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National Bank Of Pakistan

This dissertation is dedicated with Respect and Reverence, Love and Affection
To
Whose love and prays always accompanied me and guided me
Like a shining star whenever I was in darkness and enabled me to reach this stage
To
Whose Guidance, Patience, Devotion and Love enabled me to accomplish this task
To
Who supported me in every stage of life.
To
Who Supported me in every aspect and brought me in light whenever, I was in the deep darkness like a shining star.

With the help of ALMIGHTY ALLAH, who gave me the strength and courage to embark on this challenging venture that is to collect, arrange, interpret all the information and data on this intern-ship report. I am also grateful to many people who helped and supported me throughout this project. I also fee very fortunate in the sense that I had the full backing, backing and guidance of my teacher Sir G. M. Malik and the management of National Bank of Pakistan, Bosan Road Branch Multan.

I would like to take this opportunity to thank all the teachers of M.Sc. Accounting and Finance who have the throughout my stay at the Bahauddin-Zakaria University, in Commerce Department have been a a source of inspiration and guidance especially.

I am also grate full to Mr. Nasir Nawaz (Credit Officer) who guided me and helped me in every stage during this period.

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At the master level, the students, after the completion of their studies have to face a lot of difficulties and problems as they are entering a completely new phase of their lives that is the practical field in simple, due the vast difference between theoretical and practical work. To avoid such discrepancies the students of M.Sc. Accounting and Finance are given the opportunity to not only visit various business organizations but also to work there and gain first hand experience at the process and method in which these different organizations function.

The purpose of the practical training is to increase the know how of the students regarding the virtual jobs of different business organizations of the country. It is also included in the charter of Project Report that the students go through actual systems of the management which prevail in the various business organizations. It is also necessary to enhance their managerial capabilities include and comprehensive manner in respect of various managerial opportunities.

The preparation and submission of this Project Report to the Departmental Head is, therefore, essential for all the students of
M.Sc. Accounting and Finance. This Report on
National Bank of Pakistan covers more or less all the aspects regarding the structural organization, working system, overall growth of the company considering the fact that the report is meant to give an overview of the National Bank of Pakistan & its major operations and strategies.

Table of contents

Topics Page #

Introduction 5
Evolution of banking 6
Definition of banks 8
Types of banks 8
Introduction of Banking System 11
National bank of Pakistan 12
Banking history 13
History of NBP 17
Branch network 19
Mission statement 22
Corporate philosophy 23
Objectives 24
Organizational structure 26
Organization of NBP 27
Departments 30
Departments in NBP 31
Foreign exchange department 31
Import and export department 41
Credit and advances department 51
General banking 65
Account section 65
Remittance section 72
Locker service 75
Govt. receipt and payments 75
Clearing department 76
Computer section 76
Consumer & retailing 78

SWOT analysis 82

Suggestion and recommendation 86

INTRODUCTION

EVOLUTION OF BANKING:

It has not so far been decided as to how the word ’bank’ originated. Some authors opine that this word is derived from the word ‘bancues’ or ‘banque’ which mean a bench. The explanation of this origin is attributed to the fact that the Jews in Lombardy transacted the business of money exchange on benches in the market-place; And hewn the business failed, the ‘banco’ was destroyed by the people incidentally the word ‘bankrupt’ is said to have been evolved from this practice the opponents oh this opinion argue that if it was so, then how is it that the Italians money changer were never called ‘Banchiere’ in the middle ages?

Other authorities hold the opinion that the word ‘bank’ in derived from the German word ‘back’ which means ‘joint stock fund’ latter on when the Germans occupied major part of Italy the word ‘back’ was Italianized into ‘bank’.
It is therefore not possible to decide as to which of the opinions is correct, for no record is available to ascertain the validity of any of the opinions.

Modern Banking:

Banking in its modern form and structure stared in Britain when many of the Lombardy merchants came to England in the fourteenth century and settled in the parts of the city of the London now called Lombard Street.

The king Edward –III established the Office of Royal Exchanger for changing foreign money at a profit for the benefit of the Crown

In 1854 the joint Stock Companies Act opened an era of corporations; and the Limited Liability Act, 1855, restricted the liability of the share holder of the limited company.

DEFINITIONS OF BANK:

“Banks do business of money. Rather banks do business of lending and borrowing loans.”

“Banks are guardian distributor of cash money”.  

“Banker or a bank or a person or company carrying on the business receiving moneys and collecting drafts for customers subject to the obligation of honoring cheques drawn upon them from time to time by the customer to the extent of the amount available on their current accounts”.  

TYPES OF BANKS:

Primarily all banks gather temporarily idle money for the purpose of lending to other and investment gain in the form of return, profits and dividends etc. however, due to the verity of resources of money and the diversity in lending and investment operations, banks have been place in various categories, such as:

Commercial bank
Savings bank
Merchant banks
Mortgage banks
Consumer bank
Investment bank
Central bank

Commercial Bank:

The commercial banks received deposits from the general public, which are repayable on demand upon written orders of the depositors. As their most distinctive feature the commercial banks maintain the checking accounts for the constitutions.

The commercial banks are also distinguished for providing short-term finance to trade, commerce and industry to enable these sectors to expand their productive activities

Merchant Banks:

Merchant banks are those, which have been mainly financing the domestic and international trade. During the late 18th and early 19th centuries the trade between countries was financed by bill of exchange by well-reputed merchant’s houses for which they would charges a commission for their services.

Savings Banks:

The basic purpose of these banks is to inculcate the habit of saving in the people the savings banks deposits are not repayable upon only the written order of depositor but the depositor of his agent has to appear personally at the saving banks to make withdrawal and for this purpose he must present a pass book a certificate of deposit or some similar documents to prove his right to receive his payments. Post office savings banks and savings accounts at national saving organizations are well known national saving banks in Pakistan.

Mortgage Banks:

These banks mainly deal in loans for acquisition or construction of real estate against the securities of mortgage.

Consumer Banks :

These banks providing finance for purchasing consumption goods for the use of Brewers

Investment Banks:

These banks assists business houses and governmental bodies to raise money through the sale of stocks and bond for usually long term purposes these banks perform the usual functions of raising deposits of idle money from the public and finance the business houses other bodies.

Central Banks:

Central banks occupy the unique position in banking structure of a country because they have been interested with the responsibility of controlling the money supply, interest rate, and financial market of a country for the purpose of economic development.

INTRODUCTION ABOUT BANKING
SECTOR:

Banking is the business of providing financial services to consumers and businesses. The basic services a bank provides are checking accounts, which can be used like money to make payments and purchase goods and services; savings accounts and time deposits that can be used to save money for future use; loans that consumers and businesses can use to purchase goods and services; and basic cash management services such as check cashing and foreign currency exchange. Four types of banks specialize in offering these basic banking services: commercial banks, savings and loan associations, savings banks, and credit unions.

A broader definition of a bank is any financial institution that receives, collects, transfers, pays, exchanges, lends, invests, or safeguards money for its customers.

This broader definition includes many other financial institutions that are not usually thought of as banks but which nevertheless provide one or more of these broadly defined banking services. These institutions include finance companies, investment companies, investment banks, insurance companies, pension funds, security brokers and dealers, mortgage companies, and real estate investment trusts.

NATIONAL BANK OF
PAKISTAN

BANKING HISTORY IN PAKISTAN: 

At the time of partition the total number of Commercial Banks in Pakistan were 38 .Out of these Pakistan had 2 banks, India had 29 and there were 7 exchange banks. The total deposits of Pakistan banks stood at Rs. 880.0 millions where the advances were Rs 198.0 million. Before the partition of Sub Continent the entire banking business was almost controlled and managed by non-Muslims. The Muslims were deliberately kept cut of banking profession by the wealthy Hindu community. When Hindu capitalists became sure of the division of Sub Continent, they secretly began transferring their capital to the safe places in India.

The funds and the other valuables were transferred at an accelerated pace to India and there was a mass scale migration of non Muslims from West Pakistan to India which also caused the drain on the bank deposits. The Hindus in order to ruin the economy of the newly born State closed down most of the head offices and the branches of scheduled and non-scheduled banks in Pakistan. The number of scheduled bank’s branches was reduced from 619 to 213 in both the wings of the country after independence.

The non-scheduled banks also suffered a severe jolt and their number was reduced from 411 to 106 over the same period. West Pakistan from where there was greater exodus of non-Muslims to India suffered a great deal, as a number of branches fell down (from 487 to 69).
In the east Pakistan though the number of branches were not closed in such a great number as in west Pakistan, large portion of the deposits were with drawn from the banks and transferred to India by the non Muslims. The mass scale closure of branches and withdrawal of the deposits caused a dead lock in the banking business in Pakistan.

The government of Pakistan was quite aware of the serious banking situation caused by the withdrawal of deposits and wholesale migration of banking staffs to India. It took up the challenge and started reorganizing the crippled banking immediately after partition.
A moratorium of free months was also allowed to banks that had financial difficulty due to sudden withdrawal of deposits.

In addition to above, the following arrangements were made for facilitating:

Settlement of claims by the governments.

Each bank was to declare on to its offices both in India and Pakistan.

Clearing house for transfer of accounts:

Each bank was open at least one central office in Pakistan where it could consolidate work of all its branches and start paying out to depositors.

The government took some effective measures for providing banking training facilities to Muslims. There were some complaints that Hindu banks were not honoring the cheques of Pakistani national and were also refusing to give securities kept in their custody. The government issued an ordinance, which empowered it to investigate all such complaints, and if satisfied of their bonafide, the payments should be realized. In case the bank insisted on non-payments, the government should realize the assets of the banks, which were sufficient to discharge such liabilities.  

The government of Pakistan also allowed the removal of valuables kept in save deposits vaults and lockers by submitting an application and getting necessary approval from the custodian of evacuee property.

The government of Pakistan tried to provide all kinds of facilities with sincerity to the known Muslim bankers for restoring normal banking facilities in the country but the response was discouraging. An inter dominion agreement was reached between India and Pakistan in April 1949.

The main provisions of the agreement was as under:

The inter dominion agreement could not be fully imported. India delayed the transfer of Muslim deposits to Pakistan. The non-devaluations decision of Pakistan government further led to the suspension of remittance facilities through normal banking channels.
Due to panicky withdrawal of deposits; some banks went into liquidation and the payments could not be made to the depositors.

In order to regulate both of the banking on sound footings, the following measures were taken to develop the banking system in Pakistan.

The State Bank of Pakistan, which is the central bank of the country, was established in July 1948.
The National Bank of Pakistan was established on 1949,to serve as an agent to the SBP.

The Industrial Development Bank of Pakistan was set up on August 1, 1961 with a Paid up Capital of Rs; five crore. The Agricultural Development Bank of Pakistan (ADBP) was set up in 1961. it provides short , medium and long term loans to  the farmers. In Jan, 1974 the entire commercial banks were Nationalized. The weaker commercial banks were merged with the stronger once and in all Five major banking companies were formed. MCB and ABL have again been privatized.
Pakistan banking council was set up for coordinating the activities of the nationalized commercial banks. The banking council formulates the policies and guidelines for the banks.
Interest has been eliminated from the banking transaction from July 1, 1985. The banks are now accepting saving deposits on Profit and Loss Sharing bases. Modaraba and Leasing Companies are also operating in Pakistan.

The banks nationalized, due to weaknesses such as over staffing, deterioration in customer services, raising bad debts, loan on political bases etc, are being gradually denationalized. MCB was privatized in April 1991. The shares of ABL have also been sold to its 7500 workers. Permission to open ten banks in the private sector has also been given.
The permission to open an Investment bank has also been given. It will go a long way is providing capital for the industrial projects.  
The government of Pakistan has also liberalized the exchange and payment procedure. The Pakistani firms and companies can now maintain Foreign Currency accounts in Pakistan on the same bases
as known Pakistanis.  

National Bank Of Pakistan

Historical Background :

The normal procedure of establishing a banking company under the Companies Law was set aside and the Bank was established through the promulgation of an Ordinance due to the crisis situation that had developed with regard to financing of jute Trade. The Bank commenced its operations from November 20, 1949 at six important jute centers in the then east Pakistan and directed its resources in financing of jute crop. The Bank’s Karachi and Lahore offices were subsequently opened in December 1949.

State bank of Pakistan after its formation demanded from the Indian Reserve Bank the assets against the Indian currency retired from Pakistan territory. Government of India refused to hand over the assets worth about five hundred million rupees. The dispute is still unsettled and these assets are still not delivered to Pakistan. Until June 1950, the Bank was engaged exclusively on jute operation. Thereafter, it was felt that it could expand its business to include other commodities as well. Bank took a
big stride in 1952, when it replaced the Imperial Bank of India, as an agent of State Bank of Pakistan.

With the passage of time its functioning diversified as they take over the function of different institution with the passage of time like in past they took over the function of Imperial bank of India and now of NDFC (national development finance corporation).

It is working as the agent of the state bank of Pakistan and performs its functions wherever state bank of Pakistan is not present.
The government floated its 10 % of the shares in the open market in past and the ratio became 60: 40 and in future they trying to make it 55: 45.

In 2004 national bank celebrated its golden jubilee during the last fifty years bank has made substantial strides in the financial services industry in Pakistan.
In 2004 its market share was around 22% and it remains the largest financial institution in Pakistan.

Branch Network:

With the geographical development of its branches, the Bank has been able to extend its services to a much larger number of Pakistanis all over the country. Today it has more than 8.5 million accounts. Bank maintains its presence in all the major financial centers of the world through its 15 overseas branches and 5 representative offices. Of these, three representative offices have recently been set up at Tashkent (Uzbekistan), Baku (Azerbaijan) and Almaty (Kazakhstan) to take advantage of the emerging opportunities in CIS countries. Bank’s role globally is well assisted by its network of correspondent banks located strategically in Asia, America, Europe and Africa.

Apart from having a vast branch network, Bank is at the forefront in the acquisition and application of new technologies in every aspect of its banking facilities. It has acquired leased telephone lines for on-line banking. The Bank has 12 Regional Computer Centers to cover various on-line and batch system requirements of branches and controlling.

BRANCHES ALL OVER THE COUNTRY:

Ownership:

NBP is 100% owned by the Government of Pakistan (GOP).

Deposits:

NBP holds 24.6% share of time and demand deposits in the country. Local currency deposits comprise 67% of bank’s total deposits while foreign currency deposits account for the rest.

Assets:

NBP’s total assets stood at PKR350 billion on December 2001. This included total earning assets of about PKR268 billion with gross loan portfolio of PKR140 billion. The bank also has an investment portfolio of PKR91 billion, which comprises treasury securities, corporate bonds, shares and other securities.

Deposits:

As of December 2001 NBP had a paid-up capital of PKR1.46 billion divided into 146 million shares of 10 rupees each. Total shareholders’ equity was PKR10 billion, however, revaluation reserve has increased shareholders’ funds to PKR16 billion. NBP has, however, increased its paid up capital from PKR Rs. 1.46 billion to Rs. 3.73 billion through issuance of bonus shares (subject to corporate and shareholder approvals).

Mission statement of National Bank of Pakistan

“ To be recognized in the market place by Institutionalizing a merit & performance culture, Creating a powerful & distinctive brand identity, Achieving top-tier financial performance, and Adopting & living out our values ”.

Corporate Philosophy At National Bank:

We at NBP believe that our customers are our most important and 1st responsibility, we must, therefore, serve our present customers and promise to serve our potential customers to the best possible on-counter and behind-counter services. We should try to provide a total and integrate package of services to create satisfied clientele. Our braches, regional offices and head office should regard the customer as their most priority, serving them with maximum possible helpfulness and courtesy.

Our second most important responsibility is the employees who work for our great institution. They must have their security , stability and fair treatment in their jobs in recruitments and assignment, in training and development, in promotion and placement . till separation. They should be treated with dignity and should be made to rise to their highest potential working condition should be attended. Supervisor should be tough minded but fair in the pursuit of bank objectives.

Our third most important responsibility is our executives and officers. They should have talent, education, experience and ability with a premium, place on commitment, knowledge, leadership and orientation towards action, implementation, improvement and achievement of goals.

Our fourth responsibility is to the communities that r served by our great institution. Our 1st community is the Pakistani nation whose service is the reason for our existence.

Our 5th responsibly is to our owners and stockholders. We must make a sound profit and protect our business by creating financial services.

Objectives of National Bank:

Objectives are ends towards which an enterprise activity is aimed. The purpose of business is production and marketing of economic goods and services but to accomplish these objectives to a number of enterprise objectives may be necessary.

National bank of Pakistan has certain objectives.
These objectives are:

Advancing loans
Accept deposits
Remitting of funds
Sale of promissory notes
Selling and realizing property of bank claims
Investment or underwriting of stocks

Advancing loans:

one of the main objective of NBP is advancing loans to industrialists and traders against security of stock, debentures or other securities

Accept deposits:

Bank provides deposit facility to its customers. The types of deposits are:

Profit and loss saving accounts
Fixed account
Current account

Remitting of funds:

The bank provides the facility to its customers remitting large amounts of money in the form of bank Drafts, Telegraphic Transfer, Mail Transfer to where ever the customers want.

Sale of Promissory Notes:

To sell and realize the proceeds of sale of any promissory notes, debentures, stock receipts, bounds, shares etc.

Selling and realizing property of bank claims:

To manage sell and realize all property whether moveable or immoveable which may come in any way of the bank in satisfaction of its claim.

Investment or underwriting of stocks:

To invest the funds of the bank in or the underwriting of any of stocks, funds, shares securities, debentures, bonds or scripts or other securities for money issued by any public limited companies and to convert them into money when required.

ORGANIZATIONAL STRUCTURE

ORGANOGRAM OF NATIONAL BANK OF PKAISTAN

DEPARTMENTS

Departments in National Bank Bosan Road Branch:

Following departments are working in NBP main branch:

Foreign Exchange
Import and Export
Credit and Advances
Remittances and Deposits
Accounts
Computer
Government
Consumer retailing

FOREIGN EXCHANGE DEPARTMENT:

Foreign exchange is an important department in bank system. In the foreign exchange department all the operations of the bank are done in the same way as in all other departments of the bank this department also involve in deposits, remittances and advances but the difference with other department that the foreign exchange department deals in foreign currency rather then in local currency. For opening of account in foreign exchange the minimum balance required is $100.This department is just like Cash Department in local currency. In this department, the dealing is made in foreign currency.

In National Bank of Pakistan, four currency accounts are available:

US Dollar
Pound Sterling
Japanese Yen
Euro

FUNCTIONS:

The department performs the following functions:

Account opening
Account closing
Inward/outward remittance
Issuance of traveler cheques

ACCOUNT OPENING:

Terms and conditions:

Account opening requires two things:

1) National ID card of the customer and introducer
2) Introducer

CUSTOMER:

Customer is the person who comes with the purpose of opening the account.
INTRODUCER:

Introducer is a person having the account in same branch and gives guarantee about the customer. If the introducer is not proper than state bank charges RS 5000/- per head from that employee of the bank who has opened the account of the customer on the request of the introducer.

Procedure of Account Opening and Depositing Foreign Exchange:

First of all, the customer is required to fill an application form. Then he attaches the photocopy of his identity card and fills the signatory cards. Then he is allotted an account number by entering in the account opening register. Now he fills the pay-in slip and deposits money on the counter.

Following things are needed for opening of account:

Account opening form
Signature card
Letter of kinship
Letter of thanks
Issuances of cheque book

Account opening form:

Account opening form consist of:

Category of account
Currency
Title of account
Account number
Customer information
Initial deposit
Authorized person in case of customer death

Signature Card:

The signature card included the name and specimen signature of the customer.

Letter of kinship:

In the latter of kinship the customer authorized the bank to pay the proceedings of his/her PLS/Current foreign currency account to the related person by describing the relationship of the person with the customer after the death of the customer.

Letter of Thanks:

Letter of thanks is the latter issued by the bank to the customer for two purposes :

1st purpose is to say thanks to the customer for opening the account in their bank
2nd purpose is to confirm the address provided by the customer while opening the account.

Issuance of cheque Book:

Cheque book is issued to the customer after sending the letter of thanks when the customer comes with the latter of thanks and requests for the issuance of the cheque book. A cheque book (usually having 25 leaves) is issued to the customer.

Closing of Account:

The customer can close the account. The customer is required to submit an application for closing the account. The account is closed out and his balance is paid to him after deducting the closing charges, i.e. $ 20 and the application is filed in account closing file.

There are many reasons for closing of account:

Account holder Owen request
Death of account holder
Closing of account due to the bad manners of account holder

Inward/Outward Remittances:

The remittances are of following types:

Foreign Telegraphic Transfer (FTT)
Foreign Demand Draft (FDD)
Foreign mail transfer(FMT)
SWIFT
Western union money transfer(WUMT)
Foreign Exchange Bearer Certificates (FEBC)
Special US Dollar Bond

Foreign Telegraphic Transfer:

This is telegraphic transfer just like ordinary local currency TT, but this is foreign currency. Its charges are fixed, i.e., if payment is in cash, charges are Rs. 1500. If payment is through account, Rs. 1200; if deposit is above Rs. 50,000 charges are Rs. 600.
NBP has its correspondent bank in New York . NBP gives credit to main office Karachi, which gives credit to NPB New York, which gives credit to NPB, which ultimately gives credit to required destined bank and account number.

Mode of payment can be cash or by debiting the account. When FTT is received from abroad, NBP debits Main Office Karachi account and gives credit to the account of beneficiary.

Foreign Demand Draft:

Foreign Demand draft is also known as FDD. A person who wishes to remit money to someone in another place may if he does not send his own cheque, obtain from his bank a draft on demand payable to the person who is to be paid the money. It may be drawn upon one of the banker’s own branches, or upon some other bank where exists for draft to be drawn. Whenever a draft is drawn own advice is dispatches the same day. Advising the bank or branch as the case may be, of the particular of the draft of that banker on whom it is drawn may recognize the draft was it is presented.

When a person requires a draft, he should be asked to complete the prescribed application form in which he should state the amount of the draft, the name of the payee and the place of payment. The bank charges commission Rs. 500 flat, excise duty Rs. 4. for charges.

After receipt of money, the entry is passed in FDD register and a number is allotted to FDD. Then FDD is prepared and given to the customer. After this, they give credit to Main Office Karachi, and advice is also sent to Karachi.

Foreign Mail Transfer:

These are also known as FMT. Transfer by mail of an account of currency to another country. The Remitter sign auroras requesting the banker to transfer the amount by mail, giving the name and address of the payee.  
Foreign Bills for Collection:

Under this head, all foreign cheques are included whose payments are to be received from abroad.

When a customer asks the bank for collection, the cheque is sent to the bank on which is drawn. Then on the receipt of advice from abroad, the customer’s account is credited in the bank and debit the Main Office Karachi account. The bank charges $10 or the equivalent amount in rupees.

Foreign Exchange Bearer Certificates (FEBC):

Foreign Exchange Bearer Certificates can only be issued from Foreign Currency Account and not from deposit of local currency. The maturity period of these certificates are 5 years, 7 years and 9 years. It can be issued and enchased only in rupees. The customer account is debited and state bank of Pakistan (SBP) is credited.

Special US Dollar Bond:

The bonds have the maturity period of 3 years, 5 years and 7 years. The bank gives the interest at the rate of 5% + LIBOR, i.e. 2%, 3% and 4% respectively.

Traveler Cheques:

Issuance of Traveler Cheques:

NBP issues the traveler cheques to those people who want to travel abroad. These are not drawn on any specified bank or banks, but payable at practically all banks throughout the world and guaranteed by some well-known institution. National bank purchases the traveler cheques from American Express Bank and makes the payment after selling it to the client.

Procedure:

A customer is required to submit the following things:

Valid passport with visa
Return ticket

Currency to be deposited in Pak Rupees. Ticket is endorsed. It is converted on the selling rate of that day. Traveler cheques are issued. Their limit is $50 per day for private visit and maximum limit for the year is $2100.

Limit for businessman is $200 per day and maximum limit is $6000. But approval from Chamber of Commerce & Industry is required and certificate of ticket issue for which the payment must be made through cheque. Pak rupee currency account is necessary, and he has to present cheque for the amount to the bank. Endorsement of the ticket is very essential. Issuing ticket authority should endorse its stamp on the passport.

SWIFT:
The SWIFT system (Society for Worldwide Inter bank Financial Telecommunication) has been introduced for speedy services in the area of home remittances. 
The system has built-in features of computerized test keys, which eliminates the manual application of tests that often cause delay in the payment of home remittances.  The SWIFT Center is operational at National Bank of Pakistan with a universal access number NBP-APKKA. 
All NBP overseas branches and overseas correspondents (over 450) are drawing remittances through SWIFT.  In case of transfer of funds the introduction of S.W.I.F.T., an acronym for Society for Worldwide Inter-bank Financial Transactions, has made remittances faster and secure. The system works like Internet communication processes. All the banks in the world are registered for the service, which have the facility of online computers. Headquarter of S.W.I.F.T. is in Belgium. The message sent through this way does not require any code tests to confirm its authenticity.
The sending process is more secure where two officers make the transmission of the message, one types the content with his code word and the other executes it with his password. There are different types of codes that are used for the messages interchanged on the basis of the type of the transaction.Using the NBP network of branches, you can safely and speedily transfer money for our business and personal needs.

Swift is a soft wear. It is use for following purposes:

Financial transactions
Non-financial transactions
Linking
Import export

Different codes are used in swift for different purposes:

Letter of credit code is 700
Remittance code is 100
Bank to bank transaction code is 202.etc.

Procedure:

When any massage comes through swift 1st its received by head office then head office authority send that massages to different banks via mail to main branches of relative banks.

Western Union Money Transfer:

Western union money transfer is a fastest way to receive money worldwide. It is working in almost 200 countries. Different Govt and private organization are dealing with WUMT

Govt. organization e.g banks
Private organizations e.g Zarco, Money changer, Dollar East, Master Currency

Main office of WUMT is situated in Dubai, it is a procedure of counter payment
Time required in only one hour and deduction on it is $50.

Procedure of payment:

WUMT just needed identification, no need of a/c, its an counter payment
Procedure of payment is that the customer came to specific person who is dealing with WUMT tell him the:

1) MTC NO

2) Receiver name

First name
Middle name
Last name

3) Sender name

First name
Middle name
Last name

4) Telephone no

5) Photo copy of ID card

6) Expected amount (10% margin is acceptable)

7) Test question

After if the that related officer feed MTC # (mail transfer control) , it is unique number not less then 10 digits, receiver name , his/her 1st name and last name, and sender name to check whether amount is come or not . When all these things are correct then give a form to the receiver, he/she filled the specific form, after that office done his signature and give one copy to customer, other copy send to the cash counter for payment and the last copy for put in file for the purpose of record. Payment is made only in Pak rupees.

WUMT form:

It form is divided into three sections:

1st for receiver information, his name, address and telephone number
2nd section for sender, his name, address telephone number
3rd section is for expected amount, MTC number, test question, signature.

There are three copies of form:
1st for counter payment,
2nd for customer and
3rd for branch record.

IMPORT AND EXPORT DEPARTMENAT

Export Section:

A term used for goods and articles commodities sent from the country to another. Exports in Pakistan are done by the following four modes. These modes are : 
ADVANCE PAYMENT
DOCUMENT AGAINST ACCEPTANCE (D/A)
COLLECTION
UNDER L.C.

ADVANCE PAYMENT:

In this type of export the importer is making the payment in advance. This shows the height of confidence between importers after the shipment is completed then the bank sends and E-form to SBP stating the export being made.

DOCUMENT AGAINST ACCEPTANCE (D/A):

Consignment is given to the auction house with out any order. A trust receipt is being made issued. Amount is given to the exporter when the goods are being sold or if the auction houses are not able to give the exporter the required money then gave to return the goods in full to the exporter. This payment is made after a specific period of time on which both the parties had agreed i.e. 30, 60, 90, 120, 180, days. If neither the payment is made nor the goods are returned the importer (auction house) are treated as criminal under section 420 of criminal act in Pakistan.  

COLLECTION:

Under this type of exports, bank has no liability, buyer and seller sets the rules for this type of export. Only documents are rooted through the bank and also payment is received through the bank. It is done with the prior arrangement between the buyer and seller firm order. Payment is made by the draft, when the bank received the documents through other bank the payment is made.
The exporter produces the following documents with the bank at the time of export.  
Export license
Covering schedule
Covering letter (document are received)
Airway bill or bill of lading
Invoice
Packing list
Certificate of chamber of commerce
Insurance of goods
E form

 In this type of export payment can be made in parts.  
UNDER L.C:

Bank receives an L.C from the importer for exporter of goods. These export LC used in Pakistan are following two types.  

SIGHT L.CS
USANCE OR D/A LCS

SIGHT L.CS: 

The LC in which payment is made at sight basis after documents are delivered.

USANCE OR DA L.CS:

In this class of LC the exporter with that listed in the l.c makes the payment after a specific period of time bank checks all the documents provided. if no error then payment is being made else vice verse. The payment in this type of export is made in full else specified, partly payment may be made when both the parties agrees. After receiving the LC and checking all the documents the officer is issuing an approval sheet. The bank provides the bill of exchange.

Exporters provide the following documents to the bank:  
Bill of lading or air way bill
Invoice
Packing list
Certificate of chamber of commerce
Insurance
E form
The bank informs SBP about current export uses the E form. It is issued in quadruplicate. The custom authorities retain first spy of E-form and returned SBP, .2nd copy is for SBP 3rd for exporter and 4th for the banks record. When full payment is being made the SBP’s copy is returned to SBP. After receiving their copy SBP compares the two forms.  
FORM E:

It describes the detail of the goods to be exported, the importer’s particulars, the amount of foreign currency payment and the details of the importer as well .

TERMS OF SALE:

CIF (cost, insurance and freight)
FOB (freight on board)
CFR (cost and freight)

DOCUMENT OF EXPORT:
Following documents are required for export:

Financial documents
Shipping documents
Miscellaneous documents
Commercial document
Original Invoices of the transaction for sale.
Bills of Exchange drawn on the importer by the exporter
Bills of Lading from the shipping company along with the details
Insurance documents
Along with these documents the Bank certifies that:

Exporter is known to the Bank and is a bona fide businessman and customer in Pakistan. He has made arrangements with realization of the export proceeds, which .Must be made within 120 days from the date of the shipment of the goods.

The Bank shall receive export proceeds against shipment on firm contract within the prescribed period by the State Bank. Failure to make the receipts, the Bank shall inform the State Bank the circumstances and reasons shall comply with it; In case of non-realization of export proceed within the prescribed period Bank obtain from the exporter the circumstances and the reasons.

Banks certifies those firms for which:

Arrangements have been made for realizations of export proceeds
Bonafide of importer/consignee abroad and credentials have been checked and verified. Arrangements have been made for the receipt of export proceeds
Genuineness of the charter party where shipment is to be made against charter party bill of lading has verified.

After submission of all the related documents to the negotiating Bank, seller is bound to receive payment. The Bank on its part is also bound to make payment however it is only reasonable to allow the banks sufficient time to scrutinize the documents that exporter has submitted.

After these documents have been verified and found correct the bank makes the payment to the exporter, in addition confirming it from the issuing bank. All the documents of the export transaction are received by the exporter and then submitted to are sent to the foreign bank for authentication. When the confirmation is received then a security sheet is prepared to check the amount of the LC as well as the amount of Bill of Exchange.

The advising bank certifies form-E after checking the invoice, LC and the contract attached with the Form-E. After certification from the banks the exporter then goes to the custom authorities and makes the shipment to the importer.

IMPORT SECTION:

Letter of Credit:

A letter of credit is defined as under :

“Undertaking by the importer’s bank to exporter that the draw in accordance with terms and conditions of the credit, will be honored if presented with in the validity of the credit.”

It is a conditional undertaking by the Bank to make payment to the exporter if he fulfills the terms of credit by presenting the required documents to the bank in his country. In fact LC is a legal document on behalf on which the payment made by the importer’s bank to the exporter’s bank.

National Bank of Pakistan is providing this service to its customers who have an account with the branch and other businessmen too. This facility has been recognized as a modern banking activity of all commercial banks that are included in the list of 6000 Banks internationally.

Information in LC document:

The name of the local company, which is importing the goods
The name of foreign company, which is exporting the goods
The details of the goods to be transacted including the amount, quality, mode of packing etc.
The total amount of the LC
The number of days for which the LC is valid
The name of the banks, who are regulating all these dealings
The name of the carrier which will be used for the shipment of the goods to the importer
The bill of shipment number

Parties involved in a letter of credit:

There are normally six parties involved in a letter of credit:

Buyer (known as the importer or consignee)
Buyer’s Bank (known as opening, or paying bank)
Seller (known as the exporter, or beneficiary)
Seller’s bank (known as advising, confirming, negotiating bank)
Carrier (known as the shipping company)
Insurance Company

Types of LC:

There are two types of LC:

1-Irrevocable LC:

An irrevocable LC is one that is a definite undertaking by the issuing Bank that it cannot be cancelled or amended without the consent of all the parties to the credit. The exporter feels himself safe and assured that his payment will be met in time without delay.

2-Revocable LC:

This type of credit is one that can be cancelled at any time by the issuing bank giving any reason to the negotiating bank, meaning that the importer’s bank shall not honor any cheques/drafts presented for payment. The importers do not so commonly use this type of LC, as most of the time there are instructions by the exporters to open and irrevocable LCs in their favor.

Opening of LC:

For opening of LC the following documents are required by the bank:
Application or bond
Order or invoice or indent
Insurance (mist according to Pakistan rules)
Liability endorsement of customer
Irrevocable documentary credit (LC)
Serenity form
An L.C is issued after opening of the letter of credit it is sent to the negotiating bank.  
LC Opening Charges:
LC OPENING CH
When an LC is opened, the bank collects certain charges from importer these are:

Commission
Postage charges
Telex charges
Bills Under LC:
After receiving the L.C. the negotiation bank checks the documents, which are provided by the exporter with that are described in the L.C. if there is not discrepancy in that documents then the negotiating bank gives the payment to the exporter otherwise vice verse.  
The negotiating bank sends the document provided by the exporter to the LC issuing bank with their covering letter known as bills under L.C. The negotiating bank sends these documents by two mails so that if one mail is not received then the set from second mail can be used for further transactions.

