will take place with the mutual consent
of both parties.

The loss to any vehicle of PNSC that is insured is also brings premium to PNSC.
The procedure is same as in the vessel case.

Liability Insurance:

If the loss that is beard is due to the negligence of our own, then it will be liability
insurance. Like stowaway cases in which illegal persons come to the vessel
because of our own negligence.


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All the expenses of liability insurance are covered by P&I club that is in London.

Short Landing:

Short landing occurs when goods that are on the ship are short in quantity. In this
situation following documents are required:

Final Outrun Report: It is issued for the arrangement of short lading report
and then next steps are taken to fulfill of short landing of goods.

Short landing Certificate: It is an order due to which we can claim on our
short landing goods and claim loss to P&I club.

Shortage case:

It mean that that the volume is less of product instead its quantity.
Like demand was 50 kg bag but only 20 kg was appeared.
In this situation following documents are required:

Provisional outrun report: It is issued for the arrangement of shortage
case and then next steps are taken to fulfill of shortage volume of goods.

Joint Survey Report: it is an investigation certificate upon which
investigation will be done over vessels.

Bill of Lading: This is the document that tells all the specifications of goods
that were loaded to the vessel.


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Freight Section:

In freight section there is checking, analyzing and clearing the freight (rent) of
Pakistan National Shipping Corporations vessels and also the freight of
subsidiaries of Pakistan National Shipping Corporation.
When the client party is going to give all the statements of accounts that will be
Time Chartered account. It includes companys General Ledger, Journal Voucher
and chartered hire invoice.

Then Pakistan National Shipping Corporation will be going to make the
statements or accounts. In which PNSC and its subsidiaries freight earnings are
calculated by considering each vessels earning. This will be all included in ageing
Schedule In it total earning of each vessel are included on monthly basis and
balance are also included on monthly basis.

It includes:

Voyage charter earning (freight on number of Voyages)
Time charter earning ( freight depending upon time period)
Foreign chartered earning (Freight charged on Foreign voyages by taking
cargo of customers)

After these three kinds of earning they totaled these earnings and a total earning
or total revenue is acquired.

When the revenue or freight is received they Debit the Receivables and Credit
the income portion when they are going to record the transaction.

Outstanding Schedule of Receivable is the schedule in which the balance that is
not collected in that month is settled. The outstanding balance is settled in this
schedule.

Slot Business means that when PNSC have made the agreement with his
customer to carry his cargo but it did not have any ship to carry the cargo of his
customer. At that time PNSC made an agreement to another cargo ship to carry
the cargo of its customer on time.

For example, PNSC made agreement to carry the cargo of Mr. Michael to Japan
for $20000. But At the time no ship was available at that time PNSC will find
another ship of other company going to Japan and made an agreement to carry


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Mr. Michaels cargo. Suppose agreement was made 0n $15000. So PNSC is
getting $20000 from its customer and giving $15000 to the other company to
carry the cargo and having profit of $5000. This is Slot Business.

Time Chartered Voyage is voyage base on time. Chartering the whole ship for a
specified time period, no matter how many voyages are completed in that time
period l.ike, chartering ship for 200 days. In time chartering the book keeping is
made on monthly basis but charges are taken on daily basis.

Voyage chartering refers to taking freight on number of voyages that are
completed by a ship. In this chartering the freight is paid on basis of voyage
completed. In voyage chartering the book keeping is made on monthly basis and
payment is made on voyage basis.

The main functions performed by freight section are:

Follow the regulation of State Bank of Pakistan and keep knowledge of
fluctuations in the exchange rates for taking freight and other charges
according to the change in exchange rates.

Prepare the periodic statements about all the collection of freight and also
make statements for outstanding freight for the knowledge and
information of management.

Release all the information about the freight and all other receivables
from the parties before the release of delivery order for cargo that is being
discharged from Pakistan.

Be quick in collecting information and data required from the bill section
for the timely preparation of annual business plan, annual strategies and
policies.

Also prepare monthly forecast of the cash that is incoming to the Pakistan
National Shipping Corporation from the freight that is collected in
Pakistan.

Always give detailed and timely response to all the audit queries.


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Bills Section:

Bills section of Finance department in Pakistan National Shipping Corporation is
concerned with the bills that are related to the business. All the bills that are local
and handled in Pakistan and are in local currency in rupees relate to this section.

The responsibility of this section is to clear all types of bills of Pakistan National
Shipping Corporation and its subsidiaries. The bill section actually makes the
payments that are payable due to bills.

The ill section doesnt receive the bills directly. Bills are all those payments that
need payments. Like bill against purchasing of uniform need payment of the bill
of uniform.

If the bill is less then Rs. 25000 then no need of quotation. But if the bill is greater
than 25000 then the bill section need quotation of all the products that are
purchased. At that time requirement of quotation is necessary for the payment
made against the bills.

The billing section deals in only Pakistani Rupees not in foreign currency. The
foreign bills or payments are handled in Remittance section that is related to all
the foreign expenses that are in shape of bills.

Pakistan National shipping Corporation defines or fixes a budget every year for
different kinds of items or for different kinds of equipment every year. It design
budget for every item separately.

Different items or expenses that need bills and need payment are the following
items. Pakistan National shipping Corporation set a specified budget each item in
the following list has its own budget.

Courier services
Printing and stationary
Repair & Maintenance of different things like office machines
Uniforms for employees
Telephone bills
Computer expenses
Diesel or oil for generator
Postage


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One thing also can be possible that the bill section has less amount or budget for
an item but the bill or payment is much more then the budget, at that time the
billing section will make request to the General Manager of Finance for the
sanction of payment or budget.

But when the payments should be made immediately at that time there is little
time of making payments and the budget approved from General Manager of
Finance takes time in this situation billing section do another method.

The action that billing section take in this situation is that it makes the payments
from another items budget that has sufficient balance. When the payments are
made then the budget that is sanctioned from the General Manager of Finance is
added to that items budget where from payments were made.

The main functions of billing section are as follows:

Clear all types of bills of Pakistan National Shipping Corporation.

Clear all types of bills of PNSC and its subsidiaries.

Give timely response all audit queries.

Prepare periodic statements of bills section.


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Book Keeping Section:

Book keeping in Pakistan National Shipping Corporation is the recording of
routine transaction and day to day record keeping normally by an electronic or
computer system. In Pakistan National Shipping Corporation Maintenance of
record related to finance is kept. All record of the company that is finance related
is under this section.

All the other finance sections send their all data related to book keeping
department which maintain all the data electronically. The book keeping
department is responsible for the preparation of financial statements.

