Project on Pel Final Print

8/7/2019 Project on Pel Final Print

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EXECUTIVE SUMMUARY

PEL and PEL appliances fall under the SAIGOL Group of Companies. PEL has long beenknown in as a company that produces quality products. PEL has created a brand loyalty

among its users and the company credits that to its high quality and vast product range.

PEL has been continuously adding new products to its range. As a result PEL has registered

a significant increase in its sales volume, during the last ten years.

One sector in Pakistan that has grown considerably in the past is the Home Appliances

Division. There is great competition in this sector and PEL has survived this competition

with great flair.PEL enjoys good reputation in the market for its home appliances.

PEL is in a growth phase in this sector. This sector carries a lot of potential and PEL can

capitalize on this fact.



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To excel in providing engineering goods and services through continuous improvement.

y To provide quality products and services to the complete satisfaction of ourcustomer and maximize return for all stakeholders through optimal use of

resources.

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

y To promote good governance, corporate values and a safe working environment

with a strong sense of social responsibility.



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PEL was established in 1956 with the technical collaboration of M/S AEG Germany and is

the oldest electrical equipment manufacturing unit in Pakistan.

In October 1978 the company was taken over by the SAIGOL Group, which is one of the

leading industrial and commercial groups of Pakistan. The products manufactured by PEL

have always been of a high standard and the name PEL is synonymous with quality all

over Pakistan. PEL, since its inception has been acting as an institution working for the

advancement and development of engineering and modern technology in Pakistan.

Since its inception, the company has been working for the advancement and development

of engineering know-how in Pakistan. The company has produced hundreds of engineers

and skilled workers and technicians through its apprenticeship schemes and training

programs.

PEL has been continuously adding new products to its range. As a result, PEL has registered

a significant increase in its sales volume, during the last ten years. In 1978, the SAIGOL

Group of Companies purchased the major shares of company. At that juncture the companywas only manufacturing transformers and switchgears. With the SAIGOL in the

management, PEL started expanding its product range by entering into Air Conditioner

manufacturing.

y In 1981, PEL window type air conditioners were introduced in technical

collaboration with General Corporation of Japan.

y In 1986-87, the company started manufacturing of refrigerators in technical

collaboration with M/S IAR-SILTAL of Italy.

y In 1987, PEL deep freezers were also introduced in technical collaboration with

M/S Ariston of Italy.

y

In 2006, the company has started manufacturing of split type of air conditioners of various capacities as the customer choice has shifted from window to split type. The

product has been well received in the market. This encourages the company to

multiply its production in the coming year.



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PEL is the pioneer manufacturer of electrical goods in Pakistan. The company is listed on all

the three stock exchanges of Pakistan. Its principal activity is manufacturing and sale of

electrical capital goods and domestic appliances. But now, PEL is operating a single

business entity without any division. There are following departments in the PEL:

PRODUCTION DEPARTMENT

Research Development

Quality control Department

Human resources Department Marketing and Finance Department



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The company comprises two divisions:

Appliances Division

Power Division

APPLIANCES DIVISION:PELs Appliances Division is the flag carrier of the SAIGOL GROUP

involved in home appliances manufacturing.

Air conditioners

RefrigeratorsDeep freezers

Microwave oven

Washing machines

Generators

POWER DIVISIONS:PEL Power Divisions manufactures energy meters,

Transformers

Switchgears

KiosksCompact stations

Shunt capacitor banks

Energy meters

Generators

All these electrical goods are manufactured under strict qualities control and in accordance

with international standards. PEL is one of the major electrical equipment suppliers to

Water and Power Development Authority (WAPDA) and Karachi Electrical Supply

Company (KESC) , which are the largest power utilities in Pakistan. Over the year, PEL

electrical equipment has had been used in numerous power projects of nation importancewithin Pakistan.

