Internship Report

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

Submitted To:

Mr. Muhammad Fahad Javaid

Lecturer, Management Sciences Department

Submitted By:

Nabeel Safdar CIIT/FA08-MBE-033/LHR

22/09/2010

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

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Preface

No doubt that Allah is the main source of knowledge and wisdom. He is omnipotent

as well as omniscient. It is a great Blessing of Allah that He Has enabled me

because of His Holy Prophet (Peace Be upon Him) to present my humble

contribution for the distribution of knowledge.

The Internship Report is the collection of observation and experience. I hope that

this report will be equally important both for me and all the management students

and persons making future in the field of Management Sciences.

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Acknowledgement Countless thanks to Almighty Allah (The most merciful the most beneficial). The only

creator of universe who enabled me to complete this report, in spite of various

difficulties. All respects to the Holy Prophet (P.B.U.H) who enable us to recognize

our greater and whose spiritual teaching guides us in every matter of the life.

I wish to record my deep sense of gratitude to my supervisor Mr. Muhammad Fahad

Javaid, who through this works to encouraged me to read the available literature,

think a new about the issues involved and innovate. I have enjoyed working with him

& explored new ideas that he suggested from time to time.

Mr. Muhammad Fahad Javaid was very helpful through this work in various ways. I

also wish to acknowledge the help, support and inspiration all the person who

provide me support and guidance in our research.

I would like to express my gratitude to the Department of Business Administration for

giving me the opportunity and arranging such an extensive internship program. I

would also like to acknowledge my debts to those officers of Samad Rubber Works

(Private) Limited (SRW), who have been extremely helpful for me, Especially Mr.

Aftab Iqbal and Mr. Irfan Ahmad.

Last but not the least I must thank my parents and other family members who were

all very kind and supportive for our adventure into my Internship report.

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Table of Contents

Page

Preface ii

Acknowledgement iii

1. Executive Summary 1 2. Introduction 2

2.1 Purpose of the Study 2 2.2 Methodology of Research 2

2.3 Constraints and Limitations 2

3. Organization Setup and Function 3 3.1 Mission 3

3.2 Background of Host Organization 4

4. Business Operation 6 4.1 Organization Structure 6

4.1.1 Board of Directors 6

4.1.2 Organizational Chat 7

4.2 SWOT and PEST Analysis 8

4.2.1 SWOT Analysis 8

4.2.2 PEST Analysis 9

4.3 Brands and products 10 4.4 Business Strategy 12 4.5 Business Process Analysis 13

5. Marketing and Sales Department 15 5.1 Marketing Strategy 15

5.1.1 Creating Sustainable Value and Market intelligence 15

5.1.2 New Product Launching 15

5.1.3 Advertising techniques 16

5.2 Competitive Strategy 16

5.2.1 Physical Distributions role in the Economy 16

5.3 SYSTEM OF SALES 17

5.3.1 Procedure of sales to distributors/parties 18

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5.3.2 Procedure of sales through branches 21

5.3.3 Procedure of sales to armed forces 22

5.3.4 Procedure of walk through sales: 25

5.3.5 Procedure of export sales: 25

5.4 BCG - Matrix (SRW Brands) 26 6. Human Resource Management 27

6.1 Human Resource department activities 27 6.1.1. Recruitment and selection process 27

6.1.2 Training and development 28

6.1.3. Compensation and benefits 29

6.1.4 Performance appraisal 32

6.2 Assessing Current Human Resource 32

6.3 Human Resource Information System (HRIS) 33 6.3.1 The Anatomy of HRIS 34

6.3.2 Succession Planning 34

6.3.3 Determine the Demand for Labor 35

6.3.4 predicting the Future labor supply 36

6.3.5 Matching Labor Demand and Supply 37

6.3.6 Appraisal Methods 37

6.3.7 Information Components of HRIS 38

6.3.8 Summary 39

7. Accounts and Finance Department 40 7.1 Books, Records and Documents 40

7.2 System of Banks 41 7.3 System of Finances 42 7.4 System of Cash 42 7.5 Financial Statements 43

7.5.1 Balance Sheet 43 7.5.2 Profit and Loss Account 44 7.5.3 Statement of Changes in Equity 45 7.5.4 Cash Flow Statement 46

7.6 Ratio Analysis 47 7.7 Sales Trend Analysis of Different Brands 51

8. Recommendations 54 9. Learning as a Student Intern 55

9.1 Duties 55 9.2 Accomplishments 55

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9.3 New Knowledge Acquired 56 9.4 Problem Encountered 56 9.5 How Experience Impact my Career 56

10. Index 57

11. Bibliography 62

12. Glossary 63

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1. Executive Summary

The purpose of this report is to provide an overview of the 6-week Internship

Program at Samad Rubber Works (Pvt.) Ltd.

Samad Rubber Works (Pvt.) Ltd. was established in 1948, has been manufacturing

High Quality Products. This report describes the Business Process, Background,

Organizational Structure , Marketing Strategy , Competitive Strategy of the company

along with my new learning Experiences during the Internship Program.

This report mainly emphasis on Background of SRW, their Business Operation, and

SWOT analysis along with PEST analysis, working of Finance department,

Marketing and Sales procedures, Human Resource department and Learning as a

student Intern.

During my Internship at Samad Rubber Works., I successfully completed all the

task/duties that were assigned to me. During the course of employment I learned

about different functions performed in an organization. I learned about

documentation requirements and record keeping for different activities and

processes. This internship is not only help full for making this report but this

education gives a general knowledge about business, decisions and policies. In this

way I personally feel that your mind start thinking innovatively, broadly and

dynamically. Facing challenges of day-to-day life is not a difficult task to handle for

individual. After the completion of internship program, internship report has been

prepared just in accordance with the practical exposure. I have strong belief that this

report will guide and ease the readers to understand the operations at Samad

Rubber Works.

I have tried my best to include all the possible information during this period so that it

can be help to the management students who want to enhance their career in the

field of Management Sciences.

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2. Introduction 2.1 Purpose of the Study

The pre-requisite of internship program is to make the students of MBA aware of the

practical expertise and to acquaint them with the real management process. The

internship program is to broaden the vision of practical experiences with theoretical

knowledge as it increases one’s capabilities to handle problems at various stages

and the ability of decision. With an intention of grooming the best executives of the

future, Department of Management Sciences has organized a comprehensive

internship- training program. All of us were placed in leading organizations of

business arena to gain first hand knowledge and insight into their management and

working. So, when I was given the chance of selecting an organization, I opted for

Samad Rubber Works (Private) Limited (SRW). As it is National Company and

reflect true business practices of Pakistan.

2.2 Methodology of Research

Basically Information was gathered from two types of Sources

Secondary Data

1. Personal Observations

2. Interviews wit officers

Secondary Data

1. Various Books

2. Internet

3. Company Annual Statements

2.3 Constraints and Limitations

Due to shortage of time duration of Internship less amount of information was

available. As Internee is not an employee, so accesses to sensitive documents were

not available.

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3. Organization Setup and Function

3.1 Mission

Mission Statement

To optimize the rubber base production and pursue an aggressive exploration

programmed in the most efficient manner on the local as well as international

horizons through a team of professionals analyzing the latest development in the

production technology on rubber based products & maintaining the highest

standards of health, safety & environment protection.

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3.2 Background of Host Organization

Samad Rubber Works is a private limited concern established in 1948 manufacturing

a variety of rubber products as Pakistan Rubber Industry. The core business from its

inception has been manufacturing of rubber products. The company started

operating under the name of Samad Rubber Works (Pvt.) Ltd. in 1962.Samad

Rubber Works today is considered as one of the leading quality rubber product

manufacturers in Pakistan. Samad Rubber Works (Private) Limited (SRW) was

incorporated in Pakistan on August 1962 as private limited Company under the

Companies Act, 1913 (Now Companies Ordinance 1984). The Company is basically

engaged in manufacturing and sale of rubber based products. Over the years, they

have achieved excellence in development of in-house expertise for production of

contact adhesive, moulded and fabricated rubber products including high-tech

inflatables.