Book keeping department firstly record all the transaction and then put these
transaction into general Journal. General Journal is the day to day record of
business transactions in convenient intervals, the debit and credit amounts
recorded in the Journal (posted) to the accounts in the ledger.

After the journal the transactions are pasted to Ledger account from the general
journal. The record keeps using track of the increase and decrease in financial
statement items is termed as ledger account or simply an account. The entire
group of accounts is kept together in an increasing record called a ledger.

After the ledger posting the balances are posted to Trial Balance. In a trial
balance, separate debit and credit columns are used to list the balance of the
individual balance account.

After completion of trial balance adjusted entries are made. Often a transaction
affects the revenue or expenses of two or more different periods. In these cases
adjusted entries are needed to assign to each period the appropriate amounts of
revenues and expenses. These entries adjust the balance of various ledger
accounts.

After all the necessary adjusting entries have been journalized and posted, an
adjusted trial balance is prepared to prove that the ledger is still in balance.

Once an adjusted trial balance has been prepared, the process of recording
changes in financial position for the accounting period for the accounting period
is complete. Financial statements are prepared directly from the adjusted trial
balance.


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Now the financial statements like Balance sheet, Income statements, Statement
of cash flow, statement of owners equity can be prepared directly from the
adjusted trial balance.

After that closing entries are made, Closing entries are the journal entries made
at the end of the period for the purpose of closing temporary accounts.

All of this process is done by computer system. In all of this process verification is
made and reasoning is checked behind every transaction. Book keeping is made
effectively because all these transactions and financial statements will be audited
by government. Internal audit department is lying in the Pakistan National
shipping corporation & it also conduct audit in different intervals of time.

The record of book keeping is also kept in manual form in the shape of files.
There are many reasons to keep the data in manual form. But the most important
is that the audit is conducted on manual record of book keeping.

Another reason is that this manual data will be available at any time to any
person who needs that data in hard form. So it will be easier to give the data to
the people who require it.

The book keeping department is the most important and technical work section
at all. The entries should be recorded carefully. The thing that made this section
complicated is that all the finance sections have to send their data to the book
keeping section.

Book keeping section has to arrange all the data of all other 14 sections and it will
bring all the data in a mannered way and arrange all those sections in a single
section to use all the data of all sections to make the financial statements.

The process or system in the book keeping section is same as we have read in the
books. Almost same procedure of accounting that is used in Pakistan National
Shipping Corporation that we have taught in our BBA program.

But the practical work and experience is much more different from that which we
were told before. The things that look so simple are very deep and complicated
when we enter in that system.


61
Workshop Section:

Workshop section is related to workshop related accounts and all the financial
matters that are related to the workshop. Pakistan National Shipping Corporation
has its own workshop at the port of Karachi.

It has a marine engineering workshop and the basic purpose of that workshop is
to provide the repair and maintenance services to the PNSC own fleet also give
services to the foreign ships arriving at the port of Karachi.

It make repair and maintenance to the foreign ships also to increase the
revenues earned by the workshop of Pakistan National Shipping Corporation and
also chance for improving of workshop workforce by examining and making work
to the international and high tech vessels.

It also gives the services to the Pakistan Navy Ships. Pakistan Navy also brings its
ships to the PNSC workshop if there is any kind of need of repair in the ship.
The workshop is now having international standard services in all aspects of its
work like in Mechanical and Electrical repairs.

The workshop is located in Kemari. In the workshop section all the data about the
workshop is maintained that is related to Finance. Like the assets that are present
in the workshop are maintained in books of accounts of workshop section.

All the wages and salaries related to the workers that are doing work in the
workshop are maintained and kept proper in books of accounts are under
workshop section.

The head of Revenues and expenses are also separately maintained and updated
in this section that is related to the workshop. Revenues are all those received
values that are due to the repair services given to the ships that were bring to the
workshop.

All the expenses are also kept in record in this section that is related to the
workshop. Like maintenance of workshop, wages and salaries of employees
working in the workshop, daily workshop expenses etc.


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The functions of PNSC workshop section are:

For the workman, officers, supervisors, staff, tradesman and apprentices
prepare and conduct training programs in the workshop as well as outside
the workshop.

Plan and submit different proposals for the addition, alterations and
improvements of the workshop to be the equal of the requirements of
new vessels and also to acquire new technology.

Carry out deck, engine rooms and electrical repairs of PNSC vessel at
Karachi as per defect list and advice of Maintenance and repair
department.

First plan and then manufacture such workshop equipments which can
reduce the cost of repair of the vessel.

Try for the welfare of the workforce in Pakistan National Shipping
Corporation workshop.

Carry out test and trials of machinery in association with maintenance and
repair department.


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Afloat Section:

Afloat section is related to the wages of the employees that are working on the
ship. Like wages of captain or wages of crew that are working on the ship or
vessel. The term afloat is related to the ship employees wages. This section of
finance department deals with all the matters and affairs of the ship employees
wages and their work.

All the members on the ship in voyage didnt need pay in cash because it will be
useless for them on the ship. They need no money on the ship; they need only
daily usage products and the food when they are on the voyages.

So on the ship all the data of a member is maintained that how much he gets
daily usage products from company, like cigarettes, soap etc. The extra work
done by any member is also recorded that how much a member works in extra
time.

The normal work for a member is 6 hour ON then 6 hour OFF. It means that a
member will work for 12 hours in a day. If he is agree t do extra work then extra
work will be on pay.

When the daily expenses and extra wok revenue is recorded at that time they
make all record in a proper way. They see that what the balance is. If their
revenues earned are greater than their expenses they add the balance in their
basic pay. If the expenses are greater than the extra work earning then the
balance is subtracted from their basic salary.

At the end of the voyage the members are paid their wages with their earnings
on the ship. The wages are always paid at the end of the voyage except any kind
of emergency or uncertainty.

Sometime the Pakistan National Shipping Corporation is also gave some benefits
to the members working on the ship, like allowances, daily usage products for
free. These expenses are from Pakistan National Shipping Corporation for which
it made an agreement with the employees at the time Pakistan National Shipping
Corporation was hiring these members into its crew.

The salaries or wages that are related to the office work or administration work
other then the ship management is named as Ashore or Pay rolls.


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Payrolls Section:

Payrolls are all the wages or salaries that are related to the office workman.
These are also called Ashore section. Like the employees who are working in
Pakistan National Shipping Corporation at Main office also including all the
employees working on all 19 subsidiaries office work.

This section maintains all the information and keep the record salary of each
employee separately in Pakistan National Shipping Corporation. This section also
deals extra benefits that are offered to the employees and maintain the record of
extra benefits also.