In spite of stiff competition emerging local and multinational brands, PEL Groups

appliances and electrical equipment have remained in the spotlight due to constant

innovation. Strategic partnership with multinationals of repute have enabled the PEL

Group to incorporate new technologies into existing product ranges, thus giving the

Pakistani market access to innovative, affordable and quality products.



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REFRIGERATORSPremier Series:

Door : Galaxy

Compressor : Danfoss

Warranty : 3 years compressor & 1 year parts & service

PC 20185 - 16Cft

Capacity 420 Lts. (Approx)

Price (Rs.) 34,800

PC 20175 - 15 Cft


Price (Rs.) 33,700



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PC 20165 - 14Cft


Price(Rs.) 32,100

PC 20145 - 13 Cft


Price (Rs.) 30,900

6 SERIES:

Door : Galaxy

Compressor : Danfoss

Warranty : 3 years compressor & 1 year parts & service



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PC 6400 - 12Cft


Price Delux (Rs.) 29,800

Price Smart Galaxy (Rs.) 29,100

Price Smart (Rs.) 28,500

PC 6300 - 11 Cft



Price Smart Galaxy (Rs.) 28,600

Price Smart (Rs.) 28,000

PC 6200 - 10 Cft



Price Smart Galaxy (Rs.) 27,600Price Smart (Rs.) 26,500

AIR-CONDITIONERS

SPLIT

PEL presents Cool life Split AC which is a technologically advanced model especially

designed for Pakistani market. This masterpiece from PEL provides maximum cooling even

at very high temperatures while minimizing electricity consumption.

COOL FEATURES:

y Free Installation Kit Compressor Warranty

y Auto restart functiony Environment friendly refrigerant R22

y Anti-rust outdoor unity Easy-cleaned panel

y Self diagnosis and auto-protection

y Two-direction air flow (SLR)y Independent dehumidification

y Trapeziform Inner groove tubey Hydrophilic aluminum fin



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SILVERLINE (QB):

Price 2 Ton Rs. 50,900

Price 1.5 Ton (H&C) Rs. 40,500

Price 1.5 Ton Rs. 37,600

Price 1 Ton (H&C) Rs. 32,300

Price 1 TonRs. 29,300

XPRESSION:

Price 2 SF Rs.50,400

Price 1.5 Ton Rs.37,000

Price 1 TonRs.28,800

IMAGE:

Price 2 Ton Rs.52,000



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Cook, Bake, Roast or Grillwith the all new PEL Microwave. With cutting edge technology and

advanced features..... cooking was never this easy!

Cool Features:

y Smart Intel-menu - Preset cooking menu'sy 360 degree cooking system - Cook-Bake-Roast-Grill

y Engrave features - Energy Savingsy 3 years Magnetron Warranty - Peace of Mind

PMO 9036 B8

PMO 9036 TGS:

CapacityPrice

36 Lts.(approx.)

Rs. 9,000

PMO 9036 TG:Capacity

Price

36 Ltrs.

(approx.)

Rs. 8,300

PMO 8021

PMO 8021 T:

CapacityPrice

21 Lts.

(approx.)Rs. 6,600

PMO 8021 M:Capacity

Price

21 Ltrs.(approx.)

Rs. 5,900



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MICROWAVE

PMO 8019 SD

CapacityPrice

20 Lts.(approx.)

Rs. 6,100

PMO 8019 SM

CapacityPrice

20 Ltrs.

(approx.)Rs. 5,300

WASHING MACHINES

MAGIC CLEAN PWM.7700-N:

The PEL Semi Automatic Luxury Wash - 7700-N equipped with Japanese technology has a

100% rust proof plastic bodywith a big multi pilaster. It can handle heavy loads and has a quick dry spin.

In addition, it supplements a drain switch that quickly drains out all the excess water. So treatyourself with the Luxury Wash - washes away heavy loads and dries them up quickly.