The registered and works office of the Company is located at 409-Ferozpur Road,

Lahore. During current year the Company hired a factory on rent to meet the

production in respect of contract with Defence; the factory is located at Plot No. 02,

21-K.M. Ferozpur Road, Lahore. The Company has two branch offices in Karachi

and Rawalpindi each. These branches are responsible for sales in those cities. The

head office deals with the sales made to the rest of Pakistan.

The achievements of the company in different fields of rubber manufacturing have

earned the company a quality name and an excellent reputation.

A few distinctions of the company are given below:

a) National quality award, 1998.

b) Innovation award for development of Anti Mine Shoe.

Initially the Company started its business by manufacturing rubber solutions from

Neoprene adhesives with the brand name of “SAMAD BOND”. Later on the

Company started manufacturing of other rubber products like rubber pipes, air

pillows, foams, air mattress, gum boots, rubber pitches etc. Currently the Company

is manufacturing rubber products for the armed forces on contract basis. Sale to

armed forces varies from year to year as it is totally based on contract.

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In prior years, the Company has started the manufacturing of non-rubber adhesive

products e.g. ‘Samad Power Glue’, ‘Samad Silicon’ etc. The sale of these non-rubber

adhesive products is increasing every year. Currently, the Company is involved in

packing and filing of ‘Samad Power Glue’, moreover the Company launched a new

adhesive product ‘Poshish Bond’, which increases the sale for the year.

Company has the capability of meeting international quality standards be it BSS or

ASTM or specifications laid down by the customer. However perpetually conforming

to stringent military specifications for products supplied to the Pakistan Defence

forces. Over the years the company has earned good repute in the highest Defence

quarters of Pakistan and has received letters of appreciation for its ongoing R&D in

different fields of Defence Manufacturing.

Some of the major machinery includes calendars, internal mixer, two roll open mixing

mills, spreading (coating) machines, hydraulic moulding presses, autoclaves,

braiding machines, power looms and a glass fiber products manufacturing facility.

Employing a man power of 400 men, Samad Rubber Works has been the pioneer

manufacturer of contact adhesives, rubber hoses and inflatables (including boats, life

jackets) in Pakistan. Products manufactured cater primarily for 2 sectors i.e. Defence

and commercial market. Five decades of experience in manufacturing quality rubber

products and popular brands of adhesives, hoses and other quality rubber products

have earned the company a credible name in the domestic market.

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4. Business Operation

4.1 Organization Structure

4.1.1 Board of Directors

Sr. # Name Position Held

1. Mr. Abdul Sami Chief Executive/Director

2. Mian Fazal Haq Director

Mr. Abdul Sami is responsible for overall administrative matter of the Company. He

is directly involved in sales, production and creditors. Mr. Fazal Haq has limited

involvement in the Company’s affairs. These two directors are signatory for the bank

cheques, and signature of any of them is enough for the payment through banks.

One director can approve the documents/records maintained by the Company in

absence of other director except for specific ones.

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4.1.2 Organizational Chat

Board Of

Directors

Accounts And

Finance Manager

Marketing And

Sales Manager

Human Resource Manager

Production Manager

R&D Manager

Assistant Manager

Assistant Manager

Accountant

Accountant

Clerks Cashier

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4.2 SWOT and PEST Analysis

4.2.1 SWOT Analysis

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

1. Strengths (S)

2. Weakness (W)

3. Opportunities (O)

4. Threats (T)

Strengths

a) Samad Bond as a brand.

b) Efficient Research and development department.

c) Sound Financial Resources that enables it to cope with large production

orders and timely deliveries.

d) Talented Management & skilled workers to achieve required goals.

e) Good-Will of company in the mind of Customers & Competitors

Weaknesses

a) Organization’s staff is not properly motivated due to lake of promotions,

incentives and less wages offered by the company especially at workers

level(S-Level).

b) SRW has very less advertising & promotional activities in media.

Opportunities

a) There is opportunity in market for penetration and diversification.

b) To reduce per unit cost to increase the market share.

c) New contracts from Defence.

d) Go for Exports.

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Threats

a) Inadequate & Adverse government policies.

b) Economic instability is one of the worst hindrances.

c) There is great Risk of political instability in country.

d) Great fear of War & Terror danger always present.

e) New entrants due to potential in market.

f) Need Army Contracts for healthy profits for company.

4.2.2 PEST Analysis

PEST analysis stands for "Political, Economic, Social, and Technological analysis"

and describes a framework of macro-environmental factors used in the

environmental scanning component of strategic management.

Political Instability

The political situation of Pakistan is not satisfactory. Due to the rapid change in the

Government every government sets its own new trade policies. Government should

apply sustainable policies for the beneficial of the exporters as well as the investors.

Economic Situation

The economic condition of Pakistan can also affect the foreign investors increasing

inflation rate make the cost of production high and thus reduce the profit margin of

the investor.

Social Situation

The change in the lifestyle of the people affects the growing demand of the SRW

products. The change in the lifestyle and needs in different demographics also affect

the demand of the customers. Due to all these changes SRW is performing excellent

for the excellence organization as well as for the customer.

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Technological Factors

Technological advancement in all the sectors of the country has changed the entire

socio-economic environment. Especially in the rubber sector there is a lot of

technological development. Machines and devices are installed in the SRW has

made extension in its present setup by installation of well advanced technology

imported from Japan China and France.

SRW has received Innovation award for development of Anti Mine Shoe.

4.3 Brands and products

Samad Bond is famous brand of Company and basic strength. Following are the

rubber/non-rubber items, which are sold by the Company to the general public as

well as to armed forces.

Samad Bond:

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Ultra – Paster

Jet

Sher kacha solution

Shoe adhesive

Lasting bond

Gum boots

Pipes

Samad power glue

Cushion/solution compound

Life jackets

Air pillow

Foam

Air mattress

Rubber sheet

Rubberised fabric

Rubber boats

Stone buffing

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Mattress

Rubber marking pads

Rubber pitch

Polo grip

Rubber driving

Samad silicon

Floatation vest SRW

Fabric nylon

Rubber cover

Pneumatic mattress

Poshish Bond

Pakka Solution

Rubber fins

Flotation bladder

Reconnaissance boat-3 men

Assault boat-6 men

Assault boat-13 men

Zodiac collapsible rubber boat-10 men

Rubber flexible tank

Self inflating mattress

Tethered Balloon

Pontoon floats

Rubber flooring titles

Items of assault crossing expedients

Aluminium ladder

Grapnel

Fibre glass raft float

Hulling rope

Hauling rope

Dummy weapons

Inflatable life jackets

Inherently buoyant life jacket

Sleeping bags

Weapon covers

PLCE (Personal Luggage carrying Equipment) items

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4.4 Business Strategy

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

as under:

Exploring and Establishing Export Markets

The management of Company has successfully established a well diversified export

market to mitigate the risk of shortfall in exports. Company has exported its high

quality products in more than 23 countries across Middle East, Africa and South East

Asian countries and its brand is recognized and known as the best quality product

amongst the high profile buyers.

Economy of Scale with New Units

Commissioning of Company has reached a new height of scale of production. The

operation has been very smooth and its capacity utilization has reached to almost

90% within a short period of three months. The management of Company is now

actively pursuing the setup of grinding facilities abroad for capitalizing the vast

experience of its management together with its international brand recognition.

During current year the Company hired a factory on rent to meet the production in

respect of contract with defence; the factory is located at Plot No. 02, 21-K.M.

Ferozpur Road, Lahore. Company is also planning to make a unit in Wah

Cantonment to meet the Defence needs and accomplish the projects.