Extra benefits include medical allowances, residential allowances, workers fund,
transportation allowances, and Mess allowances etc.

There are three kinds of workers in the Pakistan National Shipping Corporation.

Permanent
On contract
On daily wages

Above benefits that are described are only for permanent employees. Little bit
benefits are also offered to on contract employees. But no allowances or
benefits are offered to the daily wages employee but only their basic daily wages
are given.

The payroll section is responsible to maintain all payrolls of each employee either
that is permanent, either it is contractual or it is on daily wages.

The section is responsible to send all the information regardi ng to the payrolls of
the employees of the Pakistan National Shipping Corporation to book keeping
section where the payrolls will be charged into the head of expenses in different
books of accounts.

The employees that are on daily wages and they are off from the office for one
day then the wage of that day will not be payable to that employee.
So the work of payroll section in Pakistan National Shipping Corporation is very
complicated and demands much attention of the person that is responsible and
working on the payroll section.


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Fixed Assets Section:

Assets are the property of the Pakistan National Shipping Corporation. Assets
section also called fixed assets section in PNSC. This department is responsible for
the accounting of assets.

Assets of PNSC include:

Land
Buildings
Vessels
Vehicles
Office equipment
Furniture and fittings
Motor launch and jetty
Equipment on board
Container fitting
Beach huts
Workshop machinery and equipment
Computer equipment

In accounting of fixed assets their Net book value is calculated by using different
methods.

The main asset of the Pakistan National Shipping Corporation is the Vessels.
Vessel is depreciated according to its cost and life off the vessel. For the Pakistan
National Shipping Corporation it is necessary to Dry Dock the vessel right after
every 2.5 years and Class Renewal survey after 5 years.

Dry Docking means color paint of the vessel and its repair and maintenance. I
mean that vessel is brought at dry place and color and other work is made. It is
necessary for all the shipping companies to dry dock their vessels after 2.5 years
of last dry docking. When 2.5 years are passed they are asked to dry dock their
vessel as soon as possible.

The expenses of dry docking will be depreciated or charged or adjusted i n 2.5
years. The reason is that if we charge it in only 1 year then our profit will be
decrease at a very low level even it can go to the negative side because the dry
docking is very much expensive even in million dollars.


66
Class Renewal is another necessary work in ship. It means that after every 5
years a survey will be conducted to the ship and it will be checked that either the
ship is in condition to carry the voyages for upcoming 5 years or not. Normally
survey is conducted before the repair work that is done to that ship that is going
to be surveyed.

Class renewal is the requirement of IMO International Maritime Organization
which held the right to survey the vessels of every ship in the world. It is
necessary to every shipping Corporation in the world to survey its vessels under
IMO after every 5 years. The basic purpose of the survey is to safe the voyage and
lives of human.

International Maritime Organization conduct surveys of the vessels by following
three organizations who work under the International Maritime Organization.
These are:

Loyed Registered Shipping
American Bureau Ship
Bureau Barry Task

If the ship is declared fit for the sail to sea for upcoming 5 years or more then 5
years then a letter will be issued that this ship is fit for sail for 5 years and after 5
years again a survey will be conducted to see the performance of the ship. As it is
fit for more voyages then now you can do repair and maintenance on the ship.

But if the survey is conducted and the condition of ship didnt allow that the ship
will continue for next 5 years at that time the ship will not be allowed to continue
the voyage and there will be no need for repair and maintenance to the ship and
the ship will be scrapped.
Class renewal survey is also very expensive and it is adjusted or depreciated in 5
years. Reason is the same that if we charge it in only 1 year then our profit will be
decrease at a very low level even it can go to the negative side because the class
renewal and survey is very much expensive even in million dollars.

The depreciation of other asset depends upon the nature of the asset and its life.
Followings are the depreciation rates that were applied on different assets at
June 30, 2009 to calculate their book value.


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Annual rate of Depreciation on Assets

Assets Rate
Buildings 3% to 20%
Vessels 04%
Vehicles 20%
Office equipment 15%
Furniture and fittings 10% to 15%
Motor launch and jetty 10% to 15%
Equipment on board 10% to 15%
Container fitting 15%
Beach huts 15%
Workshop machinery and equipment 5% to 10%
Computer equipment 25%


68
Summary of Functions Finance Department:

There are various important functions that are performed by the Finance
department of Pakistan National Shipping Corporation. But broad functions of
department comprising finance division are as under.

Responsible to manage and allocate the funds.

Find the resources of obtaining funds.

Make the best strategy to invest those funds

Responsible for overall direction and policy implementation

Responsible for budgeting, accounting, purchasing, and treasury functions.

Maintain the accounting system, the payroll system, the fixed assets
system, reconcile book accounts, and prepare financial reports.

Prepare annual budget

Maintain Books of accounts, supporting vouchers, and other accounting
record of the corporation and subsidiaries in all with legal and regulatory
requirements.

Preparation of quarterly, semi annually, and annual accounts of the
corporation as well as of the subsidiary company and consolidated
accounts of PNSC group in accounting with legal and regulatory
requirements.

Ensure complete compliance with the policies and procedures set out in
internal control system.

Arrange audit of accounts.

Maintain effective control over all local and foreign bank accounts and
regularly reconcile those accounts.


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Exercise effective control over cash flow and ensure that surplus funds are
invested in accordance with governing rules so as to maximize income.

Accounting of receivables, payables, deposits, receipts, payments, and
advances.

Ensuring that all returns required under the income tax ordinance are filed
promptly.

Accounting for PNSC workshop, stores, departments, and regional office
accounts.

Maintain financial control over regional officers.

Obtain approval from State bank of Pakistan for all foreign currency
transactions.

Processing and accounting of payments of salaries, allowances, advances
etc, to Ashore & Afloat personnel & controlling recovery, adjustment and
reconciliation thereof.

Accounting of all revenues earned by the corporation & expenses incurred
locally as well as abroad.

Checking and arranging payments of all bills including cargo expenses,
bills, medical bills, legal expenses bills, purchases of capital assets, stores,
spares etc.

It also Sanction expenditure then control and review of expenditures.

Review of contracts, agreements, schedule of rates and charges,
documents and files from financial angles.

Preparations, implementation and monitoring of revenues & capital
budgets, & revised budget estimated.

Short and long term financing arrangements- tapping of sources of funds,
evolution of loans offers, negotiation with leader.