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Cool Features:

y One year parts & service warrantyy Japanese technology

y Super large multi pulsator y Quick dry spin

y Drain switch to drain all excess water y Semi automatic

y Ability to wash extremely heavy loadsy Low noise & easy operations

y 100% rust & shock proof unbreakable plastic body

Magic Clean PWM 7700 N

Capacity Twin Tub

Retail Price (Rs.) 9,350

MAGIC CLEAN - PWM512:

The PEL Econo Wash 512 is made from Japanese Technology with 100% rust and shock proof

unbreakable plastic body. It's a top load with a powerful motor that provides a brighter wash andhas a build in energy saver that gives you excellent energy efficiency. So save the energy with

this Econo Wash - consumes less electricity as it gives more output.

Cool Features:

y One year parts & service warranty

y Japanese technologyy Two Spin Efficiency Wash Cycles

y Energy Friendly AAA Ratingy Optimized Design

y Super Large 10Kg Capacityy Low Noise & Easy Operations

y 100% rust & shock proof y Unbreakable plastic body

Magic Clean PWM 512 Single Tub

Capacity 10 Kg

Retail Price (Rs.) 6,850



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WATER DISPENSER

SILVERLINE

Water dispensers are a welcome addition to PEL range of home appliances. Our Silver line and

Life-Stream water dispensers make life a little easier and fridge space a bit more plentiful. WhileCold water refreshes your mood in burning summer, Hot water on demand is great in the office

for packets of soup, instant coffee and tea.

Cool Features:

y Hot & cold water

y Refrigerator y Separate Freezer

y Compressor Coolingy Stainless Steel Water Tanks

y Super Quiet Designy Energy Saving

y CFC Freey 1 Year Warranty



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PLS 681 SL

Retail Price Rs. 11,900

LIFE STREAM

Water dispensers are a welcome addition to PEL range of home appliances. Our Silver line and

Life-Stream water dispensers make life a little easier and fridge space a bit more plentiful. WhileCold water refreshes your mood in burning summer, Hot water on demand is great in the office

for packets of soup, instant coffee and tea.

Cool Features:

y Hot & cold water

y Refrigerator y Separate Freezer

y Compressor Coolingy Stainless Steel Water Tanksy Super Quiet Design

y Energy Savingy CFC Free

y 1 Year Warranty



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PLS 801

Price (PLS 801 Silver) Rs. 10,600

Price (PLS 801 White) Rs. 10,100

PLS 326

Price (PLS 326)Rs.10,000

y Delux designy Safety device for low water

y High efficiency compressor coolingy Stainless steel water tanks

y Refrigerator capacitywith 15Ltrs.y Refrigerant R134a



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Sales during the 3rd quarter ended SEPTEMBER 30, 2010 period at Rs. 16.719 billion

registering an increase of 24% over corresponding-period and net profit also grew to Rs.

3.50 from 194 million showing an increase of 80%. Summary of financial result for 9

months ended on SEP 30. 2010 is as under:

2010 2009 RUPEES IN

THOUSANDS

INCREASE/DECREASE

Sales 16,719,612 13,445,049 3,274,563Gross Profit 3,149,584 2,655,096 494,488

Profit Before Tax 549,878 296,055 253,823

Profit After Tax 349,696 194,475 155,221

Earning Per Share-

Basic

2.87 1.34

K EY OPERATING AND FINANCIAL DATA:

This is the financial report of PEL from 2005 to 2009. In this report every type of

information given which is necessary to analyze the financial condition of PEL

(Rs. in Millions)

Financial Dec 09 2009 2008 2007 2006 2005

Sales Gross 5,203 16,118 13,927 13,078 11,042 8,078

Net Sales 4,631 14,622 12,652 11,813 9,408 6,790

Gross Profit 1,483 3,338 2,850 2,530 2,048 1,483

EBITDA 1,134 2,082 1,878 1,846 1,436 1,031

Financial Charges 620 1,373 973 937 742 452

Profit before Tax 222 394 635 707 517 418

Profit after Tax 161 261 457 582 442 322

EPS - Basic 1.28 2.17 4.14 5.50 6.30 6.07



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Share Capital - Ordinary 1,067 970 970 764 611 531