Cost Reduction

Without cost reduction measures and efficient operations, no company can achieve

sustainable growth in its business operation in a highly competitive world. The

management of Company has successfully implemented various cost reduction

measures taken earlier except for the heat recovery project which is progressing

according to schedule. As a result of various cost reducing measures, Company is

one of the lowest cost producers of shoe adhesives in the country with hybrid

technology.

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Future Outlook

Current situation posed serious doubts for stable and sustained developmental and

infrastructural projects in the country. Safe and secure environment is of pivotal

importance for new investments. Entrepreneurs both local and foreigners pay high

importance to conducive and safe working place. On going war like situation in

Northern parts of our country and severe security concerns in other areas of the

country is hampering the overall economic activities. In addition liquidity crisis,

increasing electricity tariff, power shedding and still higher cost of financing are

serious impediments to economic growth in the country. Going forward, spending by

Govt. under annual PSDP is reportedly much less than budgeted for the first quarter

of FY 2010. In export markets, specially, in Gulf region the competition is getting stiff

after capacity additions by a few Gulf States. Company is also planning to make a

unit in Wah Cantonment to meet the Defence needs and accomplish the projects.

4.5 Business Process Analysis

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

1. To distributors/parties;

2. Through branches;

3. To armed forces;

4. To walk through customers; and

5. Through export.

The Company has two branch offices in Karachi and Rawalpindi each. These

branches are responsible for sales in those cities. The head office deals with the

sales made to the rest of Pakistan. To facilitate its branch customers the Company

authorized its branch managers to obtain order and deposit amount in the

Company’s bank accounts received from the customers.

The Company purchases local & imported material and different procedures are

applied for both types of material.

1. Local Purchase

2. Imported Material

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Local Purchase

The department of Store, the Incharge of whom is Mr. Naeem Ishaq (Manager

Purchase & Stores), is responsible for all types of purchases and imports .

Numerous items are purchased by this department, the list of which can be obtained

during the annual stock taking. These goods not only include material but also

stores and spares.

Imported Material

Numerous items are imported by the Company to fulfil the requirements of material it

needs for production of different items. The Company imports the materials from

around the world, but mostly from Taiwan and Japan. Mr. Naeem Ishaq, being

manger purchase, deals the matters related to imports.

Production

Production is carried out under the supervision of Mr. Manzoor Ahmed (Manager

Production Dept.) and Mr. Aslam (Deputy Manager Production). After receipt of order

for sales, costing is made by Mr. Shakeel (Costing Executive) in consultation with

Mr. Manzoor and incharge of respective sub-department of Productive Dept.

Consultation is also made with Mr. Sami for costing of defence products.

Mr. Aslam is responsible for the production of foams. Adhesives are produced under

the supervision of Mr. Abdul Basit. Mr. Rafiq is responsible for the production of

hoses. Defence items are critically supervised by Mr. Manzoor. After completion of

production, goods are transferred to Packing Dept., from where; these are forwarded

to Finished Goods Dept. for dispatch to customers.

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5. Marketing and Sales Department

Samad Rubber Works is a well established fully rubber based manufacturing

company of just the right size: not too large so, that management is closely involved

with day to day operations , and big enough to provide the full range of products that

their principals expect. The company is fully equipped to serve the immediate and

long term marketing and distribution objectives of its principals.

Every new product entrusted to their care is handled just like a new baby nourished

along its initial stages, seen through its teething problems and guided through life’s

many pitfalls. And have the skill know how and resources to create a leader.

I think, few, if any of the competitors can match the experience or the company’s rich

historical legacy strong and stable. All this has been achieved by developing a

dedicated team of highly motivated professionals fully aware of today’s supply chain

management needs.

5.1 Marketing Strategy

The company ensures width, depth, and merchandizing of brands at all potential

outlets, ensuring equitable feedback to Principals, Achievement of Targets and

adequate investment levels as per Principal’s requirements.

5.1.1 Creating Sustainable Value and Market intelligence

The company keeps up-to-date information about the current Market trends, the

competitor’s strategies, weaknesses and strengths. Samad Rubber Works on regular

basis gives feed back to company’s management and suggestions to improve their

efficiency and Brand image.

5.1.2 New Product Launching

The company puts all its resources for the success of the new Brands launched in

the market and also become part of the promotional activities.

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5.1.3 Advertising techniques

Mostly advertising by company used is BTL (Below the Line) such as use of

hoardings, display at shops and free gifts. Company generally does not use ATL

(Above the Line) Techniques. This is due to low budget that company ignores print

and electronic media for advertisements.

5.2 Competitive Strategy

Providing customers with satisfying products is important but not enough for

successful marketing strategies. These products also must be available in adequate

quantities in accessible locations at the times and when customers desire them. This

article explains the key role of distribution channel. Special emphasis is placed on

the role of distributors and on physical distribution.

In Pakistan, for very long, it was a “sellers” market and therefore, channel of

distribution edit not present great deal of problems. In a host of the cases, most of

the industries followed very conservative patterns of distribution and the consumers

or customers had to search the product. The situation has changed now and a

customer has wider exposure and choice and hence it is important that the product

must choose the right channel for the maximum coverage and exposure.

5.2.1 Physical Distributions role in the Economy

The rising affluence of consumers has given rise to National and International

markets for goods and services. Literally thousands of new products has been

introduced during this century, which are sold and distributed to customers to in

every corner of the world. Business firms have greatly increased in size and

complexity to meet the challenges of expanded markets and the proliferation of new

products. Multiplant operations have replaced single plant production. The

distribution of products from point of origin to point of consumption has enormously

important component of the GNP of industrialized nations. As a significant

component of GNP, distribution has impact on the rate of inflation, interest rates,

productivity, energy cost, availability and consumerism. In a study by the National

Council of Physical Distribution

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There are different channels of distribution available to manufactures:

a) Selling direct to consumers by door to door visits

b) Sale depots chain stores like “Bata” or “Service” shoes stores in Pakistan. The

principle underlying is to make it convenient for consumers to procure their

requirements.

c) Catalogue selling, where all products are detailed and pictured in catalogues

and consumers place orders by mail or phone and products are delivered

accordingly.

d) Selling by manufactures direct to retail or specialized outlets, from where the

consumers buy like beverages companies.

e) Selling to whole sale trade with or with out getting involved in direct

distribution to retail trade. This channel is of greater advantage to the

manufacturers when the turnover reaches such a large volume that it appears

less feasible for one distributor to handle. This system has problems like as it

is difficult in implementation of uniform sale policies, as different dealers have

different natures and sometimes they are not of size reasonable enough to be

able to provide professional services.

f) Selling through exclusive distributors, either one for the country or one for

each town and region. This is practiced by pharmaceutical companies which

want extensive coverage with out getting involved in it themselves, , thus

being left with adequate time and resources to concentrate on quality aspects

of products and its sale promotions.

5.3 SYSTEM OF SALES

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

1. To distributors/parties;

2. Through branches;

3. To armed forces;

4. To walk through customers; and

5. Through export.

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The Company has two branch offices in Karachi and Rawalpindi each. These

branches are responsible for sales in those cities. The head office deals with the

sales made to the rest of Pakistan. To facilitate its branch customers the Company

authorized its branch managers to obtain order and deposit amount in the

Company’s bank accounts received from the customers. During current year the

Company issued 5602 sales tax invoices.

5.3.1 Procedure of sales to distributors/parties:

Procedure of sales through distributors/parties is as follows:

a) The Company has twenty seven (27) distributors and more than 950 parties in

head office ledger. Distribution is allowed at the discretion of Main Abdul Sami

(Chief Executive). Most of the distributors are doing business with the

Company for more than twenty years.

b) The terms of credit sales vary with party to party. It ranges from 03 to 15 days

but in some cases it extends to two months. No discount is allowed in case of

early payment or any penalty charge for the late payments.

c) The orders are received by Mr. Abdul Basit (Manager Sales Dept.) or by Mr.