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Accounting and Maintenance of loans profile & subsidiary loan ledger,
register of mortgage & charge register of debentures, filing of returns as
also processing of debt services payments with government & state Bank
of Pakistan, preparation of schedules & medical incidental to or connected
therewith.

Accounting and maintenance of fixed assets.

Custody of assets and reconciliation of record with annual physical
verification.

Investment appraisal, completions of formalities relating to acquisition of
ships & other assets, import license, custom duty, sales tax and other
levies, letter of credit etc and disposal of ships of scrapping locally.

Preparation of provisional voyage results and review of performance of
each ship in relation to the budget, preparation of periodical voyage
summaries, port statistic etc.

Interpretation of financial and services rules & regulations and
amendments thereto, developing adequate record, safety and custody.

Collection, tabulation, summarization of information figures, data etc &
supplying the same to management, government and other agents.

Representation on various committees e.g. Tender Committee, personnel
Committee, Negotiation Committee, Welfare fund, Purchase, Economy
Committee.


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MIS Department:

MIS department of PNSC is very important department because it is the hub that
connects all departments and make link between different departments. This
department constantly provides the services in data processing and it also plans
the future data processing strategies. To achieve the desired goals it establishes
strategies.

It also maintains coordination between different departments. In MIS
department the computer systems are used for the different kinds of tasks like
financial accounting, payrolls, billing, purchase etc. MIS department is the
provider to all the departments and staff the equipment like electronic tools and
computer system.

The programs like, the development of the new programs, accessing the
softwares requirements and planning for different actions, the need of training
to its employees are also come under the MIS departments.
Whenever the user department require any reports then MIS department also
provide the required reports to the department who need reports like cash book,
bank book, general ledger, trial balance, financial statements, voyage and cargo
ledger, bills receivables, realized statements, outstanding statements, category
wise and aging statements.

The MIS department basically performs 2 functions:

Support function
Software function

Support function that is performed by the MIS department is that takes care of
Networking in the PNSC; also take care of the different system matters like take
care of Hardware, Operating system, firewall, Server and Antivirus Maintenance,
procurement of I.T equipments and other services.

The Software function is the second function that is performed by the MIS
department that involved implementation of new software and training to its
employees that how to use that software, website management, database
management, up gradation of previous system.


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Function of MIS department:

The functions that are performed by the MIS department in Pakistan National
Shipping Corporation are the following:

The MIS department is responsible to plan and formulate strategies while
keeping the desired goals in front of them so that goals that are defined
can be achieved.

MIS department also establish strategies regarding the data processing
that will be processed in the future.

This department also makes changes, modifications, alterations and up
gradation of the operational system that now exists in the MIS
department of PNSC.

Data processing should be constant and MIS give services to the
corporation.

MIS department also maintain a good and strong relation with the other
departments for the coordination among all the departments so that MIS
department can assess their needs and fulfill their needs with the
suggestion for the future.

Also develop new software, systems and program and also implement
them in the department.

MIS also asses the software needs and plan various actions to fulfill the
requirements of software.

Also get information about the employee training needs and if training is
necessary then plan & monitor the training no matter that either its is in
the house or outside agencies.

Responsibility of MIS department also include Design some standards and
reporting performance to measure and monitor the activities and
performance of different sections that are working under the MIS
department.


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Enhance the knowledge of the employees or users who are engaged in the
work of data processing. MIS department responsibility is also to educate
the users in the field of data processing.

Provide all the account reports that are required by the any user
department, whenever the user department need more particularly the
following:

Local Cash book (daily, monthly and annually)

Bank book (foreign) monthly

General Ledger (quarterly)

Trial balance (quarterly)

Profit and loss group statement (quarterly semi annually and
annually)

Financial statements

Hull and cargo claims subsidiary ledger & voyage ledger (current,
previous, and advance quarterly and annually)

Bill receivable, realize and outstanding statements

Voyage statistic account

Operating expenditures, vessel voyage-wise Earning and
expenditures (semi annually)

Port expenses, Port disbursement, agent disbursement account

Foreign income & expenditure account, exchange rate

Head office register of payrolls, pay slip, overtime estimates

Welfare fund statements (monthly and annually)

Consolidated salary statements (semi annually)


74
Online enquiry system

Vessel position and status

Voyage accounts , port, Vessel, route & voyage-wise

Bill receivable, party-wise, age-wise, sequence-wise

Position of on board inventories.

Purchasing Section in MIS:

In the purchasing process there are three modules
-- Requirement
-- Procurement
-- Inventory

Purchasing Process:

The purchasing process starts from the Requisition of the ship mean there is the
requirement of an inventory.

After that the sign of the supplier are required who will supply the inventory at
the ship.

Then we will make analysis the quotation that is sent by the ship to ensure that
the inventory required is necessary to purchase.

After the analysis we will order that allow purchasing inventory.

Then there will be outstanding order means further order to the seller.

Then the seller will send the required inventory and we will make payment.

At the last stage the physical inventory will reach on the ship.


75

Financial Statements


76

PNSC and its Subsidiary Companies
CONSOLIDATED BALANCE SHEET
AS AT JUNE 30, 2009

2009 2008
(Rupees in '000)
NON-CURRENT ASSETS
Property, plant and equipment 8,264,524 13,624,883
Intangible asset - 1,649
Investment properties 969,296 969,987
Long-term investments in: - -
Related party (associate) - -
Listed companies and another entity 22,715 40,229
Long-term loans 1,012 1,434
Long-term deposits 90 90
Deferred tax - net 20,655 15,316
9,278,292 14,653,588
---------------------------------------------

CURRENT ASSETS
Stores and spares 444,682 475,663
Trade debts 798,023 563,000
Agents' and owners' balances 20,420 32,145
Loans and advances 76,852 39,495
Deposits and short term prepayments 21,260 9,535
Interest / mark-up accrued 147,214 65,143
other receivables 136,052 137,148
Incomplete voyages 83,587 -
Insurance claims 33,063 13847
Short-term investments 5,108,614 3,113,147
Cash and bank balances 2,223,490 3, 39
------------------------------------------
9,093,257 7,848,228
NET CURRENT ASSETS 18,371,549 22,501,816
===============================

Continued


77

LESS: CURRENT LIABILITIES AND PROVISIONS
Trade and other payables 1,366,078 1,201,541
Provision against damage claims 99,810 130,579
Incomplete voyages - 3,931
Current portion of long-term financing - 245,607
Taxation net 252,268 212,372
1,718,156 1,794,030
SHARE CAPITAL AND RESERVES
Issued, subscribed and paid-up share capital 1,320,634 1,320,634
Reserves 14,512,150 11,572,647
15,832,784 12,893,281
MINORITY INTEREST 1,895 1,694
---------------------------------------------
EQUITY ATTRIBUTABLE TO EQUITY HOLDERS 15,834,679 12,894,975
SURPLUS ON REVALUATION OF FIXED ASSETS-NET OF TAX
-Group 596,672 7,601,880
- Minority 2,148 2,148
-------------------------------------------
598,820 7,604,028
NON-CURRENT LIABILITIES