Share Capital - Preference 526 526 526 605 605 605

Share Holders' Equity 4,187 4,007 3,703 3,241 2,683 1,920

Long Term Loans 4,199 3,596 2,570 1,501 432 596

Current Liabilities 7,191 6,554 6,558 5,178 6,048 4,322

Non-current Assets 14,083 10,356 6,892 4,675 3,797 3,048

Current Assets 8,852 8,714 9,401 6,871 6,310 4,708

Total Assets 22,935 19,070 16,293 11,546 10,107 7,756

Dividend %

Cash Dividend - - - - - 10%

Stock Dividend 10% 10% 25% 25% 25% 15%

Production Data

Transformers - MVA 1,010 2,466 2,385 2,243 2,022 1,356

Switchgear - No¶s 564 4,046 4,685 3,347 3,832 2,660

Energy Meter - No¶s 225,657 443,307 525,155 912,997 1,266,521 986,085

Air Conditioners - Tons 21,545 28,581 81,631 61,161 41,499 -

Refrigerators/Deep freezers - Cfts 1,283,145 3,156,604 3,556,450 2,899,583 3,552,595 2,924,905

BALANCE SHEET: As at December 31, 2009

Note December

31, 2009 June 30, 2009

(Rupees in thousand)

EQUITY AND LIABILITIES

SHAR E CAPITAL & R ESERVES

Authorized capital 5 2,500,000 2,500,000

Issued, subscribed and paid up capital 6 1,593,720 1,496,677

Reserves 7 131,931 131,931

Un-appropriated profits 7 2,461,255 2,378,750

4,186,906 4,007,358

SURPLUS ON R EVALUATION OF PROPER TY, PLANT AND

EQUIPMENT 8 4,373,769 2,788,311



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NON CURR ENT LIABILITIES

Long-term financing - secured 9 4,079,149 3,493,417

Liabilities against assets subject to finance lease 10 119,368 103,367 Deferred taxation 11 2,883,631 2,013,543

Deferred income 12 101,108 110,207

7,183,256 5,720,534

CURR ENT LIABILITIES

Trade and other payables 13 1,284,080 1,506,702

Interest / mark-up accrued on loans and other payables 14 333,763 337,322

Short-term borrowings 15 4,706,890 3,946,515

Current portion of:

- long-term financing 9 783,597 677,349

- liabilities against assets subject to finance lease 10 82,959 85,944

7,191,289 6,553,832

CONTINGENCIES AND COMMITMENTS 16

22,935,220 19,070,035

Note December

31, 2009

June 30, 2009

ASSETS

NON-CURR ENT ASSETS

Property, plant and equipment 17 13,457,138 9,720,022

Intangible assets 18 511,134 583,512

13,968,272 10,303,534

Long term investments 19 22,906 21,771

Long-term deposits 20 92,152 80,179

CURR ENT ASSETS

Stores, spares and loose tools 21 90,721 76,854



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Stock-in-trade 22 3,826,744 3,258,607

Trade debts - unsecured 23 3,227,219 3,807,776

Advances 24 825,807 686,044

Trade deposits and short-term prepayments 25 193,963 180,262

Other receivables 14,952 12,671

Other financial assets 26 27,522 26,107

Sales tax refundable 27 154,374 131,593

Income tax refundable 367,325 291,579

Cash and bank balances 28 123,263 193,058

8,851,890 8,664,551

22,935,220 19,070,035



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The strengths, weaknesses, opportunities and threats of PEL are discussed below:

STRENGTHSPEL has the following strengths.