The negotiating bank sends following documents to the advising bank:  

Covering letter to advising bank 1 copy
Bill of exchange 2 copies
Invoices 8 copies
Bill of lading or air way bill 3 copies
Packing list 3 copies
Shipping advice to insurance company 1 copy
Shipping certificate from vessel 1 copy
The advising bank chicks all the documents which they received from the negotiating bank finds any information which is not given in the L.C in this bill if the bank finds no thing then transaction is made and if there is any discrepancy then the advising bank may claim the return of amount from the negotiating bank.  
Remittances Under LC:
The advising bank gives the authority to the negotiating bank to get money from their account from of their branches. If the bank has no account with the negotiating bank or the currency of the amount in the LC is different from that of the official country currency. Then the advising bank issues a debit authority letter to the negotiating bank to get the money from that bank and authorize the bank make payment to the negotiating bank.  
Reporting To The SBP:
After an import transaction is completed then the officer uses an I form to report to the SBP for that import. This I form is issued in quadruplicate. One of its copies is sent to the SBP. Other copies are for bill of entry 2 national bank of Pakistan copies. This form contains the information about the import against an L.C i.e. description of goods their quantity amount of LC shipment date port of shipment vessel and etc.  

Requirement For Imports:

Annexure – A (request for opening LC)
Invoice Performa ( by beneficiary)
Limit sanction certificate.
Valid import license (not necessary)
NID Card of the importer.
Insurance Certificate
Bill of Exchange
Bill of Lading
Vouchers Made By NBP:
Liability voucher
Commission voucher

CREDIT AND ADVACNECS DEPARTMENT

Credit:
It may be defined as:
“ The sale of goods and services and money claims in the present in exchange for a promise to pay in future. “
The most important activity of the bank is the granting of credit to the customers. NBP provides short term long terms financing for domestic and international trade. The policies made by central office of the cash can be amended on the basis of the rules and regulation, economic risk of each country board of directors and committee of the NBP made this type of decisions and informed about these decisions to the branch managers.
Manager can grant the credit limit to each customer with in the declared limits approved by the controlling offices i.e., co, GHQ, circle and zonal. Banks grant credit to the customer for a certain period of time. The banks provided credit to the customers so that they can purchase ahead of their liability. By giving these facility to the customer’s large scale production of commodity can be achieved and economic growth rate can be increased. The power to sanctioned loans had been delegated for controlling different offices, according to amount of loan.  This department is also called as risk management group.
The following elements are used for credit selection:
Character:
It is based on the borrower willingness to repay the obligation. The loan officer sees the family background mode of living, business nature, habits, moral reputation and etc. before giving the loan.  
Capacity:
The ability of borrower to repay the loan when due. The borrower ability to repay the loan is assessed by the office so that he will be able to repay the loan in future.

Functions Capital:
The officer assesses the capital of the borrower. If assets held by the borrower are liquid, they can be easily convertible in cash; but if non liquid is used then it is risky to given loan.  
Collateral:
It is collateral security. It may consists of stocks bonds , bill of exchange, bills of lading, etc. the bank has protect him self from any discrepancy in the future. They increase the ability of the borrower to obtain the funds from the bank.  
Condition:
The economic condition of the borrower is determined. The economic conditions of the borrower in and out side the country effects the repayment of loan. If condition is favorable then loan is given otherwise vice versa.  
Advances:
Advances provided by the bank are of the following two types.
Funded
Non-funded
Funded:
In fund based bank contributes a large amount of the fund based on clarified as follows
TYPES OF ADVANCES:

Demand Finance:
One time disbursement of the whole amount sanctioned, as the limit for the credit allows. Any person, individual, group, company, firm and all others can achieve this mode of financing. The mark-up or interest is calculated on the total amount disbursed and requires to be paid before the date of final adjustment. Regarding the amount, limit and period, it depends on the nature of the case in review.

Cash Finance:

In this mode of financing the borrower is allowed to make withdrawals of funds as he requires, but the total amount outstanding cannot exceed the limit sanctioned. The mark-up/interest is calculated on the amount outstanding on his account. The calculation of mark-up/interest is based on the number of days a specific amount is withdrawn. This finance if normally borrowed by small traders or individuals for their petty matters involving cash transactions up to rupees three hundred thousand maximum.

Running Finance:

To assist a large-scale business operator to carry on his day to day requirements of liquid funds, this account is opened is made operation in his favor. Running finance is provided where the amount goes beyond rupees three hundred thousand. The mark-up/interest is calculated the same way as in case of cash finance.
Security against running finance is that which is easily convertible in to cash and bank kept 25% margins with it.
Non-Fund:
Bank provide non fund advance in the following form:  
Guarantee
Imports
Guarantee:
A guarantee is a promise between one person to another person or party to answerable for the debt of a third party. Bank issues guarantee after 100%cash collaterals are provided by the person i.e.50% in the form of the property.  

Imports:
Bank provides non-funded credit facility to the following basis.  
Sight LC
Usance or DA LC.
Sight LC:
In this type of L.C when payment is made documents are released. A cash margin of 30% is relational by the bank.  
Usance or DA L.C:
The bank retains the payment after a period of days, which is given in the L.C a margin of 30%.  

TYPES OF LOANS:
The credit department of NBP has providing the following types of loans
Short term loans
Long term loans
Working capital loan
Syndicate (project) loan
Monitoring
Documentation in short term financing
Demand promissory note
Mark up agreement
Letter of guarantee in personal capacity
Letter of authority
Letter of pledge
Memorandum of deposit of title deal

Status Reports:
A credit report is an assessment of borrower’s character and capacity from a banker’s point of view. Credit reports on borrowers called Status Reports, financial reports, banker’s opinion or confidential reports. All these terms carry more or less the same meanings. The study of a borrower is a study of his character, capacity and capital, and collateral often known as the 4Cs to consider his credit worthiness and eligibility for the bank advance.

The purpose of compilation of credit report of the borrower is to assess their net worth. It must contain information about borrower’s means, character, integrity, assets, liabilities, business and experience. Besides, borrowers own investment, details of properties, must be obtained. The borrower may be asked to give written clarification of their existing liabilities.

In the case of Limited Companies, their borrowing powers to be verified from their Memorandum & Articles of Association. Their certification of incorporation to be examined, exiting borrowings, prior charge on their fixed assets, paid-up capital, reserves, profit and loss position, detailed particulars of their directors and complete analysis of balance sheet must be incorporated in the credit report. Independent inquiries about the borrowers and opinions form their previous bankers must be made. As such a comprehensive credit report is compiled which serves as a constant guide to the banker about his borrower.

This report is prepared by the bank of the intending borrower with a view to considering his Credit Worthiness and Eligibility for the Bank Finance. Besides other things it contains the net worth of the borrower.

Net worth of Borrower:
Individuals:
Net of the individual’s worth is the total investment or equity of the sponsors/borrowers in the company through which they are asking for credit and in the other sister concerns.
Firms:
Total investment in Business + Properties – liabilities
Companies
Paid-up-capital + Reserves + Profits (Losses)

The Investigation process:

Knowing the market place
Risks inherent in lending
Management risk
Market risk
Earnings fluctuations risk
Default risk
Marketability risk
Criteria checked for loans:
Major areas requiring focused attention of the analyst are:

1.Financial Condition:
Which is reflected in the trends of:
Net sales
Gross sales
Operating profits
Net profits (at least for the last 3 years)

2.Structural Liquidity:
It refers to the extent of liquidity usually available in the business, or which is the routine requirement of the borrower based on the nature of his periodically maturing liabilities.

3.Industry/Business Of Operation:
The banker has to check that in which industry or segment of market the loan is being given this is important because if there were a recession in that industry for decades then it would not be feasible to invest in such a business.
Certain traditionally stable industries are in Pakistan in which NBP feels satisfied while investing.
For example in they feel satisfied by investing in ICI.

4.Debt Equity Management:
Excessive reliance on debt, rather than plough back of profits or injection of fresh equity, to maintain a healthy combination of debt and equity is thought with danger because ultimately the debt servicing requirements place a heavy burden on its liquidity thereby its survival.

5.Asesst Management:
Asset management involves the analysis of how productively the assets of the company are being used. Sales and profitability can be measured with this.

6.Borrower’s Credit Worthiness:
In order to get a complete picture of the borrower’s credit worthiness, inquiries will have to be made about:

His business.
Trade experience.
Assets and liabilities.
His account with bank or with other banks.
His financial statements and income tax returns.
An interview with him will be necessary to elucidate or supplement the information that may have been collected.
7.Management:
Before giving loan NBP also checks whether the management have the depth, skill and experience. If the management is aggressive and adoptive to the new changes then it is most likely that the banker may receive the loan back on due date

8.Securities:
In case the borrower is not in a position to meet his obligations, there must be something else to call back upon. So bankers take securities to have a resource to them to guard liquidity, that is, security is an insurance against calamities.
In case of cash finance the customer have to give the same amount of money to the NBP as a security for which it takes loan.

Condition for security:
The security must be liquid or radically convertible to cash with more then adequate margin of safety fully under the banks control, having high value, which can with stand volatile market condition.
Secured by acceptable immovable tangible collateral with necessary margin and fair degree of marketability under the forced sale situation (should have buyer).

The types of securities may vary from a piece of land or building to commercial papers or ornaments. Further, security has its own importance, not only as constituting the ultimate source of recovery in the event of failure of the borrower or his enterprise, but as providing a measure to the borrowers own stake in the enterprise and also placing the limitation on his future borrowings.

However, though security serves as a cushion to fall bank upon in case of need, but its adequacy alone should not form the sole consideration for judging the suitability of the loan. So the choice of security is not made in isolation, but keeping into consideration the customer and security offered together.
Guarantees:
A grantee is defined as
“An undertaking by a person to responsible for the debt of another person.”
National bank of Pakistan issues guarantees to government agencies like atomic energy, high way department, and customs arthritis. Sui northern gas and others. It also issues guarantee to multinational organization like Siba gigay, Sandoz, PBS, and etc. for the purchase of pesticide or insecticide from any fertilizer company.  
Bank accepts only long other bank guarantee but in some cases personnel guarantee is also accepted. The guarantee issued is treated as contingent liability. According to local rules and regulation the policy for issuance of guarantee can be changed. The expiry of the guarantee can be set by both bank  and guarantor. The minimum period is one year and the guarantee can be reissue for extra period with paying charges.
The two officers whose signatures appears in the specimen signature book of bank and also counter sign by the zonal chief must sign each guarantee. Both officers must also sign any amendment. Am amendment in the guarantee can be made after giving written application to issuing branch. If the value of the guarantee is reduced by the amendment the liability amount will be reduced and if will value is increased additional liability entries will be passed.
The bank provides following types of guarantees to the customers.
Bid bond
Mobilization bond
Performance bond
Bid bond:
The facility provided at the time of bed opening is called bid bond.  
Mobilization bond:
When the bid is accepted, the bank provides this type of facility to the customer.  
Performance bond:
When the project is completed, the contractor about the performance of the project provides a performance certificate for one year. During one year, if there is any mishap in the project the repair otherwise authorities claim the performance charges from the bank.
Bank charges commission on issuance of guarantee as per their schedule of charges. If the party did not pay the amount in the stipulated time period, bank puts this case for recovery. If some amount is recovering then it is good otherwise bank deduct the amount from its profit and starts the legal procedure against the property pledged by the customer to bank.  
Bank assesses the demand of the customer and then writes letters to other banks to provide them confidential report of credibility about the customer this is one provided in the shape of CIB (credit information bureau) report provided by the SBP. In this report the credits of the customers with the bank operating in Pakistan are given. After checking this report the bank issues the guarantee to the customer. In case of death of his heir as given in the will be responsible for that guarantee.  

 Security:
It is an interest or right in the property gives to the creditor to convert it in cash in case of debtor fails to meet the principal and interest.
The bank provides the following securities to the customers.
Mortgage: 
Transfer of interest in movable property for securing the payment of money lend on existing or future liability. The bank provides the following two types of mortgage.  
Registered mortgage
Equitable mortgage
Registered Mortgage :

Registered mortgage is provided on the residential property, commercial industrial property, raw plot, etc. A party can get registered mortgage if they provide the following documents to the bank.  
Title deed
Non encumbrance (NEC)
pit form (in case a constructed hose)
Valuation certificate
Affidavit
Mortgage deed
Personnel guarantee of mortgagor
Power of attorney
Legal opinion.
 Banks examine all these reports, and if they are correct then issue the mortgage to the party. The bank examines these reports to see that the property they want to mortgage is registered and is not already pledged. The bank also calculates the value of the property and the legal opinion of the customer in case of non-payment.  

Equitable Mortgage:
Equitable mortgage is provided on the residential property, commercial industrial property, raw plot, etc.  
Title deed
Non encumbrance certificate (nec)
Pti form (in case a constructed house)
Valuation certificate
Affidavit
Memorandum of deposit of title deed
Personal guarantee of mortgagor
Power of attorney
Legal opinion
In this mortgage a charge form bound the customer for any legal action in case of non-payment. In this type of mortgage hypothecation of stocks involves.  

Pledge: 
A pledge is an “a class security given to customers for stocks ware house, customs, and etc. it is defined as actual delivery of movable property to lender as security for a loan. When the customer makes the payment of the loan in full he can back his mortgage property from the bank i.e. when full payment is made the stock is released.

Procedure of sanction of loan:
In Credit department 1st step is to preparation of credit line proposal for the preparation of credit report. For this following information required by the bank from the party

Purpose of loan
Details of all firms or companies associated with business
Name of proprietor/ partner/directors
Accurate and up-to-date balance sheet and profit and loss statement of last two years of business
Market report of the borrower repute
Report from the bank if borrower has maintain his account with the bank
CIB report
Full details of existing limit and actual liability against the business
Particular about the foreign exchange deposits and bills given by the borrower to the bank
Memorandum and article of association in case of limited company
Audited report of balance sheet and income statement of last two years

After checking all the securities, customer verification the manager done the following tasks:

Preparation of credit proposal
Prepare the about the customer
Sanction of loan

Preparation of credit proposal:
After formal application for the credit the party submits approval. For this purpose borrower can use coarse paper or the form provided by the bank. Along with the application borrower also submits the documents required by the bank. The bank manager evaluates the documents provided by the borrower. He gets the party’s credibility report confidentially from the other commercial banks. He checks the balance sheet and income against the assets in the company. He also measures the percentage of owner’s equity. Then he doses the ratios analysis of the company. If the party is involved in the export and import business then the data of the last three years of this business is considered. The manager of the bank also examine the project violability, the securities provided by the debtor to the bank are evaluated by measuring their worth. In the case of pledge is assessed by the manager while in case of new party manger checks from where the party is financing for their business

Prepare the Proposal about the customer:
After preparing the proposal manger prepare the report about the customer. Report contains the following information

Name of the company
Date of establishment
Address
Nature of business
Branch office
Worth of business
Date
Banker’s opinion
Head cashier opinion
Branch manger opinion

In case of partnership business following information are included in the report:

Partner, their share in capital, profit and loss
Deed of partnership
Partnership letter
Turn over
Net profit
Personal property of partners
Bank balance of partners
Advance payment of suppliers
Particular of machinery installed in the factory through financing

Incase of corporation/limited companies the following information are included:

Incorporation and commencement of company
Sales offices
Capital information
Directors and their contribution to capital
Balance sheet with explanation and evaluation
Net worth of the company

3) Sanction of loan:
If the limit of the loan lies with in the power of manger then he sanction the loan otherwise manger with the covering letter along with all necessary documents sends it to the concerned sanctioning authority.

GENERAL BANKING:

General banking area is also call the operations group. It consist on following section

ACCOUNTS SECTION
REMITTANCES
CLEARING SYSTEM
GOVERNMENT RECEIPTS
CONSUMER AND RETAIL BANKING
LOCKERS
Accounts section:
Accounts Department of the bank can be considered the most important department. This department is basically concerned with processes and activities of recovering, sorting, summarizing and reporting data resulting from the whole day transactions of all the departments. Actually the process of this activity starts from the preparation of all the required vouchers by different related departments. When these vouchers are prepared, these are posted into respective computer terminals by the relevant departments. Before merging, a batch list is printed out by Computer Department and duly checked by the respective departments. After this, merging stage comes, after which a proof list is printed out. This is the stage, where Accounts Department starts performing its function. Proof list is checked by the Accounts Department.

This section performs the following functions:

Opening of Accounts
Issuance of checque books
Closing of accounts
Payment of Cheque

Types of Accounts:
Following types of accounts are open in NBP
Saving account
Current or demand account
Fixed account
 Saving account (PLS):
This type of account is designed to encourage the saving habit of the customer and lead to a long-term banking or investment relationship.
Bank saving accounts are in the nature of deposits accounts and are not normally available for drawings. Rates of interest are typically ahead, by a small margin. Saving accounts with the banking sector represent a very small proportion of total deposits. Customer can make any withdrawals from type of account. The cash reserve ratio is typically low them the current account because the withdrawals against this account is very low. The minimum balance for this account is Rs.100 and interest rate is  
Current or demand account :
These are those deposits, which can be drawn by the depositor at my time by presenting a cheque to the bank. People deposit their money in this account they gave a ready command on their account in developed and under developed countries of the world, a very significant part of money is kept under current or demand account. On this type of account of interest transfer of cash or by cheque takes place at sight. The cash reserve ratio for this account is very high. The operating cost for the handling of this type of account is very high because withdrawals are very regular.  
Fixed account:
Fixed accounts are those, which are deposited for a fixed period of time and are repayable after the expiry of stipulated time to the customers. Those people who have surplus funds and want to have save investments deposit the amount in the fixed account. The rate of interest given to depositor varies with the length of deposit, i.e. it is higher for longer period and lowers for shorter period. The rates on this type of deposits are higher than the saving bank accounts. The cash reserves against this deposit are very low because there is no fear of withdrawal of a month before the stipulated of time. No paying books or passes book or cheque book is issued to the customers against this deposit to the depositors.  

The authorities of national bank of Pakistan have the right to revise all these rates of interest with out any notice to customers generally rates of interest are revised after six months. The amount deposited for 7 and 30 days short term notice and accumulated for the period exceeding the limit and the customers can get the interest of the extra days of deposit but in the case of months and years the customer did not get any additional interest for the exceeding period of deposit.  

Procedure for Opening an Account:
First of all, the customer gets an application from the bank, which requires all information necessary for opening account and also the documents required. An account can be opened as:

An individual account
Joint account
Proprietorship account
Limited company account
Partnership
Club, society, association and trust

Information Required by the Bank:
Name
Address
Telephone No.
Currency of Account
Nature of Business
Country of Residency
Special instructions regarding the account
Signatures

Documentation In case of limited company accounts:
Photocopy of National Identity Card of each director
Application form
Copy of company’s memorandum and articles of association
List of directors
Copy of board resolution
Certificate of incorporation
Their signature cards
Certificate to commence business

Documentation In case of Partnership Account:

Application form
A copy of partnership deed
Signature cards of partners
Registration certificate copy
A copy of National Identity Card of each partner

Documentation In case of Club, Society, Association or Trust:
Application form
Copy of rules
Certified copy of resolution
Signature cards

When the concerned officer is satisfied then he opens the account and gives an account number that will be used in all communications with the bank in regard to the account and when making deposits and withdrawals.
Bank has the right not to open an account without assigning any reason or to close the account if it is not operated in a satisfactory manner by the instructions of the head office.

Issuance of Cheque Book:
After opening the account, a cheque book is given to the customer to sign upon which the number of cheque book issued and the name of the customer is written. Bank issues a cheque book against requisition. A cheque book may be of 20 (PLS), 25, 50 or 100 leaves (current A/C). Rs. 4.50 per leaf as excise duty is charged to the customer.
A cheque book register is maintained by the office. In this register, the cheque book inventory, cheque books issue are recorded.

Loose Cheques:
If any customer forgets or leaves his cheque book at his home, which is far away from the bank or whatever the case may be, the customer applies with the bank for the issuance of loose cheque by the bank as he does not has his cheque book with him and the money is urgently required, the this cheque is called the loose cheque.
Bank issues a loose cheque for Rs. 50 as charges for the issuance of the loose cheque plus Rs. 4.50 as excise duty.

Payment of Cheques:

It is bank’s primary function to repay the money required for its customer’s account usually by honoring his cheques. It is a contractual obligation of a banker to honor its customer’s cheque if the following essential are fulfilled
:
Cheque should be in a proper form
Cheque should not be mutilated
Cheque should be drawn in this particular branch
Cheque should not be damaged
No unauthorized material alterations
Funds must be sufficiently available
Cheque should not be post date or stale
Cheque should be presenting during the banking hours

Procedure for Closing an Account:
The customer can close the account. Customer is required to submit an application for closing the account. Then the account is closed out and his balance is paid to him after deducting the closing charges, i.e., Rs. 200 and the application is filed in Account Closing File. Remaining leaves of cheques will also be collected from the customer.

The activities of Accounts Department can further be divided as:

Routing of expenses vouchers
Preparation of daily activity reports
Preparation of weekly and monthly statements
Preparation of statements for tax purpose.

Routing of Expenses:

Vouchers of all expenses and material purchases are routed out through this department. As far as the expenses are concerned, they include the heads of salaries paid to confirmed employees of bank, wages paid to employees that are on contractual basis, rent of the building, lease installment and insurance premium paid to insurance company for the insurance of vehicles and cash in safe and counter. Expenses also include the utility bill, which consists of courier, electricity, water and gas bills, medical expenses, which are reimbursed.

Preparation of Daily Activity Reports:

As far as the daily activity reports of this department are concerned, these include the following heads
Voucher collecting of
Loan transactions
General ledger transactions
Foreign currency related transactions
Fixed deposit related transactions
The checking is on daily basis.

Preparation of Daily, Weekly Monthly and Annual Statements:

Daily Statements:
These statements are sent daily to Main Office Karachi. These are:

Daily Affair Statement, which is same as Balance Sheet
Statement of Income and Expenditure, which includes the details of income generated and expenses incurred by the bank.

Weekly Statements:
These statements are generated on weekly basis for the purpose of sending it to Head Office. These also include:

Statement of affair
Deposit and advances position of the bank

Monthly Statements:
These statements are prepared on monthly basis and also sent to Head Office (Qatar). These include:

Provisional statement of income and expenses.This statement adjusted for accruals and pre-payments.
Monthly Balance Sheet and Income Statement
Comparative Statement

Statements for Tax Purpose:
The department also prepares two statements for the purpose of paying tax on monthly and annual basis. These statements are generated for the purpose of submitting to Central Board of Revenue.
These are:
Statement of deduction of income chargeable under the head salary under Section 53 (Tax deducted at source)
Withholding Tax from the payments made to vendors, suppliers and other parties providing various services. The rate of withholding tax is as follows:
Suppliers 2.5%
For other parties 5%

Remittances Section:
Remittances can be made through:

Instrumental transfer
Electronic transfer

Instrumental Transfer:
Instrumental transfers are following

Demand Draft:
It is an instrument, which is payable on demand and it is only presentable in the city/country. When any draft, i.e., an order to pay money, drawn by an office of bank upon another office of the same bank for a sum of money payable to order on demand, purports to be issued by or on behalf of the payee, the bank is discharged by the payment in due course.
When a person requires a draft, he should be asked to complete the prescribed application form in which he should state the amount of the draft, the name of the payee, and the place of payment. The person to those persons, who have been duly authorized to act on his behalf, should sign this application form. An advice is prepared and two copies of this advice are sent to the Head Office. The bank charges 3% withholding tax and commission according to the rate list (minimum is Rs. 200).

Pay Order:
It is an instrument, which is payable in demand and only presentable in city.
Pay order is also called the banker’s cheque drawn upon the issuing bank itself. It is not negotiable and therefore, bankers tend to cross the instrument “Payee’s account only” to avoid the possibility of dealing with instruments with forged endorsement. The pay order is issued favoring individuals, commercial concerns, government departments. On the presentation of pay order, the bank is liable to pay the amount to the customer. Bank charges excise duty of Rs. 4 and service charges of Rs. 100.

Pay Slip:
It is an instrument, which is issued by bank and used for expenditure purposes, i.e., electricity bills, maintenance bills, security bills, fixture and fitting, etc.

Call Deposit:
Call deposit are not actual deposits of bank. It is in fact the liability of the bank. Call deposit are ofently prepaid by the bank for contractors
PROCEDRE :**

Following steps are involved :

1) Depositor fill the credit vouchers for call deposit. He writes the following information
Name of company
Amount
Date
2) He deposits the cash along with filled voucher in the cash department

Encashment of CD:

For the encashment of call deposit needed
5 rupee stamp
two signature of customer on the back side of CD
token issued
accountant make entry in the CD register show that it has returned

Electronic Transfer:
Electronic transfer is of following types

Telegraphic Transfer:
It is the message, which is sent from one branch to another on the order of payer to payee through wire. It is one of the quickest means to transfer fund through the use of telex/fax/internet or cable. Payment to the beneficiary is affected directly by the drawee office upon identification or through credit into beneficiary’s bank account. As such remitting office is not required to issue any instrument payment to the remitter for delivery to the beneficiary.
Issuance and Payment of Telegraphic Transfer Outgoing:
Application form is filled by the client in which the name and account number of the beneficiary, which is to be credited and name of customer is required. For telegraphic transfer, the payment can be made in case or by cheque or by debiting the customer’s account if he is the account holder. The amount of Telegraphic Transfer should be written on the form. The amount is transferred to beneficiary’s account in the other bank. An advice is given to the customer but application is filled in the record of the bank.
If the beneficiary is not the account holder of DBL, bank credits a Telegraphic Transfer payable account and when payment is made to the beneficiary, TT payable account is debited.
Issuance and Payment of Telegraphic Transfer Incoming:
When a TT is received then an entry is passed in TT incoming register after verifying the test. When a person comes and wants to en cash his TT, bank checks the statements of that person. If the bank finds any account credited to the person’s account against TT, bank prepares a voucher for this payment against that TT. The customer then presents that certificate to the cash counter and collects money.

Mail Transfer:

It is the same like TT, but in this type, the message is sent through mail rather than telex. The procedure is same as TT, but the advice is sent through mail rather than wired.

Travelers cheques (TC) :
These are also called TC. Traveler’s cheques first came into use century ago. Form of travel currency giving to the holder .the security of a letter of credit and convenience of a local currency. In practice, they are acceptable in payments of accounts on board ship, at hotels and in stories. They are in form of a draft. They should be so signed immediately on issue and place is provided on the cheque for the signature of the beneficiary on its

Lockers service:
National bank of Pakistan also provides lockers facility in the country. The lockers issued only to the depositors. No lockers are issued to any unknown person.
The dual control system is used for lockers. The officer has master key to apply on the locker but he cannot open the locker of any person. The locker holder provides the bank has specimen signature. Whenever the locker holders come to open the locker, his signatures are verified by the officer and then will be able to open his locker. If the key of the locker is lost company providing these lockers breaks the locker and new lock is fitted in its locker and lock is destroyed in the presence of the locker holder and bank charges RS 1200 for that. In case the locker holder dies, the court opens his locker in the presence of his heir as mentioned in his will or and his belongings are given to them and the locker is closed.  

Billing And Government Receipt/Payment:
This department is performing following functions:
Collection of utility bills
Collection of dues of education institution
Payment of salaries
Payment of zakat
Payment of pension
Clearing Department:

The major function of Clearing Department is to receive the cheques, which are drawn on some other bank. The customer can get the money in his account at NBP, from the cheques drawn on another bank. The bank accepts these cheques and collects the amount from that bank on which cheque is drawn through the Clearing House. Bank charges some commission for this function.

Procedure for Clearing the Cheques:
Pay-in Slip:
The customer fills pay-in slip. This slip is just like deposit slip. The cheque number, date, amount and account number must be written on this slip.

Stamping and Scrutinizing:
The officer on receipt of cheques and pay-in slip will stamp the pay-in slip with “cheque received” and give a portion of slip to customer and the remaining portion is attached with the original cheque.
The original cheque will be marked with two stamps.

National bank of Pakistan
Clearing Stamp

At the end of day, all cheques are counted and then scrutinized in bank-wise and sent to the Clearing House.

Computer Section:

Through this department bank has make its way to enter in twenty first century. This department is playing a very important role in making the banking procedures faster and helping the bank for providing new services to its customers. This division provided the bank with online branches, systems to make the whole procedure foolproof.

Types of Branches:
There are three types of Branches in all over Pakistan of NBP

1. Online Branches:
The branches, which are directly, link with central computer AS-400, through wide area networking through fiber optics. These branches have dumb terminal directly linked with central computer. Yet only forty-four branches all over Pakistan are online. Of these forty-four, seventeen are located in Karachi, seven in Lahore, two in Islamabad and two in Multan and two each in other regional head offices.

2. Batch Branches:
The branches where all transactions are carried out with the computer base system but these branches are not connected to the central computer with wide area net working. Batch branches are using three type of system, Branch Back Office (BBO) based on FoxPro, Branch Automated System based (BAS) on UNIX, Branch Integrated System (BIS) based on FoxPro in Karachi mostly branches are facing this problem. BAS was establish in the beginning while BBO is currently implemented now efforts are under way to convert all branches into Electronic Banking System (EBS) which is used by online branches as this system does not require a person to remain sitting till the branch closed its daily operation but the system automatically close it self when the branch timing is over. The database in head office is also based on this system.

3. Manual Branches:
The branches where all transactions are carried out manually and records are maintained on registers usually stored in big wardrobes.
All branches in Pakistan report to there regional head office regarding there daily transaction. In the RHO through On Line, terminal data goes to head office central computer; Except for branches those are On Line as they transfer there daily data directly through there own terminal. As day-to-day, activities of all branches are recorded in a central computer.

Evening Data Receiving Center:
Data form batch branches reach the main branch in floppy diskettes while form manual branches it is in form of hard copy. Data comprises of transactions in profit loss account, current account, advances etc termed as “Daily Transaction Report”. Clerk in charge register all diskettes and manual in registers called “job booking register” one for each of two type of data. These floppies and manual are bring in by riders. There are fourteen riders in total who bring information form all branches located in Karachi region.

Data Entry Department:
The next task after receiving the data is to enter that data in to a computer. The floppy disk is directly inserted in the computer. The program in used is based on “COBOL” language. This program is designed in away that it demand “Hash Value” value before opening the floppy for further action this value serve the purpose of password or pin code send by the branch on entering that value the data enter in to the computer. This computer is attached with the terminal of central computer. The operator of that terminal takes the data from the computer and converted it in to a text file through that terminal the data finally goes to the central computer.

Defects and Error Handling:
Errors of different origin occur when the data goes to central computer. Sometime retrieving data from the system (BAS, BBO, and BIS), other than used in HO (EBS) also caused errors. Other errors include Unmatched (This error occurs when document no matched with the previous one exists), no master (when opening of new account is not mentioned), Date in Valid, duplicate cheques (this error occur when the last objection is not removed). these and other such error are see by the person in charge.
In the end of day print out of the data enter in central computer is taken. Any Incomplete information for any branch and any information require by that particular branch is sent to that branch. More over material is used to make a WST which is sent to State Bank of Pakistan.

Consumer and retail banking section:
Consumer and retail banking department is offering two facilities to their customers

NBP Advance Salary
NBP Ghar Ghar Television

NBP Advance salary:
NBP advance salary facility allows you to draw three months salary in one go.

NBP advance salary offers you
Take up to three months advance salary take home
Fastest processing and immediate disbursement
Easiest facility for 1 to 36 months
Minimum documentation

Eligibility:
This facility will be available to permanent employee of

Federal and provincial Govt.
Semi Govt., autonomous, semi autonomous, local bodies and Govt. corporations
Other corporations and organizations approved by NBP

Those who qualify for thius scheme should have:

Three years of service age remaining
Salary account at NBP

Limit of Finance:

Three net take home salary
Customer must have account with national bank which show last three months salary in his/her account

Calculation of limit:

Average of three months and minimum salary which ever is less taken it as base and multiply it by three

Maximum duration of loan:

Three years is max duration.

Requirements:

Requirements are:

Three months salary certificate
NIC photocopy
Auto roll over form
Application form
IB-12
Three undated cheques
Annexure C
Annexure D
Account opening form

Procedure:

After filling the application customer signed it with his salary-disbursing officer then under taking is officer approving it. Open the account that is calls separate loan account, which is once Debit and many time credit.

NBP Ghar Ghar Television:
NBP offering the customer to get the television on lease base:

Eligibility:

Four categories are there:

Lean of account
Lean of guarantor account
National saving certificates
Guarantor of NBP

lean of account:
Here the amount of customer account is pledge and customer can’t DR it until the expiry of limit

Lean of guarantor account:

The person who is taken the guarantee of that customer his account is marked as lean and pledges it until the expiry of installments

National saving certificates :
Three types of certificates:

Defense saving certificates
Special saving certificates
Regular saving certificates

Every certificate having their face value. The 75% of that valve is marked as lean.

Guarantor of NBP:
The employee of national bank can give the guarantee of that customer. The procedure is same his or her account is marked as lean

Duration of scheme:
Two types of duration :

For one year
For two year

Product supply:
Product is supply by L.G electronic at the customer address.

Products:

Different products are offered by L.G such as:

Television
Monitors
Air conditioner
DVD
VCD

Documents:
Documents required by the banks are:

Application form
IB-12
NIC photocopy
Delivery order
Agreement
Letter of hypothecation
Adamantly bound
Letter of acceptation and satisfaction

FOR NBP employees:

Authorization certificate
Guarantee
Salary certificate
This scheme is only for residential of Multan.
COMPARATIVE ANALYSIS:

Comparative financial statement analysis is reviewing consecutive statements, which show changes in individual account balances on a year to year or multi year basis. For the purpose of analysis we again summarize the financial statements in absolute data (billion) and in groups of similar items. Sometimes it is difficult to understand the absolute data changes, so percentages are shown for easy understanding.