Long-term financing - -
Deferred liabilities 219,894 208,783
---------------------------------------------
18,371,549 22,501,816
===========================


78
PNSC and its Subsidiary companies
CONSOLIDATED PROFIT AND LOSS ACCOUNT
FOR THE YEAR ENDED JUNE 30, 2009

2009 2008
(Rupees in '000)
REVENUES
Chartering revenues 5,390,341 4,761,142
Freight 6,005,781 5,915,303
Rental income 78,227 77,083
-------------------------------------------
11,474,349 10,753,528
EXPENDITURE
Fleet expenses-direct 31 8,394,921 7,258,730
- Indirect 16,860 18,331
-------------------------------------------
8,411,781 7,277,061
-------------------------------------------
GROSS PROFIT 3,062,568 3,476,467

Administrative and general expenses 519,807 445,027
Other operating expenses 319,113 184,265
Finance costs 54,154 174,987
-------------------------------------------
893,074 804,279
+ Other operating income 825,417 814,973
-------------------------------------------
PROFIT BEFORE TAXATION 2,994,911 3,487,161
Taxation 682,069 1,038,281
-------------------------------------------
PROFIT AFTER TAXATION 2,312,842 2,448,880
============================
Attributable to:
Equity holders of the Group 2,312,641 2,448,540
Minority interest 201 340
------------------------------------------------
2,312,842 2,448,880
==============================

EARNINGS PER SHARE FOR PROFIT ATTRIBUTABLE
TO EQUITY HOLDERS OF THE CORPORATION 17.51 18.54


79
PNSC AND ITS SUBSIDIARY COMPANIES
CONSOLIDATED CASH FLOW STATEMENT
FOR THE YEAR ENDED JUNE 30, 2009

2009 2008
(Rupees in '000)
Cash flows from operating activities

Cash generated from operations 2,216,760 6,193,569
Employees' gratuity paid (1,108) (31,945)
Employees' compensated absences paid (41,859) (36,833)
Post retirement medical benefits paid (19,632) (8,445)
Contribution to plan assets of employees gratuity fund -00 (235,159)
Long-term loans and advances net 422 593
Finance costs paid (8,789) (30,229)
Taxes paid (642,066) (787,258)
--------------------------------------------
Net cash generated from operating activities 1,503,728 5,064,293

Cash flows from investing activities

Fixed capital expenditure (3,465,790) (3,347,801)
Investment in investment properties (2,138) (3,350)
Proceeds from disposal of property, plant and equip. 886,846 6 2,712
Interest / mark-up received 544,706 684,374
Dividends received 1,898 1,716

Net cash used in investing activities (2,034,478) (2,662,349)

Cash flows from financing activities

Repayment of long-term financing (282,642) (264,857)
Dividends paid (403,609) (195,888)
--------------------------------------------
Net cash used in financing activities (686,251) (460,745)
---------------------------------------------
Net (decrease) / increase in cash and cash equivalents (1,217,001) 1,941,199
Cash and cash equivalents at the beginning of the year 4,649,105 2,707,906
---------------------------------------------

Cash and cash equivalents at the end of the year 3,432,104 4,649,105


80
Pattern of Shareholders as at June 30 2009:
No. of
Shareholders

Shareholding

Total share held

From

To
11002 1

100 372182
3227 101

500 747982
878 504

1000 638118
721 1001

5000 1538384
81 5001

10000 586254
24 10001

15000 296674
19 15001

20000 347854
12 20001

25000 280285
6 25001

30000 170104
2 30001

35000 69500
8 35001

40000 301312
6 40001

45000 257815
5 45001

50000 250000
4 50001

55000 215600
3 55001

60000 179865
4 70001

75000 292200
2 75001

80000 155300
1 80001

85000 83000
1 90001

95000 95000
2 100001

105000 205595
1 125001

130000 128200
1 150001

155000 150900
2 155001

160000 317642
1 190001

195000 192241
1 195001

200000 200000
1 225001

230000 227500
1 235001

240000 235916
1 240001

245000 242800
1 245001

250000 246500
1 260001

265000 262344
1 385001

390000 386236
1 435001

440000 436564
1 445001

450000 449697
1 495001

500000 500000
1 745001

750000 746603
1 765001

770000 769700
1 1440001

1445000 1443762
_____1_____ 117705001

117710000 117706724
16,030

132,063,379


81

COMPARATIVE STATEMENT OF YAER WISE REVENUE & EXPENSES 1979 TO 2009

Year Revenue Expenses Gross
Profit/(Loss)
1979 455,814 423,526 32,288
1980 1,084,177 1,073,573 10,604
1981 1,444,582 1,437,877 6,705
1982 1,660,459 1,653,866 6,593
1983 1,599,148 1,805,733 (206,585)
1984 1,534,116 1,738,179 (204,063)
1985 2,289,554 2,243,245 46,309
1986 2,657,624 2,553,188 104,436
1987 2,209,737 2,404,063 (194,326)
1988 2,643,383 2,775,940 (132,557)
1989 3,787,923 3,618,384 1,695,390
1990 3,164,931 3,193,129 (28,198)
1991 3,860,369 3,751,710 108,659
1992 4,062,877 4,023,743 39,134
1993 3,134,077 3,272,481 (138,404)
1994 3,302,474 3,638,029 (335,555)
1995 5,159,560 5,687,483 (527,923)
1996 6,962,004 6,902,996 59,008
1997 7,761,518 7,479,472 282,046
1998 4,597,215 4,393,437 203,778
1999 3,710,787 3,552,518 158,269
2000 3,540,170 3,839,190 (299,020)
2001 5,458,665 5,013,725 44,940
2002 4,899,201 4,326,001 573,200
2003 5,404,864 4,605,487 799,377
2004 6,963,102 4,864,589 2,098,531
2005 7,950,981 5,416,485 2,534,496
2006 7,924,614 6,255,047 1,669,567
2007 9,089,124 6,495,702 2,593,422
2008 10,753,528 7,277,061 3,476,467
2009 11,747,349 8,411,781 3,062,568
2010 - - -


82

Summarized Performance


83

Summarized Performance:

The financial performance of PNSC regarding different aspects is summarized
below.