Asghar (Marketing Officer). All orders are placed by the customers verbally to

them. In case of large companies such as BATA Pak. Ltd., Service Indust.

Ltd., Nestle and Haleeb etc., written purchase orders are received by the

Company.

d) The Sales and Marketing Department have up-to-date awareness about the

level of finished goods held, which is provided by Mr. Abdul Basit (Manager

Sales Dept.). He finalizes the orders received from the customers in

consultation with Mr. Kashan Ali (Asstt. Finished Goods Dept.). A

Production/Sales Planning Sheet is prepared by Mr. Abdul Basit & Mr.

Kashan Ali keeping in view the availability of finished goods, and raw material

if production is to be made. Quantity required by the customers/branches

through sales orders is not fully supplied. It is supplied in parts considering all

the clients at a specific point of time mutually agreed.

e) In case of shortage of finished goods, Mr. Kashan informs Production Dept.

for the required quantity of items to be manufactured within specified time. A

copy of planning sheet is forwarded to the Production Dept. Entry is also

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made in the registers maintained by both Depts., i.e. Production and Finished

Goods.

f) On the availability of goods, the Finished Goods Department (F.G. Dept.)

prepares Daily Production Report which is counter signed by Production Dept.

F. G. Dept. reconciles it with Registers maintained by production Dept. and

F.G. Dept. and Mr. Khalid Butt (Asstt. F.G. Dept.) signs the register of

Production Dept., whereas F.G. Dept. register is signed by Production Dept.

g) On the availability of goods, Sales Department issues Daily Despatch Report

to the Finished Goods Department for despatch of goods to the customers.

Normally this report is sent to the Finished Goods Department a day before

on which goods are to be despatched. This report is unsigned and is

discarded after few days.

h) The F.G. Dept Prepares Monthly Production Report in triplicate from the

register maintained by them, duplicate and triplicate is forwarded to

Production Dept and Accounts Dept. respectively. Mr. Abdul Basit (Manager

Sales Dept.) reconciles the production of whole month with the despatch data

maintained in his personal computer. F.G. Dept. also prepares monthly Stock

Position of Finished Goods sheet in duplicate, a copy of which is forwarded to

Accounts Dept. for up-dation of stock of inished goods on monthly basis

i) In Finished Goods Store, Mr. Rafique (In-charge) and Mr. Kashan (Asstt. In-

charge) are responsible for all despatches.

j) Storekeeper of F.G. Dept., at the time of despatch of goods, prepares Gate

Pass-Outwards in triplicate. One copy is forwarded to gatekeeper, while other

is to the Accounts Department for preparing sales tax invoice and third copy is

retained for store record purpose.

k) Mr. Muzammil (Acct. Asstt.) is responsible for preparation/maintenance of

Sales Invoices and Mr. Kaleem (Acct. Asstt.) is responsible to maintain

Supply and Stock registers. Everyday Mr. Muzammil prepares the required

number of sales tax invoices and posts the entries in computerized software

and maintains the vouchers under his the supervision.

l) Two copies of Sales Tax Invoices are sent to the customers along with the

goods. Out of those two, one copy is retained by the customer while the other

is used for acknowledgment purpose, which afterwards placed in party‘s file.

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m) Vouchers, first prepared by Mr. Sajjad (Acct. Asstt.), checked by Mr. Abid Ali

(Accountant) and verified by Mr. Irfan Riaz and Mr. Amir Subhan, and the

same vouchers finally approved by a director.

n) The transportation charges are borne by the Company. In case of sales

returns, transportation charges are borne by distributors themselves.

o) Few clients bear the charges of transportation on behalf of the Company,

however, afterwards they are issued credit note.

p) Discount is allowed to the distributors and parties at the discretion of the top

management and manager Marketing and Sales Dept.

q) The Company provides discounts on gross sales to its distributors on the

following rates and on following items.

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

i. Goods can be returned by the customers within six months from the date of

sales. For few distributors, this period can be increased to nine months.

ii. Mr. M. Ali (Gate Keeper) enters the returned goods in a register.

iii. After entering into the register, the goods are moved to the related section

of production department.

iv. The supervisor of that section prepares the report for those goods

regarding its condition and sends to Mr. Abdul Basit.

v. Mr. Abdul Basit then approves the quantity of the goods to be despatched

again to the customers as a replacement.

vi. Same procedure for the documentation is applied for despatch of goods as

mentioned above.

vii. No entry is made for items received by the Company for the replacement

purpose.

Sr.# Item Rate of discount %

1. Samad Bond 101 7.0

2. Samad Ultra 5.0

3. SPG 0.5 gms 8.5

4. SPG 2.0 gms 12.0

5. Silicon 3.7

6. Samad Jet 5.0

7. Poshish Bond 5.0

21

5.3.2 Procedure of sales through branches:

The Company has appointed Mr. Moin Chisti and Mr. Zaheer Chisti in Karachi and

Rawalpindi respectively, as Branch Manager. Both managers are eligible to get

certain percentage of commission, which varies item to item. The rate of commission

remains fixed normally for a single year.

Following are the items, which are dispatched to the branches along with the rate of

commission (on receipt of sales) and discount thereon;

Sr. # Items Commission % Discount %

Karachi Rawalpindi Karachi Rawalpindi

1. Samad Bond Tube (40 g, 80 g) 8 6 - - 2. Samad Bond Tin 7 6 - - 3. Samad Bond Ultra 5 6 - - 4. Samad Power Glue (02 g) 7

6 - -

5. Gum Boots 7 6 - - 6. Samad Silicon - 6 8 - 7. Pipes - 6 - -

a) There are almost 435 parties in Karachi and 599 in Rawalpindi. Discount

allowed to parties ranges from 5% to 13%.

b) Branch managers are responsible and authorized to deal with the parties and

there are no direct connections of the Company with the parties of branches.

Head office only maintains the ledgers of those parties.

c) Branch managers verbally receive the orders from the parties and inform the

head office for total demand.

d) The head office after arranging the required goods despatches it to the

branches.

e) Builty charges for the goods to be despatched are borne by the Company.

f) No receiving is obtained when these goods are despatched to branches.

g) The procedure of despatch of goods from the Company is same as for the

distributors except that the Stock Transfer Note (STN) is sent to the branches

instead of sales tax invoice. Sales tax invoices are prepared by branches

themselves.

22

h) It’s the responsibility of the branch managers to collect the amount from the

parties.

i) For some parties, with whom the Company has long-term relations; discount

is given according to the instructions from the top management or manager

Marketing and Sales Dept.

j) Branches pay the transportation charges for the goods to be delivered to the

customers.

k) The branch managers send packet after every two or three days, which

contains Sales Tax Invoices, Receipt Slips, Expenses Vouchers with

evidences, Deposit Slips to bank, Account Statement (depicts the daily

receipts and payments), Daily Stock Report and Daily Progress Report

(from Rawalpindi only). The branch managers also send detail of receipts

from the customers and deposits made in the bank account of the Company.

l) These packets are received by Accounts Department where Mr. Sajjad (Acct.

Asstt.) posts the entries accordingly for all the sales and expenses.

m) Mr. Muzammal receives sales tax invoices and updates respective records.

n) The branch managers send monthly report of receipts from the sales to the

head office, for the purpose of commission payable to them by the Company.

o) For transportation charges, along with Commission Details, they also send

detail supported with vouchers for the allowable expenses as per Company’s

instructions.

p) Mr. Sajjad prepares the same detail of commission, which is afterwards

checked by Mr. Irfan Riaz (Asstt. Manager Finance) and approved by both Mr.

Amir Subhan (Manager Fin.) and Mr. Abdul Basit (Manager Sales &

Marketing).

q) No sales returns are made in the branches.

5.3.3 Procedure of sales to armed forces:

Following is a procedure of sales to armed forces:

a) Information regarding tenders received by the Company from two ways:

i) The Company is registered with Director General Defence

Purchase (DGDP); this department issues the fortnightly bulletin

which contains the advertisement for tenders.