PROFIT & LOSS ACCOUNT:

Particulars 2002
Rs. 2003
Rs. 2004
Rs. Inc. or Dec.* in
2003
Rs. % Inc. or Dec. in 2004
Rs. %
Markup/interest earned 29702 31291 27519 1589 5.3 2183* 7.3*
Markup expenses 20881 18877 14699 2004* 9.6* 6182* 29.6*
Non-markup income 4030 4501 4817 471 11.7 787 19.5
Non-markup expenses 7510 9058 9165 1548 20.6 1655 22.0
Profit before tax 1032 3016 6045 1984 192.2 5013 485.8

BALANCE SHEET:

Particulars 2002
Rs. 2003
Rs. 2004
Rs. Inc. or Dec.* in 2003
Rs. % Inc. or Dec.* in 2004
Rs. %
ASSETS:
Cash & balance with treasury bank 70944 79155 55531 8211 11.8 15413* 21.7*
Balances with other banks 29151 30001 35878 850 2.9 6727 23
Landing to financial institutes 15940 18749 21717 2809 17.6 5777 36.2
Investments 72609 71759 143524 850* 1.2* 70915 97.7
Advances 1403181 170319 140547 30001 21.4 229 0.2
Other Assets 35945 36952 27489 1007 2.8 8456* 23.5*
Operating Fixed Assets 6729 7200 8115 471 7.0 1386 20.6
LIABILITIES
Bills Payable 2152 2245 3366 93 4.3 1214 56.4
Borrowing from financial institutes 10299 11485 10032 1186 11.5 267* 2.6*
Deposits 316493 349617 362866 33124 10.5 46373 14.7
Other Liabilities 25275 34185 29683 8910 35.2 4408 17.4
OWNER EQUITY
Share Capital 1463 3730 3730 2267 155.0 2267 155.0
Reserves 9729 7476 7144 2253* 23.3* 2585* 26.6*
Inappropriate 185 752 3404 567 306.5 3219 1740.0
Surplus on revaluation of assets 5605 5552 9657 53* 9.5* 4052 72.3

Compression of Income Statement:
There is increase in markup or interest income in 2003 as compare to 2002. But in 2004 interest income decreased. Interest expenses decrease at low ratio in 2003 by 9.6% over 2002 interest expenses but the interest expenses of the 2004 decrease rapidly by 29.6%. The net markup is more in 2004 then 2003 which is Rs.12820 billion in 2004 and Rs.12414 billion in 2003.
The non-markup income also increase by Rs. 471 billions in 2003 and by Rs. 787 billion in 2004 which shows increasing trend of customer services provided by NBP to them and more investment. The non-markup expenses are also increasing but these are increasing more than non-markup income. This is not a good indicator of the performance of NBP.
The profit before tax is increased rapidly in 2003 by Rs. 1984 billion over to 2002 profit and in 2004 profit before tax increased more rapidly by Rs. 5013 billion over 2002. These figure shows NBP is rapidly growing.

Compression of Balance Sheet:
The current assets are increased form 2002 to 2004. The landing to financial institutions is increased by Rs. 2809 billion in 2001 over 2000 and by Rs. 5077 billion in 2004 over 2002.

The investment slightly decrease from 2002 to 2003 but it increase by Rs. 70915 billion in 2004 over 2002. Advances increase in 2001 but decrease in 2004 which is bad indicator. As the advances increased by Rs. 30001 billion in 2003 over 2002 and increase by Rs. 229 billion in 2004 over 2002. The liabilities of NBP increasing at low percentage in 2003 and 2004 over 2002. The working capital is in well position to pay the current liabilities of the bank. The share capital of the NBP increased in 2003 over 2002 by Rs. 2267 billions but it remained same in 2002 as in 2001. NBP offer 13 million share for general public at 6-10-2005 for Rs.46 per share, face value is Rs. 10 per share and Rs. 36 is premium. This increase shows the extension of business of NBP.

TREND ANALYSIS:

It is a long term trend comparison. Analyzing data using index number trend analysis require choosing a base period, for all items, with a reselected index number usually set to 100. Since the base period is a frame of reference for all comparison, it is best to choose a normal year with regard to business conditions. In trend analysis we compute percent changes by reference to the base period.
In other words trend percentages, which may be thought of as index numbers showing relative changes in financial data resulting with the passage of time are computed.
PROFIT & LOSS ACCOUNT:

Trend percentages
2002 2003 2004
Markup/interest earned 29702 31291 27519 100 105.3 92.7
Markup expenses 20881 18877 14699 100 90.4 70.4
Non-markup income 4030 4501 4817 100 111.7 119.5
Non-markup expenses 7510 9058 9165 100 120.6 122.0
Profit before tax 1032 3016 6045 100 292.2 585.8

BALANCE SHEET:

Trend Percentages
2002 2003 2004
ASSETS:
Cash & balance with treasury bank 70944 79155 55531 100 111.6 78.3
Balances with other banks 29151 30001 35878 100 102.9 123.0
Landing to financial institutes 15940 18749 21717 100 117.6 136.2
Investments 72609 71759 143524 100 99.0 197.7
Advances 1403181 170319 140547 100 121.4 100.2
Other Assets 35945 36952 27489 100 102.8 76.5
Operating Fixed Assets 6729 7200 8115 100 107.0 120.6
LIABILITIES
Bills Payable 2152 2245 3366 100 104.3 156.4
Borrowing from financial institutes 10299 11485 10032 100 111.5 97.4
Deposits 316493 349617 362866 100 110.5 114.7
Other Liabilities 25275 34185 29683 100 135.3 117.4
OWNER EQUITY
Share Capital 1463 3730 3730 100 255.0 255.0
Reserves 9729 7476 7144 100 76.8 73.4
Inappropriate 185 752 3404 100 406.5 1840.0
Surplus on revaluation of assets 5605 5552 9657 100 99.1 172.3

In trend analysis I take 2002 as base year and I calculate trend ratio of 2003 and 2004 over 2002.
Trend Analysis of Profit & loss A/C:
The markup or interest income increased in 2003 which shows as 105.3% of 2002 or 5.3% increase in markup but markup decrease in 2004 92.7% of 2002 or 7.3% decrease in markup. The markup expenses decrease in 2003 90.4% of 2002 or 9.6% decrease in markup expenses but in 2004 markup expenses are 70.4% of 2002 or 29.6% decrease in markup expenses. The net markup in 2003 increased by 14.9% (5.3% increase in income and 9.6% decrease in expenses) over 2002. The net markup in 2004 increased by 22.1% (7.3% decrease in income and 29.4% decrease in expenses) over 2002. So the position of the NBP is good in 2004 than 2003 even markup income is less in 2004. The profit before tax increased by a rapid speed 292.2% of 2002 in 2003 and in 2004 585.8% of 2002.

Trend Analysis of Balance Sheet:
All the assets except the advances are increasing in 2003 and 2004 over 2002. This is because of the increase in share capital and the rapid growth in profits of the bank. The advances of NBP decreased in 2004 but the profit is increased in 2004, it indicates that NBP is investing in out side than earning from interest income. Share capitals of NBP increased in 2003 over 2002 by 155% and remain same in 2004.

RATIO ANALYSIS:
Ratio analysis is the most popular and widely used tool of financial analysis. A ratio expresses a mathematical relation between two quantities. In other words “the relationship of one item to another expressed in simple mathematical form is known as a ratio.”

PROFIT & LOSS ACCOUNT:

Markup/Return/Interest earned 31,290,584 27,518,928
Markup/Return/Interest expensed 18,877,247 14,698,507
Net Markup/Interest income 12,413,337 12,820,421
Provision against non-performing advances 2,926,554 1,822,154
(Reversal of provision)/provision for diminution in the value of investment
(907,829)
21,031
Provision against off balance sheet obligations 121,752 104,217
Bad debts written off directly 150 162,276
Total provision 2,140,627 2,109,678
Net Markup/Interest income after provision 10,272,710 10,710,743
Non-markup/Interest Income Fee, Commission, brokerage income
2,984,428
3,137,007
Dividend Income 610,732 917,020
Income from dealing in foreign currencies 794,965 659,247
Share of profit of joint venture – 10,609
Other income 111,443 93,120
Total non-markup/Interest income 4,501,568 4,817,003
Non-markup/Interest Expenses:
Administrative expenses
8,551,178
9,137,779
Other provisions/(reversals)/write offs 332,912 3,134
Share of loss of joint venture 6,456 –
Other charges 8,790 23,874
Total non-markup/interest expenses 8,899,336 9,164,787
5,716,225 6,362,959
Amortization of deferred cost (2,700,596) –
Staff welfare fund 158,717 318,148
Profit before taxation 3,015,629 6,044,8141
Taxation – current (2,453,275) (2,650,000)
Prior years (622,747) (1,000,000)
Deferred 1,208,922 (141,426)
Net taxation (1,867,100) (3,791,426)
Profit after taxation 1,148,529 2,253,385
Unappropriated profit/(loss) brought forward 184,848 752,226
Surplus from revaluation of fixed Assets – 1,463,657
Profit Available for appropriations 1,333,377 4,469,268
APPROPRIATIONS:
Statutory Reserve (114,853) (225,339)
Reserve for issue of bones share – (373,038)
Proposed cash divided (466,298) (466,298)
Total appropriations (581,151) (1,064,675)
Unappropriated profit carried forward 752,226 3,404,539
Basic Earning per share 3.08 6.84

BALANCE SHEET:

ASSETS:
Cash & balance with treasury bank 79,155,081 55,531,453
Balances with other banks 30,001,482 35,878,101
Landing to financial institutions 18,749,309 21,716,802
Investments 71,759,449 143,524,971
Advances 170,319,096 140,547,374
Other Assets 36,952,148 27,489,021
Operating Fixed Assets 7,199,835 8,115,131
Differed tax Assets 952,590 –
Total Assets 415,088,990 432,802,853
LIABILITIES
Bills Payable 2,245,349 3,365,744
Borrowing from financial institutes 11,484,963 10,032,135
Deposits 349,617,068 362,865,637
Liabilities against assets subject to finance lease 46,092 74,051
Other Liabilities 34,185,081 29,682,837
Deferred tax liabilities – 2,846,186
Net Assets 17,510,437 23,936,263
OWNER EQUITY (Represented BY)
Share Capital 3,730,384 3,730,384
Reserves 7,476,063 7,144,326
Inappropriate 752,226 3,404,593
Sub total 11,958,673 14,279,303
Surplus on revaluation of assets 5,551,764 9,656,960
Total Owner’s Equity 17,510,437 23,936,263

Data is taken in billions
Working Capital Ratio: current assets – current liabilities
2003: 424,686 – 376,263 = 48,423
2004: 406,936 – 363,347 = 43,589
Current Ratio: current assets / current liabilities
2003: 424,686 / 376,263 = 1.13: 1
2004: 406,936 / 363,347 = 1.12:1
Return on Assets: Net Profit / Total Assets
2003: 1148 / 415,089 = 0.28 %
2004: 2553 / 432,803 = 0.31 %

Return on Equity: Net Profit / Equity
2003: 1148 /17,510 = 6.67 %
2004: 2553 / 23,936 = 10.67 %
Return on Deposits: Net Profit / Deposits
2003: 1148 / 349,617 = 0.33 %
2004: 2553 / 362,866 = 0.70 %
Advances to total Deposits: Advances / Deposits
2003: 170,319 / 349,617 = 0.49: 1
2004: 140,547 / 362,866 = 0.39: 1
Earning per share: Net Profit / Outstanding shares
2003: 1,148 /373,038,350 = 3.08
2004: 2,553 / 373,038,350 = 6.84
Price Earning Ratio: Market Price / Earning per share
2003: 44 / 3.08 = 14.28
2004: 46 / 6.84 = 6.73

Working capital of the NBP is enough to pay the liabilities at demand. There is no risk to any customer that his amount will not be returned to him when he demanded. The liquidity position of NBP is good because current ratio is maintained in both year 2003 and 2004. The return on assets and on deposits is increasing rapidly from 2003 to 2004. Advances to deposits are decreasing, this decrease shows that bank is not only relaying on interest income but generating income from investment.
The return on equity is increasing from 6.56 to 10.67 from 2003 to 2004. So earning per share is also increasing it causes to increase the market price of the share.

SWOT ANALYSIS

STRENGTHS WEAKNESSES OPPORTUNITIES THREATS (SWOT) ANALYSIS:

STRENGTHS:
NBP one of the largest financial institutions of Pakistan with eight million of customer base NBP holds 24.6% share of time and demand deposits in the country. Local currency deposits comprise 67% of bank’s total deposits while foreign currency deposits account for the rest.
NBP has an extensive domestic branch network of 1200 (according to the latest data) branches located all over Pakistan. The Bank also has a presence in 19 international locations including the USA, United Kingdom, Europe and the Far East.
NBP’s total assets stood at Pak Rs.370 billion on December 2000. This included total earning assets of about Pak Rs.268 billion with gross loan portfolio of Pak Rs.140 billion. The bank also has an investment portfolio of Pak Rs.91 billion, which comprises treasury securities, corporate bonds, shares and other securities.
NBP cash provision as percentage of non performing loans equal to 60% this coverage factor for the non performing loans is the highest amongst the nationalized commercial bank.
NBP is working as right arm government of Pakistan as it is responsible for all claims of government for recovery as well as payment. All depositor of NBP are in relief that their money security is guaranteed by government of Pakistan.
It acts as an agent of the Central Bank wherever the State Bank does not have its own Branch.

WEAKNESSES:
NBP staff especially at lower considers their work as burden. They usually waste time in other task a part in performing their duty. Using government property for there own need. They are reluctant to accept change brought by latest restructuring efforts.
The general out look and interior layout of branches are not as required according to modern banking
NBP bearing up large burden in running those branches, which are not producing any income but keep on adding expenditure.
NBP is relying on its traditional sources of income it has not taken benefit from innovation in banking like introducing retail banking or consumer banking and using any type of scheme to generate more deposits and producing more advances. Further, more don’t even continue its credit card due mismanagement and lack of control.
NBP is far behind in offering modern banking facility like automated teller machines then other commercial bank in Pakistan as only eighteen branches in all over country have this facility.
NBP has only forty-four on line branches. While from remaining branches data gathering is time consuming, and not fool proof. Quantum of settlement within different branches is pending because of this updating daily record is becoming very difficult.
Customers have to fallow long lengthy procedure for opening of account as well applying for debt. Which discourage most of the people to invest in NBP.
In NBP, most of the time merit not has importance in hiring of employees. Such practices are black spot on the face of bank and resulted big losses and fraudulent acts by NBP own employees.

OPPORTUNITIES:
Reorganizing efforts going on in the NBP has open many opportunities for NBP to grow. NBP current management has boarder vision. They have taken steps to improve customer services, streamline internal procedure and creating a delectating climate for technology initiative.

To achieve above mention objective they have created operation group:

Starting of the retail banking initial working. Setting of target for of making at least 300 branches country wide on line.
Closing of all those branches, which are burden on NBP.
Management to offer specialized services to major corporate including advisory and debt syndication introduces the concept of relationship manager.
Comprehensive training programs has been develop to up grade the core banking skills of the existing staff as well as integrate high quality hiring.
To improve the motivation of staff a merit-based culture is being promoted. Through overhauling the manpower recruitment preservation and performance appraisal system.

These actions taken by current management provide a great opportunity for NBP for making it future prosper and can make NBP not less than any modern commercialize bank in Pakistan.

THREATS:
Following are the major threats which national bank of Pakistan is facing:

Major threats NBP facing is from its competitor especially from denationalized commercial bank. In which MCB is on the top of the list, The Bank provides 24 hour banking convenience with the largest ATM network in Pakistan covering 15 cities with over 100 ATM locations.
Retail banking and consumer banking resulting in the products such as credit cards, housing finance and automobile finance lending to small individual consumers, and purchases of automobiles, housing, and consumer goods are generally made on a cash basis. These are causing another threat, if not counter will result in significance loss of customers
Recently banks and other financial institutions have introduced innovative schemes to attract deposits, like gift checque scheme by MCB. These schemes offer prizes on short and long term fixed deposits, through lucky draws.
Now banks are using technology which covers the distance no matter how far away any one, through a satellite based, on-line real-time banking system and by offering telephone banking, electronic funds transfer, E-Banking and other modern facilities.

SUGGESTIONS:
NBP major fault is that wasn’t keep its pace with on going changing in banking industry unlike other bank. Now this bank combining all it power and trying to approach other banks.
Latest reorganizing efforts are necessary to make it cost effective also making its facility accordingly to modern banking. These must continue.
Bank management has to put its all effort to change the prevailing culture of the bank and to put the foundation stone of business oriented culture. In which employees give important to the bank and its customer.
To attract the customer in the future NBP have to make extensive effort to give facilities of retail and consumer banking. Plus the technology in the banking which will be necessary for future banking is another week area need to be stressed.
The outlook and interior lay out of the branches is another thing which needs to be improved.
The procedure of taking services from the bank must be made easier and straight forward not involving long difficult procedure for simple task.
To remain in the market bank need to be vigilant in the eyes of customer. One way is through promotion efforts, so that people aware about he services of the banking and any addition which the bank as made in the portfolio of its services.

GENERAL BANKING
General banking area is also call the operations group. It consist on following section

ACCOUNTS SECTION
REMITTANCES
CLEARING SYSTEM
GOVERNMENT RECEIPTS
CONSUMER AND RETAIL BANKING
LOCKERS

Accounts section
Accounts Department of the bank can be considered the most important department. This department is basically concerned with processes and activities of recovering, sorting, summarizing and reporting data resulting from the whole day

Fatima Sugar Mills

IN THE NAME OF ALLAH WHO IS MOST BENEFICENT AND MERCIFUL

dedicatIONS tO:

Man Mo

My parents whose encouragement, guidance and presence are assets of my life

My teachers who illumined the dark corners of my mind and heart.

TABLE OF CONTENTS

Sr. No. Description Page No.

1. Preface 1
2. Acknowledgment 2
3. Structure of Management 3
4. Growth of Sugar Industry in Pakistan 4
5. Group Profile 5
6. Board of Directors 6
7. Mission of FSML 7
8. Objectives 8
9. Introduction 9
9. Working Force 11
10. Products of the Company 12
11. Production 13
12. Main Departments 15
13. Departments at Site 16
14. Departments at Head Office 33
15. Banking Section 47
16. Data Administration 51
17. Organizational Incentives 55
18. Quality Management 57
19. Problems of Sugar Industry 59
20. Comments & Suggestions 60
PREFACE
This report describes the effort made by me for the learning by first hand practical experience about a business organization. Today is the era of experience as is said by quotation “Experience makes a man perfect.” No body can deny the importance of practical training and experience.
Through internship students get the first touch of professional exposure of the roles; they have to play during their professional careers. The students not only acclimatize themselves to the corporate environment but also learn to assume responsibility, co-operation and teamwork the hallmarks of modern management.
Having experience of sugar industry is really a good experience for me. I am submitting all my experiences. No doubt, omissions and errors are expected but it is requested to ignore the nominal errors.
I was lucky enough to have a chance of doing internship in Fatima Sugar Mills Limited, Fazal Garh, Sanawan, Kot Addu. I learnt a lot about the practical business and above all, the mental discipline and awareness, which are the most useful tools for an executive to raise the organizational structure.
M. Nasir

ACKNOWLEDGEMENT
First of all, I want to express all and thanks to ALMIGHTY ALLAH whose blessings are above each and every thing which make me able to present my tiny effort. All prays to Hazrat Muhammad (pbuh) who is the reason for creation of the universe and whose kindness came to my part.
Secondly on the successful completion of my internship program, I whish to express my gratitude and heart worthy acknowledgement to my teachers for full co-operation and helped me in completing this report. I feel utmost pride in acknowledging with sincere gratitude for the valuable guidance I have received from my respected teacher Mr. Rizwan.
He has been a constant source of enthusiastic encouragement through out the internship program. Due to his guidance I have become able to complete internship as well as this report. His advice, criticism and remarks were of the most value to me.
I am also thankful to following persons:
Mian Fawad Ahmed Sheikh Chief Executive
Mohammad Younus Executive Director
Major ® Qaiser Bajwa General Manager
Amer Haroon Financial Controller
Khalid Riaz Bhatti Manager Accounts
Abdul Majeed Chief Accountant
Furthermore all the other executives and staff members of Fatima Sugar Mills Limited, Head Office and Site deserve my thankfulness for their co-operation and guidance during the course my internship at Fatima Sugar Mills Limited. Finally I would like acknowledging the contributions by many other sources of information used in preparation of this report.

M. Nasir

GROWTH OF SUGAR INDUSTRY IN PAKISTAN
Sugar is the important sector of the Pakistan’s economy. Sugar industry plays a vital role for development of any country’s economy. In Pakistan this industry play a significant role for economic development.

HISTORY
The sugar industry, which is endowed with a strong base of sugarcane, had started its journey from almost non-existence in 1947. The industry has gone through a long way and now possesses 77 sugar mills in all over the country. The Sugar industry not only fulfills the entire local requirement but also sharing out the total foreign exchange earning.
At present Pakistan’s sugar industry is facing lot of problems like lesser demand of sugar in the country due to recession in the economy, declining prices into the domestic as well as international markets & huge unsold stock of sugar. Government role in R & D for developing the sugarcane varieties is not very significance; only few private institutions are doing some research in R & D in developing various varieties with higher yield.

GROUP PROFILE
The company has been sponsored by FATIMA GROUP OF INDUSTRIES in MULTAN. The sponsors are already engaged in the field of textile. Their company, Reliance Weaving Mills Limited has been awarded Best Performance Trophies in the field of export. The group engages the following companies and firms.
Sr. # Company Name
FATIMA SUGAR MILLS LIMITED
FATIMA FIBRES LIMITED
FATIMA TRADING COMPANY LIMITED
FAZAL CLOTH MILLS LIMITED
FAZAL WEAVING MILLS LIMITED
RELIANCE WEAVING MILLS LIMITED
RELIANCE EXPORTS LIMITED
RELIANCE FIBRICS LIMITED
RELIANCE COMMODITIES (PVT) LIMITED
RELIANCE COTTON (PVT) LIMITED
FARRUKH TRADING COMPANY (PVT) LIMITED
MUKHTAR TRADING COMPANY (PVT) LIMITED
RELIANCE COTTON (PVT) LIMITED
GADOON PACKING (PVT) LIMITED

BOARD OF DIRECTORS
Chief Executive Mian Fawad Ahmed Mukhtar
Directors Mian Fazal Ahmed Sheikh
Mian Faisal Mukhtar
Mrs. Ambreen Fawad
Mrs. Fatima Fazal
Mrs. Fadia Kashif
Mrs. Mehnaz Aamir
Secretary Amanullah Khan
Auditors M/s Hameed Chaudhri & Company
Banks Muslim Commercial Bank Limited
National Bank of Pakistan
Habib Bank of Pakistan
Head Office 2nd Floor, Trust Plaza, L.M.Q Road
Multan, Pakistan.
Phone No. Head Office (061) 4551203-2
Mills 066-2550512-13
Fax No. Head Office 061-4511677
Mills 066-2250514
Email: fatmagrp@mul.paknet.com.pk

MISSION OF FATIMA SUGAR MILLS LIMITED
To produce superior quality White Refined sugar.
To face competition in the Local & International Market.
Total Quality Management.

OBJECTIVES
Following are the objectives of company.
Total quality focus to meet customer’s requirements.
The highest standard of business ethics.
To care on the business ethics.
To carry on the business at best possible level.
To guarantee performance of contracts by members or persons having dealing with the company.

INTRODUCTION
INCORPORATION
Fatima Sugar Mills Limited was incorporated in 1988.
NATURE OF BUSINESS
Crushing of Sugarcane & Raw Sugar in to White Refined Sugar.
FIRST CRUSHING SEASON
Fatima Sugar Mills Limited starts its first crushing season in 1993-1994.
LOCATION
Fatima Sugar Mills Limited is located at Fazal Garh, Sanawan, Kot Addu.

HEAD OFFICE
Head Office of Fatima Sugar Mills Limited is located at 2nd Floor, Trust Plaza, L.M.Q Road Multan.

FINANCIAL YEAR
The financial year of the company is from 1st October to 30th September.
RAW MATERIAL
The main raw material for the mill is sugarcane, which is abundantly available in Pakistan.

MAIN COMPETITORS
Sheikho Sugar Mills Limited, Anwar Abad, Kot Addu.
Layyah Sugar Mills Limited, Layyah.
Ashraf Sugar Mills Limited, Bahawalpur.
Indus Sugar Mills Limited, Rajanpur.

WORKING FORCE
Detail of total working force at site and at head office is as under:

AT SITE
Permanent Employees 307
Temporary Employees 45
Seasonal Employees 437
Daily Wages Employees 20
Total 809

AT HEAD OFFICE
Permanent employees 32
Temporary Employees 16
Total 48

PRODUCTS OF THE COMPANY
The main product of the company is White Refined Sugar and also other sugar by products, which are as follows.
Molasses
Baggasse
Mud

White Refined Sugar
Major business of the company is to produce white refined cane sugar of intermission standard and from the erased cane and three different components are achieved that are fibber, Pith and Moisture.
In the last crushing season 2005-2006 the company also import raw sugar from India and other different countries of the world.

Molasses
This is a by-product and it is sold to Molasses Contractors. One of the allied concern, Reliance Commodities (Pvt) Limited is the main buyer of the molasses of Fatima Sugar Mills Limited and also the main buyer of Molasses from whole the country.
Reliance Commodities (Pvt) Limited is the main exporter of Molasses in Pakistan.

BAGASSE
This is also a by-product of the company. It is also used in boiler but the entire Baggasse is sold to the Baggasse Contractors.

Mud
Mud is also the by-product of the company. It is sold to the Mud Contractors.

PRODUCTION
(50 kg)

PERIOD SUGAR BAGS
1996-97 810,000
1997-98 923,250
1998-99 970,435
1999-2000 871,450
2000-2001 2,696,740
2003-2004 2,890,000
2004-2005 28200000
2005-2006 3245300

MAIN DEPARTMENTS
Following are the main departments at Site and at Head Office.
AT SITE
MECHANICAL
ELECTRICAL
CHEMICAL
CANE
ACCOUNTS
COMPUTER
ADMINISTRATION

AT HEAD OFFICE
FINANCE
ACCOUNTS
EXPORT/IMPORT
ADMINISTRATION
PURCHASE
SALE
MECHANICAL DEPARTMENT
Mechanical department is the main department of any sugar mill. This department plays very effective role for crushing of sugarcane.

FUNCTIONS
The main function of this department is to control the whole plant & machinery. The main goal of this department is that the whole process is going through effectively and efficiently without any hurdle.
Mechanical department has qualified engineers who are very professional about their work. All the work is done under supervision of Chief Mechanical Engineer.

ELECTRICAL DEPARTMENT
Electrical department is also very important department of any sugar mill. This department plays very effective role for keeping the plant in running conditions.

FUNCTIONS
The main function of this department is to assist the mechanical department, with the help of this department; mechanical department has a better control on whole plant & machinery. The main goal of this department is to supply electricity to whole plant & machinery.
Electrical department has also qualified engineers who are very professional about their work. All the work is done under supervision of Chief Electrical Engineer.

CHEMICAL DEPARTMENT
Chemical department is another main department of any sugar mill. This department plays very important role for crushing of sugarcane.

FUNCTIONS
The main function of this department is to test the quality of sugar, with the help of this department sugarcane is crushed in to white refined sugar. The main goal of this department is to maintain a quality standard.
This department plays his role during whole the process because different types of chemicals are mixed in sugarcane juice for making the juice in to liquid shape. This department checks the quality during the whole crushing process.
Chemical department is working under very experienced person who has vast knowledge about chemical. All the chemists are very experienced and professional.

CANE DEPARTMENT
Cane department is the major department of any sugar mill. This department is purchasing sugarcane from growers.

FUNCTIONS
Cane department is working under General Manager Cane, who is a very experienced person and has a much more knowledge about sugarcane quality.
The main function of this department is the purchasing of sugarcane. The main goal of this department is to supply high quality sugarcane.
Main input of Fatima Sugar Mills Limited is the raw fresh sugarcane. To control the different activities of purchase of sugarcane, cane department play very important role.
This department has purchased sugarcane from different villages of the country. Cane field officers are surveying regularly and motivate growers. This department opens depots in different villages for purchasing of sugarcane. In Punjab a number of small grower’s exit and yield different varieties of sugarcane that profitable to the growers. Cane department also play very important role for granting a loan to the growers in the shape of seed, fertilizer and machinery, which has to be returned in the shape of supply of sugarcane to the respective mill.
Before start of crushing season, cane department of Fatima Sugar Mills Limited arranges a survey of the growers of surrounding area of the mill for the availability of sugarcane. They collect data about varieties, quality and quantity that would be available during the season.

CANE ACCOUNTING
After receiving sugarcane from the grower, process of payment starts. Cane accounts generate the payment that is sent to the banks for disbursement.
Cane accounts generate the following output from cane accounting package.
Grower Ledger
Cane Payment
Contractor Register
Loan Register
Daily Cane Purchase & Receipt Summery
Cane Accounts Department is working under Main Accounts Department. All the printed data sent to Head Office on daily basis. Payment to grower is made through bank after getting approval from Head Office, in case of emergency sometimes payment is to be made at Head Office, but during routine, payment to growers is done at site through bank.
ACCOUNTS DEPARTMENT
Accounts department is the department, which is recording all the business transactions into books of accounts. With the help of this department, we should know the actual position of the company about profit or loss. Accounts department is working under Chief Accountant, who is a very experienced person.

FUNCTIONS
The main function of this department is recording & classifying all transactions into books of accounts, keeping whole record of the company about payments, receipts, profits & losses. The main goal of this department is to work effectively & efficiently within the accounting standards all the time. Main Accounts Department also supervises the Cane and Store Accounts.
Normally Accounts Department performs following activities:
Maintaining Records
Keeping Accounts Record of All Departments
Payment of Wages & Salary
Store Accounts
Cane Accounts
Dealing With Banks
Tax related matters
Stock Position
Stock Taking

CANE ACCOUNTING
Main Accounts Department also supervises the Cane Accounts. This department deals with following matters:
Keeping Sugarcane Purchase Record
Keeping Record for Growers
Arranging payment for growers
Recovery of Advances from Growers

STORE
Main Accounts Department also supervises the Inventory / Store Department. Inventory means stocks of things and items, which are used with in the company for producing goods, and finished goods offering for sales. Inventory can be divided into following four groups:
Raw Material
Work in Process Inventory
Finished Goods Inventory
Spare Parts Inventory
For effective control over the company’s inventory, it is necessary that overall work should be done under Accounts department.
It is very important for store that it has to maintain sufficient stock of all the related parts / goods to make the factory continue its production and functions of other departments without any hurdle. This department receives the demand from various departments and then arranges the required goods / items.
When demand of items / goods received, then following process starts.
Purchase Requisition received at store, through relative department’s head, which contains item’s name & quantity.
Store Incharge checks the required material/items and issue to relative department according to demand, if required material/items currently not available in store, then Purchase Incharge makes the purchase indent for required material/items.
Purchase indent sent to the Purchase Department at Head Office after getting approval from General Manager at Site.
Purchase Department collects quotations from different listed sellers.
Purchase Manager compare all quotations and send summery of favorable rates to Chief Executive for approval.
After getting approval from the Chief Executive, Purchase Department issue Purchase Order for required material / items, which contains Mode of Payment, Mode of Delivery, Item Name, Quantity etc.
Delivery of required items at Site through supplier’s own vehicle or through rented vehicle on company’s expenses according to the contract.
Gate Inward sent to store, which contains complete report about Quantity of Material/Goods, Bilty No., Vehicle No., Supplier name.
Store Incharge checks the material/items, if any item is not according to demand then this item sends back to supplier, if material/items are according to demand then store incharge issue Inspection Report.
After issuance of Store Inspection Report then Store Incharge issue Goods Receiving Report which clearly shows the complete detail about material/items.
When any item or material has to go out from store for any purpose then gate pass is used, which contains quantity of item/material, purpose for going and name of the person taking it.
All the above-mentioned documents have three copies. First copy hold down at Store, Second copy is hand over to the seller and third copy sent to accounts department.
Store’s issue material/items to various departments according to their demands and then posted all transactions into accounts. At the end of each month store consumption is sent to head office.
Normally accounts department sends all record to head office on daily basis, but they are maintaining some record at mills, which is necessary for routine work and for reconciliation purpose.
COMPUTER DEPARTMENT
Now a day’s computer plays very effective role in all fields of life. At present all sugar mills in Pakistan are using various software’s. Computer department of Fatima Sugar Mills Limited is working under Incharge Computer operator, who is a very efficient person and have a vast experience about different software’s.
There are two departments in which computer is being used in Fatima Sugar Mills Limited (site), which are as follows:
Cane Department
Accounts Department
Main input of the Fatima Sugar Mills Limited is the raw sugarcane. To control the different activities of purchase of sugarcane, computer is very much helpful. Growth of sugar industry has brought about certain changes that demand application of modern computer application in operations of growing sugar mills.

CANE DEPARTMENT
CANE APPLICATION
In cane application, computer is playing its role in a very superlative manner. It is good sign for the company keeping the record of each grower and give recommendations on the basis of given parameters.
CANE LOADING & PROCUREMENT
Before starts of the crushing season, cane department of Fatima Sugar Mills Limited arranges a survey of the growers of surrounding area of the mill for the availability of sugarcane. They collect the data about varieties and quantity that would be available during the season.
This data is posted in to the computer to accommodate each and every grower during the season for the supply of sugarcane to the mill.
Following reports are generated from cane application software.
Survey
Agreed Cane
Schedule Summery
Village wise Procurement Summery
Circle wise Procurement Summery
Point of Purchase Summery
Indent Printing
Work Order Printing
CANE YARD MANAGEMENT
Sugarcane comes to the mills in different ways, which are as follows:
Grower brings the sugarcane on his own vehicle
Grower brings the sugarcane on rented vehicle
Sugarcane comes through the purchasing centers on rented vehicles.
When sugarcane reaches the factory gate then cane yard management starts. Cane yard management produces the following information:
Weighting of sugarcane
Recording the Weight
Recording the Vehicle Number
Recording the Date
Printing of CPR’s
Daily Crushing Summery
Contractor wise summery
When sugarcane enters in the mill, first of all its weight is checked at weighbridge, then this weight is posted into computer and gives a CPR to the grower.