Revenue:

The consolidated revenue for PNSC group for 2009 was 6.7% higher than FY08. It
increased from Rs 10.753bn to Rs 11.474bn in 2009. This increase is credited to
the increased voyages in the current year as well as the enlarge freight tons for
the current year.

Total freight however decreased for 2009. It decreased by approximately 8.1%
from 9451 million to 8684 million tons. Except the liquid sector, the other entire
shipping sector showed some signs of decrease in freight tons.

Total expenditure too, showed a considerable increase in 2009. It showed an
increase of approximately 15.5%. This was attributed to a substantial increase of
direct fleet expenses that inflated from Rs 7.25bn to Rs 8.39bn in 2009.

Sub-category of expenses includes general and other expenses, operating
expenses, which too showed an increasing trend for the current year, which
affected the profitability of the company. The current year showed an increase in
the liquidity position of the company. The current ratio increased by 21% in 2009.
This has resulted because of a greater proportion increase of current assets wit h
respect to current liabilities.

Operating and Net Profits:

Considering the profitability of PNSC in 2009, there has been a mixed trend in
certain ratios calculated. First the Gross Profit Margin, there has been a decrease
from 32.33% in 2008 to 26.69% in 2009. This is basically attributed to an increase
in direct fleet expenses incurred by the company. This considerable increase has
resulted in lower gross profit margin in 2009.

Coming to the net profit margin, we can see the same trend as it is for gross
profit margin. It decreased from 22.7% to 20.16% in FY09. This again can be seen
as the general and other expenses increased in a great proportion to the


84
revenues earned. Though the financial costs were reduced, it couldnt t play a
considerable role in increasing the net profit as huge expenses were incurred.
The major sub-category that showed an increase in the direct expenses was the
fuel expenses which showed a 4.3% and claims which showed a 33% increase in
2009.

Market Share and Marketability:

Marketability of PNSC showed a huge decline over the past year. The market
price has nearly halved in 2009. This is because the company has been facing
constrains in their profitability for past 2-3 years. Considering the earning per
share, there has been an increase in this ratio from Rs 18.54 to Rs 19.54 in 2009,
basically due to an increase in the net-profit seen in the current year. Moreover,
dividend per share also saw a rise as the company was announced a 30% cash
dividend this year; this increased the total cash dividend paid out this year.

However, the biggest slum could be seen in price-earnings ratio, the traders are
not ready to higher prices for the shares of PNSC in the market, because of
severe effects in profitability and their expenses which constraints their growth in
income. Therefore there was a decline of Rs 5 to Rs 2.4 in 2009.

This is one major concern for the company as it has reduced its market worth for
2 consecutive years, which has dented upon the reputation of the company.
Moreover, investors are not ready to invest because of the reasons mentioned
above; hence the company needs to revive the trust of the investors by
effectively managing its resources and assets.

Share Prices in Rupees
Year 2009 2008 2007 2006 2005
High 52.31 112.20 97.20 139.70 150.00
Low 44.14 65.00 40.00 57.00 50.50

In 2009 Total numbers of share holders of PNSC are 16030. And total shares held
are 132,063,379.


85

Pattern of shareholding in 2008.

CATEGORY OF SHAREHOLDERS No Share Held %
NBP Truestee Deptt 1 888,937 0.67
Investment Corporation of Pak 1 74,575 0.06
Mr. Jahangir Siddiqui 1 5,616 0.00
Mr. Khowaja Obaid Imran Ilyas 1 2,414 0.00
Bank,Develp.Finance Institution 24 860,160 0.65
Non-Banking Finance Instituions 48 727,351 0.55
Insurance Companies 12 1,481,339 1.12
Modarabas and Mutual Funds 12 1,747,861 1.33
Federal Government 1 117,706,724 89.13
Individuals 11747 7,538,034 5.71
Foreign/Non-resident Investors 3889 441,919 0.33
Others 72 588,449 0.45
Total 15819 132,063,379 100.00

No. of Employees:

In Pakistan National Shipping Corporation total number of employees is 1077.

Future outlook:

In line with PNSCs expansion/replacement plans, the Corporation acquired two
Aframax Tankers. The first, named Lahore was delivered in February 2010, and
the second Karachi was delivered in April 2010. In addition, PNSC is actively
working on an acquisition plan to add five more dry cargo vessels to its fleet, to
replace the vessels scrapped in the last year.


86
No. of Ships PNSC owns during 1979 TO 2010

Freight Revenue
Rs. In Million


87
Operating expenses
Rs. In Million

Operating Profit
Rs. In Million


88
No. of Voyages

Cargo Handled
Freight in Million Tons


89

Financial Analysis


90

Financial Analysis:

Financial analysis is the most important part of the internship report. It enables
us to know the financial position of the company. Thats why I applied the
financial ratios to know the current and previous financial condition of the
Pakistan National Shipping Corporation. So the analysis of financial statement is
also the part of this internship report.

Financial statements are projection and management tools and should be used
by management to analyze the business. Ratios use information from these
reports to reveal the financial status of the company. Ratios allow you to judge
the companys relative performance compared to others in the industry and to its
previous performance. Ratios also help you see relationships or correlations
between financial items on different statements.

By measuring performance in percentages rather than raw numbers, ratios allow
you to evaluate the companys performance over a period of time, to compare
the company to other companies of different sizes but in the same or similar
business, and to plan for the future. Calculating financial ratios should become
part of your regular financial reporting process. The ratios can then be assessed
at the same time as the other financial reports.

When using financial ratios to analyze a company, you should answer the
Following questions:

How consistent and realistic are the numbers used to calculate the ratios?
If the numbers have been tallied in an inconsistent manner, are not realistic, or
are not up-to-date, the ratios will be of no value.

How closely do the individual ratios compare with company policies?
Company policies should be established to help the business meet financial goals.
For example, most entrepreneurs set a standard for the number of days they will
Allow on credit terms. If they allow customers a Net/30 payment schedule, then
their Days Sales Outstanding should be near 30 days. This number would confirm
that the company is following the policy to collect on receivables within 30 days.


91
Liquidity Ratios:

Liquidity ratios measure the amount of cash or investments that can be
converted to cash to pay expenses and short-term debts. Liquidity ratios
determine your ability to meet current liabilities.

Current Ratio:

How it is calculated-------- Total current assets / Total current liabilities

What it measures ---------- Whether the company has enough liquidity to pay its
short-term obligations.

What it tells-------------------This ratio tells whether enough cash is available to pay
the bills. Theoretically, a current ratio of 2.0 is preferred for most companies.