Brand Name

Strong Dealer Network

Quality Products

Best Sales Services

Market leader in WRAC

Number TWO in refrigerators in Pakistan

Strong Management Team

Distribution of Authority

Research and Development Department

Free Customer Services

BRAND NAME:PEL has created a strong brand image in the mind of the customers through

high quality and low prices. The customers of PEL always prefer its home appliances like

Window A.C, split A.C. and Refrigerators, during the time of purchase. PEL is a popular

company in Pakistan every one knows about the PEL products and its brand name. Thats

why PEL is a market leader when it comes to Window A.C.

STRONG DEALER NETWORK :

It is also the plus point for PEL that it has developed a strongdealer network in the market. The dealers always try to sell the products of PEL to the

customers because, the company for its products, gives them a high margin. The

management of PEL also provides more incentives to their dealers than there competitors.

Dealers are very conscious about the PEL products and always guide the customer in

buying the PEL products.



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QUALITY PRODUCTS:PEL is also in a strong position because it provides superior quality

products to customers. So it gives an edge to company over its competitors. Due to best

quality, guarantee of products of PEL is more than its competitors.

BEST SALES SERVICES:PEL provides the after sale service to customer which increases the

customer satisfaction. The biggest strength of services department is that it handles a

complaint within 24 hours in any part of the country that helps in increasing the customer

satisfaction level.

MARK ET LEADER IN WRAC (Window Room Air Conditioner):

It is also strength of PEL that it is amarket leader WRAC. Customer always gives preference to PEL in window A.C. market

because of low prices, high quality and durability.

NUMBER TWO IN REFRIGERATORS IN PAK ISTAN:After the Dawlance refrigerators, PEL has the

second position in the refrigerators market. PEL is gradually coming up in refrigerator

market and increasing its market share. Due to improved quality, innovative features and

good sales services PEL is becoming the first choice of customers.

STRONG MANAGEMENT TEAM:It is another plus point that PEL has a strong management. Its

employees are competent. efficient, skilled and knowledge. They always corporate the top

management in achieving of goals that are assigned to them. Employees are well aware

about the company objectives and are committed to the development of company.

DISTRIBUTION OF AUTHORITY:Top management of PEL delegates the power to the

subordinates for achieving the marketing objectives in a specified time period. So every

manager has an authority to take decisions to achieve the goals of company. In this way

they save the time and work quickly.

RESEARSCH AND DEVELPOMENT DEPARTMENT:PEL has a strong research and development

department that is continuously trying to develop new features for the product. R&D

department spends huge amount of money for the development of new products.



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LESS UTILIZATION OF CAPACITY:Due to lack of finance a company cannot utilize all its

resources on its full capacity. It increases the cost of products per unit that decreases the

profit margin of each consumer item. Sometimes, the company cannot allocate the

resources according to the requirements of the production department, which later on

becomes a problem for the complete utilization of resources.

OPPORTUNITIES

For PEL, there are more opportunities for expansion in business. Following are the

opportunities for PEL:

Exploration of market in Pakistan

Increase in product range

Export opportunity

Increase in production capacity

EXPLORATION OF MARK ET IN PAK ISTAN: PEL has the opportunity to explore the market in all

over Pakistan. Even through PEL has introduced its products in many cities of Pakistan but

there are so many places that are yet to be exploited.

INCREASE IN PRODUCT RANGE:PEL can increase its product range that will be more profitable

for the company. There are many needs to develop new consumer items like PEL washing

machines, vacuum cleaner and other items.

EXPORT OPPORTUNITY:PEL has also the opportunity to export there products in other

countries like U.A.E, Saudi Arabia, other Gulf and African countries.

INCREASE IN PRODUCTION LINE:Company can also increase its production line at maximum

level that will increase the efficiency of the employees and will reduce the total cost.



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THREATS

Following are the main threats for PEL;

Strong Competition

Chinas Product in the Market Price war

Slow Growth rate in Pakistan

Instability of Government

Tax Department

World Trade Organization

STRONG COMPETITION:There is very strong competition in the home appliances division.