CANE ACCOUNTING
After receiving sugarcane from the grower’s process of payment starts. Cane Accounting Package generates the payment that is sent to the banks for disbursement.
Following are the main reports generated from Cane Accounting Software.
Grower Ledger
Cane Payment
Contractor Register
Loan Register
Daily Cane Purchase & Receipt Summery
Cane Accounts Department is working under Main Accounts Department. All the printed data sent to Head Office on daily basis. Payment to grower is made through bank after getting approval from Head Office, in case of emergency sometimes payment is to be made at Head Office, but during routine, payment made to growers at site through bank.
ACCOUNTS DEPARTMENT
Accounting software is also used in Accounts Department. All the transactions are posted into computer. When any voucher/report required, that can print out very easily.
ADMIN DEPARTMENT
Admin department is the department, which is dealing matters about administration. This department plays very important role for maintaining discipline in the mills. Admin department is working under Admin Officer, who is a Retired Captain of Pakistan Army and has much more experience about administration matters.

FUNCTIONS
The main function of this department is to handle all the administrative matters and maintaining discipline in the mills. The main goal of this department is to provide easy working environment in mills. This is very important department of the organization as the name shows; this department has to administer all the operations of the organization. Sections of this department are divided into offices as under:
Gate Office
Time Office
Security Guard Office
Labor Office
Gate Office
This office has been made to keep the record of each and every thing coming into and going out of the mills gate.
For this purpose gate office clerk maintains two type of registers called;
Outward going pass register
Inward going pass register.
When every thing including raw material, stores supplies, or any other thing comes into the mills premises a document named as I.G.P is made in which information like date of supplier, description, quantity of the material and any other remarks are written. In the same way, O.G.P is prepared for out going things etc.

Time Office
This office keeps and maintains the time record of all the workers on time cards and pay register for the final costing of the workers salaries.
It keeps the attendance records, which is than used to calculate the salary to be paid to the workers on monthly basis.
It keeps the records of the over time, leaves, number of days worked of all the workers and than calculate their over time on the basis of the basic salary of each worker.
It keeps the records of Social Security, EOBI, Education Cess etc. of each employee / worker payable to government treasury.
It keeps the records of Gratuity, Bonus, Pensions and other benefits including CPL (Cash Paid Leave) to each employee / worker of the organization.

Security Guard Office
The main objectives of the security office is to safe handling of the goods from / to the mill premises. For the achievement of such objective a team of security guards has been employed by the company. All the keys relating to the mills office, labor colony, (quarters) are lying into the responsibility of the security officer.
No out side visitor can come into the mills premises without the permission of the security guards.
Whenever any visitor wants to enter into the mill, security guards firstly contact with the authority in the mill to grant the permission to enter into the mill premises.
Security guards can check each and every person before coming in or going out of the company gate for the security purposes.
They see and check the outward going pass of the certain things when these ought to bring out of the mill premises.
They are in uniforms of dark green color.
They are the guardians of the every thing of the company.

Labor Office
As required by the labor department of the Government of Pakistan, that this office has been setup to deal with all the matters that are related with labor. The labor officer is the head of the Labor Office. He is responsible to resolve all the disputes, conflicts, misunderstandings and any other hind of matter, which may arise from time to time between the labor and the immediate supervisor, or with any other person in the organization.
It is the duty of the labor officer to inform the legal requirements concerning the labor and company affairs.
It is also the duty of the labor office to satisfy himself regarding payment of bonus, gratuity, and other benefits to labor and to keep their morale and motivational level high. It is also a requirement to be a successful labor office that he should keep his knowledge up to date regarding the rules and regulations of the labor department.

FINANCE DEPARTMENT
Finance department is the department, which provides funds to the company. This department plays very important for fulfilling the need of fund. Finance department is working under Financial Controller, who is a Fellow Member of Institute of Chartered Accountants of Pakistan and has vast experience about financial matters.

FUNCTIONS
The main function of this department is to get Cash Finance and Running Finance, according working capital requirements, from different Financial Institutions against pledge of sugar stocks. This department also performs following activities:
Financial Planning.
Fund Raising.
Managing Cash & Credit Activities.
Capital Expenditure Decisions.
Analyze the Financial Information.
Evaluation.
Short Term & Long Term Financing.
Finance department analyzes the financial information and then presents them into proper form, so that financial position of the company can be properly viewed. Finance Department evaluating and determining about required additional finance. All the functions are based upon Balance Sheet, Income Statement and other Financial Statements.

ACCOUNTS DEPARTMENT
Accounts department is the department, which is recording all the business transactions into books of accounts. With the help of this department, we should know the actual position of the company about profit or loss. Accounts department is working under Manager Accounts, who is a Chartered Accountant of Pakistan.

FUNCTIONS
The main function of this department is recording & classifying all transactions into books of accounts, keeping whole record of site and head office. The main goal of this department is to work effectively & efficiently within the accounting standards all the time.
Main duties of Accounts Department are as follows:
Maintaining Records
Keeping Accounts Record of All Departments
Payment of Wages & Salary
Dealing With Banks
Control of Funds
Cash management
Payment of Bills and Charges
Receipt of Cash
Tax Matters
Cash Flow
Arrangement of Heavy Funds
Preparation of Final Accounts
Analysis of Reports
Provides Reports for Assistance in analysis to top management decisions.
We can say that this department acts as a nervous system. Every matter is first brought in the knowledge of the head of this department, then he take appropriate action according to the situation. The members of this department are every experienced.

INCOME TAX MATTERS
As required by the tax authorities of the Govt. of Pakistan, whenever the company makes purchases from the supplier, gets services on contract or on commission basis, the amount paid to the party is tax deducted. When the company will make the payment to the party (supplier, contractor or commission agent) it will deducted the tax from the amount to be paid to them.
Tax deducted are payable to the Income Tax authorities. When the company makes the payment of this tax, a Tax Challan is filled and prepared by the section and after payment it is filed into the tax Challan file after debiting the tax payable. The sellers, contractors and agents from this section then receive these challans for their official uses.
SALES TAX MATTERS
Sales Tax is deducted from sellers at the time of sale. The company also pays the sales tax to the suppliers, but this sales tax has claimed as refund and it is to be adjusted from total amount of Sales Tax payable, then remaining payable amount is to pay to the Sales Tax Department.

SALES TAX REFUND PROCEDURE AT FSML
When the company makes the purchases of the raw material and other items with the value of the goods, it also pays the sales tax; this tax is called the out put tax.
When the company sells the sugar or other by-products it receives the amount from the buyer including the sales tax this tax is called input tax.
As stated earlier when the company’s out put tax is greater than the input tax it has the tax receivable amount in positive side and it has the facility to get the tax refund from the sales tax authorities.
The sales tax return Challan is filled in which the in which the information are written relevant to the tax payable and receivable. The sales tax refund claim can only be made for the period one month before the 20th of the next month so the sales tax section to work in accordance with this requirement.
Following documents are also prepared and presented to the sales tax authorities if and when required:
Bills of the entry / tax invoices indicating the purchases.
Bills if exports indicating the exports, their receipts, dated and evidence from the custom authorities of the goods exported.
Sales tax returns photocopies of the last three months.
Photo copies of the sales tax registration / application.
5. Photo copies of the purchases, supply (I.G.P & O.G.P).
EXPORT/IMPORT DEPARTMENT
Export/import department is the department, which is dealing matters about import or export. With the help of this department, required material can be imported or exported. This department is working under Export Officer.

FUNCTIONS
The main function of this department is to open L/C’s in different banks according to requirement of purchase department. The main goal of this department is to work effectively & efficiently all the time.
Normally this Department performs following activities:
Opening of L/C’s.
Clearance of items/material.
Keeping Record of import/export documents.
Dealing With Banks about export/import matters.
EXPORT ORDER EXECUTION
PROCEDURE
INQUIRY
Customer inquires are received via Telex, Fax and Letters. These are directly sent to Chief Executive for review. After Chief Executive’s review, these are sent to department Incharge. After careful analysis, these inquires are replied after Chief Executive approval.
COSTING
Costing sheet prepares for Chief Executive’s approval. In absence of Chief Executive’s department Incharge approves price.
COSTING APPROVAL
Chief Executive’s gives approval or may suggest any other price to be offered.
CONTRACT REVIEW & ISSUE
Section Incharge takes following steps before issuing a contract:
Prepare contract review check sheet.
The requirements are adequately defined and involvements of production areas are specified.

In-house / Out-house, have the capacity to meet the order requirements.
PRICE QUOTATION
In getting approval of costing and review of customer’s requirements, prices are quoted to customers for confirmation.
CONFIRMATION OF SALE CONTRACT
If customer confirms the price offered, sale contract is issued to the customer with complete details of price, quality, delivery, payments terms etc.
LETTER OF CREDIT (L/C)
Customer establish / opens L/C well before shipment time. In case of delivery in receipt of L/C, concerned section Incharge reminds customer. After receipt of L/C, these are checked with regard to ordered goods, prices, shipment details, marketing, shipment negotiation elates etc. Discrepancies in L/C are noted and informed to customer for ratification.
DISPATCH OF GOODS
Molasses is dispatched to the customers. If the shipment is to be custom cleared from Karachi, goods are sent to Karachi on trucks with all necessary records. Dispatched goods are detail noted in relevant registers.
IMPORT OF GOODS/SPARE-PARTS
PROCEDURE
Procedure mentioned above reversibly used for import.
PURCHASE DEPARTMENT
Purchase department is the department, which conducts all the purchase for head office and site. This department plays very important role for maintaining discipline in the mills. Purchase department is working under Manager Purchase, who is B.Com + C.A-Articles.

FUNCTIONS
The main function of this department is to purchase Spareparts, Store Material, Chemicals, P.P Bags etc. The main goal of this department is to purchase required items at convenient rates.
This department conducts all the purchases. There is also a Purchase Assistant in this department to keep the records. Whenever any particular department requires any part of material/goods, its head makes a demand of items to be required. This demands contains the information like, items description, quality, quantity and others. The departmental head signs the demand and sent to the purchase department, then purchase department sent it to Chief Executive for final approval.
The Manager Purchase has the list of preferable suppliers of the certain items. When any item is required, first he get rates from market though purchasers, then he compare market rates, and making a purchase order of the supplier which provide the material/items at convenient rate after obtaining verbal or written approval from the Chief Executive.
Purchased material sent to the mills premises through rented vehicle or the supplier is sending material/items according to the contract.
In Purchase Department work is done according to the following process:
1. Purchase Requisition received from store of site or head office, which contains items code, items description and balance in the store.
2. Purchase Department sends this requisition to Chief Executive for approval.
3. Purchase Department collects quotations from different sellers after approval from Chief Executive.
4. Quotations are compared and summery sent to Chief Executive.
5. Purchase Order is prepared for required material / items after getting approval from the Chief Executive.
6. Delivery of required items to Site Store / Head Office Store.

SALE DEPARTMENT
Sales department is the department, which deals the sale of sugar and other by-products. Sales department is working under Sales Officer.

FUNCTIONS
The main function of this department is the sale of sugar, molasses, baggasse & mud. The main goal of this department is to sell the stock at best available market price. To keep the record of sale of sugar and other by-products Computer Software is used. All transactions of sale are posted daily in computer.
Following record are maintain by Sale Department:
Sales Register.
Stock Reports.
Delivery Orders.
Invoices.
Sales Tax Detail.
Parties Position.
In Fatima Sugar Mills Limited normally all the sale is done through agents. There are three main parties of sale; all sales are done through these parties. Delivery Orders are sent to site according to contract. Without delivery order godown incharge cannot dispatch the sugar bags.
BANKING SECTION
The Company kept Current Accounts almost in every bank, but most business is routed through these banks, which are as follows.
Allied Bank of Pakistan Limited
National Bank of Pakistan Limited
Muslim Commercial Bank Limited
Habib Bank Limited
United Bank Limited
Bank Al-Falah Limited
Emirates Bank International
The company has also kept Loan Accounts in all above-mentioned banks. The company has routed its most of the import business from Allied Bank of Pakistan Limited, most of the L/C’s are opened in Allied Bank of Pakistan Limited.
The company is also availing Cash Finance Facility from the above mentioned banks against pledge of sugar bags. Normally at the beginning of the crushing season sugar bags are not sold in market, because these bags are used against Cash Finance Facility from banks. Cash Finance is the main source of the company when there is a shortage of funds.
The company has also availed Short Term & Long Term Finances from following banks.
Investment Corporation of Pakistan
Allied Bank of Pakistan Limited
National Bank of Pakistan Limited
Muslim Commercial Bank Limited
Habib Bank Limited
United Bank Limited
This section is the very important part of the Accounts Department. All the functions that are related to the banks are done in this section. Key functions of the section are as under:
Preparation of Bank reconciliation statement.
Treatment of the bank’s debit and credit advices.
Preparation of Demand Drafts, Telephonic Transfers, Pay Orders, Cheques with reference to payments to the parties.

BANK RECONCILIATION STATEMENT
Some banks of the company sends the statements of the accounts to the company on daily basis and some sends at the end of every month or on the demand of the company from time to time. This statement has all the records of transactions between the company and the bank during that specific period.
Accounts department reconciles the bank statements with accounts, some time due to some reasons, transactions do not equally matched with the company’s records. Reasons are as follows:
Cheques issued by the company to any party but not still presented to the bank for payment.
Cheques deposited but not cashed or canceled due to some reason.
Any amount debited or credited by the bank but not treated in the company’s accounts.
All these missing items are required to be settled in the company’s accounts.

DEBIT & CREDIT ADVICES
Banks sends debit and credit advices to the company according to the transactions. These advices are the reflection of the transactions between the company and the bank.

When any amount is deducted from the company account due to any reason like:
Deduction of Bank Cheques.
Payment of any amount to any party on the behalf of the company.
The adjustment of loan.
For these amounts, the bank made the Debit Advice, means that certain amount has been deducted from the company’s account, and sends it to the company. Ultimately the company considered these as the expenses and deducts this amount from the banks ledger. Accounts department credits these amounts to the banks ledger through the B.D.N Voucher (Bank Debit, Credit Note), this voucher is firstly signed by Accountant, secondly by the Chief Accountant, thirdly by the Financial Controller, fourthly by General Manager, fifthly by Internal Auditor and at the end this voucher sends to Chief Executive for final signature.
Moreover, when the bank adds any amount in the company’s account due to some reason like:
Re-imbursement of loan / refinance.
Depositing of any amount in the bank by the company.
Depositing of any amount in the bank from any party in the company’s deposits.
Mark-up on the company’s deposits.
For these, the bank sends the Credit Advice to the company, means that the certain amount has been added to the company’s account and sends advice to the company. The company add this amount to the banks ledger. Accounts department debit these amounts to the banks ledger through B.D.N Voucher (Bank Debit, Credit Note), this voucher is firstly signed by Accountant, secondly by the Chief Accountant, thirdly by the Financial Controller, fourthly by General Manager, fifthly by Internal Auditor and at the end this voucher sends to Chief Executive for final signature.

LETTER OF CREDIT
One of the most important functions of the commercial banks in the world is to finance the imports and exports trade. There are several ways of financing international trade, of all the methods available at present, the documentary letters of credit are most important because they undertake the beneficiaries to obtain money either immediately or within a set period; provided the beneficiary fulfills the conditions lay down in the letter of credit.
Article – 2 of the uniform custom and practice for documentary credit (brochure 500) of the international chamber of commerce (ICC) defines the documentary credit as under.:
“Any arrangement, however, named or described, whereby a bank (the issuing bank), acting at the request and on the instructions of a customer (the applicant) or its own behalf is to make payment to or to the order of a third party (the beneficiary), or is to accept and pay bills of exchange (draft/drafts) drawn by the beneficiaries, or authorizes an other bank to effect such payment, or to accept and pay such bills of exchange (draft/drafts), or authorizes an other bank to negotiate, against stipulated documents, provided that terms and conditions of the credit are compiled with.”
From the above definition it means that a documentary letter is a bank’s written undertaking given to the exporter for payment of a certain amount of money on behalf of the importer provided the exporter tenders to the bank or its overseas agent, the specified document within a specified period in accordance with the terms of understanding.
DATA ADMINISTRATION
Business environments are becoming more and more complex with the passage of time. The cope with changing environment and modern technology, a lot of energy & knowledge is needed. Media and information technology are of utmost important and discoveries in the computer technology have been made in the past few decades.

SOFTWARE SPECIFICATION
FSML got their system development in FoxPro Language. FoxPro is a very powerful language. They have following systems computerized.
Accounts system
Sales System
Purchase System
Store System

HARDWARE SPECIFICATION
AT SITE
ACCOUNTS DEPARTMENT
Main Server Pentium-III
Four Clients Pentium-I
Printer LQ-2170

SALE DEPARTMENT
Main Server Pentium-III
Client 486
Printer LQ-2170

PURCHASE DEPARTMENT
1. Main Server Pentium-III
2. Clients Pentium-I
Printer LQ-2180

AT HEAD OFFICE
In FSML, they are using network computer system. Their terminals are network through networking. They have nine terminals on the whole.
All the terminals are dumb terminal and the centralized processing machine in installed in the office of manager MIS dept.
They are also using two personal computers for documentation that is not related with their computer system.

Presentation of Reports
No one system can said computer until it generals certain reports. So the system of FSML is also generating a broad no. of reports. Following are some important reports produced by this system;
Listing of all master files
Listing of all ledgers files
Sub ledgers
Edit lists
Due balances
Day Book
Purchase day book
Sale day book
Trail Balance
Cash Book
Monthly Balances
Outstanding Cheques
Trail Balance
Monthly Profit & Loss Account.

Data Flow
In FSML, they are using Online System. In accounts dept. they are using four vouchers. These vouchers are as follows;
Journal Voucher
Bank Voucher
Debit Voucher
Credit Vouch
Following are the files that are being maintained there;
Char of Account
Employees
Buyers
Suppliers
Banks
Letter of Credits ( for Sale & Purchase )
The data about any voucher flow in a way that first of all, it comes to Keypunch Operator. He recognizes the type of voucher i.e. JV/BV/DV/CV. After recognizing the type, he assigns a specific code to the voucher depending upon that with which entity this voucher is related. After the Keypunch Operator has assigned the code to the voucher then the accountant checks that whether the voucher is assigned the right code or not. In no, than it is sent check to the K.P.O to correctly assign their code to the voucher. If yes, then it is again sent to the K.P.O to key input that voucher. Then edit list is displayed on the accountant’s screen and he checks the voucher entry. If the finds any error in the entry he asks backs the K.P.O to make the entry correct. If there is no error in inputting the voucher then it is sent to be stored in the hard disk.

Data Security
The issue of data security is crucial in the era of centralized database. We use the term “data security” to mean protection of the data in the database against the unauthorized or accidental disclosures, alteration or destruction. Realizing that perfect security is unattainable, the objective of data security is to minimize the risk and probability of loss and disclosure to the lowest affordable level.
There, in FSML, they are securing their data in following ways;
Backup
Protecting from unauthorized access
Watchman
UPS (Un-interruptible Power Supply)
Stabilizer
We have already described that FSML is being running their computer network under the environment of VM.s / CMs Operating Systems. Their Operating Systems provides them he facility to set different level passwords. Each level may be allocated different rights that are pre-specified. They are using five levels of data securing and only the authorized person can access the system up to the extent they have authority. These levels are as follows;

System Level Security
This is highest level of security. It has all the possible rights. It has access to change the different operating system protocols. It can change the different passwords. It can modify the level of rights given to different users. In FSML, M. Tahir, the head of MIS Dept, carries it.

Field Level Security
This level of somewhat different, with reference to other levels. The manufacturer of operating system uses this level. Whenever, there is any problem in system, manufacturing personnel are called. The personnel of manufacturing firm come there and input their password and work there to save the problem without disturbing the personnel of MIS Dept.

Manager Level Security
This is the top most level in operational work. Manager MIS Dept also holds this level. Under this level, the manager can perform any kind of activity regarding the management of the data.

Programmer Level Security
The next lower to the manager level is the programmer level. In this regard the programmer of the organization can make any modification in the source program of the system. The manager of MIS Dept. FSML also holds this level.

User’s Level Security
This is also called the K.P.O level. At this level user of the system have the minimum rights. Their main work is to input the data and to generate different reports.

ORGANIZATIONAL INCENTIVES
Although the FSML has no formal human resource department (HRD), a lot had been done and is being done to make the moral of the workers of the Organization high & high.

WPPF (WORKERS PROFIT PARTICIPATION FUND)
This is the name of the fund given to workers when company earns profit. It is 5% of the total profits earned during an accounting year. Every workers / Employee whose not pay is up to Rs. 3000/= is eligible for getting this fund.

BONUS POLICY
The company maintains a bonus policy for its workers to initiate the motive to work whole-heartedly for increasing workers and organizational efficiency. According to this policy, company shall give a sum equivalent 60% basic salaries of worker at the end of the every accounting year in case of report earning.

SOCIAL SECURITY FACILITY
The company deducts a nominal amount in the account of social security from the salaries of the workers on monthly basis. This deducted amount is submitted to the social security and they allot a social security number with an identification card, which shows that the worker had got the facility of social security. Major advantage provided through social security number is the free health care including medical and surgery facilities from the specified social security hospitals.

E.O.B.I(EMPLOYEES OLD AGE BENEFITS INSTITUTION)
This is an important deduction from the salaries of the workers for the regular income in the old age / post retirement age so that workers have a thought of relief that there would be no financial problem after the expiry of his employment. EOBI is an institution where this deducted amount is accumulated for the future use when these people will not be able for employment.

HOUSING FACILITIES
The workers have provided with the residential facilities and small quarters are provided to the workers. These quarters are often visited by the resident director for the checking of cleanliness and other important matters if raised by any situation from the workers side.

TRANSPORTATION FACILITIES
As the Mills is located at 10 KM on Khanewal Road, which is far from Multan city. So the company provides transportation facilities for its workers and employees at limited level.

FOR SCHOOL CHILDREN
School Children of the housing area of the factory are provided with a KIA Van for transportation on both sides from factory to their schools.

COMPANY CANTEEN
Company has given the provision of a canteen / café-teria for its workers and employees. I provided food and refreshment items to the workers on very cheap rates. The quality of the food available in the factory canteen is under the supervision of the labor officer.

BIG LUNCH
According to this scheme, company gives lunch to all its workers / employees at Mills, once in every month.

LOAN TAKING FACILITY
The company has provision for loan to its workers / employees. The workers / employees refund this loan in installments. These installments are deducted from their respective salaries.
QUALITY MANAGEMENT
The ISO 9000 is major consideration for the every type of organization and especially for the textile industry. No firm can export its products in future without ISO 9000 certification. Realizing the situation organization is analyzing the situation for necessary actions. This discussion includes following topics:

ISO 9000
ISO 9000 Quality System standards are currently, one of the highest criteria of quality in the world trade. Up to now more than 60 countries in the world have officially adopted this standard. The European Community (EC) is the most active region in prompting them. Presently companies that produce regulated products, such as medical devices, must be registered. The EC encourages all products to register their products.

QUALITY MANAGEMENT IN PAKISTAN
The industrial culture in Pakistan is undergoing changes from traditional information management to modern formal management. With the wide spread establishment of management schools, increasing collaboration with international companies and deregulation policies of government, the management crises in industries is minimizing. The industries are expanding an people are looking more and more into new avenues for exports. Due to this phenomenon, the competition in both local and export market is increasing.

WHAT IS ISO 9000
The ISO 9000 (International Organization for Standardization), is a worldwide federation national standards bodies that prepares and issued standards. The ISO 9000 series was issued for the first time in 1987 and has had a great impact on the manufacturing industries. They establish requirements for Quality Assurance and Quality Management System of manufacturing, services and other organizations. They do not refer to any specific technical specification of products. The elements that are described in them cove: organizational structure, personal responsibilities, authorities, training organizational channels, procedures, documentation and records process control and resources allocation for production and all related departments that directly affect product quality.
These standards are generic and apply to all types and sizes of companies. However, they are written in general terms. While applying these standards to a company, they must be interpreted professionally to suit the applicability. Clear concepts, professionalism, and involvement of all employees (from top to the very bottom) are required.
The basic aim of ISO 9000 is to provide a management framework to prevent “Non-Confirming” in every stage. From design through to after sale servicing. A minimum framework is provided for a quality management system to ensure a basis for contracts between purchaser and suppliers.
ISO 9000 registration is given only after assessment by an approved registration body. There are a number of bodies operating worldwide. A company seeking registration is free to choose any accredited registration body.
After a company applies to a registration body, its Quality Auditors, whom are specialist in this area, formally visit the plant, interview personnel, evaluate the plant, and if it complies with the standards, issue a certificate to the company.

PRACTICES FOR ISO 9000
Being an export oriented organization as more than 80% of total of the company are of export nature. So company’s most dealings are in international market. Main buyers are Japan, Korea, Taiwan & U.A.E.
International purchases are very much conscious about the quality and they prefer the supplier who have either implemented the quality control or trying to do so.
So ISO 9000 certificate is very much important to compete in international market, to increase exports of the company as well as the country to have sound foreign exchange reserves, which are very critical factor for an economy.
In FSML, they share still not recognized the need for ISO 900 certificate. The reason behind this is, that the quality certificate ISO 9000 is the requirement of EC i.e. EC EURPOIAN country, while the company’s main buyers are Japan, Korea, Taiwan. But it is necessary for the company to run a comprehensive program of quality achieving and maintaining.

RATIO ANALYSIS
LIQUIDITY ANALYSIS
NETWORKING CAPITAL RATIO
Year 2004 2005
Current Asset 224290711 503118870
Current liabilities 249930033 619463159
NWC 25639322 116344289

CURRENT RATIO
Year 2004 2005
Current Asset 224290711 619463159
Current liabilities 249930033 619463159
Ratio 0.89:1 0.812:1

QUICK RATIO
Year 2004 2005
(CA-INV) 176241782 150200878
Current liabilities 249930033 619463159
Ratio 0.7:1 0.24:1

CASH RATIO
Year 2004 2005
Ratio 0.09:1 0.009:1

ACTIVITY RATIO
INVENTORY TURNOVER RATIO
Year 2004 2005
CGS 604089035 2387843626
Inventory 48048929 352918000
Ratio 12.57 6.76

AVERAGE AGE OF INVENTORY
Year 2004 2005
AAI 360/12.57 360/6.76
Ratio 28.6 53.25

AVERAGE COLLECTION PERIOD
Year 2004 2005
ACP 3133739/2256826 20644760/6920908
Ratio 1.38 2.89

ACCOUNT RECEIVABLE TURN OVER
Year 2004 2005
A/RTO 360/1.38 360/2.98
Ratio 260 120
OPERATING CYCLE
Year 2004 2005
Operating cycle 1.38+28.6 2.98+53.25
Ratio 29.98 56.23
CASH CONVERSION CYCLE
Year 2004 2005
CCC 29.98-5.91 56.23-1.09
CCC 24.04 55.14

AVERAGE PAYMENT PERIOD
Year 2004 2005
APP 8675929/1466468 7390871/6736804
Ratio 5.91 1.09

ACCOUNT PAYABLE TURN OVER
Year 2004 2005
A/PTO 360/5.91 360/1.09
A/PTO 60.91 330

FIXED ASSET TURN OVER
Year 2004 2005
FATO 812457543/644644379 2491526879/602625379
Ratio 1.26 4.13

TOTAL ASSET TURN OVER
Year 2004 2005
TATO 812457543/880682087 24915267879/1117663503
Ratio 0.92 2.229
DEBT ANALYSIS
DEBT RATIO
Year 2004 2005
Debt Ratio 619990432/880682087 928967379/1117663503
Ratio 0.7 0.83

DEBT EQUITY RATIO
Year 2004 2005
DER 370060399/260691655 309504220/188696124
Ratio 1.4 1.6

TIME INTEREST EARNED RATIO
Year 2004 2005
T.I.E.R 191923537/65960804 53316779/121874095
Ratio 2.90 times 0.43 times

PROFITABILITY ANALYSIS
GROSS PROFIT RATIO
Year 2004 2005
GPR 208368508/182457543*100 103683253/2491526879*100
Ratio 25.6% 4.16%

OPERATING PROFIT RATIO
Year 2004 2005
O.P.R 191923537/812457543*100 53316779/2491526879*100
Ratio 23.6% 2.13%

Cash from operating activity Rs. Rs. Rs.
Earning before interest and tax 52622125
Less taxes 6189
Earning after interest and tax 52615936
NON CASH EXPENSE
+ Accumulated depreciation 45466558
Total 98082494
CHANGE IN ALL CURRENT LIABILITIES
+ Current portion of redeemable capital (5198226)
+ Short term finances 295703363
+ Creditors 79027989
Total Cash Provided By 369533126
Change in current assets other than cash and market securities
+ Stores (8370733)
+ Stock (304869071)
+ Debtor (17511021)
+ Advances 33365214
Total (297385611)
72147515
Cash providing by operating activity 170230009
INVESTMENT ACTIVITY
+ Change in gross fixed assets (34475589)
+ Change in long term liabilities 267043
+ Change in long term deposit (439300)
Cash used by investing activity (3619815)
FINANCING ACTIVITY
+ Change in stock holders equity 0
+ Change in redeemable capital (61911973)
+ Change in deferred liability 1355799
+ Interest payment 124611467
+ Dividend 0
Cash used by financing activity (185167646)
+Opening balance of cash & M/S 24709462
Ending balance of cash & M/S 6152010

INTERPRETATION
LIQUIDITY ANALYSIS
Liquidity ratio refers to the ability of an organization to meet its current obligations as and when they come due.
Net working capital is positive in 2006, which is Rs.116344289. The net working capital indicates that current assets are being financed through long-term debts. Current assets are less productive and long-tem debts are costly source of finance. So by using costly source of finance in less productive asset will lead to low profitability and on the other hand positive net working capital suggests that company is able to meet it short terms obligations on time and there is no fear for its technical insolvency. So the risk of insolvency is low and profitability is low.
Current ratio shows that the company has less then Rs1.current assets against the current liability. The situation is very poor and not satisfactory. Quick ratio is good but cash ratio is very poor. Over all the situation of the company with respect to liquidity analysis is very poor.

ACTIVITY ANALYSIS
ACTIVITY RATIO
Activity analysis is used to measure the speed at which current account can be converted into sales, efficiency, or effectiveness with which a firm manages its resources.

INVENTORY TURN OVER
Inventory turn over ratio has not improved in 2006 as compared to 2005. It shows that the company is able to convert its inventory in to sales quickly.

AVERAGE AGE OF INVENTORY
Average age of inventory has improved in 2006 which is the negative sigh and will result in reduce profitability as it involves storage and opportunity cost.
AVERAGE COLLECTION PERIOD
Average collection period has improved in 2006 as compared to 2005. Operating cycle of the company has increased. So more cash is required to finance the operating cycle.
AVERAGE PAYMENT PERIOD
It has reduced in 2006 which is favor able so the cash conversion cycle of the company has also increased. So company will take the longer time period to convert its account receivable into cash.

ACCOUNT PAYABLE TURN OVER
It also improved in 2006 as compared to 2005.

ACCOUNT RECEIVABLE TURN OVER
It has decreased in 2006 as compared to 2005.

FIXED ASSET TURN OVER & TOTAL ASSET TURN OVER
Both have increased in 2006 as compared to 2005, which is very good sign.

PROFITABILITY ANALYSIS
Gross profit ratio has decreased in 2006 as compared to 2005, and also operating profit ratio. It shows the worst condition of the company. The company has loss in 2006.
PROBLEMS OF SUGAR INDUSTRY
Quality of sugarcane is not very good, because of lack of research in this sector.
Role of Government in developing varieties of sugarcane is not very significant; only some private institutions are doing some research in developing various varieties for higher yield.
Government’s wrong policy for import of raw sugar.
Heavy duties on export of sugar.
Instability of exchange rate also creates problems for exports and imports.
Increase in cost, due to Government policy of increasing prices of sugarcane, furnace oil & electricity.
Low sale price of sugar in the market.
Higher rate of mark-up on Finance Facilities.
Lack of institutional finance for modernization efforts.
SWOT ANALYSIS
STRENGTH
Having a professional management.
Friendly and cooperative working environment.
Technical know how and well qualified staff.
Better financial resources.

Weaknesses
Lack of research and development.
Lack of market survey

Opportunities
Entering into new markets
New government and industrial projects

Threats
Invisible trade barriers.
Strict Govt. policies
Instability of exchange rate
Low sale price of sugar in market
Higher rate of mark up
COMMENTS IN BRIEF & SUGGESTIONS
After a short careful analysis, I come to know that the financial position of the company is very strong than the other sugar mills in sugar industry.
As the financial analysis shows that the company is high geared. So it is depending on outsider’s funds i.e. borrowed capital. In the result of this, it has to bear the large amount for interest and bank charges. This is also a major burden on its financial position. Company should get from its bankers, some relaxation in long-term loans & its cost.
In Fatima Sugar Mills Limited there is no formal marketing department to promote and introduce its output in local & international market. There is a crucial need for having a disciplined & coordinated program of marketing to boost up sales.
There is a need of searching the new customers in local market.
Sugarcane seeds should be provided to the growers.
Fatima Sugar Mills Limited should advise its field supervisors to be more active in field, coordinate with growers and try to understand problems of the growers.
Fatima Sugar Mills Limited should appoint skilled persons in every department.
Local worker should be preferred.
Fatima Sugar Mills Limited should introduce the new brands of sugar packets, such as 5 Kgs, 10 Kgs, and 25 Kgs.
Branch of Sales Department should be setup in mills to provide the selling facilities to the local agents & dealers.
Fatima Sugar Mills Limited should conduct market surveys and research to know the customer’s views and suggestions.
Sale Department should be engaged only in sales activities and perform only following activities.
1. Sale of White Refined Sugar.
2. Sale & purchase of Molasses.
3. Sale & purchase of Baggasse.
4. Sale of Mud.
5. Maintaining a Sale Register.
Remaining work should be done by Accounts Department, which are as follows:
Keeping whole record of Sugar Parties, agents and Customers.
Posting of Sale Voucher.
Posting of Cash Received from Customers Voucher.
Internal Audit Department should check each voucher.
Internal Audit Department should conduct monthly audit of accounts and submit its report to Chief Executive, General Manager, Financial Controller and Manager Accounts.
Only one room is available for external auditors in whole group, at least two rooms should be arranged permanently for external auditors.
Computer department should also establish at Head Office.
Computers, which are currently using at Head Office, should be replaced because of low speed.
Accounting Software should also be replaced because this software cannot generate various important reports.
At least one I.T Engineer should be appointed at Head Office.
Job rotation principle should be implemented.
Tax department should be established, which deals only tax matters.