Year 2009 2008 2007 2006 2005
Ratio 5.44 4.37 5.47 3.54 3.24

Interpretation:
Current ratio of PNSC tells that company is in strong position to pay its short term
obligation. In 2005 and 2006 the current ratio was low but still it was strong. And
now the current ratio is 5.44 it means that company can pay very easily its short
term obligation.


92
Asset Turnover Ratio (Times):

Year 2009 2008 2007 2006 2005
Ratio 0.62 0.47 0.55 0.58 0.62

Interpretation:
Asset turnover ratio shows that sales/revenue are how much percent of the
Assets. If this ratio increases it is good for the business. If we see in PNSC case,
we can see that in previous few years the revenue was decreasing as compared
to the assets but in 2009 again it increases to 0.62. This means that revenue is 62
percent of the total assets of Pakistan National Shipping Corporation. It can be
called good because the assets of PNSC are very large.

Equity / Total Assets (%)

Year 2009 2008 2007 2006 2005
Ratio % 90% 91% 87% 83% 79%


93

Interpretation:
This ratio tells that how much equity is involved in the assets that are purchased
or acquired. We can see that in assets the equity is present in a large amount.
Mostly PNSC didnt take loans to acquire any asset. It is purchased by equity
portion. This condition is good for PNSC as it is a government company. As a
result PNSC avoid from giving any interest to the banks.
The equity portion has an increasing trend in the few last year as you can see
above. PNSC should maintain it.


94

Profitability Ratios:

Profitability ratios help you evaluate the profitability of your business. By
comparing certain numbers, these ratios can help identify elevated expenses,
inefficient operations, and profitable margins. Although dozens of ratios exist, an
understanding of a just a few simple profitability ratios will get you started.

Gross Profit Margin:

Year 2009 2008 2007 2006 2005
Ratio % 26.69 32.32 28.53 21.06 37.17

Interpretation:
Gross profit is that profit which comes after deducting the cost of goods sold or
expenditure. When gross profit is high it is expected that the operating and net
profit will also be high. The gross profit margin of PNSC was high in 2005 as
compared to other 5 years. In 2009 the gross profit was 26.69 percent of total
revenue earned. It means that CGS was 73% of the total revenue. So the total
CGS should be decreased to enhance the gross profit margin. It varies because
the COGS of PNSC vary along with the total revenue.

Operating Profit Margin:

Year 2009 2008 2007 2006 2005
Ratio % 27% 32% 29% 21% 37%


95

Interpretation:
Operating profit comes after deducting operating expenses. In last 5 years
operating profit was high in the year of 2005 because the gross profit in that year
was high. When operating profit comes we deduct tax and interest. In this
condition PNSCs operating profit margin is looking good. But still less than the
2008 operating profit margin. Operating profit in 2009 is 27% of the total
revenue. It varies in these 5 years because the operating expenses vary along
with revenue.

Net Profit Margin:

Year 2009 2008 2007 2006 2005
Ratio % 20.16 22.77 25.71 16.08 34.00

Interpretation:
Net profit comes when all the expenses, costs, interests, and taxes are deducted
from the sales revenue. Net profit margin tells that how much percent of the


96
total revenue, net margin is. The net profit margin of PNSC was high in 2005 and
20 % in 2009. Net margin is in decreasing trend from 2008. It should go upward
so it is quite good that net profit is 20 percent of the total revenue. PNSC should
maintain it and try to increase it in next year.

Return on Assets:

Year 2009 2008 2007 2006 2005
Ratio % 12.58 10.88 14.25 9.10 21.28

Interpretation:
This ratio tells that how much percent is earned on the assets. We can see that in
2005, 21.28% was earned on every rupee and in 2009 this ratio was 12.58 %.
Reason is that earning available on common stock holders has been changed but
minor. But the assets of the PNSC have changed their value, thats why return on
assets is fluctuating in these 5 years.

Return on Equity:

Year 2009 2008 2007 2006 2005
Ratio % 14.60 18.98 22.50 16.94 46.49


97

Interpretation:
This ratio tells whether the company is a good investment. As ROE increases, the
company becomes more attractive to potential investors. Generally, improving
net income will also improve shareholders equity as the profits will become
retained earnings. Return on equity is on decreasing trend so the PNSC should
look that what they had to do. In 2005 it was 46% but now it is only 14% so there
must be some corrections.


98
Debt Ratio:

Debt Ratio:

Year 2009 2008 2007 2006 2005
Ratio % 10.54 8.90 12.89 18.72 20.95

Interpretation:
Debt Ratio tells that how much percent of the assets debt is payable by the
company. PNSC has a decreasing trend for getting loans. It basically uses equity
for acquiring assets. In 2005 debt ratio was 21% and in 2009 it was 10 %. So PNSC
has to pay low level of debt. And it is good for the business of PNSC.


99
Solvency ratios:

The leverage or solvency ratios are used to analyze the financial structure of a
firm and its capacity to comply with its long term obligations.

Leverage Ratio:

Year 2009 2008 2007 2006 2005
Ratio % 11.91 15.53 20.35 34.85 45.76

Interpretation:
This ratio tells that total liabilities are how much percent of the stock holder
equity. As we can see that the total liabilities are consistently decreasing year to
year as a result the leverage or solvency ratio is also decreasing. It means that the
total liabilities are decreasing. PNSC operate the business by the equity. Now
liabilities are 12 % of the total equity. And these liabilities are current liabilities
that remain in every business.

Short Term Debt ratio:

Year 2009 2008 2007 2006 2005
Ratio % 88.37 89.33 71.01 63.26 56.93


100

Interpretation:
This ratio tells that how much percent short term liabilities are the part of total
liabilities. As PNSC didnt take much loans that are of long term nature, thats
why this ratio is continuously increasing. PNSC is also willing to pay its long term
payments/liabilities. The short term debt ratio was 56 % in 2005 it mean that
current liabilities were near to half of the total liabilities. But in 2009 short term
or current liabilities were near to 90% and only 10% were long term loans.

Capitalization Ratio:

Year 2009 2008 2007 2006 2005
Ratio % 1.38 1.60 5.90 11.68 19.70


101
Interpretation:
This ratio tells that long term debt is how much percent to the share holder
equity. So in PNSC long term debt was 20 % in 2005 but now it is only 1.38%.
Reason is that PNSC operate by equity not taking loans rather it pays all the long
term loans. Its equity is increasing year to year and long term loan is decreasing
year to year thats why capitalization ratio is decreasing from previous year.