23

ii) The Director Procurement (DP) of armed forces contacts with the

Company and inform them regarding tender in case of repeat order.

b) In case of tender submitted by DGDP for repeat order, Company files the

document/quotation to them and in other case to the DP of army/navy/air

force.

c) A bidder, who offers the lowest value along with the quality required by the

armed forces, wins the tender.

d) Agreement/contract is made and signed by both parties. On the behalf of the

Company Mr. Abdul Sami signs the documents being the authorized signatory

(for contracts and bills) in consultation with Mr. Manzoor (Manager Production

Dept.). Costing is carried out by Mr. Shakeel (Costing Executive) in

consultation with Mr. Manzoor.

e) Mr. Abdul Sami informs to the Production Department regarding contract

requirements.

f) A sealed sample is received from army to prepare the same (advance

sample) by the Company which is forwarded to army within 45 days.

g) After approval of advance sample, Production Department starts the

production to complete the job within the stipulated time.

h) The date of completion of job is written on the agreement, which could be

different from the date required in the tender.

i) After production, the goods are kept in Bound Rooms/Offer Rooms. Manager

production informs Mr. Sarwar Sheikh (Company Secretary) regarding

completion of production. A list in duplicate is provided by Production Dept. to

inform Mr. Sarwar Sheikh regarding completion of production.

j) Mr. Sarwar Sheikh communicates to concerned department of Defence through Advance Notice for commencements of inspection.

k) Inspection is made by the person appointed by Defence Department. He locks

and seals the Bound Room and takes sample with him. Later on, next team of

inspectors checks 5% of the whole stock. On third visit, the inspectors inspect

100% items. Finally, a Col. Rank army officer checks on random basis which

is called Control Sample.

l) Rejected quantity is again put into process and inspection process is

conducted again.

m) Inspection Note (IN) is issued to the Company by the ASID (Army Store

Inspection Depot).

24

n) The goods are despatched by the Company according to the terms written in

the agreement.

o) The procedure of preparation of Gate Outwards Pass and Sales Tax Invoice

at the time of delivery of goods is the same as mentioned above.

p) Normally the Company sends the goods to Lahore Railway Station or to the

place as per agreement, where the Armed Forces has office. MCN (Military

Credit Note) is issued to the Company.

q) From railway station one copy of RR (Railway Receipt) is received by the

Company after loading of goods in railway carriages.

r) Company sends the copies of following to CMA (Combined Military Accounts)

through bank and bills around 80-90% of the total value of a contract:

i) Inspection Note

ii) Military Credit Note.

iii) Railway Receipt

iv) Sales tax registration certificate.

v) Income tax exemption certificate.

Along with, Form - DPL-15 for the purpose of warranty given by the Company

for the products supplied to the Armed Forces, is attached.

s) This 80-90% bill is discounted from the bank (MCB, Shadman Branch.)

t) The bank discounts 75% of this 80-90% and credits the account of the

Company.

u) CMA issues CRV (Consignment Received Report) to the Company after

receiving the goods.

v) The issue of CRV means that the Company is now eligible to receive the

balance payment of 10-20%.

w) Approximately, it takes one month for the whole process i.e. from the

despatch of goods to issue of CRV.

x) Liquidated Damages (LD) charges for late delivery are borne by the Company

at the rate of 2% p.m. (maximum limit is 10%) on the total cost of the goods.

y) Price reduction charges can also be borne by the Company if ASID reports

that quality of goods is not up to mark.

z) Warranty is provided by the Company for free of charge replacement of faulty

materials or bad workmanship.

25

5.3.4 Procedure of walk through sales: Following is a procedure of walk through sales:

a) Such type of sale is very minimal, and it can only be made with the approval of

directors or Manager Sales and Marketing.

b) No limitation of quantity is fixed for such sales.

c) The process of preparation of gate pass and sales tax invoices are the same as for

the rest of the types of sales.

d) Receiving of goods can be obtained on a gate pass or on sales tax invoice.

e) Mr. Muzammal after preparing the sales tax invoice sends it to the Accounts

Department for recording sales transaction.

5.3.5 Procedure of export sales:

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

a) Mr. Abdul Basit contacts with the party or party contacts him for the purpose

of export sales.

b) After this Mr. Abdul Basit consults with Mr. Abdul Sami for his approval.

c) If Mr. Abdul Sami approves the deal, then Mr. Abdul Basit forwards the

information to Mr. Sheikh Sarwar.

d) He sends Performa Invoice to the Client.

e) The Company receives the amount in form of TT/demand draft/bank cheque.

f) The instrument is deposited in the bank.

g) The Company submit Form-E (form for export purpose) to the State Bank of

Pakistan through bank containing all information regarding export to be made.

h) Advance Payment Form also submitted to a bank containing the information

regarding amount received from the party.

i) The Company meanwhile contacts the forwarder for the shipment of goods.

j) Goods are manufactured and despatch to the party, the navigation mode

could be through shipping, by land or by air.

k) The Company maintains the copies of following at the time of export of goods:

i) Form – E.

ii) Advance Payment Form.

iii) Commercial Invoice.

iv) Packing List

v) Certificate of origin, and

26

vi) Bill of lading/shipping

l) When goods are despatched by the Company, at the port, above-mentioned

documents are submitted to the Custom department.

m) Finally Mr. Sarwar Sheikh sends commercial invoice, packing list, certificate of

origin and bill of lading/shipping to the party. Both through fax and by courier.

5.4 BCG - MATRIX (SRW Brands) High Low High

Low

MARKET SHARE

Defense Items

Star

Samad Power Glue

??

Samd Bond, Hose Pipes

Cash Cow

Water proof Foam

Dog

MA

RK

ET G

RO

WTH

27

6. Human Resource Management

Human Resource Management is an essential part for any organization. Moreover,

development of this department is the first step, the ground on which the future of the

company depends. It is essential for every single business unit. It is people, not

technology who create the company.

Every organization has its own policies and strategies by which they control the

functions of their departments. Similarly, Samad also have own policies and

strategies by which they control all the functions of their departments. Samad

Rubber Works (Pvt.) Ltd. HR department is also conducting all the practices of HRM

like Job analysis and design of work, recruitment and selection, training and

development, performance appraisals, compensation, employee relationships, staff

welfare and some other things like that. These all practices are conducted by own

policies and strategies. HR department not make decisions related of its own

department, they also conduct in company’s decision.

6.1 Human Resource department activities

1. Recruitment and Selection

2. Training and development

3. Compensation & Benefits

4. Performance Evaluation / Employee relationship

6.1.1. Recruitment and selection process

Samad Rubber Works (Pvt.) Ltd. recruitment process is well established first of all

They give ads in news papers, company website etc. Once they receive an

application form, from candidates with required documents and C V.

a) Application is received by the HR department and forward to the related

department.

b) After approval of manager of related department, an applicant has to meet the

MD for final interview/approval.

c) If the candidate is hired by the Company than HR department maintains his

28

personal file. This personal file includes the following:

i Copy of identity card;

ii Application for job;

iii Appointment letter;

iv Outstanding performance/promotion letter;

v Qualification documents.

d) The successful candidates are assigned by temporary number, for staff its TS

and for worker it’s TW.

e) The probationary period for staff is six months whereas, for worker, it is nine

months. Permanent employee’s number is issued to an employee when he gets

the letter from the management.

f) Employees are issued a swap card for the daily attendance purpose.

g) All facilities are given to the temporary employees, which are provided to

permanent employees, like fair price shop etc.

6.1.2 Training and development

Staffing and training

The Samad Rubber Works has always believed that education is a powerful force in

improving the quality of life and creating opportunity for people and their families

around the world. The HRD at Samad Rubber Works (Pvt.) Ltd. provides training to

employees under the following categories;

a) Basic Orientation:

b) Development Courses/ Local Training:

Planning and Forecasting

The process of deciding what positions the firm will have to fill, and how to fill them.