FATIMA SUGAR MILLS LTD.
ORGANIZATIONAL STRUCTURE

TABLE OF CONTENTS

Sr. # Topic Page #
01 Growth of Sugar Industry in Pakistan 04
02 Introduction 08
03 Main Departments at Site 14
04 Mechanical Department 15
05 Electrical Department 16
06 Chemical Department 17
07 Cane Department 18
08 Accounting Department 20
09 Admin Department 29
10 Main Departments at Head Office (Finance) 33
11 Accounts Department 35
12 Export & Import Department 40
13 Purchase Department 44
14 Sales Department 46
15 Banking Section 47
16 Organizational Incentives 61
17 Quality Management 65
18 Ratio Analysis 69
19 Statement of Cash Flow 74
20 Interpretation 76
21 Problems of Sugar Industry 79
22 SWOT Analysis 80
23 Comments in Brief and Suggestions 81

Pepsi

PEPSI COLA

Introduction:

Pepsi Cola started in the January 1898, from a small Drug store in the city of North Carolina. The owner of the Drug store, Mr. Caleb Bradham, prepared a drink, which the customers called “the Bred Drink”. Bred registered this drink with the name of Pepsi Cola in 1903. Then he started his own production at Marco level and established his own company. The business expanded and this drink got fame time. In 1909 this company reached to 24 states of America with more than 250 dealers. The very first packing of Pepsi was in 16.5 ounce.

In 1932 Pepsi cola has introduced its new packing in 12 ounce. In 1950 Pepsi Cola has started its new Advertising Campaign with the name of “Refresh without Filling”. It also changed the chemical formula and decreased its sweetness and calories.

With the efforts of the Sales & Marketing Department, Pepsi got so much fame that it established new plants at a rate of thirty per annum. In 1985 the design of the bottle has been changed after 20 years. And a new and attractive packaging has been offered with two new flavor i.e., Teem & Mirinda.

Today Pepsi is available in more than 160 countries of the world including Soviet Union & China.

HISTORY OF PEPSI COLA:

2001
Pepsi puts “a little twist on a great thing,” introducing lemon-flavored Pepsi Twist and Diet Pepsi Twist. The product launch marks the return to lemon-flavored colas for Pepsi, which distributed Pepsi Light until the mid- 1980s. Colombian singing sensation Shakira stars in a series of new commercials for Pepsi just as her debut English-language album hits stores in the U.S. At the same time, Pepsi agrees to sponsor the Latin pop star’s worldwide concert tour. Pop superstar Britney Spears appears in her first Pepsi commercial during the 2001 Academy Awards. The high-energy spot also runs online, where more than 2 million fans click their way to Britney’s own version of “The Joy of Pepsi.” Also Ricky Martin and Robbie Williams signed for Pepsi.

2002
In December, American music and film sensation Beyoncé Knowles joins the Pepsi family. The company introduces Pepsi Blue. A fusion of berries with a splash of cola, the blue-hued soft drink is created by and for teens. Pepsi-Cola becomes the official soft drink sponsor of the National Football League in U.S. Supermodel Cindy Crawford unveils new Diet Pepsi graphics during the March Academy Awards telecast. The new packaging features a bubbly blue background that reflects the brand’s light, crisp, refreshing qualities. Cindy’s commercial also helps introduce a new Diet Pepsi tagline, “ Think Young. Drink Young.”

2003
Pepsi-Cola unveils a new advertising campaign, “Pepsi. It’s the Cola,” which is the brand’s first major campaign shift since 1999. The new campaign highlights the popular soft drink that goes with everything from food to fun. Pepsi launches the biggest outdoor campaign in Australian history. Featuring aspirational local talent: Holly Valance, Harry Kewell and Chloe Maxwell. In Europe Pepsi launche campagne “OK Corral” with football players.

2004
Pepsi launches two biggest new campaigns: “Dare for more” with appearance of Beyonce, Britney, Pink and Enrique Iglesias, and “Foot battle” featuring greater football talent: David Beckham, Roberto Carlos, Francesco Totti, Ronaldinho, Raul, Quaresma, Diego Cunha, Fernando Torres and Van de Vaart.

Shamim & Co. (Pepsi Cola)

INTRODUCTION:

Shamim & Co. (Pvt.) Ltd. was established in 1964, Shamim & Co. is a franchise of Pepsi Cola International Which deals in CSD (Carbonated Soft Drinks). Pepsi Cola International have 9 (nine) Franchises all over Pakistan. Shamim & Co. (Pvt.) Ltd. Jail Road Multan in one of them covering 18 District & 135 Stations.

Shamim & Co. Multan has very committed staff and this is the reason that it captures More than 70% share of market share.

Company has now serviced new experienced & competent sales staff & increases this share form 70% to 80 or 90%.

As for as Distribution / Placement is conserved company has a very well- establish distribution network covering whole of the franchise areas.

Depending on the potential of the town we have one and more than one distribution in each town. Sale supervisor / Sale officer is responsible for all the activities of that distributor. He looks after the stock availability, contingencies and all the routes covered by the salesman of that distribution. Salesman training is also a main responsibility of sale supervisor.

Company has invested too much money in shape of Coolers, Visi Coolers , Counters and Cabin.

Which are offered to those shops which are producing good sales to promote sales & oblige these shops?

All the services matters of coolers and maintenance and look after of these assets are also the responsibility of our sales force.
Every salesman in the distribution network is covering a specified area in which all the points and shops are listed in a “Route Card” salesman is bound to fill that

Route Card with the sales figures of every point on that specified day.

MAJOR COMPETITOR:-

Pepsi Cola major competitor is Coca Cola in all over the world,

About Coca Cola:

Mission of Coca Cola international is “From our heritage to our mission to the people who bring our products to thirsty consumers, the Coca Cola is a part of lives everywhere”.

In order to achieve this mission, we must create value for all the constituents We serve, including our consumers, our customers, our bottlers and our communities.

The Coca Cola company creates value by executing a comprehensive business strategy guided by six key beliefs;

Consumer Demand drives every thing we do.
Brand Coca Cola is the core of our business
We will serve consumers a broad selection of the nonalcoholic ready to drink beverage they want to drink throughout the day.
We will be best marketers in the World.
We will think Globally and act Locally.
We will lead as a model corporate citizen

Objective of our business strategy are to increase volume, expand our share worldwide nonalcoholic ready-to-drink beverage sales, maximize our long term cash flows and create economic value added by improving economic profit.

Strategic Marketing:-
The Coca Cola Company versus PepsiCo

Market Share:

Pepsi-Cola ranked as the second -best selling soft drink in American supermarkets in 2000. A consistent runner-up to Coca-Cola Classic, Pepsi- Cola was joined by three other PepsiCo products in the year 2000 rankings – Mountain Dew, Diet Pepsi and Caffeine-Free Diet Pepsi.
Pepsi Coranked second in American CSD market share to the Coca-Cola Company, holding 31.4% during the same year. Coca-Cola Classic outsold all soft drinks in America during the year 2000, netting over USD$ 2 Billion at the cash register. The Coca-Cola Company maintains the CSD market as its primary line of business. With subsidiaries located throughout the globe, Coca-Cola is easily able to dominate the Global CSD market.

In the year 2000, Coca-Cola generated only 29% of its operating income in North America, representative of its large volume of international sales.4 inversely; PepsiCo maintains lines of business in both the CSD market and the snack foods market.

According to the Beverage Marketing Corporation (BMC), Coca-Cola has held command of over half of the world’s CSD market since 1998. On a brand-by-brand scale, Coca-Cola took five of the top seven spots globally in 1999, with standard-bearer Coca-Cola holding a 28.6% share of global CSD volume. Pepsi-Cola was in second place with a 10.8% share, while PepsiCo’s Mountain Dew placed sixth in terms of global Volume.

Table : 2003 Market Share

Pepsi Cola Coca Cola
Market Share 31.4 % 44.1 %
No. of Countries 160 200
Variety of Product Large Large
Target Market Youth General
Strategy Focus Diff. Differentiation
Diversification Related Related

Market Penetration:

It is the shared goal of PepsiCo and Coca-Cola to increase the overall global consumption of their products. Kotler and Armstrong contend that improvements in advertising, prices, service and selection can increase repeat purchases and attract new consumers 7. In an attempt to increase market share during the famous “Cola Wars” of the 1980’s and 1990’s, PepsiCo initiated the “Pepsi Challenge” advertising campaign. Without changing their product, Pepsi temporarily enjoyed a heightened market share and began to penetrate further into the competitive American CSD market.

Coca-Cola responded with several attempts to counter the effects of Pepsi’s successful new marketing strategy. In late 1986, Coca-Cola renamed its top-selling CSD “Coca-Cola Classic” and launched a corresponding global advertising campaign. The success of Coca-Cola Classic has been based largely on the integrity of Coca-Cola’s original formula. Brand loyalty and insistence drive a large portion of the CSD market, and Coca-Cola has the advantage with their century-old formula.

In the 1990’s, Pepsi shifted their focus to the growing American teenage market. PepsiCo adopted a new marketing strategy which aggressively marketed through high school and college campuses. PepsiCo began selling contracts of exclusivity to hundreds of American schools, benefiting many schools with needed monies, and providing PepsiCo a direct link to American teenagers. While Coca- Cola has adopted a similar method of obtaining exclusive selling power, PepsiCo has followed up with various aggressive advertising campaigns using popular American teen icons to promote Pepsi products.

“The next generation” motto was replaced with “Joy of Pepsi” and “For those who think young,” targeting not only American youth, but the youthful mindset of every consumer. Pepsi continues to use teen and child icons to promote their products, while Coca-Cola has latched onto the remaining Baby-Boomer market. Through product placement and exclusivity contracts with restaurants, sports arenas, amusement/theme parks and various large event coordinators,
Coke has been able to increase their overall visibility to counter

Pepsi’s latest marketing strategies.

Speaking on the success of PepsiCo’s aggressively competitive marketing strategies, PepsiCo Chairman/CEO Roger Enrico writes:

“Without Coke, Pepsi would have a tough time being an original and
Lively competitor. The more successful they are, the sharper we have to be. If
the Coca-Cola Company didn’t exist, we’d pray for someone to invent them,
And on the other side of the fence, I’m sure the folks at Coke would say that
Nothing contributes as much to the present-day success of the Coca-Cola
Company than… Pepsi.”

Market Development:

Identifying new and developing markets for current products – market development – is another method both Pepsi and Coca-Cola are presently using to increase overall sales. While PepsiCo’s shift in advertising to a younger audience can be considered market penetration, it also exhibits qualities of market development. Teenage Americans have not traditionally been looked at as a powerful consumer group until recent years. Identifying this developing market, among other demographic ‘micro-markets,’ Pepsi has been able to penetrate areas that Coca- Cola has not.

The Coca-Cola Company and PepsiCo alike have taken note of the potential for expansion in the geographic markets of China, India, Philippines. CSD market development ties in very closely with both market penetration and product development strategies. Many CSD preferences are tied to societal and/or cultural preferences and existing alternatives. Sprite and 7-Up (non-cola CSDs) have been very successful in African-American markets. In 2001, PepsiCo further augmented their marketing strategy to break into this previously unaddressed micro market with a new non-cola CSD named Code Red.

Product Development:

While targeting the African-American market, PepsiCo determined that its Mountain Dew line could be augmented with a new cherry flavor (Code Red). “PepsiCo also hit the streets to go after the black and Hispanic audience with whom Mountain Dew has traditionally not done as well. Rap jingles starring Busta Rhymes and Fatman Scoop hit the airwaves, and cases of Code Red mysteriously began to appear at the doors of inner-city influencers.”

Revisiting the “Pepsi Challenge” from the 1980’s and 1990’s, we see a larger attempt to increase market share with product development. Prior to releasing Coca-Cola Classic, Coca- Cola attempted to diversify their product with the 1996 introduction of Coke II. Altering the formula of their best-selling CSD, the Coca-Cola Company attempted to make the product more appealing to consumers. Coke II was very poorly received, and Coca-Cola’s attempt at product diversification failed with thousands of consumer complaints about the new formula.

In the brand-loyal CSD market, product modification is rarely well- received, as exemplified by the failure of colorless colas and the poor performance of recently released lemon-flavored colas.

Diversification:

Starting up or acquiring businesses outside of current markets and products – diversification – is an excellent way to strengthen a company. Profits and revenues generated by secondary or even tertiary ventures can provide additional resources to strengthen a businesses’ primary class of products. However, as Kotler and Armstrong explain, “companies that diversify too broadly into unfamiliar products or industries can lose their market focus.”
PepsiCo was faced with this very situation in the mid-1990’s with their restaurant ventures.

PepsiCo was operating with over 400,000 employees worldwide, many of whom supported one of the three fast-food chains under Pepsi’s banner. The hot food division of PepsiCo brought in the most revenue of any of their existing divisions, but was the least profitable. In 1997, PepsiCo spun off their restaurant businesses as Tricon Global Restaurants, in a move to keep from becoming too over-diversified.

PepsiCo, valuing its stability through diversification, moved to acquire Quaker and SoBe in 2001.Quaker specializes in health foods and is the industry leader in non-carbonated sports drinks. SoBe is a world leader in health and new-age non-carbonated beverages. PepsiCo correctly identified the global demand for more non-carbonated ready-to- drink beverages, and was able to move swiftly to diversify their holdings. Gatorade, a sports drink acquired with the Quaker purchase, sold slightly over USD$ 2 Billion in the year 2000 – rivaling Pepsi’s competitor Coca-Cola. Coca-Cola does not show any sign of moving into markets other than ready-to consume beverages, but still offers a wide array of diversified beverage products. The 239 beverage brands that Coca- Cola produces constitute a major portion of beverages available to consumers worldwide, covering dozens of micro-markets. Unlike PepsiCo, Coca-Cola has a long history of success with international marketing efforts and business strategy. Thus, rather than competing with Coca-Cola on in the international beverage arena, PepsiCo has ensured longevity with alternate product offerings.

PEPSI TODAY

An Overview

PepsiCo Inc. is among the most successful consumer product companies in the world with annual revenues of $24 billion and approximately 140,000 employees. Some of PepsiCo’s brand names are nearly 100 years old but the corporation remains relatively young. PepsiCo Inc. was founded in 1965 through the merger of Pepsi-Cola Company and Frito-Lay Inc. PepsiCo divisions operate in two major domestic and international businesses: beverages and snack foods.

Through our divisions PepsiCo has achieved a leadership position in each of these business segments: we are world leaders in beverage bottling and we are the world’s largest producers of snack chips.

PepsiCo’s brand names are some of the best known and most respected in the world and our restaurants are named as favorites by millions of people. PepsiCo has achieved a continuing record of growth. This record is based on high standards of performance, distinctive competitive strategies which are superbly executed, the personal and professional integrity of our people, business practices and products.

Our overriding objective is to increase the value of our shareholders’ investment through integrated operating, investing and financing activities. Our strategy is to concentrate our resources on growing our businesses, both through internal growth and carefully selected acquisitions within these businesses. These strategies are continually fine-tuned to address the opportunities and risks of the global marketplace. The corporation’s success reflects our continuing commitment to growth and a focus on those businesses where we can drive our own growth and create opportunities.

PepsiCo’s beverage business consists of Pepsi-Cola North America and PepsiCo International.

Pepsi assumes responsibility for supplying the essential ingredients of a product and it assures the bottler of exclusive right of sale within their specified geographical franchise area. It works with supplier firms to assure the availability of quality packaging, merchandising, and other related equipment made to standard specifications. It provides advertising campaigns and media support. It creates suitable promotional campaigns and marketing strategies. It offers aid in personnel training for sales and production staff. It makes available quality control facilities and technicians. It develops a national publicity effort and offers aid in formulating local level community relations projects. And, in addition to performing these functions, Pepsi offers service through a large field force, including specialists in a number of technical and marketing skills.

The bottler has reciprocal obligations in connection with their franchise right. They agree to only use approved advertising and distribute a finished product of unvarying high quality, to use merchandising materials, and to market the product vigorously.

Today, there are more than 400 Pepsi-Cola Bottlers in the US and more than 600 internationally. The product is sold in approximately 200 countries and territories. The Company itself operates only a relatively small number of bottling facilities, principally in larger metropolitan markets.

PEPSICO INTERNATIONAL:

PepsiCo International (PCI) is PepsiCo’s international soft drink operation and includes the business of Seven-Up International. PepsiCo beverages are available in about 195 countries and territories.

PepsiCo began selling its products internationally in 1934. Operations grew rapidly beginning in the 1950’s. Today PBI accounts for about 20 percent of all soft drinks sold internationally.

PCI organization consists of three geographic business units, each with self-sufficient operations and broad local authority. The three units are:

– Pepsi-Cola Europe
– Pepsi-Cola Latin America
– Pepsi-Cola Asia
PCI beverages are produced by a combination of independent franchised bottlers, joint-venture bottling operations and company-owned bottling plants. PCI is the soft drink market leader in more than 50 countries and territories including Saudi Arabia, Venezuela, Russia, Pakistan, Hungary and Vietnam. Other key markets include Mexico, Saudi Arabia, Venezuela and Argentina. PI also focuses on high potential, underdeveloped markets, such as China and India. PI has also established operations in the key emerging markets of Eastern Europe, including Budapest, Warsaw, Prague and Moscow, where Pepsi-Cola was the first US consumer product to be marketed.

The division’s flagship product is Pepsi-Cola, with its brand extensions Pepsi Max, Pepsi Light, Caffeine Free Pepsi, Caffeine Free Pepsi Light, Diet Pepsi, Pepsi Twist, Pepsi Blue, Vanilla Pepsi, Pepsi X and Wild Cherry Pepsi. The division’s other major brands include Mountain Dew, 7UP, Diet 7UP, Mirinda and Teem. In all, PI offers dozens of soft drink brands in a variety of packages and sizes.

THE BUSINESS ENVIRONMENT:

Consumers:

Pepsi believe the main ‘drivers’ behind consumer behavior are value, variety, attitudes and convenience.

Competitors:

Pepsi’s direct competitor is Coca-Cola Amatil. The non-soft drink competitors are tea, coffee, water, energy drinks, sports drinks, milks, etc which are all consumed on beverage occasions. Pepsi aims to gain a greater share of these occasions.

The Marketing Mix:

Product:

Pepsi, Pepsi Light, Pepsi Twist, Pepsi Max, Pepsi Diet, Pepsi One, Pepsi Vanilla, Pepsi Blue, Pepsi Wild Cherry, 7UP, Diet 7UP, Caffeine Free Pepsi Light, Mountain Dew (including Diet, Caffeine Free, Code Red, and Live Wire flavors).

Price:

Pepsi is competitively priced to its major competitors, offering a better tasting product at a competitive price.
Promotion:

60% of the marketing funds are spent on advertising. Primarily TV advertising with radio, magazine, cinema and outdoor support. Other promotional items include: point of sale material, consumer premiums (e.g. clothing, caps, etc), sporting and concert sponsorships.

Place:

PAH/PI own the Pepsi brands. They sell the concentrate to CSA who manufactures and bottles the Pepsi products and distributes it to consumers. CSA distribute Pepsi via various channels e.g. major supermarket chains, smaller milk bars, restaurants and fast food outlets (KFC, Pizza Hut and Oporto). Pepsi also have refrigerated vending machines at various locations and workplaces.
Service the right pack size at the right price, in the right place at the right time.
SLOGANS
1981 – Pepsi’s Got Your Taste For Life!
1983 – Pepsi Now!
1984 – Pepsi, the Choice of a New Generation
1992 – Gotta Have It
1993 – Be Young, Have Fun, Drink Pepsi
1995 – Nothing else is a Pepsi
1999 – The Joy of Cola
2000 – The Joy of Pepsi
2002 – Ask for more
2003 – It’s the cola
2004 – Dare for more
2005- Dil Hai Tu Maango Aur

PEPSI INGREDIENTS:-

Water

At least 86% of soft drink is purified water. In the case of diet soft drinks water comprises around 96%.

Sweeteners

Such as sugar (sucrose from sugar cane) or non-nutritive sweeteners. Sugar is used in Pepsi, 7UP, Mountain Dew and Mirinda. The most popular and most widely non-nutritive sweetener used is Aspartame. NutraSweet is the registered trade name and it is used in Pepsi Light, Diet 7UP and Pepsi Max. Aspartame, being 200 times sweeter than sugar, is used in very small quantities. Other non-nutritive sweeteners permitted are acesulphame potassium, thaumatin, saccharin and cyclamate. Pepsi Max and Pepsi Light use a dual sweetener system, aspartame and acesulphame potassium. The latter is 300 times sweeter than sugar, requiring even less to sweeten the soft drink. Shelf life of the product is extended, as, unlike aspartame, acesulphame potassium does not lose its sweetness over time.

Flavors

Pepsi uses flavors to develop characteristic tastes associated with our beverages. These come from a variety of sources; natural, artificial and nature identical. They are usually derived from a number of ingredients used in special combinations. Examples of flavors used in the manufacture of soft drinks include natural flavorings from Kola nut, and fruit. Food acids and bittering agents such as citric, phosphoric acids and caffeine are also flavoring substances.

Our products and the flavors used in those products are safe and suitable, but they are proprietary.

Carbon Dioxide

Effervescence gives soft drinks their special bubbly appeal and is added

During production by injecting C02 into the product on the way to the filler.

Colors

Colors are added to Pepsi Cola products to enhance the esthetic appeal and appearance of products whether they are the typical brown of our colas or the yellows of Mountain Dew.

These may be both natural and artificial.

Natural colors or colors sourced from natural materials. Many countries have regulations that specify certain colors as natural. These colors are referred to as “natural colors.”
Synthetic (or artificial) colors. Internationally there are many colors that are accepted.

Preservatives

Certain preservatives are used in soft drinks to ensure microbial stability and prevent spoilage

PepsiCo Brands List:

Pepsi-Cola
Caffeine Free Pepsi
Diet Pepsi
Caffeine Free Diet Pepsi
Pepsi Twist (regular & diet)
Wild Cherry Pepsi
Pepsi Blue
Pepsi ONE
Pepsi Vanilla
Diet Mountain Dew
Mountain Dew Code Red
Diet Mountain Dew Code Red
Mountain Dew LiveWire
Mountain Dew Blueshock
Mountain Dew AMP energy drink
Mug
Sierra Mist (Regular & Diet)
Slice
Lipton Brisk (Partnership)
Lipton Iced Tea(Partnership)
Dole juices and juice drinks (License)
FruitWorks juice drinks
Aquafina purified drinking water
Frappuccino ready-to-drink coffee (Partnership)
Starbucks DoubleShot (Partnership)
SoBe juice drinks, dairy, and teas
Sobe energy drinks (No Fear and Adrenaline Rush) Outside North America
Mirinda
7UP (International)
Pepsi Limón
Kas
Teem
Pepsi Max
Pepsi Light
Fiesta
D&G (License)
Mandarin (License)
Radical Fruit

FUTURE PLANNING

The company operates through a well experienced, loyal and hardworking employees. The first and the most basic plan it to train them according to the changing technology and computerized environment, and satisfying their needs and requirements. Upgrading the plant structure and installation of the new machinery are other plans. The company is planning to increase its sales force and development in its infrastructure in the coming time period.

SHAMIM CO. (PVT.) LTD.

District Coverd by Shamim & Co.

Multan A Zone

Multan B Zone

Multan C Zone

Multan District

Multan Outskirts

Khanewal

Maisli

Vehari

Muzafar Garh

Leiah

D.G. Khan

Sahiwal

Okara

Bahawal Pur

Ahmad Pur

Bahawal Nagar

Haroonabad &

Rahim Yar Khan

As for as products are conserved, company is offering (under given) products in the market. The details are as under,

Now we are going to discuss the Stock Keeping Units (SKU’s).

Stock Keeping Units (SKU’s)

SSRB This stands for Single Serving Returnable Bottle (Regular)
We are offering Pepsi, Mirinda, 7-Up & Mountain Dew in this group.

LRB This stands for “Liter Returnable Bottle” this includes Pepsi, Mirinda & 7-Up. We are not offering Mountain Dew in this class.

Pet Bottle (1.5 Liter)
This includes Pepsi, Mirinda & 7-Up. This group also does not have Mountain Dew in their family.
Here Diet Pepsi & 7-Up are also available to enlarge the range of group.

NRB This stand for “Non Returnable Bottle”. It can also be called as “Deposable”
It has 300ml quantity. This group includes Pepsi, Mirinda, 7-Up, Diet Pepsi & Diet 7-Up.

Cane Packing, we are offering cane packing of all that brands that are offered in SSRB. Including Pepsi, Mirinda, 7-Up and Mountain Dew.

Post Mix – This includes Fresh / Fountain. This group includes Pepsi, Mirinda, 7-Up & Mountain Dew. This facility is offered on “QSR” that stands for “Quick Serving Restaurants” and all those points where no of walk-in-customers in very huge with their short time stay at that point.

Pepsi Cola International is a large group covering KFC, Pizza Hut, Burger King, Lays Potato Chips & Aquafina (Mineral Water).

ORGANIZATION HIRARCHY:-

Managing Director

He is the owner of this company and final operational authority to manage all departments of the company. All department’s heads are responsible to report him all about their performances and matters.

General Manager Sales and Marketing

General Manager Sales and Marketing is responsible for the performance of his department and to achieve the objective assigned to him such as marketing, sales, distribution. To carry out his duties more efficiently he has two Divisional Managers, Four Regional Managers, & 18 Area Sales Managers.

General Manager Operation

He is responsible for the whole shipping. Workshop related activities to smooth on the factory operations without any hindrances.

General Manager Technical

He is unlike sales department performs key role as to manage production department producing quality products as per need of the sales department, quality control department also works under him.

General Manager Finance

Finance, Accounts, Audit and MIS departments work under his control. He is responsible to make major company financial policies to meet the needs of the each and every department regarding budgets etc.

Manager Research & Sale Information System (SIS)

Manager identify where your customers shop, you need to determine if there is room for you to compete within the market. To do this, you need to identify all competing or substitute products. Sophistication of this process will vary depending on where your customers shop. For those businesses whose customers shop within local markets, begin your research behind the wheel of your car. Conducting “Market Surveys” is a fairly inexpensive method to collect and examine the competition.
Distribution Channel:-

The company operates through a well-established network of a number of distributors. The company has two types of delivery systems i.e.

Direct delivery system

Indirect delivery system

The basic difference between the direct and the indirect delivery system is that in a direct distribution system, the company spends its own resources while in a indirect distribution, the dealers spends their own resources on all the factors which increased the sale. The company also has its depots in different cities. Which helps a lot in increasing its sale and directing the distribution system.

8 Steps of Pepsi Sales

Our company is very conscious about the development and growth of our employees especially the sales force. We have designed a 8 step process for proper guideline of our sales team just to make their sales calls effective and result oriented. There steps are as follows,

Preparation
Greeting
Stock Checking
Merchandising
Presentation
Order taking
Curb side de-briefing evaluation
Administration

PREPARATION

i. What are Objective
ii. What to do here
iii. How to do that

Simply where we want to go, & how to get our there.

GREETING

It includes greetings and hand-shake. Greet the customer by name & he will be delighted should be keep in mind of every person involved in sales.

STOCK CHECKING (Stock Availability Store Checking)

This includes all the good e is dealing in this will help us to know about his financial worth patented and clientage.

MERCHANDISING (Display)

Display of Visi Cooler
Display outside shop
Availability inside Deep Freezers

It is the most important job to be performed by our sales force.
The order of our product in display should be like this

Top cane packing
Pepsi, 7-Up, Mirinda and Mountain dew
Then

Non Returnable bottles
Then

Single serving returnable bottles
Then

Single serving returnable bottles (Regular)
Then

Liter returnable bottles & pet bottles on the floor of visi coolers

Every sales person should be caring about the display

PRESENTATION

Policy
Scheme
Product availability
Total sales tack

ORDER TAKING
Taking Order

CURB SIDE DE-BRIEFING
Evaluation

ADMINISTRATIONS

Cash
Empty
Sales figure entry
Infection of stock

Company desired to increase it’s market share from 70 % to 80 % or Above. This is only possible if we

Retain our exclusive point
Explore new points
Increase sales of points
Increase stock at mix points
Conversion of coke points
Elimination of B- Brands

SHAMIM & CO. OBJECTIVE:-

The major objective of the company is to produce and supply of highest quality, which confirms to both the national and international quality stands. The company is committed to provide maximum level of customer satisfaction.

DEPARTMENTS:-
Finance
Marketing
Publicity
Shipping
Store
Production
MIS
Audit
Clearance
Management accounts

Finance:-

Department of finance includes Banking and insurance which deals with providing assurance to the company assets from any damages or crises.
Department ensures that each and every valuable asset of the company is secured and providing all financial services to the company such as leasing activities and searching sources of finance.

Following are the list of assets which are secured by the banking and insurance department.

motor vehicle
machinery
stock
life insurance

Shamim and company is taking insurance services from the following insurance companies

Askari General Insurance Company (pvt) Ltd.
.Shaheen insurance company (pvt) Ltd.

Period of insurance:-

The assets of Shamim and company are insured for the period of one year during this period If there is any damage to the assets with in the limits of insurance agreement the Banking and Insurance can claim for payment of damage.

The process of insuring an asset is given in following steps

intimation:-

The banking and insurance department gives intimation to the insurance company for insuring any concerned asset all necessary documents are provided to the insurance company.

survey:-

After intimation received buy the insurance company it sends its surveyors to investigate about the asset being requested for insurance.
The investigation includes getting all facts about market value, cost and life of asset of the asset.

cover letter:-

After survey process is completed and insurance company is satisfied about the asset it issues a cover letter to the company witch includes all necessary information about premium, expiry date and other information needed to get asset insured and policy number is also allotted for further reference.

Premium payment receipt:-

After cover letter is received by the Banking and insurance department it has to pay the premium with in one month to the Insurance company. And when payment received by the insurance company it issues a receipt called PPR or premium payment receipt which is kept by Banking and insurance company and is used if there is any damage to asset being insured for claiming.
Leasing activities:

Banking and insurance department is also responsible for leasing activities the department takes leasing facilities from various financial institutions which provide leasing for certain limits and periods.
The company has leased many of its assets from financial institutions it some times sells and leases back its assets following are the financial institutions from which the company is receiving financial facilities.

Orix leasing
Muslim commercial Bank
Faysal Bank
Habib Bank

Documents:

Following are the major documents used in the banking and insurance department

Letter of Credit:

Letter of credit or L.C basic requirement when the company is importing raw materials or any other items for use.
The bank issue the letter of credit in favor of the company for assuring the exporter that if the company does not pay the bank will pay the amount of imported goods.

Cover Note:

Cover note is a document which is issued by insurance company when the concerned company asks for insuring any of its assets it contains basic information such as descriptions of items value of asset period of insurance.

MARKETING:-

Q. What is the promotion?
Promotion means to make an awareness of the product in consumer mind for its availability at certain place.
Q. Why you need promotion.
To make the exposure of product.
Q. How you can satisfy about your promotion
Its depend on the feed back of consumer. That how the consumer may perceive the promotion of product. If the feed back is positive
For Example: the company achieving is object for the promotion then the defined promotion successful otherwise company observe the drawbacks for the defined promotion In prove it and implement and the feed back process against starts, so it is a continues process till the time. The company may get the Targeted object
Q. What are the sources of promotion?
There are two source of promotion
Electronic
Print Media.
Personal Selling
Q. Which you preferred and why?
Both are important because they have relevant work
Q. How many types of promotion?
There are two types of promotion
Sales Promotion
Product Promotion
Q. How legislation effects on promotion?
Firstly we get approval from govt., for promotion (Price off) volume duration.
Q. Is there any ordinance or law for governing promotion?
Yes there is a promotion ordinance. All the policies are related with this law.
Q. How you defend your promotion against your competitors?
To make is more and more attractive for the customer before starting the promotion normally it is viewed that what sort of promotion activity may start different ideas are generated and then from these ideas A promotion is defined with its pros and corns.
Develop a Promotion Mix
Is based on customer
It may be of all natures
It may be for any male, female of any type (relevant to sex age).
Sales Promotion
Schemes of different nature
i.e.,
Price off scheme
Discount scheme.
Various prizes scheme (from) small-to-small & big to big).

Promotional activity Plan
A promotional activity plays a vital role to enhance sales. With this activities may be done to promote 7- UP and Miranda
In post mix this following are the objectives for promotional activities
To increase the sales of low volume outlets
To do product promotion
To develop the credibility of Pepsi products (Pepsi, Miranda) and 7UP
For promotional activities following prizes may be offered in schemes.
Cash prizes ranging from RS 5- 1000/=
T- shirts, caps, school Bags, Kit bags lunch boxes, bats
Wail man, Rest watch, cassettes/CD, Radios
Free COLD DRINK GLASS
Some bumper prize (Diamond ring, Rado watch, CD player. T.V. Refrigerator)

Promotional Timing
For the promotional activities below stated or the other activities may be donning in the months of March. April (starting of peak season) and September to November (sales decline season).
Promotional Target Market
For promotional activities low volume outlets, Key outlets, entertaining outlets may be preferred. This shall encourage outlets as well motivate.
Prizes distribution
Prizes may be given to the consumer as conveniently, it could be placed either at outlet premises or at factory
With the sport of these prizes the below stated promotional activities may be done.
Scratch the glass
Under this scheme screeching the hidden part of the glass may in hide prize.

Lucky draw
Under this scheme different small prizes with one-bumper prizes may be given to winner by making a lucky
Some other activities like PEPSI logo uniform may be provided to high selling outlets for their serving staff.
Some activates may be done in shape of parks tickets with PEPST printed over there. In parks various promotional activities could be done like discounted rate; free cold drinks etc at some selected park for a specific day.
SWOT Analysis
Strengths
Strong image of PEPSI in consumer’s mind
In time service of supplies and technical assistance
More installation of post mix machine
Weaknesses
No advertisement budgets for post mix.
No signage’s of post mix in the market
No promotional activities in post mix.
No availability of spare parts.
No proper workshop for post mix.
Opportunities
Opening of new outlets
Strong consumer commitment with Pepsi.
Threats
Coca- Cola is on its way to get market share

Publicity:-

Definition:

Publicity is a non-paid for communication of information about the organization or product generally in some media form. At a large organization generating favorable publicity is usually the job of public relations director. In smaller companies publicity can be the job of marketers the owner and other employees. Indeed in a quality focused organization publicity presenting a positive image of all employees. Because it is non paid and usually reported by media as news publicity carries a lot of weight with the general public.