Every company adopts different strategies for the selling of the products. It reduces the

profit margin of each company and increase the bargaining power of buyers who will

demand higher qualities of products at lower cost.

CIHINAs PRODUCT:Chinas products are another threat for Pakistani companies because these

products are cheaper than the Pakistani companies. China products stress the indigenous

companies to lower the quality and prices that will not be profitable in the long run.

PRICE WAR:As there is stiff competition in the home appliances market that will cause the price

war.

SLOW GROWTH RATE IN PAK ISTAN:There is also slow growth rate in home appliances in Pakistan

that will increase the stocks of companies. Although, this industry is in the growth phase,

but the speed of the growth is very slow.

INSTABILITY OF GOVERNMENT:The rapid changes in governments will become a threat for

companies because every government adopts new policies for industries. So it increases

the uncertainty for the investors who want to invest heavy amounts in their new projects.

TAX DEPARTMENT: Tax department is another major threat for company that will restrain the

business expansion. There is a most tax complicated procedure operating in the country

that creates hurdle in the production and smooth functioning of different companies in

Pakistan.



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WORLD TRADE ORGANIZATION:W.T.O. will give the permission in 2005 to each company of

home appliances to export their products after less duty or duty free products. That will

increase the pressures for the indigenous companies to reduce the prices and increase the

quality. It will increase the competition among the foreign companies and indigenous

companies.

Advertising is non personal communication paid for by a clearly identified sponsor

promoting ideas, organizations and products. The most familiar outlets for ads are the

broadcast and print media.

The company highly believed in advertising. The company is expanding a lot of money on

different advertising media which are:

Television

Hording

Neon Sign

Stickers

Banners

Point of Sale

Calendars

Wall Clocks

Brochures

Key Chain

Billboards

ORGANISING ADVERTISEMENT:A firm can manage its advertising program through

following ways:

By developing an internal advertising department

By using an outside agency

By using a combination of both



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ADVERTISING THROUGH PRINT MEDIA

PEL is conducting its advertising through internal advertising department. It is performed

by publishing ads in hot selling magazines.

ADVERTISING THROUGH ELECTRONIC MEDIA

PEL is conducting its advertising campaigns through advertisements several outside

agencies. PEL sister concern Red Communication is the main advertising agency used

for the purpose of making ads according to the changing trends of market and considering

ethical issues. Latest design of PEL is designed by this agency by focusing on a college girl

and its requirements from new technology and PEL is providing the appliances which is

fulfilling these requirements.



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ADVERTISING DURATION:

For Refrigerators and Air-Conditioners: from March to June

For Oven and Washing Machine: from November to March

SALES PROMOTION

Sales promotions sponsor-founded, demand-stimulation activity designed to supplement

advertising and facilitate personal selling.

PEL uses outdoor activities:

y Exhibitions

y Road Shows

y Promotion Schemes

First super brand of Pakistan in home appliances

PEL Awarded Health and Environmental National Excellence Award -2008

PEL wins best Environmental Reporting Award

PEL awarded 6th annual Environmental Award-2009

WINNER OF CUSTOMER

CHOICE AWARD



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First of all we should divide the task accordingly to the strategy among the group members.

There should not be a one man show in the completion of the project. All the group

members must be taken on board before taking any decision.

If we had a field visit of PEL Company, we would certainly have been able to compile even abetter project. A lot of outdated and non-concerning material is available on internet which

can distract the assignee from the relevant things so do analyze your data first.



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y Adopt a true decentralized organization setup which gives all employees to

take part in decision making.

y The company should have a strong marketing information system to make

proper forecasts.

y The company should announced two holidays (Saturday & Sunday) in aweek.

y Make sure proper functioning of HR department.

y More allocate budget to its marketing department.

y Shorten its cash conversions cycle.

y Should also focus on direct selling of its products to customers.

y Should constantly add technology in its products and systems.

y Should speed up its delivery process by establishing and expanding its stores

in areas of high demand.

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