Samad Rubber Works (Pvt.) Ltd. HR department involves in company strategic

planning and they also make sufficient planning for hiring new employees in the

future. We forecast for the expected employees needs in the organization. We

forecast of employees on the change technology and increasing in productivity.

29

After planning we send this report to the head office for approval. If we get approval

from the head office then we start recruitment process.

Job analysis and designing

Samad Rubber Works (Pvt.) Ltd. company HR department check its own job

description and job analysis in which they get the information about employees work

activities, human behavior, performance standard, job context and human

requirements and also other information related to this conduct. HR department of

Samad Rubber Works (Pvt.) Ltd. used this information for Recruiting, selection,

compensation, performance appraisal, training, and employee’s relationship.

6.1.3. Compensation and benefits

Objective of compensation

According to HR department compensation objective is to improve performance of

employees and convey a message to employees that company is loyal with

employees.

HR department manager says that employees are our assets, there for we are

careful about their financial health and benefits. We give following compensation and

benefits:

a) Basic salary

b) Bonus

c) Medical Reimbursement

d) Provident fund

e) Social security

Benefits to the employees

a) Bonus u/c 10-C of Schedule of Industrial & Commercial Employment (S.O)

Ordinance, 1968 (basic plus CLA)

b) Gift bonus (basic)

c) Sick leaves - 8

30

d) Casual leaves - 10

e) Earned leaves - 14 (on basic salary plus CLA) – encashed at the end of year

f) Group Insurance of all employees & workers below age of sixty

g) E.O.B.I & Social Security

h) Gratuity

i) Medical – for those who are not registered with social security (50% of actual

expenses)

Fair Price Shop

Along with other benefits the Company also provides the facility of Fare Price Shop,

which has following features:

a) All employees are given 6 kgs of grains of different types every month.

b) Rs.12 is deducted from the salary of every employee.

c) Two slips are issued at the time when salary slips are issued. One slip is

submitted by the employee at store, and second at the gate.

d) Separate store issue procedures also applied for pluses purchased by the

Company.

e) Along with this, workers are given two packs of soap monthly without any

charge.

Procedure of time record followed

a) Every employee of the Company, whether permanent or temporary, except

directors, is issued a swap card for recording of time spend by employee in the

Company.

b) The Company has computerized system of recording the time, which helps

them to calculate the exact amount of basic salary.

c) Every employee has allowed the relaxation of five minutes and fifty nine

seconds at the start of a day. Otherwise deduction will be made to the portion

of time for which he comes late. These late charges are deducted on the gross

salary.

d) Overtime calculations are made by MIS department under which the computer

system is installed.

31

e) This overtime should be approved by department in-charge before the start of

overtime and than if this overtime is applied by the worker, than actual

overtime should be approved by a director.

f) Employees get overtime, which is equal to:

(Gross salary)

= No. of working days x 8 hrs.

(in a month)

x over time hours worked

Loans

a) The Company also allows provides loan facility to its employees. Following is

the procedure for loan and its repayment.

b) Loan is applied through application, submitted by the employees to Mr. Ashraf

(Personnel Dept.).

c) He stamps the application and writes date of appointment of the employee on

the application.

d) The loan is granted equal to the amount of gratuity of person applying or as

per his reputation in the Company.

e) This application is sent to the Cashier and he writes the detail of loan if

already taken by the applicant before forwarding it to directors.

f) It’s the discretionary power of directors to accept or reject the application.

g) If accepted, applicant is forwarded to Mr. Hannan to ask him to prepare the

cash voucher manually.

h) After this Mr. Khalid verifies the voucher with approved application and

forwards it to the Cashier for payment of loan.

i) Photocopy of that application is sent to Mr. Faqeer Hussain. He enters the

information regarding the loan into register and forwards it to MIS Department.

j) For those employees who are getting pay through bank, loan is paid to them

through banking channel.

Advances

The Company has a policy to provide the facility of advances against salary to the

employees fortnightly. Following is a procedure:

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

32

b) His slip is forwarded to the Cashier.

c) Fortnightly, MIS Department generates the salary sheet.

d) This list is send to the Cashier and he checks whether employee is eligible for

advance amount for which he is applying.

e) The amount is paid and receiving is obtained on the same salary sheet.

f) This report afterwards is sent back to MIS Department for updating the salary

record.

6.1.4 Performance appraisal

Samad Rubber Works (Pvt.) Ltd. performance appraisal is annually HR manger said

that we appraise the employee due to their performance about goals of the

organization .we set the goals started the year and tell the employees about the goal

if the employees achieve this goal we appraise the employees.

Steps in appraising performance

The performance appraisal process contains three steps;

a. Define the job

b. Appraise the performance

c. Provide feedback

6.2 Assessing Current Human Resource

First we make profile of organization’s current employees. This includes information

about the employee’s name ,skills , knowledge , experience, training , prior

employment, current position , appraisals , salary level , languages spoken ,

attendance tracking , drug & health testing , promotion , dependents.

Skills/knowledge/experience:

The purpose is that to asses that whether the employees are given the jobs

according to their potential or they are underemployed. And if the person has

multiple skills he can performs other tasks as well rather than hiring more people.

33

Training:

If there is gap between current knowledge/skill and requirement of job or for future

need this helps to select individuals for training and development , promotion and

supporting organization’s strategic direction.

Appraisal:

This is to keep record of the performance of the employee so that he may be

promoted or get incentives on basis of his performance to keep him motivated.

Drug & Health testing:

This provides an idea of the employee whether he has some health problem or uses

alcoholic products. This can affect the performance of the employee.

Make Profile HRIS (Database)

Promotion recruitment compensation Training & development

employee relation Equal employment opportunity

6.3 Human Resource Information System (HRIS)

A computerized system that assists in the processing of HRM

information.(Decenzo,Robbins)

A Human Resource Information System is a systematic procedure for collecting,

storing, maintaining, retrieving, and validating data needed by an organization about

its human resources, personnel activities, and organization unit characteristics.(

Kovach Kenneth )

The HRIS is sometimes also referred as HUMAN RESOURCE MANAGEMENT

SYSTEM (HRMS).

34

HRIS can support long range planning, with information for labor force planning,

and supply and demand forecasts; staffing with information on equal

employment, separations, and applicant qualifications; and development with

information on training program costs and trainee work performance. HRIS can

also support compensation programs with information on pay increases, salary

forecasts, and pay budgets; and labor/employee relations with information on

contract negotiations and employee assistance needs. In every case the purpose

is to provide information that is either required by human resource stakeholders

or supports human resource decisions.

6.3.1 The Anatomy of HRIS

Control

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

Inputs Outputs

Employee information New Information

Company policies Accurate

Other HR information etc. Relevant

Consistent

Comprehensive

6.3.2 Succession Planning

In addition to computerized HRIS, some organizations also generate Replacement

Chart, which covers individuals in middle to upper level management positions. This

ensures that another person is available to move to the higher position.

The replacement chart high lights those positions that may be vacant in the future

due to retirements, promotions, transfers, resignations or death of the employee.

This gives ready information to the organization to spot any skill shortage.

Transformation

35

Replacement Chart looks similar to organizational chart. The people who can

replace are listed beneath with the expected time in which they will be prepared to

take on the needed responsibility.

Sample Replacement Chart

6.3.3 Determine the Demand for Labor

The organization must be well aware that when new human resource will be required

in future in order to fulfill the goals and objectives of the organization .Organizations

require diverse mix of people because , employees are not perfectly substitutable for

one another in an organization . The estimates of future demand such be accurate in

both qualitative and quantitative.

We should know what type of employees in terms of knowledge, skill, and

experience is required by the company. Our forecast methods must allow for the

recognition of specific job needs as well as the total number of vacancies.