Difference between Publicity & Advertising

Public relation practitioners have a different approach to the media than do advertisers. Whenever possible they avid purchasing time or space to communicate messages. Instead they seek to persuade media gatekeepers to carry their information. These gatekeepers include writers, producers, editors, talk show coordinators and newscasters. This type of public relations labeled publicity and is characterized as cost free because there are no direct media costs. The credibility of publicity typically is much higher than advertising. I.e., if we tell you our product is great you may well be skeptical. But if an independent objective third party says on the evening news that our product is great you are more likely to believe it.

Types of Publicity

Publicity comes in many forms. The most common are news stories and public service announcements.
News stories- initiated by the media themselves allows the marketer little of if any control over the message.
Public service announcements space or time donated by media to nonprofit organization for socially responsible message
Generating publicity

Marketers generate news stories in whatever ways are likely to attract favorable media coverage. The simplest approach is to circulate press releases. Marketers may also host’s news conference4s and stage attention getting events.

Press releases
A press release in an article written by company members and distributed to the media. A press release is a like a mini-news stories. It provides the media with information about the product or organization.
A press release gives the marketer sum control over news coverage by allowing the marketer to decide when to make an announcement and what information to include. In preparing a press release the following tips can be helpful.
Keep it short.
Use clear concise language
Polish up the lead
Cite major facts
Include the name and phone number of the person who can be contacted to verify the story.

News conferences

The marketer invites reporters to the news conference and usually provides them with advanced information. A spokesperson for the organization may read a prepared statement and answer the question from the media men. But there is no guarantee that media will attend or ask the question that he spokesperson wants to answer.
Activities and events

To draw attention on its tenth anniversary a law firm in Orlando commissioned to photographers to create photos celebrating 20 local companies, 10 of which where the law firm’s clients. Not only did the resulting exhibit receive favorable publicity in the local press, but also the local historical museum added the photos in its collection.
As in this example the key is to create events that are some how favorable linked to the organization or its products. “Thus there are as many ways to generate publicity as there are ideas in the mind of marketer

Pepsi Takes new twist’ on Cola

Pepsi Twist, the great Taste of Pepsi with Lemon, enters selected markets in the United States PURCHASE, NY, June7,2001 – Complementing the grit taste of Pepsi with a twist of lemon, Pepsi-cola company is introducing a refreshing new product called “Pepsi Twist. “Regular and diet versions of the crisp new cola now are entering retail outlets in selected US markets.
“Consumers have been telling us they’re looking for something extra in their soft drink options, “said Dave Berwick, vice president of carbonated brands for Pepsi-Cola north America. “We know that nationally more people prefer the taste of Pepsi. With Pepsi Twist, we’re dialing up the refreshment possibilities while focusing on the bigger picture of expanding flavor variety among colas.”
Pepsi Twist was tested as a summertime-only proposition last year in Minnesota and Texas, where it met with tremendous consumer response, boosting total Pepsi trademark volume, display inventory and awareness
Its expanded availability this summer covers about a third of the country. Predominantly the central United States. Pepsi twist is being distributed in a wide range of packages wherever Pepsi products are sold in those markets
Dedicate television, radio and point-of-purchase ads are supporting the rollout of Pepsi twist where available. An introductory TV spot is set in a zoo on a scorching summer afternoon. It’s so hot even the penguins take extraordinary measures of stay cool. Created by Pepsi’s longtime advertising agency, BBDO New York, the humorous new commercial invites consumers to try “A New Twist on refreshment.”
Purchase. NY – based Pepsi-cola company is the global beverage division of PepsiCo, inc. in addition to Pepsi Twist, is brands in the United states include Pepsi, diet Pepsi. Pepsi ONE, mountain dew, Mountain Dew code red, wild cherry Pepsi, sierra Mist, Mug, Slice, Aquarian, Fruit works, Doe single-server Julces and So Be. The company also makes and markets category-leading iced teas and coffees, respectively via joint ventures with Lipton and Starbucks.
Pepsi-Cola’s culture is informal and entrepreneurial. Our people are empowered to make the decisions necessary to grow the business. We seek to achieve outstanding results through innovation, long term partnerships, and an open work environment that respects the individual and promotes personal and professional growth
Pepsi-cola products account for about one-third of the U.S. soft drink market. Brands include Pepsi; diet Pepsi, Pepsi One, mountain dew slice, Mug Root Beer, Aquarian and All Sport Through the Pepsi/Lipton tea Partnership. A joint venture of Pepsi-Cola North America and Lipton, we are the leader in the ready-to –drink tea market. In addition, we virtually created the ready-to-drink coffee category with the introduction of frappuccino through our joint venture with Starbucks Corporation.
Pepsi-Cola North America (PCNA) manufactures Pepsi-Cola beverage concentrates and sells them to bottlers in the United States and Canada. We develop the national marketing, promotion and advertising programs that support our brands and generate new products and packaging. Pepsi-cola people coordinate selling efforts for national fountain, supermarket and mass merchandising accounts. Whether it’s a new package or a new computer application, our goal is the same meeting customer needs.

SHIPPING DEPARTMENT

Shipping is a very critical area for any beverage organization. It serves the role of coordinator or middleman between production and sales. Ensuring appropriate quantity and on time availability of empty & liquid stock is utmost important. Any malfunction in empty receiving, storage, supply to plants, liquid stock and distribution directly affects sales. This is a complete chain or cycle and any weak link, bottle neck or disturbance will slowdown the whole operations.
Shipping department has following main functions.

RECEIVING & STORING NEW OR USED EMPTY

New empty is purchased from Pakistani or foreign suppliers as required. Management of production, shipping and procurement takes the decision of when, from where and in what quantity to buy new empty.

After approval, the purchased lot is identified with quality control passed stickers.
Consignment is unloaded at the empty godown.
Empties are transferred in cases manually and inspected for breakage.
Cases are transferred to plant as per requirement on empty movement slip.
Empty incharge does, stock taking and maintain daily empty stock physical report. Shipping department also receives used empty from dealers, distributors, salesman etc.
Dealer/Salesman arranges the return of empties from market as per contract.
On arrival of vehicle, dealer/salesman records entry (detail of empty) on gate register. A token # is issued to every vehicle.
Shipping staff unloads vehicle on the token number. Empty incharge checks then for breakage and they are sorted out physically in standard, junior, liter sizes and put into cases brand and size wise.
Empty incharge prepares empty slip. Empty slip has an office copy and three other copies at factory one copy goes to MIS, other is for shift incharge at DP godown and the third is for gate office.
Gate office reconciles the copy of empty slip with initial entry.
Gate register has two parts, one is for gate entry and the other is shipping received. Details of empty slip must match with the earlier gate entry otherwise empty incharge & shift incharge is informed.
SUPPLY OF EMPTY TO PLANTS

Shipping department has two godowns for empty storage. These are godown No.1, No.2

PEPSI TOWN

Due to shortage of space in godown # I, empty is unloaded at godown # 2 or sent to PEPSI town. This empty is returned when storage space becomes available at godown # I. Empty is supplied to plant when required by production people in specific quantity. the delivery is through forklifts.

Daily production report.

Report Product Loss Dirty Return To

Sign of production office

LIQUID STOCK & DISTRIBUTION

Plant RG I Excise DP Distribution

Clearance Godown

& payment

From DP godown liquid stock is issued to three main parties.

For the base market salesman directly take load from factory godown. At the end of the day, they return the empty and deposit daily cash.
SHAMIM & CO. has five depots to ensure smooth, regular supply and stock maintenance in other cities covering whole franchise area. The depots are treated like distributor /dealers. Shipping, sales and MIS staff works in depots. Trucks are made available by the company on contract to supply liquid and return empty frame depots settlement sheet of depots in prepared and cleared by the transfer of cash from dealer’s account to company accounts.
Some dealers whose area is not base or under any depot’s range also take load directly from factory and clear their settlement sheet by cash payment.

The procedure for all three types of parties is same. The salesman / drives deposits empty slip to MIS computer operator. Liquid slip is issued to the salesman on which the quantity, size and brands are specified. Vehicle is loaded in the DP godown monitored cleared by stock incharge.

FINISHED GOODS STORAGE

Finished goods storage should be secured against sunlight, rainfall, moisture and other intimidation.

Issued on FIFO (first in, first out) basis via validity of production dates. It ensures that product is not expired, bad taste and visually unattractive.
Shift wise record of daily transactions is maintained.
These are physical stock taking for physical but not for expiry dates.

HANDLING & PACKAGING

Forklifts are used for transferring FG shells I cases from production area to shipping hall or not delivery ducks to ensure product do no get damaged.

All Pepsi Cola carbonated soft drinks are packed in glass/PET bottles or post mix tanks. This is called primary packaging. Filled glass/PET bottles are further secured by means of plastic or wooden shells/cases called secondary packaging.

PROCEDURE OF EMPTY & LIQUID IN/OUT

Empty IN Liquid
¶1 Stocktaking of empty at the beginning Of shift (copy)
¶2 Empty unloading
¶3 Checking for empty slips to MIS,
¶4 Dealer and an office copy
¶5 Addition of new arrival in copy Stocktaking in the morning and entry on Liquid Received and Issued form Full in and liquid receive from SHAMIM & CO. Is added on the form.

Empty Out Liquid
¶6 Empty send to SHAMIM & CO. on New and Others Empty Slips.
¶7 The amount is subtracted from copy MIS issues liquid slip

Liquid is loaded on the sales vehicle according to liquid
Slip
Minus the amount from Liquid Received and Issue form

RESPONSIBILITIES OF DEPOT INCHARGE

Monitoring of empty and stock in charges
Maintenance of shipping records and documents
Reconciling physical stock with MIS reports
Posting on balance sheet register
Sending daily stock report and dealer wise sales report to factory
Receiving bank slips from dealers
Clearance of depot’s settlement sheet
Transfer of cash to friends agency account
Maintenance of stock FIFO system

During my visit to depot, I studied depot operations and

The job of stock incharge.
Performed the job of empty incharge.

Worked on the seat of shift incharge.

Drew liquid laws arrangement, Depot layout and time study of loading & unloading of vehicles.

OBSERVATION AND SUGGESTIONS

Extremely poor situation condition at godown # 2.

Dirty empty washing in godown # 2 is with HC1. Which is very hazardous to the people working there is well as it can cause problems when empty is filled.

It is a very difficult task to manage vehicles parking at unloading pad, providing way to forklifts transferring empty to the plants, and maintaining lanes properly. Trunks and other vehicles have to wait for hour in queue for their term.

Environmental conditions are not good. Shipping staff and labour has to work whole day in sales vehicles and forklift’s. It causes health problem for them liquid is supplied to depots based on daily sales and current stock position. But many times they receive unneeded liquid.

No financial or statistical technique is used to calculate what is appropriate stock level in a depot, when liquid should be sent and in what quantity.

Pepsi town is a big land area. Where a huge stock of empty is lying.

Empty should be kept under shelter to protect against weather. There is no proper arrangement of empties. There should be kept in an ordered and countable way.

Breakage, rejected empty, TIN packs and other useless material must be sale out by getting maximum price.

The job of empty incharge, stock incharge, shift incharge is very demanding. It requires mental ability, efficiency, physical fitness, ability to manage people and space and responsibility. They are paid low as compared to the people of same rank in other departments.

Shamim & Co. announces two best employee of the month awards each month from production and service sector. Production sector includes production and quality control department while service sector includes shipping, Admin, procurement & stress, MIS, cash and accounts department. This award is won by an empty incharge of shipping from service sector. Shipping is a large department where 250/­300 people work. There should be a separate best employer of the month award for shipping. The jobs of shipping staff are more physically & mentally demanding. It will motivate and help them to some out of the complex that shipping is an ignored part of the organization.

Shipping department is working is bounded capacity in terms of storage space and tuff conditions.
However they are reducing breakage, rejection and other losses year by year and supplied by following figures.

COMPARATIVE EMPTIES LOSSES

Description 2001 2002 2003 2004
Sales breakage 8,695
0.16% 13,562
0.17% 25,766
0.25% 35,654
0.32%
By order breakage 15,462
0.30% 28,418
0.35% 19,957
0.20% 24,325
0.25%
Shipping breakage 2,659
0.50% 2,847
0.35% 4,029
0.040% 6843
0.35%
Lifter breakage 123
0.002% 198
0.002% 206
0.002% 240
0.005%
Short in shipping
Depot loss 2,583
0.050% 2,052
0.025% 2,587
0.026% 2,873
0.029%
Reject by 5,591 6,876 7,044 9,137
Production 0. 10% 0.08% 0.07% 0.09%
Short received by production 1 1 32 18 28
Total losses 54,600
1.32% 79,880
1.03% 97,770
0.98% 79,072
1.03%

QUALITY CONTROL

Quality control department is responsible for following functions

* Water treatment (for bottle filling & washing)

* Syrup making (pasteurization room)

* Calibration

Laboratory equipment’s
Production equipment’s

o Incoming raw material testing

o In process testing

o Finished goods testing

o Market complaints handling

Market rejections
Customer rejections
Trade sampling

o Quality testing of CO2 plant and Boiler

WATER TREATMENT

Water is the main ingredient of the beverage product. Raw water is treated so as to make it free of all impurities and use in the process.

WATER TESTS

Water Testing 2P-M Indicator Method:

The purpose of “2P-M” or ” A ” alkalinity test is to verify that water treatment plant is operating correctly and final treated water for processing conforms to standards. High alkalinity leads to undesirable effects. The frequency of the test is after every half-hullr.

Total Dissolved Salts Testing In Water:

The purpose is to provide rapid, indirect evaluation of the total dissolved salts in a water sample. The level of total dissolved salts is a useful measure to gauge the overall consistency of the mineral contents in the water, which ultimately effect the quality of beverage. The frequency of the test is after every four hours.

Water Test Chlorine Residual:

Chlorine “residual” is the amount of chlorine that remains after the natural chlorine demand of the water has been satisfied. Two fold purpose of the test is:

Where chlorine is necessary , to demonstrate that the level of chlorine present is adequate for water oxidation & disinfections purposes &

Where chlorine is prohibited, to confirm that it is absent.

The frequency of test for water treatment is after an hour and for washer final rinse is once in a shift.

Taste, Odor And Appearance: Treated Water:

The purpose of this test is to provide a rapid, gross evaluation of major defects in treated water for syrup & beverage making. In this test, the taste, odor and appearance of treated water samples are assessed hourly.

Water Hardness Test:

The hardness in the water will affect the beverage quality as well as produce scale in washers, boilers etc. water hardness is gradual decrease in the tendency of water to form foam due to presence of impurities like chlorides, soleplates etc.

PRODUCTION

Bottles Washing Plant:

In the plant, syrup (from syrup tanks) and water (from water treatment) is mixed at a specific ratio called flow mix. The mixture then moves to carbo cooler where carbonation of product i.e. absorption of CO2 in the syrup at low temperature is done. It then moves to filler where product is filled in empty bottles and crown caps are put on it. The final product moves towards packing machine through conveyer however most of the time bottles are packed into cases manually.

CO2 (Carbon Dioxide) plant:

CO2 assures the product a measure of added sanitary protection and greater shelf life. CO2 gas in addition to product carbonation, contributes to the production process itself by:

Displacing air from water and product during processing.

Supplying counter pressure needs for some filler bowls.

CO2 enhances both beverage’s taste and appearance. Carbon Dioxide imparts a pungent, slightly acidic taste to the finished product as well as creating greater eye appeal. Each individual product should be carbonated to a level most suited for that flavor.

IN PROCESS TESTING

BRIX INVERSION TEST

The purpose is to break the sugar molecule into simple molecule of glucose and fructose, Inversion is performed to confirm on-line brix target .the test is taken after an hour of starting tank on production line.

FILL HEIGHT TEST

The purpose of fill height measurement is to verify that containers are consistently filled to the correct level as established depending upon package size. Fill height is the distance from the top of bottle to the meniscus of the liquid.

BRIX BY HYDROMETER TEST

The purpose is to measure by weight, the percent solids of sugar in simple syrup, finished syrup, control drinks and final beverage. Brix is defined as by weight percent solids of sugar.

pH TESTING

pH scale indicates the amount of acidity or alkalinity. pH is measured for Raw water, treated water, control drink, finished beverage, T.A. testing and incoming raw material. The purpose of the test is to define the line Brix. This also helps in predicting the sensory attributes of the beverage.

TITRATABLE ACIDITY TEST

The purpose of the test is to measure the acidity level in the test sample.

INCOMING RAW MATERIAL TESTING

Sodium hydroxide (Caustic Soda) %purity test
Processing material calcium chloride test
Conductivity Ash in granular sugar by conductivity meter:

The purpose is to test the incoming sugar for its ash contents in order to define quality. Sugar ash is primary indicator of sugar sensory performance in a beverage. It is comprised of organic and in organic salts left over from the refining process. The sugar is used in syrup making.

Processing Materials Ferrous Sulfate Test:

The chemical is used in syrup water treatment.

Processing Materials Activated Granular Carbon Test :

The chemical is used in syrup making and water treatment.
Crown Corks/Caps Inspection/ Attribute Analysis:

The purpose is to ensure that incoming lot of crown corks/caps fulfills the appearance requirement and free from defects. Crown caps are used for packing (sealing) of bottles after filling. Crowns and closures should match supplier shipment label and purchase order. The characteristics considered in the analysis are outside printing, inside printing, color, shell or liner flash, cracks, band etc.

Glass Bottles Inspection/ Attribute Analysis:

The purpose is to identify the visual defects effecting the beverage quality in the incoming glass. The defects are categorized as following. Very critical defects: Any defect dangerous for personnel.

Critical Defects: The defects that result in hazardous or unsafe conditions for smug, maintaining or depending upon the product. These could be Struck glass, Loose glass, False bottoms, Bird, Swings. Major defects: The defect likely to result in failure or reduce materially the usability of the product for intended purpose. The defects are Cracks, Chocked necks, Bent neck, Stones over 1.6mm (1/16 inch) etc. Minor defects: a minor defect is departure from established standards having little bearing on the effective use. These could be Brush marks, Seeds, Birty molds, Dirty finish etc.

HYDRATED LIME TEST

Hydrated lime is used in water treatment ( Reaction tank).

Taste, Odor & Appearance Test: Granular Sugar:

It is granular sugar test for its sensory attributes for consignment acceptance or rejection for every delivery.

CO2 purity test: CO2 used in Carbo cooler for absorption.
Chlorine (sodium hypo chlorite) test: Used in water treatment.

Post Mix tanks inspection:

Post Mix is undiluted fountain syrup that is delivered to retailers in transfer tanks. The inspection is performed before filling new or market returned tanks. A form is filled with the following format

Tank# Product Appearance Pre-inspection
O-ring Safety
Wolves Washing Filling Performed

Post Mix tanks washing:

It is in order to eliminate the chances of contamination. The steps are . Rinse with treated water

Clean with detergent
Rinse with treated water
Sanitize with chlorine
Rinse with treated water
Sanitize with steam

CALIBRATION

The calibration ensures that the equipment is fit for its intended use. Calibration is very integral and critical because instruments are eyes into the process and if the are not working properly, the process may produce unexpected or undesired results.

PRESSURE GAUGE CALIBRATION

The purpose is to test the non-existence of pressure difference & note if difference exists.

HYDROMETER CALIBRATION

The purpose is to test the non-existence in Brix reading and note if difference existed.

THERMOMETER CALIBRATION

To assure that thermometers are properly tested for their exact temperature reading. The calibration is for:

o Dial thermometers for washers
o Mercury/ Alcohol thermometers for laboratory testing

pH meter model H18424 calibration
pH meter model H8314 calibration
Calibration for TDS meter
Conductivity meter calibration
Refract meter calibration
Incubator calibration
Syrup tanks calibration: to get actual syrup volumes.
Temperature gauge: to test their exact temperature.
Pressure gauge calibration
Hand refract meter

SUGGESTIONS

In the production hall, very concerned person must use masks, gloves and safety glasses.
Earplugs should be provided to the people working in the production hall.
Proper sitting room should be provided to CO2 supervisor to keep the spare parts, tools and documents safely.
Labor should wear neat and clean uniform.
Proper arrangement should be for draining
Many under 18 age boys are working in production.
PCI QUALITY RATING

PCI collects product samples from market, tests them in their labs against standards, sends monthly test results summary to their franchisers and allots rating (colors) to franchisers after every three months. The PCI Operations Director – Quality Systems for Middle East, North Africa & Pakistan sends rating of 44 factories including SHAMIM & CO.. The color rating is based on following criteria.

Color Rating Previous New

Sensory- Ana~cal Sensory Analytical
Red < 70 % < 80 % < 70 % < 85 %
Orange < 70 % > 80 % < 70 % > 85 %
> 70 % < 80 % > 70 % < 85 %
Yellow 70 – 85 % > 80 % 70- 85 % > 85 % ­
> 85 % 80- 90 % > 85 % 85 – 90 %
Green > 85 % > 90 % > 85 % > 90 %

Green both Sensory/ Analytical good

Yellow Sensory Satisfactory/Analytically good
Or
Sensory good/ Analytically satisfactory

Orange Sensory unsatisfactory/ Analytically satisfactory
Or
Sensory satisfactory/ Analytically unsatisfactory

Red Both Sensory/ Analytically unsatisfactory

SHAMIM & CO. has been in yellow color after the standard percentage is Increased.
Management Information System (MIS)

In today’s fast moving business environment, organizations are rapidly moving towards computerization and information systems.

In this era of rapid of frequent changes, it provides current, reliable and accurate information to the management. This information is very useful in decision making. Information systems are generally defined as the system which provide regular and current information to management for decision making.

MIS department of Shamim & Co. is playing a vital role in this regard. The department is working with a small setup & satisfying the information requirements the organization with a smart staff and developed setup, the department has eliminated much work load, paper work and saved a lot previous time.

The software system have two basic parts and these are developed in some programming language. The post important part of any information system is database. The database is the basic structure of data and defines how data is organized, stored and retired from memory. The database operates at the back end. At the front end, data is entered and retired through input screens.

The MIS department is currently performing its day-to-day operations as well as involved in software development. It also provide technical assistance and training to other departments. At the time oracle 8.0 is in execution. All computer in the department are networked by LAN (local area network) the department has licensed software working.

The following systems are working in the department.

Plant Efficiency System:

The system is designed to keep current information about what is going on in production & plants. The system is helpful in getting production figures and reports about line utilization, line efficiency, mechanical efficiency, employee code, name, basic salary, allowances, tax, net pay and any other adjustments supplied by time office.

Sales & Distribution System:

The most comprehensive system of MIS is sales and distribution system. It incorporates

Sales system
Cash system
Shipping system
Post mix system

The basic input of this system is empties slip, liquid out slip, full in slip by order sips. empty short slip, the reports of the system are

load report ( dealer wise, depot wise )
settlement sheet ( dealer wise, depot wise )
Shipping shift summary .
Daily liquid out report.
Pending report.
Agent wise load out summary.
Agent wise sales summary .
District wise sales summary .
Computerize sales statements
(monthly, semi annually, annually)
Cash report

Filled inspection, breakage, actual production, paid time, stoppage, production time etc.

Excise And Sales Tax System:

Shamim & Co. is a regular tax payer of govt. of Pakistan. it pays excise and sales tax according to its production and sales. the system is developed to keep complete record of the tax transactions. stock of the product at the RG I is maintained after production. the stock is moved to DP (duty paid) godown after its clearance by excise inspector and payment of 15 % tax. at RG I, closing stock of a day is opening RG I stock plus day’s production and minus tax clearance.

Payroll System:

There is separate payroll system for Shamim & Co. and Friend’s Agency. The output of the system is pay slips and payroll report at the end of month. Payroll report incorporates.

All these reports are extremely important in the day-to-day operations of the above­mentioned departments. In addition, customized reports can be obtained as required. The system is implemented at each depot as well.

Market Research & Sale Information System (SIS):

Market Research & SIS is a very strong department, aimed to keep current record of each & every outlet of the franchise. Through this system, management can come to know

Market Share
Name & address of each outlet. T.O.T details
Publicity position
Discount verification

The system is designed in such a way that reports can be obtained about outlets:

Distributor & area wise
Route wise
District wise

The system is useful in accessing market & investment position in each area.

Market Share:
Research Assistant Manager (Saeed Bhutta) analysis is a proprietary methodology developed to help share determine whether their sale should go the market,& new competitive products in this market. This analysis allows research supervisor to go into the market, identify the components that establish market share, and determine which of those like availability, Chiller, Empty stock in order to improve their share position.
Research supervisor analysis the market & visit the shops, they analysis and click’s on there checking share format after the completion of sample size, they come back and submit these checking format to the Computer Section. Here information feed in the computer program and generate the result in the form of Share Summary.

Define the market
Before creating strategies, you need to define the marketplace in which you compete and create lists of your key competitors and the various channels serving your market.
Segment the market
The first step in creating “take share” strategies is to segment the market based upon the buying behavior of your customers. The market segments you choose must satisfy market criteria.
Market category
– Main
– Side
– Village
– Captive
Main Market – means main road, high volume market, wagon stands, commercial area.
Side Market – means colonies, mohallah, entrails, links road, side road
Village Market – means village sides, small areas
Captive Market – means parks, cinema, canteen, institute, govt. offices, kutchary, courts.
Market Sample Size
– Main Market 45 % of Total Sample
– Side Market 30 % of Total Sample
– Village Market 25 % of Total Sample
Stock Base Share
– Availability
– Chiller
– Fresh Consumption
– Floor stock
Exclusivity Base Share
– Pepsi Exclusivity
– Coke Exclusivity
– Mix

SIS deals with Tools of Traders (TOT). T.O.T. means list of items available in a shop, which helps to sell our product conveniently on priority basis. It is one of the major investments being made by the company. T.O.T. management completely depends upon the Sales force. The factors to be considered are

Data collection about the sale, volume, growth, profitability, size and place of the shop

Record of all the T.O.T. given to the shopkeeper.

Deep Freezer
Visi Cooler
Ice Chest
Bottle Rack

Further plan for the injection of T.O.T.

Checking all the equipment time by time any removing their complaints

PUBLICITY MANAGEMENT

To promote the image of the company and its products, publicity is a major tool. Publicity plays an important role in the promoting the image in the consumer’s minds.

Publicity involves Banners, posters, signings, gifts and schemes. Publicity budget is spent by focusing the followings.

Location of the area.

Arranging the sources and requirements and making priority lists

Carefully arranging the publicity execution.

Suggestions: –

The future programs of the department is:

Networking with depots
Internet development within organization

There should be formal web site and e-mail accounts of employees in the organization. A small computer books library will help the staff to add their skills.

AUTO WORKSHOP

The function of auto workshop department is top provide repair, overhauling and maintenance services to the vehicles used in the organization. These vehicles include Mazda, Toyota, Hino, Suzuki, Honda and forklifts (Toyota, TCM) of different models and capacity. Total number of vehicles served by the auto workshop is about 140. the responsibility of auto workshop is to keep PEPSI fleet efficient, deendable and energetic. Different departments particularly shipping and sales use these vehicles. Vehicles outside # are mostly used by sales staff. In case of some major work, it comes to workshop however if there is nominal repair work, they have it done locally. The staff of the department consists of 20 persons including mechanics. Record keeper, supervisor and headed by auto0 workshop manager.

DOCUMENTS / REPORT IN THE DEPARTMENT:

Daily performance report:

Vehicle # Detail of work Visit outside work Job complete/Incomplete Name of mechanic Driver’s name Sign. Remarks

Monthly performance report of auto workshop:

Maintenance work Engine Complete overhauling Welding Fabricating Denting Painting Engineering work from local market Engine Oil changing Tier tube changing repair work Servicing & Greasing work Motorcycle repair work

Work order indicating defect, repair work and remarks and after repair a certificate showing that maintenance work is alright signed by the driver of the vehicle.

Work order for market.
Log book in each vehicle for each driver.

Gate pass

Store requisitions for transport spare parts and stationary. A small section of store working under main store is maintained in the workshop

THE DEPARTMENT HAS FOLLOWING SECTIONS

Electrocution section
Tire maintenance section (compressor) Body welding section
Service section
Tool room

WORKING PROCEDURE

For any repair work, the driver must fill a work order signed by his respective in charge. The work order is also necessary for cars and motorcycles.

The work order is refereed to record keeper who hands over to supervisor after entering in register and reports to work shop manager in case of accident.

The supervisor is responsible for assigning the job to mechanic by matching the type of work and his skills.

In case of some work required from market, supervisor himself goes with the vehicle or assigns one mechanic to monitor market work.

The driver signs the work order certificate after his complete satisfaction.

OBSERVATION / SUGGESTIONS

Standards are set for mobile oil change, air filter change, mileage etc. of different vehicles. The data needs to be maintained and regularly evaluated.

Specialized workers are needed to work on different parts of vehicle e.g. spring load, radiator etc. as well as for petrol and desile vehicles. Specialist mechanics demand higher pay. For this reason, department has to get services from market.

There has been no training for mechanics, they are learning only by time. Mechanics can acquire new skills and save expenditures by attending short courses as one diploma holder mechanic is praised by department head because of his ability to communicate and better understand problems.

Maintenance and smooth of vehicle is dependant upon driver’s understanding and care for the vehicle. There is no formal training for drivers as well.

Short training camps should be arranged by the department conducted by engineers of the companies/dealers from where SHAMIM & CO. purchases vehicles.

PROCUREMENT & STORES

The department is responsible for all the purchases (including raw material), storage and issue of materials to various departments.

SUPPLIER SELECTION

Selection of right supplier is an important job being performed by the department. Selection criteria differs from one category to another category .
CRITICAL

These items are very much sensitive and one has to be cautious about making final decision about suppliers, in SHAMIM & CO. following factors are taken into consideration while selecting supplier for these items

Past performance record
PCI approved suppliers
Site audit
Self assessment through questionnaire
Product inspection and testing
Compliance by any appropriate standards or specifications

TECHNICAL/GENERAL ITEMS

While selecting a supplier for technical and general item any of the following method is used.

Past performance record
Competitive price in market
Delivery requirement of Shamim & Co.
Availability of items in the market

Purchases can be divided easily into

RAW MATERIAL PURCHASES

For the raw material purchases, there is a list of suppliers approved by Production Manager, Quality Control Manager and Procurement Manager based on their product quality. The procedure is that product samples are tested in the laboratory and then after complete satisfaction of quality, supplier is approved and sends his quotation.
Shamim & Co. has approved supplier list for following materials

Concentrate Plastic shells
Sugar Activated carbon

Glass bottles Crown corks Closures Packing cartons Pet bottles

CO2 gas Hyflo super
Glass bottles Ferrous sulfate
Crown corks Caustic soda
Closures Bleaching liquid
Packing cartons Sodium chloride
Pet bottles Lime

There are raw material specifications and special instructions regarding:

Chemical properties
Physical properties
Packaging
Sampling details
Storage & handling

Production department sends monthly demand and quotations for the quantity net of current stock and wastage are invited.

Material requirement by Production dept.
Opening/closing stock adjustment by Stores
Material to be purchased by Procurement dept.

Some time purchase quantity decisions are made on the space available in the store. After the material is purchased and Gate checking, it is again send to quality laboratory by FIFO rule.

GENERAL PURCHASES

For the general purchases like stationary, technical parts, supplies etc issue requisition slip (in case required material is in the store) or purchase requisition slip ( in case required material is not in the store stock) signed by concerned department head is send to Procurement Manager and Purchasers of procurement department make the purchase.

Store has categorized material in four labels

Mechanical
General
Stationary
General Electric

The documents/forms/reports used/generated in the department are:

Purchase requisition slip
Purchase order
Receiving voucher
Ledger (posting on ledger)
Store return voucher
Internal gate pass
Temporary gate pass
Permanent gate pass
Daily activity report
Daily stock taking report
TOT report
SALES & MARKETING

Sale and marketing is the most important department of any beverage company. To maximize the sales and profit, this department should be proper planed and managed. Shamim Co. Pvt. has a very aggressive and hardworking Sales and marketing department. Due to its efforts the company has got the first position in sales in 1993 through out the Pakistan.

Following are the major contents of this department:

Marketing Development
Tactical analysis and routine planning of market strategies.
Competition activity monitoring
T.O.T. management
Publicity management
Time management

MARKET DEVELOPMENT

The first and the most basic job of the sales and marketing department is to plan, develop and make targets. And also to make strategies to achieve those targets and develop the market. The following major factors are considered in this respect.

Collection of all the data about each and every distributors/outlets, about its sale, volume, growth and exclusivity.

Finding the gaps in the market where there is a potential.

Finding the points where competitor is strong and hoe we can break this point.

Location of non traditional shops where potential is available for the beverage.

Different offers must be given to break the competitors point or win the mix point.

OUTLET

Outlets play an important role in strengthening the market. By monitoring them you can build your market, have their loyalty and increase your sale. Sales persons should continuously visit outlets, listen their complaints and satisfy their needs and requirements. They must have information about each and every outlet, its growth, volume and type business. Proper check must be maintained to get the feedback from the shopkeepers

Tactical Analysis & Routine Planning Of Market Strategies:

On the market side the sales people gather information and on the bases of these information they further plan and improve their strategies.

Checking of the designated area, its sale, volume and growth.
Calculation of share n brands and package wise
Calculation of daily sales achievements on monthly target basis
Location of the poor performance factors and analyzing their cause
Finding their solution and getting the approval for its execution.
Planning for a schedule for the designated area.
Visiting the area according to the plan and reporting it to the higher management

Competition Activity Monitoring

On the other hand a constant intention have been given to the competitors activities, strategies and offers. They have been compared with ours and updated according to the environment

Following are the key factors to be noted in respect of the competitor:

Nothing the competitors investments i.e. T.O.T., Publicity,
Discounting, Promotional schemes, empty management,
Cash credit, Vehicles injection (etc.)
Reporting to the higher authority.
Taking action to block the competitors activities and monitoring Our

SENSORY INDICES LEVELS MEASURES

Sensory measures means to check the quality and standards through the senses. The colour, taste, appearance and other specimens of the bottle, must be checked time by time so that the standards of the PCI may not doubted

EMPTY & LOAD MANAGEMENT

Empty management means full utilization of available empty at highest productive Trippage level within the franchise area.