102

Investment Ratios:

Price Earnings Ratio:

Year 2009 2008 2007 2006 2005
Rs. 2.64 22.79 8.52 8.28 4.92

Interpretation:
Price earnings ratio tells that on how much investment on shares we are earning
Rs.1. in 2008 on each 23 rupees we were earning Rs.1. In 2009 on each Rs. 2.64
we are earning rupee 1. Reason is that in 2008 the market price of share was high
and Earning per share was low. But in 2009 e earning per share increases to 17.51
as a result price earnings ratio come to 2.64.
Earnings per Share:

Year 2009 2008 2007 2006 2005
Rs. 17.51 3.14 11.03 7.62 21.06


103

Interpretation:
Earnings per share in 2005 were highest among the upcoming years. Reason was
that at that time earning available for share holder was high. As a result per share
earnings were high. Then in 2006 earnings available for share holder decrease as
a result earning per share also decreases. In 2009 again earning available for
share holder goes high as a result again EPS increases to Rs. 17.51.


104

SWOT Analysis


105

SWOT Analysis:

S: Strength (relate to internal environment)

W: Weakness (relate to internal environment)

O: Opportunity (relate to external environment)

T: Threat (relate to external environment)

Strength:

Pakistan National shipping Corporation has following strengths:

A large capital investment
Worldwide operation
Skilled employees
Having its own ships
Both market policy ( Skimming & Penetration)
Government Corporation

Weakness:

Over staff organization
Lack of coordination between different departments
Lack of proper planning and absence of coordination with other shipping
companies
A bias policy of management towards the selected staff
Low level skill staff


106

Opportunity:

Lucrative strategic geographical location
Being a national flag carrier approximately 99% government base
organization hires PNSC services for their shipment.

Threats:

Limited amounts of imports and exports due to financial crunch in
Pakistan.
High charges as compared to other shipping companies worldwide.
High duty and taxes from the government
Dilapidated vessels
Having few Vessels


107

Suggestion &
Recommendations


108

Suggestions and Recommendations:

I would like to give some suggestions and recommendations to the management
of the Pakistan National Shipping Corporation which I feel important in my point
of view. I think that if they are being followed then it will be better for the
organization and overall performance will be increased of the organization.
These suggestions and recommendations are:

There should be paper free environment in the organization because it
reduces the speed of work and it is also very time-consuming and
challenging.

The place for sitting and work is not according to the number of
employees that are working in the organization. So how we can get
efficient results where seating arrangements are not up to the mark,
where employees work in tough conditions.

The appointment should be on merit basis not on the reference basis
so as a result eligible and efficient employees will be hired that will
enhance the performance of the organization

To enhance the working speed and overall performance of the
organizations. Corporation should offer training about new technology
like computers to its employees who are old worker and doesnt have
much knowledge about new ways of working.

There must be downsizing in employees because workforce is much
more high then it is needed. Many of them sit idle all the day as they
are just taking salary against giving nothing to the organization.

The promotion should be on performance and seniority not on the
reference base or executives own liking or disliking.

The coordination between the employees and departments should be
increased for efficient work.


109
There should be proper supervision on every employees work because
sometime a single signature is required to complete a file and to send
it to the next department. But the file remains on only one table even
for weeks due to carelessness and negligence of an employee.

There should be allowances, incentives, and bonuses to the employees
especially for the contractual and on daily basis employees.

There must be supervision on permanent employees also because
sometime they are careless about their duties and responsibilities
because they know that they are permanent so they show laziness in
their work and dont play active part in the organization.

The number of ships that PNSC owns at that time is 10. Which I think a
little bit low. The number of ships should be increased to enhance the
profit level.


110

During my internship program at PNSC I face some certain problems that come
under the limitations head. These problems and matters are following

No friendly behavior of the staff of PNSC

Hesitation to give knowledge and information

Lack of coordination between different departments that create problem
for me.

No practical knowledge, staff only gives overview of their section.

Sitting arrangements are so poor

No computer facilities for the internees.

Website of PNSC is not very much informative. Limited information is
available on the Website of Pakistan National Shipping Corporation.
Limitations


111

Private sector is not allowed to play any part in the shipping sector due to which
Pakistan National Shipping Corporation enjoys absolute monopoly in Pakistan.
Pakistan National Shipping Corporation and its subsidiary companies were
incorporated under the provision of Pakistan National Shipping Corporation
Ordinance, 1979and the Companies Ordinance, 1984 respectively. The board of
directors consist five directors appointed by Federal government and two
directors appointed by the shareholders.

The group is principally engaged in the business of shipping, including charter of
vessels, transportation of cargo, and other related services. The group is also
engaged in renting out its properties under long-term lease agreements. Pakistan
National Shipping Corporation (PNSC) is an autonomous corporation, which
functions under the overall control of the Ministry of Ports and Shipping,
Government of Pakistan. It also manages real estate and a repair workshop.

Pakistan National Shipping Corporation (PNSC) is a Pakistan-based company. The
Company, together with its subsidiary and associate companies, is engaged in the
business of shipping, including charter of vessels, transportation of cargo and
other related services.

The Company is also engaged in renting out its properties to tenants under long-
term lease agreements. During the fiscal year ended June 30, 2009 (fiscal 2009),
PNSC and its vessel-owning subsidiary companies together performed a total of
637 voyages (inclusive of foreign chartered vessels and slot chartered vessels),
and lifted 8.684 million freight tons of cargo.

The Company operates in four sectors: Trade Area East, Trade Area West, Liquid
Bulk and Dry Bulk. In July 2008, an AFRAMAX oil tanker, MT Quetta, was
purchased and inducted in to the PNSC fleet. In fiscal 2009, three dry cargo
combo vessels, MV Sibi, MV Hyderabad, MV Malakand and an AFRAMAX oil
tanker MT Lalazar were sold for scrapping.

Conclusion


112
The company comprises only 10 vessels at the moment, which are far less than
the vessels that it has in 1979. At that time it has 48 vessels. Pakistan National
Shipping Corporation (PNSC) is considered as a financial troubled organization
because during the part of its existence it remains in losses most of the year.

But Pakistan National Shipping Corporation (PNSC) improves its performance
from the last few years.

The company has invested in new vessels and dispatched the old ones. This
shows that the new vessels can be used effectively to show better performance
in future and earn higher revenues.

One of the concerns that still remain in light is the financial meltdown decreasing
the demand of freight delivery. This has greatly dented the profitability of the
company. However, global recovery is on the rise and Pakistan s economy has
also shown a sign of recovery, which is a good sign and it can assure the company
of better business opportunities in future.


113

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