36

6.3.4 Predicting the Future labor supply

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

labor needed.

(Grade 17)

Promoted out 6

Entry level 1 Retirement, early

resignation

Sickness, death, layoff

Promoted in 4

Suppose in grade 17, 4 people will be promoted in and 6 will be promoted out. There

should be only 120 people in this grade.So,6 will leave this grade and 4 will join

which still leaves space for 2 people . This means that 2 people must be recruited to

fill the vacant space.

This can give us a good idea of the vacancies available in future. Decrease in

internal supply can come due to retirement, early retirement, termination, prolonged

sickness, death, sabbaticals. We have only one definite data that is the retirement.

It is easy to predict who is going to retire.

120 people

37

On the other hand early retirement, termination, prolonged sickness, deaths are

difficult to predict .Deaths is most difficult to forecast because they are often

unexpected. Layoffs are more controllable especially in short run. Sabbaticals too

are reasonably to predict since most organizations policies require reasonable lead

time between request and initiation of leave.

6.3.5 Matching Labor Demand and Supply

The objective is to bring together the forecasts of future demand and supply of

human resource both current and future. The result is to highlight areas where

overstaffing may exist and to keep abreast of the opportunities existing in the labor

market to hire qualified employees either to satisfy current needs or to stockpile

potential candidates for the future.

When there is shortages go for recruitment and when there is oversupply the human

resource management must undertake difficult steps to go for derecruitment.

6.3.6 Appraisal Methods

1) Evaluating Absolute Standards/Essay Appraisal:

The employees are compared to a standard and their evaluation is independent of

any other employee in a work group. This process measures job traits and behavior.

Included in this group are methods like critical incident appraisal, the checklist,

adjective rating scale, forced choice, behaviorally anchored rating scales.

2) Relative Standards:

Evaluating an employee’s performance by comparing them with other employees,

this method includes group order ranking, individual ranking and paired comparison.

3) Outcomes:

This approach makes use of achieved performance outcomes. Employees are

evaluated on how well they achieve specific set of objectives. This approach is

known as goal setting more commonly referred as MBO (Management by Objective).

38

6.3.7 Information Components of HRIS:

Group 1 Basic Non-confidential Information

Employee name

Organization name

Work location

Work phone number

Group 2 General Non-confidential Information

Information in the previous category plus:

Social security number

Other organization information (code, effective date)

Group 3 General Information with salary

Information in the previous category plus:

Current salary, effective date, amount of last change, type of last change and

reason for last change

Group 4 Confidential Information with salary

Information in the previous category plus:

Other position information (position ranking)

Education data

Group 5 Extended Confidential Information with salary

Information in the previous category plus:

Bonus information

Projected salary increase information

Performance evaluation information

39

6.3.8 SUMMARY

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

fields of Human Resource.

It has the following features:

Attendance tracking

Appraisal

Job history

Employment history

Education history

Health & Drug testing

Evaluation

Skill and Training

Payroll history

Company Policies

Loans , advances

Incentives

40

7. Accounts and Finance Department

7.1 Books, Records and Documents

The Company keeps its computerized accounting records in which proper ledgers

are maintained along with vouchers. The vouchers are prepared by accounts

department and properly checked by Mr. Abid or Mr. Aftab then verified by Manager

Finance, and finally approved by the directors. The vouchers are pre-numbered.

Following are the lists of records, vouchers and documents maintained by the

Company.

Records Vouchers Input register Cash payment Output register Cash receipts

Sales tax invoice Bank payments

Salary sheets Bank receipts Staff & workers attendance register Liability (for Purchase) Leave register Journal Import request form Sales Local Purchase order (cash) Cheque Cancellation Local Purchase order (credit) Bank adjustment L/C document files Import purchase Material issue requisition Karachi & Rawalpindi Cash

Good received note Karachi & Rawalpindi expense

Inspection report Karachi & Rawalpindi receipt Daily statement of receipts and issue

of stocks

Karachi & Rawalpindi sales

Daily account statement (branches) Bank Receipt books (in Lahore, Karachi &

Rawalpindi)

Cash Receipt books (in Lahore, Karachi &

Rawalpindi)

Daily cash statement

Bank adjustment advice

41

Bank receipt register

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

7.2 System of Banks

Mr. M. Khalid deals with the banks of the Company. All the cheque books are under

his custody. Following are the people involved in the procedure starting from

preparation to approval of a bank voucher:

Prepared by Checked by Verified by: Approved by:

Sajjad Ali / M. Khalid Abid Ali Khan Irfan Riaz Amir Subhan Director

Currently the Company is dealing with following banks. Most of the banks are

inoperative.

Sr.# Bank Account # Nature

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

42

7.3 System of Finances

Along with the department of accounts the Company has also maintained the

department of finance to fulfill the growing needs of finance requirement of the

Company. Mr. Amir Subhan is Manger Finance and is responsible to look after all

the financial matters of the Company.

Following are the facilities availed by the Company. All the facilities bear interest rate

@ 6 months KIBOR ASK rate (average of all banks) + 3% with a floor of 12 % p.a.

Sr # Facility Limit (rupees in million)

1. Letter of credit (180 days) 52

2. Running finance facility 10

3. Finance against imported material – FIM (120 days) 30

4. TRF 05

5. Bank guarantee (Adv. Mobilization and Performance Bond) 150.63

6. Murabaha finance Facility (90 days) 70

7.4 System of Cash

Mr. Malik M. Shaffi is a cashier of the Company. He is working with the Company for

more than 36 years.

Mr. Shaffi verbally receives demand for cash payments from managers of all

departments and directors of the Company on daily basis. If these demands are for

following days, then he prepares the list of proposed expenditure and at the start of

every day this detail is first checked by Mr. Irfan Riaz and then by Mr. Amir Subhan

and finally approved by Director.

At the end of day, on daily basis, the cashier prepares a detail of total cash receipts

and payments supported by vouchers and evidences. Manual cash payment

vouchers are prepared by Mr. Hannan.

43

7.5 Financial Statements 7.5.1 Balance Sheet

44

7.5.2 Profit and Loss Account

45

7.5.3 Statement of Changes in Equity

46

7.5.4 Cash Flow Statement

47

7.6 Ratio Analysis 2010 2009

Gross Profit 89,547,884

66,706,667 Gross Profit Margin =

Net Sales 522,853,951

392,711,319

17.13% 16.99%

Gross profit of the company is 17.13 % approximately, which is same as compare to

last financial year 16.99 %.

2010 2009

Operating expense 57,555,758

51,118,134 Operating expense

Ratio =

Net Sales 522,853,951

392,711,319

11.01% 13.02%

Operating expense Ratio of the company is 11.01 % approximately, which is better

as compare to last financial year 13.02 %.

2010 2009

Operating Income 29,169,040

15,588,533 Operating Income =

Net Sales 522,853,951

392,711,319

5.58% 3.97% 2010 2009

Net Income 12,685,001

2,028,204 Net income as a

%age of net sales =

Net Sales 522,853,951

392,711,319

2.43% 0.52%

48

Net income as percentage of sales has been increased from the last year.

Resultantly earning per share has also increased.

2010 2009

Net Income - Prefferd Divideds

12,685,001

2,028,204 Earning per share =

Avg No. of share outstanding 15,000

15,000

Rs. 845.67

135.21

Keeping in view the fair value f the share and political stability in country the earning

per share of the company is very good.

2010 2009

Operating income 29,169,040

15,588,533 Return on Assets =

Total Assets 475,575,575

473,095,883

0.06

0.03

2010 2009

Net Income 12,685,001

2,028,204 Retuen on Equtiy =

Avg. Total Equity 99,554,984

86,869,983

0.13

0.02

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

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2010 2009

Net Sales 522,853,951

392,711,319 Sales To Fixed

Assets =

Net FIxed Assets 259,452,318

258,592,683

2.02

1.52

This ratio tells us the ability of the company's Fixed assets to create the profits. It is

not just stagnant but variation is there upward then the downward. It shows that

company's effort to utilizing assets is good and potential is there in assets.