There are two types of empty management i.e.

Empty management within distributors & within Salesman.

The sales and marketing department have to manage, plan and make strategies a about the distribution of empty whether it is on credit or cash. The department also has to handle and manage load. Whether it is on vehicles or shipping or distributors or at the depots level. At shipping level load management can be divided into

Package wise
Brand wise
Demand wise

HOW TO MANAGE THE EMPTY

Following are the steps which are necessary to manage the empty

Estimation of empty available (within shopkeeper)

Estimation of empty available ( within distributors )

Previous sales record of each specific area within distributors.

Trippage level tracking of each distributor for the last two years at least.
Estimation of sales volume growth for at least last three years

(Distributors or salesman rout)

Estimation of empty injection volume for at least three years

(Distributors or salesman rout)

Comparison of empty Trippage from the one to other distributors/salesman rout.
Factors causing poor Trippage

Factors involved causing hyper Trippage.

Empty plan (Forecasting) based on the previous years Trippage

Level & Percentage increase of empty injection.

TIME MANAGEMENT

Time management is the most important factor especially in a Beverage industry, because it is wholly dependent on Sales and Marketing Department. And without proper management of time this department cannot run. Following are the key factors which are to be considered necessary for the management of time:

Drop size of a specific area.

Tonnage of the vehicle for that specific area.

Total operational time management

Idle time monitoring and elimination.

Calculation of outlet knock time.

Calculation of available knock time for each outlet of a specific area.

Define and ideal knock time for an outlet.

Setting of a comprehensive plan, by considering all the above factors

EXCISE DEPARTMENT

Shamim & Co is a regular taxpayer of excise and sales tax to govt. the procedure is that production per hour of each plant is counted and noted in cases and bottles. The excise duty and sales tax is calculated as per govt. rate. The liquid stock of RG 1 is moved to DP godown after clearance and daily deposit of sales tax. The company and all its dealers pay sales tax at the end of each month. Sales tax and excise duty is also paid on some raw material as sugar, crown caps, concentrate etc. the department maintains following documents

RG 1 register
RG2 register
AR 1 form
Daily production report (shift bases)
ACL register

The department is concerned with collector rate of central excise and sales tax, production department, shipping department and MIS department.

CASH DEPARTMENT

Cash department does cash handling (collection and payment). The major part of cash collection is from dealers and salesman based on their settlement sheet and daily sales report. Cash payment is done on the vouchers issued by accounts department. Payments include employee’s pay, bills, allowances, procurement expenditures and day to day general expenses.

ACCOUNTS DEPARTMENT

The job of the department is to maintain books of accounts. There are following main activities of accounts.

Issuance of purchase vouchers for raw material, plant and machinery and general store items
Check payment of payroll to employees including wages, overtime, bonuses etc.
Handling of monthly tax statements.

Computerized general ledger system is working and shows the result of each transaction up to balance sheet and income/profit and loss statement.

POST MIX DEPARTMENT

The post mix department is responsible for installation, maintenance and filling of fountain fresh (post mix) machine in eight districts of Multan franchise

Dispensing is today’s “action package” carbonated soft drink in POST – MIX and PRE­MIX forms, coupled with compact, high volume, refrigerated dispensing equipment, represent convenience and increased profits for dealers and profit opportunities for the bottler. There has been a little growth in the POST-MIX / PRE-MIX dispensing area in the Pakistani Beverage Market until the 2004. But now it has grown a lot due to the following factors.

Pressure on retailers to improve selling methods and techniques. Rapid increases in the volume of soft drink consumption in outlets with storage remaining limited.

THE IMPORTANCE OF DISPENSING MARKET

Dispensing market varies from country to in size and types of out let. The title ON­ Premise identifies any out left where product can be purchased with or without food for consumption on or near the premises.

The On-Premise market is one of the most markets in a Bottlers franchise. Its importance in the continued growth and success of the Bottlers business cannot be under estimated in its effects on:

o Profitability
o Consumer awareness
o Consumer sampling
o Product Visibility
o Volume growth
o Chilled product sales
o Impact on take home sales

POST MIX MACHINE

Post Mix machine is U.S. made and it has following main components.

o Water bank
o Congesture
o Cooling system
o Walves
o Syrup tank(s)
o CO2 tank

Post Mix Department installs machine at any suitable place with the cash security of Rs, 30000. Along with Post Mix machine, they also provide counter, water tank, water filter(s), disposable glasses, disposable plates, machine maintenance and service. The cooling system is almost like refrigerator or fridge cooling system.

However gas cylinders are attached to the machine for gas mixing. Syrup and water mix-up happens in wolves at-4 C .So the customer gets fresh, cool product in no time. The water used in fountain fresh machines is acquired from locally available source, It is stored in water tank and filtered once, twice or thrice depending on the purity of the water. With one syrup tank of PEPSI, TEAM and 7-Up, equivalent of 19 cases standard bottle is obtained, While syrup cylinder of MIRINDA has the capacity of providing equivalent of 16 cases standard product.

Until now total 118 has been installed in different districts and approx. 114 are working while others needs repair. There is further demand of about 100 machine

POST-MIX SYSTEM

The syrup mixed with water and CO2 at the customer account. POST-MIX containers can be bifurcated in Transfer Tank.

The Post Mix system differs slightly in principle from the PRE-mix system. The difference is related to the way the finished beverage is produced for sale to the consumer. The bottle fill the beverage syrup into stainless steel tanks at production plant and transport the tanks to retail outlets. The operation of POST -MIX system is as follows.

Compressed CO2 Gas flows from the storage cylinder through gas a pressure regulator where it is reduced to the working pressure of the carbonator, then through a pressure relief valve and back flow check valve to a juncture where the CO2 line gets divided. One segment going to secondary regulators and the other to carbonators and the other to carbonator tanks.

The flow of CO2 from the secondary regulators goes to the syrup containers. Syrup flows from the containers to the refrigeration unit and then to the dispensing valve. The CO2 gas directed to the carbonator assembly enter a small capacity tank which contains potable water automatically controlled to a predetermined level in addition to the tank. Its safety valve, the carbonator assembly includes a motor driven water pump to force the potable water into the tank against the CO2 pressure. The carbonated water from the carbonator .

Connect dispenser to a separate outlet. Turn power switch ON. Thoroughly flush all incoming product lines before connecting them to the dispenser. Turn on the water supply and allow the carbonator to fill completely.

Lift relief valve ring until water flows from relief valve openings. Relief’s ring and allow closing.

Turn on CO2 gas and adjust regulator to 75 psi.

Activate a valve until pump starts. Close valve and allow pump to cycle. Dispense drinks from each valve to purge and remaining sanitizer from the syrup lines and establish quality carbonation in the carbonator .

TRANSFER TANKS

The most common packaging from for both PRE-MIX and Post Mix product is the Stainless Steel Tank. This tank comes as either a single entry or double entry system. Each has specific advantages and disadvantages. Both PRE-MIX and Post Mix product can be stored in either single or double entry system

DOUBLE ENTRY TANKS

Double entry tanks have separate gas inlet and liquid outlet plugs. The standard double entry tank size can hold 18 Liters of product. However the double entry tanks are also available in other sizes.

SINGLE ENTRY TANK

The single entry tank is generally made of stainless steel and can be obtained in different sizes. This tank is not commonly used for dispensing soft drinks. To date its use has been within the brewing industry.

TANK AND CYLINDER REQUIREMENT

One question the reader will need to ask is the ratio between tanks and cylinders per units purchased. The answer is dependent on these factors:

The length of distribution chains.
The sales volume per outlet.
The product Mix ( some flavors move faster than others )
Frequency of calls.
Control of stock levels.

EXAMPLE OF POST MIX TANK REQUIREMENT

One product tank contains the equivalent of 19 standard cases of 250 ml finished product, therefore an outlet selling 40 case per week would require the following minimum stock to cover a basic four flavor installation.
TANKS

Outlet Machine Stock 4 Tanks
Outlet Reserve Stock 1 Tanks
Factory Shipping Stock 3 Tanks
Factory Production Filling 2 Tanks Total: – 10 Tanks
CO2 CYLINDERS

Outlet Machine Stock 1 Cylinder
Outlet Reserve Stock 1 Cylinder
Factory Stock 1 Cylinder
Total: – 3 Cylinders

DISPENSING DEPARTMENT STRUCTURE

In a simple way, the department can be considered to have four main functions.

SALES

Security Deposit Receipt.
Legal Agreement papers.
Installation site sheet
Installation & pick up order .
Quality control functions.

SERVICE

Preventive maintenance card.
Wastage Record.
Complaints log.
Spares usage Record
Quality control & sanitation.
DELIVERY

Delivery Card.
Sales History Card Account Cash Record

WORKSHOP

Daily sale & stock report
Issue / Collection slip.
Future needs Technical Development.
Repair Section
Store Section

POST MIX SALES OFFICER RESPONSIBILITIES.

Customer Service.
Conducting Annual surveys of accounts.
Preparing a sales plan for growth in conjunction with the Post Mix Manager.
Grouping accounts into geographic routes for delivery
Helps in selection of sales man cum technicians.
New outlet development.
Existing outlet development.
Merchandising
Quality checking

OUTLET SELECTION

Dispensing equipment is very expensive and therefore every care must be taken to ensure that the outlet have proper annual yield. As with any installation of Post-Mix equipment, it is important to first undertake a site survey. Until this is done it is not possible to ascertain the equipment required. The points that need to be checked are:

1. Volume through put.
2. Type of unit required & space for product tanks
3. Construction, alteration and other details.
4. Water and electrical requirements.
5. General Details and deliveries.
6. Proper space for air circulation.
7. Dealer and staff are trained or not.
The machine is normally installed in parks, shopping centers, college canteens, ice-cream parlors, busy roads, burger comers etc. The department is having five vehicles for visits of each machine after every two days. Different routes are planned in various areas. With every route/vehicle, there is a technician, driver and helper. The purpose of the route is to replace empty syrup tank, cleaning and maintenance work of machine and resolve any complaint. Special routes are arranged in case of urgent complaint or immediate syrup tank requirement. The technician also performs the job of salesman. Cylinders are delivered on cash and it is responsibility of technician to collect cash and later submit it at cash office. During the route, they have to arrange their meal for which no allowance is given. Technician s get a commission of Rs. 2.50 per cylinder sale. Currently sales
Officer is incharge of the post mix department and performs his job as well.

Various forms/documents/reports used in the department are:

Post Mix installation/removal orders
Duty slip
Overtime register
Main store requisition
Daily complaint register
Daily technician report
Part/outlet wise sales report
Requisition for publicity
Daily post mix report
Individual technician files
Party wise profiles

SUGGESTIONS

Fountain fresh department is an area which requires much more attention. Though currently it is working with its capacity and covering five districts with a smart staff. The organization should take it as a SBU and concentrate on it because of

High expected growth
PEPSI has currently no competition in this area
No problem of empty
It does not requires a huge plant setup and works with simple setup and very low overhead
No chance of fake bottle

So the sales can be increased dramatically by better management and boosting up Post Mix department.

PROBLEMS

There is job dissatisfaction and very low motivation on the staff due to:

Low salary
Daily allowance has been eliminated
Overtime is rewarded in terms of holidays not in monetary terms. According to technicians, they normally do not get a chance of making allowed vacations due to workload so the extra holidays are of no use for them.
Higher positions are filled from outside, people within the department should be promoted to the chief technician and sales supervisor level.
Technicians perform the responsibility of salesman for which they get just Rs. 2.50 per cylinder that is very low.
Computer is present in the S.O. office but no one in the department is really qualified to get use of it.
Sales targets are set without the consent of staff.
Post Mix staff has no knowledge of ISO.

During the route riding, I observed following points

The key issue is proper and compatible combination of technician, helper and driver . these people should work as a team in the field and must possess the characteristics that make a team successful i.e. technical competence, trust —-.
The group should move with full preparation i.e. all required slips, necessary tools, tested equipment.
The vehicles must be fit and available on time. It is in their best interest and make their job safe, convenient and speedy.
The new machines are not available for installation. Used machines and counters make shopkeepers unhappy.
The behavior of the staff with shopkeepers is generally good. The outlet owners have the Post Mix office number complaints and the response is efficient.

United Bank Limited

PREFACE

In Masters of Business Administration, Internship Program is an important part to give students an opportunity to have experience of practical field. Unless and until the students experience the novelty of practical work, their knowledge of what they study in theoretical courses remains incomplete. The most important point in an Internship Program is that the student should spend their time in a true manner and with the spirit to learn practical orientation of theoretical study framework.

This internship report is on my eight weeks practical training at United Bank Limited Hussain Agahi Branch, Multan. In this internship report I have tried to give details about the United Band Limited, working and the functions of different departments of the bank.

ACKNOWEDGEMENT

First of all, I thank my all respected teachers for providing me comprehensive knowledge about Business Administration Courses and also for providing me the opportunity to complete my internship program in UBL to enhance my practical knowledge about banking sector of Pakistan. I am also indebted to the followings because without their help, I would not be able to achieve this practical knowledge:

Hussain Agahi Branch Multan
Mr. Habib Ullah Khan (VP-Sales)
Mr. Haji Nusrat (AVP-Operations)
Mr. Mirza Qamar Baig (Advances Department)
Mr. Habib-ur-Rehman Sheikh (Staff Manager)

Chowk Fawara Branch Multan
Mr. Mian Azhar (Branch Manager
Mr. Zafarullah Khan (OG-II Officer)
Mr. Jamil (Cashier)

Muhammad Saleem

HISTORY OF BANKING

“Bank is a pipeline through which currency moves into and out of circulation.”
Bank accepts deposits and repays cash to its customers on their demand. The Bank borrows money at a lesser rate of interest and lends it to the borrowers at a higher rate. It is thus a profit-lending concern. Bank cannot lend all the money that has been deposited with it. It has to keep a certain portion of the total deposits in cash with them in order to meet the cash requirements of the individuals and business concern.

Banking History
Word Bank is said to be derived from the words Banc us or Banque or Bank. The history of banking is traced to as early as 2000 BC. The priests in Greece used to keep money and valuables of the people in temples. These priests thus acted as financial agents. The origin of banking is also traced to early goldsmiths. They used to keep strong safes for storing the money and valuables of the people. The persons who had surplus money found it safe and convenient to deposit their valuables with them. The FIRST STAGE in the development of modern banking, thus, was the accepting of deposits of cash from those persons who had surplus money with them.
The goldsmiths used to issue receipts for the money deposited with them. These receipts began to pass from hand to hand in settlement of transactions because people had confidence in the integrity and solvency of goldsmiths. When it was found that these receipts were drawn in such a way that it entitles any holder to claim the specified amount of money from goldsmiths. A depositor who is to make the payments may now get the money in cash from goldsmiths or pay over the receipt to the creditor. These receipts were the earlier bank notes. The SECOND STAGE in development of banking thus was the issue of bank notes.
The goldsmiths soon discovered that all the people who had deposited money with them did not come to withdraw their funds in cash. They found that only a few persons presented the receipt for encashment during a given period of time. They also found that most of the money deposited with was lying idle. At the same time, they found that they were being constantly requested for loan on good security. They thought it profitable to lend at least some of the money deposited with them too the needy persons. This proved quite a profitable business for the goldsmiths. They instead of charging interest from the depositors began to give them interest on the money deposited with them. This was the THIRD STAGE, in the development of banking.
By experience the banks came to know that they could keep a small proportion of the total deposits for meeting the demands of customers for cash and the rest they could easily lend. They allowed the depositors to draw over and above the money actually standing to their credit. In Economics terminology we can say that they allowed the overdraft facilities to their depositors. This was the FOURTH STAGE, in development of banking.
When every bank issues receipts and most of them allowed the overdraft facilities, there was then too much confusion in the banking system. The banks in order to earn profits could not keep adequate reserves for meeting the demands of the customers for cash. The failures on the part of the bankers to return money caused widespread distress among the peoples.
In order to create confidence among the people, steps were taken to regulate the banking organization. A conference was held in Nuremberg in 1548. It was decided that a bank should be set up by the state, which should streamline the banking organization and technique. The first central bank was formed in Geneva in 1578. Bank of England was established in 1694. The responsibility of issuing of notes is now entrusted to a central bank of each country.

COMMERCIAL BANKING INPAKISTAN:

At the time of partition total number of Banks were 38 only. Out of these Banks the Pakistani Banks were only 2 , Indian Banks 29 & Exchange Banks were 7. The total of deposits of Pakistani Banks was Rs.880 Million. & advances were Rs: 198 Million.. According to banking companies ordinance Banks are the companies, which transacts the business of Banking in Pakistan.

Commercial Banks have constituted the most important [part of the intuitional credit in the economy of Pakistan. Being the largest source of credits, Banking Industry is a pivot of whole the economic activities in Pakistan. Section 37(2A) of State Bank of Pakistan Act 1965 lays down that the Banks must have paid-up capital & reserve of not less then Rs: 5 Lac & fulfilling certain other requirements for declaring as “Scheduled Bank”.

At the time of independence Bank services was badly affected. But with the passage of time these are improving. The government of Pakistan nationalized all Banks in early 1974. This act was done to minimize control of few hands over banking. But this step was proved e futile for the

Banking in Pakistan. So the Govt. had to revise its decision in1990. Two Banks (Allied Bank Of Pakistan Limited & Muslim commercial Bank Of Pakistan Limited have been denationalized. Since then Banks were working well. Now slogan of the Banks is to serve their customers in the best possible manner.

Professor Berton:
“Banks are the guardian & distributor of money “.

Similarly we can say that it is a pipeline thorough which currency moves into & outside the circle. Banks accept deposited of money and repay it on demand. Bank borrows money at lesser rate of interest & lends it at higher rate of interest. In this way Banks earn money. Bank do not lend all money they collect, they keep certain portion of it as reserve to meet the uncertain demand of the customer.

FUNCTIONS OF A COMMERCIAL BANK
In general terms the functions of a commercial bank can be classified under the following main heads.

1. ACCEPTING DEPOSITS
Some people have an excess money and they want to deposits it to some honest man or an institution which can give them some profit. So the first function of commercial bank is to receive deposit there are three types of deposits.

1.1 Demand Deposits or Current Deposits
Some people deposit their excess money in the current accounts and they can withdraw their money deposited in this account at any time during the banking hours, so bank is not ready to give interest on it.

1.2 Fixed Deposits
These deposits are fixed for a particular period. Commercial banks also pay an interest on these accounts. An important thing related to it is the varying interest rates for the different period deposits. Interest rate increases with the increase in the fixed deposit period.

1.3 Saving Deposits
To create the habit of savings, bank accepts the saving deposits and pays an interest on these deposits. And this rate of interest is greater than the demand deposits.

2. ADVANCING LOANS
Bank also advances the loans to the merchants and charges the interest. It is the major source of its income. It also issues the loan for short term, medium term and for long term. And bank receives the higher interest from the borrower for the long term loans offered.
3. DISCOUNTING OF BILL

Commercial banks also discount the bills and facilitate the business; for example one businessman purchases anything from another person and promises to pay after one month. The seller will write a bill to the buyer and there will be an order that after one month the buyer will pay the amount to the seller. Buyer will sign on the bill. In other words buyer will accept the responsibility of that amount. If seller is in need of money, he will take it to the bank and will receive the money by discounting the bills. The commercial bank also may rediscount it from the central bank.

4. CHEAP MEDIUM OF EXCHANGE
By issuing cheques and drafts bank provides cheap, medium of exchange.

5. TRANSFER OF MONEY
The commercial bank is very helpful in transferring the money from one place to another by issuing the drafts. This is very popular concept in the modern world and widely used in the business community.

6. CUSTODIAN OF PRECIOUS ARTICLES
Banks also provide lockers for the safety of precious articles. So now everyone can secure his precious metals like gold, silver, etc., and bank charges a very nominal charge for this facility.

7. AGENCY SERVICES
Commercial Banks also perform the duty of an agent. It collects and pays on the behalf of the customers.

8. INVESTMENT
On behalf of the customers all the banks also make an investment in different companies and industries. And banks receive nominal charge from the customers.

9. CREATION OF CREDIT
It also creates and extends the volume of credit.

10. FACILITATING TRADE ACTIVITIES
It also provides the finance to the foreign trade. Letter of credits are issued by the commercial banks for the foreign payments.

11. PURCHASE AND SALE OF SECURITIES
The commercial bank purchases and sells the securities, for itself and sometimes on the behalf of the costumes.

12. ACTING AS A TRUSTEE
If a client directs his bank to act as a trustee in the administration of a business, the bank performs this responsibility.

ROLL OF COMMERCIAL BANK IN THE ECONOMY DEVELOPMENT OF PAKISTAN:

Banks play an important role in the economic development of country. If our Banking system is not in accordance to the economic requirement then how it can play a vital role in our developments. The State Bank of Pakistan is at the apex and all the commercial Banks have to follow the rules of State Bank of Pakistan. Role of the banking sector can be judged by the following facts:

SAVING MOBILIZATION:

The commercial Banks namely United Bank Limited Pakistan, Habib Bank Ltd, Allied Bank Of Pakistan Ltd. & National Bank has opened Branches in urban areas & rural areas to mobilize savings of people.

FINACCING OF DEVELOPMENT PROJECTS:

Banks & other financial institutions like ADBP, IDBP, and PICIC etc. Advances short & medium terms loans for financing of the development projects both in the private & public sectors .So they helping to accelerate the rate of progress (Economic) in the country.

ENHANCING TRADE ACTIVITIES:

The credit institutions collect the savings of people & make them available for facilitating the trade activities both inside & outside the country.

CREATING CLIMATE FOR CAPITAL FORMATION:

A developed baking system stimulates the growth of economy by creating favorable climate for capital formation in the Country.

HELP OF STATE BANK OF PAKISTAN IN ACHIEVING MONETARY PUBLISHES:

Commercial Banks under the supervision & guidance of the S.B.P help in implementing & achieving the objective of monetary policy, which vary from time to time.

ASSISST IN PLANNED DEVELOPMENT:

Commercial Banks are profit-seeking enterprises. In order to maximize profit they have the incentive from S.B.P to maximize the limit of finance. An organized Banking system keeps balance between the liquidity * profitability, thus assists in the planed development of the Country.

PROFIT SHARING SCHEME:

Commercial Banks receive surplus balance of the households and business & pay interest on the deposit of client. The depositors instead of having a fixed return on the deposit will share in the profit & loss of the Bank. The profit & loss scheme arrangement is the alternative to interest, under an Islamic economic system, which is since on the experimental basis in Pakistan.

INTRODUCTION OF
UNITED BANK LIMITED
United Bank Limited was established on 7 November 1959. The first president of the UBL was Mr. I. I. Chundrigar. Most of the branches of Union Bank Ltd. were merged into UBL to work as UBL’s subsidiary .The head office was at Dhaka.
UBL is one of the largest nationalized banks in the country. With almost forty years of good standing to its valued clients, it has stood the test of time, producing assets of over Rs. 101 billion. UBL’s deposits, being guaranteed by the Government of Pakistan, are 100% secure.
UBL has assets of over Rs. 140 billion, capital and reserves of over Rs. 3.2 billion and a solid track record of 43 years, in addition to the convenience of over 1400 branches serving throughout the country and also at several overseas locations. UBL, with an integrated network of 1400 branches domestically, with 19 overseas locations, gives direct access to a comprehensive range of better banking facilities to help it’s customers monitor their business internationally.

Some Key Information about the UBL

Date Established November 7, 1959

President Mr. Amar Zafar Khan

Branches (as on Jun 2002) 1419: 1400 domestic, 19 overseas branches

Employees (as on Jun 2002) 14000 Employees

REORGANIZATION OF DOMESTIC OPERATION

In 1986, the organizational structure of domestic operations of the bank was reformed and decentralized on the basis of provinces. As a result provincial headquarters were established at Karachi, Lahore, Peshawar and Quetta in order to meet the needs of sanctioning loans and other facilities to the trade, industry and agriculture of each province. Azad Kashmir was serrated from NWFP and made separate region.
The quantum of work immensely increased due to the growth of economic activities and phase of industrialization and other change in Punjab and Sind. It was also considered necessary to improve the quality of advances and to expedite the recovery process of the loans and advances. Beside above the economic condition of the country also changed due to privatization policy, establishment of a number of new private banks as well as expansion for operations by the foreign trade and banks in major cities.
For above changes, high power committees constituted by the Govt., which recommended structural, and other reforms, the details of which are received from Pakistan banking council are follows:

FORMATION OF REGIONAL HEADQUARTERS
The provincial chiefs of Punjab, Sind, NWFP, and Baluchistan are ceased to function and in their place nine regional chief executives started functioning in the nine major cities. The new segmentation of UBL’s branches on the basis of regions can be looked from the following:

PROVINCE WISE REGION ALLOCATION

Province/Area Region Name
Sind Karachi
Do Hyderabad
Punjab Lahore
Do Faisalabad
Do Multan
Do Islamabad
NWFP Peshawar
Baluchistan Quetta
Azad Kashmir MuzafarAbad

Domestic Network of Multan Region

Multan Region 225Branches
Head Office 1
Multan 48
Bahawalpur 38
Dera Ghazi Khan 36
Rahim Yar Khan 32
Sahiwal 38
Vehari 32

COMMUNITY SERVICES
UBL is committed to the welfare of Pakistan. It lends to farmers for the purchase of tractors, superior quality seed and fertilizers. UBL further fosters the individual welfare and well being of the common man by lending house building finance and loans to set up small businesses. UBL has played a leading role in the dissemination of Computer Technology in Pakistan and is dedicated to the promotion of sports.
Agricultural Loans

Small Business Scheme

UBL Computer Training Institute

Staff Colleges of UBL

UBL Sports Complex

AGRICULTURAL LOANS
UBL’s agricultural loans on easy terms and conditions to small-scale land owning farmers boost the country’s economy and yield greener harvests. UBL enables farmers to buy good quality seeds, fertilizers, pesticides and agricultural implements.

SMALL BUSINESS SCHEME
Under the Small Business Scheme, UBL is providing loans on easy terms to those who wish to set up their own small-scale business. This scheme is aimed at spreading prosperity in the country by reducing unemployment. As more and more people start their own industrial units, the country will move steadily towards economic self-reliance.

UBL COMPUTER TRAINING INSTITUTE
UBL is a pioneer in the computerization of banking in Pakistan, and now plays a leading role in the dissemination of Computer Technology in Pakistan and is proud to be a part of the Government’s Computer Literacy Program aimed at preparing the younger generation to meet the challenges of tomorrow.
UBL, the leading user of Computer Technology in the Banking Sector has set up most modern facilities at Muzaffarabad, Azad Kashmir, and Sheikhupura for imparting training to the educated youth under the Government’s Computer Literacy Program. These centers are equipped with state of the art hardware and audio-visual aids and are manned by experienced professionals.

STAFF COLLEGES OF UBL
The UBL has three staff colleges, which are generating banking trained personnel. These colleges are at Karachi, Lahore and Rawalpindi, established in 1964, 1978 and 1977 respectively. These staff colleges are providing facilities of training to the employees of the bank so as to meeting the growing need of the banking field and coping with the changing environment of the country.

UBL SPORTS COMPLEX
In addition to providing professional banking services, the bank continued to play an important role in the promotion of sports in the country. Towards this end, the bank has already constructed a big sports complex in Karachi, where all types of facilities for sports like cricket, hockey and flood light courts for tennis and basketball have been provided.

CONSUMER BANKING

UTILITY BILL COLLECTION
• UBL has over 1300 branches collecting electricity, gas, telephone and WASA, and other utility bills like demand notice for telephone connection during business hours.
• Almost all the branches have special utility bills collection counters with sun-shelters and drinking water.
• Separate booths for utility bill collection are available at all major cities for the convenience of the public.
• Branches in all major cities have electronic bill collection machines. And now-a-days UBL management is trying to launch on-line banking system in all over the Pakistan. For this purpose some of the branches have been equipped with this on-line facility.
• For the customers’ convenience, UBL accepts cheques for payment of utility bills.

DISH, TV LICENSE FEE COLLECTION
UBL is one of the main collecting agents of PTV collection fee for issuance of licenses/renewal of licenses at its authorized branches all over the country.

PLS – SAVING ACCOUNT
UBL offers PLS Savings Account that can be opened with an initial deposit of Rs. 10,000. The share of profit is credited half-yearly to the PLS Saving accounts and is calculated on monthly balance. Depositors can withdraw their savings by presenting cheques at the particular branch of UBL during banking hours. But under the new private management each saving account holder can withdraw his amount in a week.

PLS UNI-SAVER ACCOUNTS
PLS UNI – SAVER accounts are Special PLS – saving account with several built-in special features and benefits for the depositors. Profit is calculated on a daily product basis:

PLS – TERM DEPOSITS
UBL offers the following most attractive and highly profitable deposit schemes to suit the customers’ requirements. Deposits are fully secure and you earn high profits. Deposit period along with Indicative profit rates are shown below:

Declaration of Rates of Profits on PLS Term
Rates in 2003 after Privatization

Period Profit Rate
3 months 2.90%
5 Years 3.90%

PRODUCTS AND SERVICES
The bank provides its customer various products & services, to cater their need of investments and other social or business requirements. These Product & Services offered by the bank are as follows:

UNIZAR
Following type of UNIZER accounts are available:

Current
Savings
Special notice
Term deposit accounts
Deposits can be maintained in US$, and other currencies like Yen.
Your UNIZAR account is:

Freely convertible.
Easily transferable.
Free from all exchange control regulations.
Worldwide access with the flexibility to operate internationally with real convenience.
Take advantage of the appreciation of foreign currency.
Withdrawal of funds without any restrictions.
Free from all exchange control restrictions.
The declared rates of profit on UNIZAR deposits for disbursement for the
half year 30-06-2000 is as follows:

SMALL BUSINESS SCHEME
Under the Small Business Scheme, UBL is providing loans on easy terms to those who wish to set up their own small-scale business. This scheme is aimed at spreading prosperity in the country by reducing unemployment. As more and more people start their own industrial units, the country will move steadily towards economic self-reliance.

The tax descriptions on the UNIZAR account:
Tax Type %
Income fax Nil
Wealth tax Nil
With-holding tax Nil
Zakat deduction Nil
The customers can open a UNIZAR account with foreign currency notes or a foreign remittance in the form of:
Drafts,
Cheques,
Money orders,
Mail transfers,
Telegraphic Transfers,
Travelers Cheques,
F.E.B.Cs.
D.B.Cs., subject to rules.

UNICARD
UNICARD is valid throughout Pakistan and is accepted by:
Airlines
Prestigious hotels
Hospitals
Large super markets
Petrol stations
Prestigious stores
Restaurants
Supermarkets
With UNICARD there is no hassle of paying bills and counting cash. Just sign the bills and take your leave.

UBL is the pioneer in introducing Credit Card Culture in Pakistan.
The UNICARD is like passport to carefree enjoyment.
UNICARD saves money of the holder: the holder of the UNICARD have a record of all the expenditures.

UNICASH
UBL offers you a self-service banking facility called UNICASH. You can obtain UNICASH cards and use the Automated Teller Machines, which are installed, at convenient locations called Cash points.
You can avail the following self-service banking facilities

Balance Inquiry
Mini Statement
Cash Withdrawal

Confidential Personal Identification Number (PIN) ensures that only the holder can use your ATM Card.
The PIN protects against misuse in case of card is lost. Customers can change their PENT anytime they want.
Customers can specify flexible weekly withdrawal limits.
Customer can withdraw your weekly limit in one go, or in multiple installments. Customers can use UNICASH Cards at UBL Cash-points located in the following cities:

City Cash Points

Islamabad 7
Rawalpindi 2
Karachi 2
UAE 8
Bahrain
3

RUPEE TRAVELLER CHEQUE
UBL offers the facility of the Rupees Traveler Cheque. UBL Rupee Travelers Cheques are the ideal and safest way of carrying cash when traveling anywhere in Pakistan.

Used for conducting day- to-day business.
No commission is charged from the purchaser.
No excise duty on purchase.
Easy to obtain and encash from all designated 350 branches of UBL.
Acceptable all over Pakistan.
Good until used and have unlimited life.
Easily transferable like an order cheque.