2010 2009

Net Sales 522,853,951

392,711,319 Total Assets

Turnover =

Total Assets 475,575,575

473,095,883

1.10

0.83

This tool is used for measuring the assets contribution towards the sales. Here

company position is good but in decreasing trend, the meaning of which is that the

assets contribution in sales is growing low. This ratio tells us the ability of the

company's assets to create the profits. It is not just stagnant but variation is there

upward then the downward. It shows that company's effort to utilizing assets is good

and potential is there in assets.

2010 2009

Total Liabilities

153,940,384

164,145,693 Debt Ratio =

Total Assets 475,575,575

473,095,883

32% 35%

50

Debt ratio is also a good tool for the measurement of long term debt. Here .32:1,

.35:1 is the position for long term. As company has I Rs to pay .32, .35 respectively

which tells us the strong position and good utilization of assets against the

obligations.

2010 2009

Operating Income 29,169,040

15,588,533 Interest

Coverage Ratio

= Annual Interest Expense

10,708,772

9,858,973

2.72

1.58

Interest coverage ratio is an indicator of a company's ability to meet its interest

payment obligations. Company has sufficient resources to meet its interest

obligations.

Current Ratio

Current Current Assets : Liabilities Rupees Rupees 216,123,257 97,814,283 Required 1 : 1 Actual 2.21 : 1.00

However, in exceptional cases, banks/DFIs may relax this ratio upto 0.75:1 if they

are satisfied that appropriate risk mitigants have been put in place or the ratio has

been adversely impacted due to the nature of the business of the borrower.

Liquid Assets are the assets which are readily convertible into cash without recourse

to a court of law and mean encashment/realizable value of government securities,

bank deposits, certificates of deposit, shares of listed companies which are actively

traded on the stock exchange, NIT Units, certificates of mutual funds, Certificates of

Investment (COI) issued by DFIs/NBFCs rated at least 'A' by a credit rating agency

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on the approved panel of SBP, listed TFCs rated at least 'A' by a credit rating agency

on approved panel of SBP and certificates of asset management companies for

which there is a book maker quoting daily offer and bid rates and there is active

secondary market trading. Guarantees issued by domestic and foreign banks/DFIs

received as collaterals by banks/DFIs will be treated at par with Liquid Assets. Credit

rating of foreign banks

7.7 Sales Trend Analysis of Different Brands

52

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

53

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

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

54

8. Recommendations

a) Cash handling by clerks should be more systemized.

b) Reconciliation of Sales orders and dispatches against those orders must be

counter checked by more than one person relating to Sales and Marketing

Dept.

c) Daily Progress Report sent by Rawalpindi Branch must be critically

considered by Sales and Marketing Dept. and should be commented for its

improvement in order to enhance sales. Karachi Branch should also prepare

such kind of Report on daily basis.

d) Goods Inward Pass should be prepared on the same day and at the time

when goods enter into the premises of the Company.

e) Purchase Requisition (PR) for packing material should also be raised.

f) Import Request Form must be put on file of materials imported during the

period.

g) Improvement in the salary package

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9. Learning as a Student Intern

9.1 Duties

The main duty assigned to me was to assist Mr. Aftab Iqbal (Assistant Finance

Manager).Other duties are as follows.

a) Made the closing enteries for 30/06/2010

b) Made detail of imports during the period 2009-2010

c) Calculation of income tax withheld by company on Salaries of employees

d) Reconcile banks and make Bank reconciliation Statements for the month of

July, 2010.

e) Made report on input sales tax on purchases for the month July, 2010.

f) Made report on output sales tax on Sales for the month July, 2010.

9.2 Accomplishments

During my internship I have performed different tasks. My senior in Company

assigns me different tasks which I have completed.

a) Working on amortization schedule of different leasing vehicle for learning.

b) Prepare the documents for enhancement of Running Finance Facility.

c) Calculate Financial Ratio

d) Made the depreciation schedule of Factory owned assets, leased assets &

addition / deletion

e) Made the closing enteries for 30/06/2010

f) Made detail of imports during the period 2009-2010

g) Markup calculation of Running Finance a/c MCB Bank Shadman colony

branch a/c # 1347-1 for the period 2009-2010

h) Calculation of income tax withheld by company on Salaries of employees

i) Reconcile banks and make Bank reconciliation Statements for the month of

July, 2010.

j) Made report on input sales tax on purchases for the month July, 2010.

k) Made report on output sales tax on Sales for the month July, 2010.

56

9.3 New Knowledge Acquired

I have learned a lot of new things in this internship program. Before this internship I

have no idea about the overall practices in an Organization. In every department I

learned new things. Before this experience I read only theory but when I see these

things practically I learned a lot of new things. The working in different departments

enhances my knowledge.

An exposure of the practical way of business gave me confidence about what I learnt

from my MBA I was trained there to understand the marketing strategies, planning

and problem solving techniques, I am proud of Samad Rubber Works they give me

chance to sit in there meetings, I am inspire of sitting with the professionals when

they were discussing business activities and even they also asked me to actively

participate in there discussion session.

9.4 Problem Encountered

I faced a lot of problems in my internship program. I find some difficulties in the

beginning of work. But employees help me a lot to understand all the procedures.

There was also sitting problem for any intern.

9.5 How Experience Impact my Career

This experience impacts my career in such way that I did practical job and I

took interest in learning Organizational setup. So from all above activities I

have increased of my self-knowledge and new knowledge confidence that will

help me to take initiatives when I will join any organization. I really learnt more

than my think in this short period. I took idea how a business can be managed.

And which minor points should be kept in mind while managing activities of

business. I feel Internship is necessary for practical Knowledge along with the

theory and hope this internship will change my professional career.

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10. Index

58

59

60

61

62

11. Bibliography

1. Dessler G. (2008) Human Resource Management 11th ed. FT prentice Hall Financial Times.

2. Horne V. and Bhaudri N. (2008) Fundamentals of Financial Management 12th ed. FT prentice Hall Financial Times

3. Kotler P. and Armstrong G. (2008) Principles of Marketing 12th ed. FT prentice Hall Financial Times

4. Robbins P. and Coutler, M. (2003) Management 9th ed. FT prentice Hall Financial Times.

5. Sosa A. and Dade M.. (2005) The Product Life Cycle, and Marketing Research 7th ed. , the McGraw-Hill Companies, Inc

6. Slack, N., Chambers, S. and Johnston, R. (2007) Operations management 11th ed. FT prentice Hall Financial Times.

7. www.samadrubber.com

8. Mr. Aamir Subhan (Finance Manager SRW)

9. Mr. Aftab Iqbal (Assistant Finance Manager SRW).

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12. Glossary

A ATL Above the Line, It includes Print media

B BTL Below the Line

C

Competitive advantage a company’s ability to perform in one or more ways that

competitors can not or will not match.

E E- Marketing company effort to inform buyers, communicate, promote and sell its

products over the internet.

F Fixed Costs that do not vary with production or sales revenue.

M

Marketing Process of planning and executing, pricing, promotion and distribution of

ideas, goods and services to create exchanges that satisfy individual and

organizational goals.

Mission Statement that organizations develop to share with managers, employees,

and (in many cases) customers.

Motivation induces the employees to perform their duties efficiently by giving them

different incentives or any other kind of benefits.

O

Organization a company’s structure and policies and corporate culture.

Overhead charges the company’s expense like mess charges, tea charges,

expense on foreign visits by the company’s employees as when designer visits

international trade shows etc

S SRW Samad Rubber Works

T Total Cost the sum of fixed and variable cost for any given level of production.

TQM (Total Quality Management)an organization wide approach to continuously

improving the quality of all the organization’s processes, products and services.