CHAPTER NO. 2

DEPOSIT DEPARTMENT DEPOSITS DEPARTMENT
Deposits act as a backbone of bank. It is the lifeblood of every bank. These deposits are source of generating incomes for the bank and for the general public to meet the financial needs. The supply of money in circulation is also affected by the amount of loans and advances issued by the bank. The primary economic function of the commercial bank is to receive the surplus saving money from the general public, individuals, firm, institutions, public houses and companies and to pay the cheques drawn upon the bank.
The bank accepts the deposits at a low rate of interest and lends it at higher rate of interest, the difference between the lending and accepting rate is the Source of income for the bank. Keeping in view the above factors UBL offers the following types of accounts:

Current Account

Saving Account

Fixed Account

The classification of the deposits in to current, saving and fixed accounts is mainly on the basis of duration and purpose for which the account is maintained at a bank

CURRENT ACCOUNT
Current account is running account because, customer can withdraw deposited amount at any time, whenever he feels need. The customer can withdraw without any prior notice to the bank. The bank has to pay the cheque provided within the limits of the account balance. The main thing is that bank does not pay any kind of interest on current account.
The bank cannot invest the deposited amount under current account heading, because of the fear of withdrawal. Bank has to keep with it a higher reserve ratio to meet the needs of the current account holders.
SAVING ACCOUNT
Saving Account is an important source of funds for the bank. The purpose of this account is to attract the small saving of the general public. Normally workers, schoolboys and employees of the organizations use the saving account facility. UBL also provides this facility to the general public against a certain rate of interest. The new name of this account is now a day is PLS-Saving Account. If a customer wants to withdraw a large sum of money (above 15000), he will have to give a notice of 7 to 14 days in writing to the bank. Saving account deposits provide a chance to the bank to invest safely, because customer can withdraw small amount of balance.
FIXED OR TERM DEPOSITS
Fixed or Time deposits accounts are the major source of the capital for investment for the bank and cannot be withdrawn as in case of the current account. The amount deposited can be received back after a certain specified period of time. The rate of interest paid on fixed Deposits is normally higher than saving Deposits. The rate of interest also varies due to time period. After the expiry of the period the customer presents the receipt to bank and received the amount in cash or bank added in the customer accounts as agreed between bank and customer.
OPENING OF THE NEW ACCOUNT
A customer can open the following three types of accounts:
PLS-Saving Account

Current Account

Fixed Account

1) Opening of saving Account
Saving account is also divided into two types further,

Individual saving account
Joint Saving Account

I. Opening of Individual Saving Account
An individual person can open this type of account. UBL has defined the following procedures for the opening of individual saving account:
Signature specimen card, the bank to get authorized signature of the customer as specimen for avoiding any future discrepancy gives Customer.
Account opening form, when a customer comes to open the new account in the branch he is given a printed form, to be filled by him. Account opening form consists of full name, address, and date of birth, occupation, telephone number, and N.I.D. card number.
Guaranteed by the existing account holder, when the new account holder fulfills all the requirements then he is asked to give some existing account holder guarantee, so that in future the new account holder may not fraud with the bank.
II. Opening of Joint Saving Account:
Opening procedure for the joint saving is same as in case of individual saving account. Just the difference is in the account opening form.
Signature specimen card is also used for the same purpose as for the individual saving account, to avoid future discrepancy.
Account opening form, joint saving opening from has same information more than one time because more than one person fills this form to open the account. Briefly is that no one/single person can open this account, as a result it is called joint saving account.
Rules and Conditions for Saving Account:
The account opening person knows the rules and conditions.
This account can be opened only with initially Rs. 100 not less than this amount.
PLS- Saving account may be opened by/in the name of individual or jointly, or by charitable institutions or provident funds or other funds, associations, societies and firms or clubs.
For opening of this account application has to submit on the prescribed form by the bank.
Customers can deposit money in his account by using pay-in-slip.
Customer must check the signature of two officer of the bank on the deposit slip.
Withdrawal, depositor can’t withdraw more than his balance or one quarter. At least 7 days notice must be given to bank for withdrawal purposes.
Bank can’t responsible for a cheque, which has been paid prior to receipt of written instructions from the drawer countermanding payment.
The bank will take care to see that credit and debit entries are correctly adjusted, but if any mistake is by the depositor/withdrawer than bank will not responsible for the loss.
If the account is closed the unused cheques must be returned to the bank for the cancellation and the balance amount, if any must be withdrawn.
The profit or loss on the balance due at the time of death will be paid when bank will declare its profit/loss for the half year.
Death of account holder, in absence of any instructions the credit balance outstanding in any joint account in the name of two or more persons will be payable to the survivors.
The bank to the account holders will supply statement of account every quarter.
Amendments of rules, the bank have a right to amend, alter or add to any of these rules with or without notice to the account holders.

2). Opening Of Current account
A person, businessman and organization can open the following types of current account.

Joint Current Account
Individual Current Accounts
Sole proprietorship Current Account
Partnership Current Account

Joint Current Account
More than one person can open joint current account. Minimum balance of this account is Rs.l0, 000 approx. If a joint holder dies then bank holds the account and refers case to the court.
Account opening form, this application form is divided into two sides and both sides have same information which are details of signatory (A, B), name, occupation, nationality, place and date of birth, national identity card number, business address, employer no. Etc.

Individual Current Account
Only one person can open individual current account. Minimum balance in this case is 2500, if the balance in the account is less than this limit than bank sends a statement to account holder to maintain the minimum balance. For withdrawal, checkbook is issued and used no other instrument is used or accepted by the bank. Procedure for opening this account is also same as in PLS-Saving account just the difference is in opening form information, required by the bank.

Sole Proprietorship Current Account
In sole proprietorship organization a person invests his capital and devotes full time to his business. Sole proprietor opens this account. Minimum balance that required in this account is Rs. 1000. All the profit paid on balance will go to the sole proprietor only.
The account opening form of this account is different than others because this form is filled in the name of the organization. The name of proprietor. Place and Date of birth, Nationality, Passport number and National Identity Card number, have to mention on this form.

Documents Required
Following documents certified copies are required with the application:

Most recent set of Account
Current Municipal Licensee
Commercial Registration Certificate.
Partnership Current Account
Partnership current account can be opened with the name of Partnership Company. Before opening of partnership account shareholders has to decide that how many partners have right to sign on cheque. The procedure is same for opening such account; the difference is in the account opening form. Account opening form shows the name in full, nature of business, principal place of business, address, location, and telephone number, telex number. After that this form is divided into four sides with the name of A.B.C.D. and showing the same information mentioned earlier.

Rules and Conditions
Bank can close /down any account at any time upon 48 hours write notice, after the opening of the account.
The account number should be mentioned on all correspondence with the bank when deposits or withdrawals are made.
The account holder must maintain the minimum balance requirement that is Rs: 1000.
After six-month bank refuse the payment of the cheques (post dated cheques).
Bank will not make payment if cheque is made unauthorized.
Account holder who is unable to sign, he will affix his left-hand thumb.
The cheque amount should not exceed to balance of account.
Any person opening a current account is deemed to have read, understood and bound by the bank rules and conditions of current account.

CHAPTER NO. 3

ACCOUNTS DEPARTMENT

ACCOUNTS DEPARTMENT
It is said that accounts department is the backbone of the bank. It plays a vital role in performing different banking functions. The accounts department at UBL Hussain Agahi branch is performing its function manually. Different books of accounts relating with other departments are maintained here. With the help of these books of accounts, accountant prepares monthly, quarterly, semi-annually and yearly financial statements.
The working in accounts department mainly depends upon voucher system. For each and every transaction-taking place in the bank vouchers are prepared and through these voucher contra entries are passed under different heads.

FUNCTIONS OF ACCOUNTS DEPARTMENT
The accounts department performs the following functions:

To prepare and maintain the vouchers.

To maintain and update the ledgers for term deposits.

To update general ledger.

To prepare different periods statements.

Vouchers
Each and every transaction in the bank is made through vouchers; the final place is accounts department for recording these vouchers. Officer in the accounts departments arranges these vouchers according to heads of accounts. These vouchers are of two types:

1. Debit Vouchers

2. Credit Vouchers
These two vouchers are again classified into three following types of vouchers:

Cash Voucher

Clearing Voucher

Transfer Voucher

All the daily transaction in cash, transfer and clearing is done through these vouchers. A sheet is prepared on which all the vouchers, passed during any one working day are consolidated and summarized. This sheet is called supplementary sheet. It provides help in preparing Cash Book.
There are two types of supplementary sheets:

Debit Supplementary Sheet:
In which all debit Cash Voucher, Clearing Voucher, Transfer Voucher are included.

Credit Supplementary Sheet:
In which all credit Cash Voucher, Clearing Voucher, Transfer Voucher are included.

Cash Book
It is maintained to keep the record of daily receipts and daily paid vouchers. Cashbook is consisted on the opening balance and the closing balance of the day. For correct balance of the cash book there is a need to arrange all the vouchers.

Ledger For Term Deposits
One of the functions of accounts department is to maintain and update the term deposit ledgers and books manually. Term deposit receipt or TDR ledger is updated after every month for estimation of profit on customer accounts. Accountant has to prepare different ledger for all schemes of term deposit. With the help of TDR the accountant prepares provisional ledger/Summary ledger and also statement of provisional expenses. The profit after every six-month will be the expense of the branch.

Updating General Ledger
When vouchers are recorded in cashbook then the balance of each head of account is posted to its ledger account. There are two main heads of the general ledgers, Income account & Expenditure account. All the accounts fall under one of these two main heads. Separate ledger register is maintained for every head of account. In UBL all the daily transactions in deposits, cash, clearing, transfer remittance, foreign exchange; advances are performed through these daily ledgers. Accounts department Maintains and prepares the following ledgers and books of accounts:

Daily General Ledger Expenses
Daily General Ledger Incomes/Receipts
Monthly General Ledger Assets
Monthly General Ledger Liability
Daily General Ledger Zonal Expenses
Daily General Ledger Inspection expenses.
Daily General Ledger Regional Expenses
Daily General Ledger Audit Expenses

The format of the entire above ledger is approximately same. General ledger tells about A/C No., description, previous Balance, Dr. amount, Cr. amount and running balance.

Preparation of Different Statements
Accounts department prepares these statements,
Statement of Affairs

Statement of provisional Income

Statement of provisional Expenses

Statement of Head office A/C

Balance confirmation Book/Report

Transfer Book

Statement of affairs is prepared yearly, consisting on the details about assets and liabilities of the branch. This statement provides assistance in budgeting about branch. Statement of provisional Income and expense is prepared monthly. Statement of account and balance confirmation is sent to accounts holders.

LOCKERS
UBL is also providing lockers facilities to its customers. The account department also maintains the record about lockers. The basic purpose of locker is to provide safe custody to client’s valuable ornaments, jewelry or documents. Almost in all branches, Lockers are available in different sizes at different rates. For availing this opportunity, customer has to open his account in the same branch/bank.

Locker Operating Procedure:
Bank provides an application form to the applicant who needs to operate a locker in the branch. This application form contains all rules and regulation regarding to obtain a locker. Specimen signature card is also filled in signed by the applicant. Bank assigns a password to their customer for secrecy. Each locker has duplicate keys. One (master) key is kept by the bank, and the other by the customer. In case of opening any locker, first of all master key is applied and then the customer key. If the locker has been obtained jointly then at the time of the opening, the person signed the application form, should be presented there otherwise, the bank will not allow to operate the locker. Bank officer has to maintain the following register for record keeping purposes of locker.

Locker Register
Operation Register
Key Deposit Register

Safe deposit locker fee is recovered in advance or at the start of the year, half-year or quarterly.

Types of Locker
There are basically three types of locker at UBL that are as under:

TYPES OF LOCKERS RATES OF LOCKERS
Per Annum
Small Rs. 1200
Medium Rs. 1800
Large Rs. 3000

The key deposit fee is Rs. 600. Per locker and it is refundable at the time of closing an account the breaking charges are Rs. 500 per locker and it is also refundable at the time of closing of account, provided there is no breaking.

CHAPTER NO. 4

BILLING COLLECTION
BILLS DEPARTMENT
This department basically deals in bills, which come in bank for collection. The bills are cheques, call deposit, drafts and pay order. These bills are from outstation branches of UBL or of other banks. This department provides services to customers at low charges to get their amounts from the nearest branch.

HEADS OF BILLS
There are two main heads of the bills i.e.

Outward Bills For Collection (OBC)

Inward Bill For Collection (IBC)

Outward Bills for Collection
Bills department receives cheques or other kinds of bills from its clients. The condition under Outward Bills for Collection is that the customer must have his account in the branch. This branch forwards the cheque with schedule or covering letter to that branch on which bill is drawn. The checking officer of bills department will cross the cheque with special bank stamp before forwarding the cheque to the other branch.
Outward bills for collection register
Outward bills for collection register is maintained in order to deep the records of all bills for outward collections. This register is updated two times, first at time of receiving the OBCs and secondly at the time when confirmation advice is received from the other branch, either the cheque will be paid or not by the other bank branch. After confirmation of the amount, confirmation advice is transferred to the sender branch. After confirmation of the amount and bills, the account of the customer is credited against reasonable charges, which is income for the bank.

Inwards Bill for Collection
These bills come to branch for payments so branch has to verify these cheques, pay orders, drafts and call deposits etc. The party account must be opened in that branch which sends it to paying branch .The responsibility under IBCs of the branch is to verify all the bills within three days, and should send the bank advice to the originating branch.

Inward bills for collection register
Inward bills for collection register are maintained for future record purposes. Care is made while posting the amount of bills in the register. Each bill is assigned a number according to the register series. Every year the number starts from one and continues for the whole year and next year again from one and so on.

CHAPTER NO. 5

CLEARING DEPARTEMENT
CLEARING DEPARTMENT
This department welcomes the cheques and other negotiable instruments drawn upon local branches of other banks. State Bank of Pakistan has a clearinghouse, in which the bank representative brings cheques and other Institutions and mutual claims of each bank on other are off set and a settlement is made by the payments. Clearing system is helpful for both the customers and bank in saving of time, labor and currency involvement.

PROCEDURE FOR CLEARING CHEQUES AND INSTRUMENTS
UBL is a member of SBP and has an account with SBP. The clearinghouse of SBP, through which branches forward and receive clearing cheques, with a schedule, conducts clearing. The clerk of forwarding branch prepares the schedule and vouchers of all the clearing cheque, which he received on that day and sends these cheques to the checking officer. Checking officer passes these cheques and vouchers by his initials, endorsement stamp and branch special crossing stamp. Clerk posts the contra entries of these vouchers in the clearing register. At every day at about 9:05 a.m. Representative of all local banks are in clearing house of SBP, to receive and forward the cheques.

PROCELURE FOR ADVISING H/O ACCOUNT
All the inter-bank adjustments will be effected through HO account, it will be essential for the branches to advise head office account about every transaction. The SBP will send a consolidated debit/credit advice to the branches in respect of clearing cheques delivered or received from the branches. The amount of the advice will agree with total amount appearing in the schedule of cheques delivered/received. Copies of all advice will be sent to head office. The other branches will not send any advice to head office.

TRANSFER DELIVERY
Branch receives the cheques and other negotiable instruments drawn on other branches of the same bank. Main branch of the UBL handles the transfer deliveries of cheques. The same clearing cheque procedure will be adopted in the transfer delivery case except both availing the facility of SBP, In case of cheque drawn on one branch and collected by another branch for the credit of its constituents the branch delivering the cheques will send a consolidated debit advice to the drawee branch. Clerk maintains the ledger for transfer deliveries, copies of all the advice will endorse to head office as usual.

CHAPTER N0. 6

REMITTANCES DEPARTMENT REMITTANCE DEPARTMENT
Transfer of money or equivalent to money from one branch to another branch of the same bank is called remittance. Now it has become an easier and safer method both for the client and banker to transfer their money from one branch to another within the city or Outside City.

PARTIES INVOLVED
In case of remittances normally two banks are involved, are as under:
Originating Bank Branch
It is the branch, which issued the instrument for remittance.
Responding Bank Branch
The branch that receives the instruments for remittances, also known as drawee’s branch:

TYPES OF REMITTANCE
Remittances are classified into the following two types:
Inland Remittance
Foreign Remittance

Inland remittances
It is a transfer of money from one branch to another branch of the same bank within the same country. In this case both the parties will be of the same country and same bank.

MODE OF REMITTANCES
United bank limited, uses following types for transfers of money:

Demand Draft (DD)
Pay Order (PO)
Mail Transfer (MT)
Telegraphic Transfer (TT)

Demand Draft (DD)
A bank draft is an order instrument issued for payment of a certain sum of money to a certain person. There are three parties involved:
Drawer: Issuing Bank.
Drawee: The bank on which the draft is drawn.
Payee: The name of person to whom the payment is to be made.
There are two types of demand draft, which are as follows
DD Issued
DD Payable

a) DD Issued
UBL has a standard application form that must be filled in by the customer for issuance of Demand Draft.

The DD Application Form contains:
Applicant’s Name
Applicant’s Address
Signature of Applicant
In Favor of (Payee’s Name)
Drawn on (Name of Drawee Branch)
Amount in words and figures.

The Second Officer, Cash Officer and another authorized officer must duly sign this form. The cheque of the showing the amount of the DD is attached with the application form. The clerk prepares the demand draft when all the requirements are fulfilled. As a precaution, the draft should be protecting graphed. In the case protect graph is not available, a sum of the amount payable must be written in red ink preceded by the words “UNDER” or “NOT OVER”. It is known as “Protective Crossing” or security notation. Demand draft is then recorded in the DD issued register and credit advice is sent to the drawer branch.

Bank’s Charges
The bank recovers different types of charges from the applicant on issuance of DD, including:

Central Excise Duty
Commission
Tax
Postage Charges

b) DD Payable
When the bank branch receives a credit advice issued by another branch and the title of the advice is demand draft then this is called the Demand Draft Payable or the DD Payable. Practical procedure regarding to the payment of demand draft, in the United Bank Limited may be summarized as follows:
1. All drafts drawn on a branch should be routed through the General Ledger Accounts “Draft Payable” of the Bills Payable Account. This account is credited by the drawer branch on receipt of the cover in the form of IBCA.
2. Signatures should be verified on all drafts drawn on a branch.
3. Normally, payment of a draft should be made after receipt of a corresponding credit advice. In case the advice has not been received, payment should be executed through the approval of the Manager at the drawee’s branch who should satisfy himself with regard to the authenticity of the draft in terms of signatures and otherwise.
4. On receipt of advice from the drawee’s branch, signatures should be verified if the amount of a draft exceeds Rs.5000/-
5. The draft when paid should be marked in the DD payable register.

Essential Precautions at the Time of Payment
I. The instrument should be scrutinized properly with regard to name, Drawee branch, amount in words and figures protect graphic and signatures of officers.
II. The payment should not be effected unless the payee has been identified to the satisfaction of concerned officials at drawee branch.
III. Extra care should be exercised if the payee falls in the category of non-customers. It would be better if an account holder verifies the identity of the payee, in such cases.

Payment Order (PO)
A banker’s Payment Order is an instrument drawn by a banker on himself Implicit in a payment order is an undertaking on the part of the banker to pay, a certain sum of money, on the presentation of the instrument. The payment orders are generally issued for anyone of the following practical purposes:
To facilitate all locally payable expenses on account of a bank for the reason that such payments are not executed through cheques.
2. For the sake of inland and foreign remittances in case where the beneficiaries do not maintain account with the bank.
3. For all local payments under instructions of the customers for sundry purposes like payment of insurance premium, payments to third parties, club bills, rent and taxes etc.
The following contains stepwise procedural prescriptions pertaining to the issuance and payment of payment order:

Issuance
For the issuance of payment orders, an application will be tendered on bank’s standard form (F-34) by the purchaser giving his name and address thereof In case of request from the bank’ s customer for the issuance of the payment orders, a letter in this respect, will be obtained giving full particulars of the payee authorizing the bank to debit the account.
The cost of the payment order along with an amount of Rs.5/- as commission plus excise duty will be paid on the counter.
In case of letter of authority, the total amount i.e. payment order amount, commission, excise duty and postage, if any, will be debited to the customer’s account as per bank instructions and contra credit will be passed to Bills Payable — Payment Orders Account, commission, excise duty and postage account.
The application for the issuance of payment order the Manager/Second Officer as the case shall sign (F-34) may be if it is to be issued on bank account.
The particulars of the payment order shall be inserted on the blank payment order leaf either through a typing machine or shall be neatly hand written using indelible ink. The account shall also be rounded off through a protect graph machine or by hand on top of the instrument.
Subsequently, the particulars of each payment order shall be recorded in payment orders issued register. The payment order shall be signed by two authorized officers of the bank simultaneously authenticating entry in payment order issued register and after verifying the following:
Name, code & address of the issuing branch.
Name of the payee.
Amount in words and figures.
Date of issue.
The amount is rounded off on top of the instrument either through protect graph machine or neatly by hand-writing.
VII. A stamp containing the following stipulation shall be affixed on the back of each payment order at the time of issue:
Received payment from United Bank Limited as over leaf on.
Account of______________
Date ­­
VIII. The payment order, then, shall be delivered to the purchaser or to the department concerned against acknowledgment on the reverse side of F-34 as well as on the counter foil of the payment order.

Payment
The payee shall be duly identified by a bank customer or by Manager / Second Officer in case the payment order is presented for cash payment on the counter and it will be ensured that the payment order is properly receipted on its reverse on appropriate value or revenue stamps.
The payment order will then be entered in payment orders issued register after marking the date of payment against the date of issue in the contra columns under authentication.
The payment order will then be passed for payment as per bank instructions.
The procedure as given above will be adopted in case of all payment orders received for payment, except that usual precautions shall be observed to ensure that the bank stands discharged from the payment in due course.

3) Mail Transfer (MT)
Some times a constituent of a bank wants to transfer funds from one account to another or a non-constituent wishes to remit funds in a particular account maintained at some place with a branch of the bank or when the accounts are transferred from one branch to another branch, such amounts/balances are remitted by means of mail transfer. The procedure for issuance of a mail transfer is the same as discussed for drafts except that the applicant is provided with a memorandum for money received from him for the issuance of a mail transfer on a particular branch of the bank. The payee must be an account holder (customer) of the drawee branch.

PAYMENT OF MT
The procedure for payment is as follows.
On receipt of advice from drawer branch, the test should be verified if amount exceeds Rs. 5,000.
The particulars of MT should duly be entered in MT payable register.
Following vouchers should be passed after the test has been verified
Dr. Head Office Account Drawer Branch.
Cr. Bills Payable Account MT payable.
When the customer’s account is to be credited, the following entries are passed:
Dr. Bills Payable Account- MT Payable
Cr. Customer’s Account.
If the payment is to be effected in cash, the entries are:

Dr. Bills payable Account- MT payable
Cr. Cash.
Before making the payment of MT, the drawee branch must ascertain the following:
It is drawn on the same branch.
Payee has signed the revenue stamps of adequate amount.
Payee is properly identified.

Telegraphic Transfer (TT)
Generally a mail transfer advice reaches the drawee branch the next day, when courier arrangements exist. However, when it is sent through post offices, it usually takes 2 to 3 days to reach its destination. But sometimes an individual whether customer or not, demands that his funds should be transferred from one place to another through the quickest means. In such cases, transfer of funds message is passed on through a telegram, ordinary or express, to the drawee branch of the bank. A tested message is sent to the drawee branch followed by the confirmation copy. In case the payment is immediately required by the payee, the tested message is given on the telephone.
Besides normal charges as those recovered on issuance of demand draft, the bank charges one additional expense i.e. Telephone Charges of amount Rs.100 from the customer.

Payment of TT
A TT facilitates urgent transfer of funds either by a telegram or through telephone. A step-wise procedure relating to the payment of TT at the drawee branch is as under:
1. The drawee branch receives message either on telephone, or through telegram. In case of a telegraphic conversation, the concerned official at drawee branch should ask for the proper identification of the official at the drawer branch. Whereas the message should be decoded in case of telegram.
The particular of the TT should duly be entered in the TT payable register.
In case where the customers account is to be credited, following entries be passed:

Dr. TT Account Drawer Branch
Cr. Bills Payable A/C _ TT Payable
Dr. Bills Payable A/C _ TT payable
Cr. Customer’ s Account.

4. In case where the payment is to be effected in cash, the following vouchers shall be passed:
Dr. Bills Payable A/C TT Payable
Cr. Cash

5. TT should be paid after proper identification.

With-in the country or from abroad, UBL offers the most efficient and price competitive services. With its large network of branches, it is poised to offer service almost at doorstep of the customers. UBL is a member of SWIFT
(Society for Worldwide Interbank Financial Telecommunications). It is now the privatized commercial bank to link up with three international points, Dubai, London and New York. This enables the Bank to provide secure transmission of foreign exchange payments for trade, home remittances and other transfers in a fully automated manner.

Tez Raftaar
UBL’s new remittance service, TezRaftaar offers all overseas Pakistani people the fastest and the most convenient delivery of their money to their beneficiaries in Pakistan. Best of all, TezRaftaar is completely cost free and is available at all UBL branches along the Bank’s Network in the Middle East, UK and US.
TezRaftaar has following features:
Guaranteed delivery within 24 hours to your given address in Pakistan.
Doorstep delivery by authorized courier or credited to the recipient’s account.
Free of charge transfer service.
Open to all including those who are not UBL account holders?
Complete reliability of transaction.

MONEY GRAM

Time is Money, so don’t keep your family waiting

Money gram service is a person-to-person international money transfer service that allows consumers to send/receive money around the world in minutes, with no bank account required.
FEATURES OF MONEY GRAM
FAST
With money gram your money can be transferred from almost any country in the world because it is a reliable and trusted way to send/receive money worldwide.
SAFE
The money gram service is used around the world because it is a reliable and trusted way to send/receive money worldwide.
CONVENIENT
More than 50,000 MoneyGram agent locations in more than 150 countries; computer networked to ensure that your money is transferred within minutes.
Easy: (How to Receive your transfer)
1- Sender abroad goes to nearest MoneyGram representative, fills out a form, hands in the amount he wishes to send and the send (service) fee**, and shows an I.D.
2- Upon completing the transaction, sender will be given a transaction reference number.
3- Sender calls the receiver and informs him of the transaction reference number and the amount of money sent.
4- Receiver can go to any MoneyGram representative, show an I.D, fills out a simple form mentioning sender’s name and amount expected.
5- Receiving agent hands over the money to receiver.
NOTE: “Currency exchange rate set by MoneyGram or its representatives will be applied”.

CHAPTER NO. 6

CASH DEPARTMENT
CASH DEPARTMENT
This is sensitive department of the branch. No other person is allowed to enter in the premises of cash department. As obvious from name that this department deals in cash deposits and payments. Cash department is performing its functions/duties manually. For payments and receipts, it has to maintain certain sheets, books of accounts and various ledgers, which are as under:

Cash received voucher sheet
Cash paid voucher sheet
Token register
Transaction ledger
Pay-In-Slip record
Cheque book record
Cash balance book

PROCEDURE FOR CASH PAYMENTS
The instrument against which payment is made that is the cheque. Normally the cheques come for payment in the branch are, cheques received at counter for payment and other cheques are Clearing or Transfer Cheque. No payment is made against any other monetary instruments.

Special Considerations
When cheque is received for payment special care is taken about the signature of the account holder, date, no cross or cutting in figures, signature at the back of the cheque presented for payment. If any thing is found wrong then cheque is dishonored and is given to customer for rectification. If the cheque is found valid in all respect then Token Clerk assigns token to the cheque at the back. The same Token is given to the customer as a proof. The next step is forwarding cheque to the accountant for the verification of the signature with specimen card signature. If signature are not according to specimen card then the cheque is returned to customer and token is taken back. In token register a note is written that cheque returned unpaid. If signature are similar with the specimen card than cheque amount is posted in Ledger Card/Transaction Ledger. Special care is given to the balance of the account either favorable or unfavorable.

Overdraft Facility
If the balance in the account is less than the cheque drawn, then bank may extend O/D facility to its customer but now-a-days this facility is not provided.

Withdraw Limits
If the cheque is up to or less than 10,000 then officer can sanction and in case of greater, than he has to get approved from his superiors. Finally, after all verifications of the cheque it is given to the cashier, then payment is made to holder of the cheque. At the same time cashier maintains the Cash Receive Voucher Sheet. The cashier performs all these duties manually.
PROCEDURE FOR CASH RECEIVED
For depositing any amount in the account Pay-In-slip is used that is filled by the customer. The pay-in-slip is consisted on date, A/C no., and particular about the amount to be deposited in the account. The depositor signs the part of the paying slips, which are retained by the bank to show acceptance about the entries, made in pay-in-slip. The pay-in-slip serves as a voucher to Card/Transaction Ledger is only updated with pay in slip. The cashier checks necessary details provided in the pay-in-slip and count the cash to be deposited and tally with the figures written in pay in slip and in his hand/counter. If any mistake is found then first that mistake/error is removed. If there is no one, than cashier fill in Cash Voucher Received Record Sheet and assigns a voucher no. To both the transactions made in the sheet and to pay-in-slip. This voucher sheet starts with one and continues for the whole day and next day again started from one. If all is done well, than accountant authenticates the two by signing on the two documents posting stamps on the slip. One part of the slip is given to depositor, and other part is given to clerk for further posting in Ledgers.
The Cashier, at the end of the day has to maintain and balance the cashbook. The cashbook contains the opening balance, details of payments and receipts. The Manager of the bank signs the consolidated figures and written in cashbook as closing balance, which will the opening next day.

Closing Balance = Opening Balance + Receipt – Payments

Chapter No. 7
Human Resources Department

Human Resources Department

Transfers & Postings
Scrutinizing bills (Hospital Bill)
Staff Deceased cases & its Correspondence
Retired employees Cases & its correspondence
All staff legal cases & Court at Multan & Lahore.
Retrenchment cases
Complaints and its correspondence
Fraud & Forgery cases
Mandatory Leaves and its observance.
Staff leaves and other related staff matters
Goals of all Staff
Monthly Statement of Staff
Disciplinary Action Cases

CHAPTER NO. 8

ADVANCES DEPARTMENT ADVANCES DEPARTMENT
Credit is defined as the sale of goods, services and money claims in the present in return for a promise to pay in the future. While in banking sector advance is the promise that carries the repayment of the original amount plus an interest on the principal amount, extended as advance. The credit/advance is given on the base of the confidence/trust and on the belief that the customer will be able and willing to pay on the demand or at some future time.
The term credit may not be confused with term Debt. Credit and debt are merely the same things looked at from two different points of view. When a lender extends credit, the borrower acquires it. The lender or the creditor has the right to get back payment and the borrower has the obligation to pay back. Credit can be defined in these words: “credit is the right to receive payment or the obligation to make payment on demand or at some future time on account of immediate transfer of goods”. The first phrase right to receive payment is used from the point of view of the creditor, as he is to exchange present goods for the right to receive payment in future. The second phrase, an obligation to make payment on demand, which is from the debtor point of view. The debtor has an obligation to pay in the future for the goods required. Credit and debt are two sides of the same shield.
PROCEDURE FOR ADVANCES
The credit officer will have to see the following information from the company:
Name of the Company
Legal Structure
Names of Principal Shareholders/Directors.
Line of Business.
Financial Standing & Respectability.
Repayment capacity/Behaviour.
Your Credit experience including the use of credit facilities.
For this purpose the credit officer takes following steps before advancing credit:
Step 1: Applicant is required to serve some documents to the credit officer whenever required by him. These documents may include certified Financial Statements, legal documents regarding property occupied by the borrower. And some other certificates required by law and prudential regulations of State Bank of Pakistan like property deed, mortgage of property etc.
Step 2: Now the credit officer will have to analyze the provided financial statements critically. He will have to see the summary of financial health of the company, or partnership or the sole trader ship. Then he will have to fill the form containing information about:
Balance Sheet Line # 01-43
Income Statement Line # 44 – 64
Balance Sheet Reconciliation Line # 65-83
Analytical and Comparative Ratios Line # 84 – 136
In ratio anlaysis, credit officer has to see the Liquidity, Marketability, Profitability, and Activity ratios. After this he has to see the comparative Operating/Non-operating Cash generation statement.
Step 3: While doing this job the credit officer will have to see that the financial statements are reflecting the true picture according to the GAAP or not, and must fulfill the requirement of Checklist—-Prudential Regulations. This form consists of three pages regarding the subject matter. For this purpose he has to see the competitors, suppliers, customers and bankers with whom he is dealing.
Step 4: If the credit officer is satisfied with the financial performance of the company and other documents, he will write a credit approval containing the relevant information about the business. He attaches these documents with the proposals he made and forwards to the Zonal Office. The Zonal Office advance department ensures that the requisite documents are in order. Further they applied various financial tests, client business reliability and competitiveness. If the Zonal Chief has the power to sanction the loan, then he will prepare the sanction advice and sent it back to the relevant branch. If beyond his limits/powers then send it to regional office.
ELEMENTS OF CREDIT SELECTION
Five C’s are the main elements used for credit selection:
1- Character
The loan officer checks the character of the applicant, his family background, mode of living, & business.
2- Capacity
The loan officer checks the paying ability of the applicant by his previous experience.
3- Capital
Loan officer checks the business capital and liquid assets worth.
4- Collateral
The loan officer checks collateral like stocks, bonds, B/Es,
5- Condition
The loan officer also checks the economic condition inside the country and outside the country. If economic condition is favorable than loan is sanctioned otherwise not.

SECTORS FOR ADVANCES
There are three main sectors for which UBL is advancing loans. These sectors are:
Industrial Sector
Commercial Sector
Agricultural Sector
These loans are given specially to traders, businessmen, small industrial units, including cottage and small-scale industries, agriculturists. Thus UBL is ensuring an equitable distribution of credit among various sectors of the country’s economy. Different industry codes are used for different kind of industries.
Industrial loans
These loans are given to industrial units including cottage and small-scale industries up to or less than Rs. 20 million. Loans amount shall not exceed amount specified by marginal restriction on the type of securities offered. Industrial loans are granted by analyzing the requirements of the industries.
Loan period, loans are allowed for a maximum period of 5 years including a maximum grace period of one year. In special cases up to 10 years loan period can be extended, depending on the merit of the case.

Commercial loans
Total principal amount of loans to a single borrower shall not exceed to Rs.0.3 million, including loans to dependent members of the family. Maximum maturity period is 3 years, also depending upon the nature and types of the loans, extended.
Mark-up, will be charged as per existing rate, which is subject to change from time to time. Presently it is 0.51 paisas per day on per thousand/1000. Mode of paying back, the borrowed amount can repay back in the form of quarterly, equal monthly or semi-annually with interest, or as the case decided.

Securities against Commercial Loans
Loan can be made against any or more of the following securities:
Mortgage of immovable property (land and Building).
Pledge of stocks, raw materials and finished goods.
Hypothecation of stocks, raw materials and finished goods.
State Bank of Pakistan Guarantee.
Agriculture Loan
The loan is advanced to those farmers who have cultivated land. It is classified into following types:
Production Finance
Development Finance
Production Finance:
This finance is advanced to the agriculturists for inputs requirement of lands i.e. fertilizers, pesticides, seeds etc. It is also called short-term loan. The amount of advance with interest is repayable within one year in lump sum form. Loans can be advanced to the client on his credit worthiness, or average balance.

Development Finance
These loans are advance to the farmers for the purpose of development of the land or other development purpose belongs to the agriculture sector for example for tractors, thrashers, tube-wells. It can be long term, medium term or short-term loans. The repayments of the loans are schedules in periodic installments, which may be quarterly, half yearly or yearly. Mortgage of land is used as security for the development finance. Mark up is charged on daily basis, which is changeable. The present rate of mark up is 0.50 paisas per day on per thousand.

FACILITIES BY UBL
UBL provides two types of facilities in case of advances, which are following
Funded Facility
Non-Funded Facility
Funds are given to customer according to their requirement against securities.
1) Funded Facility
If loan is on funded basis, the bank invests the big amount. Funded advance can be of following types:
Demand Finance (D.F)
Cash Finance (C.F)
Export

(a) Demand Finance
It is a main kind of advance. Bank requires 100% security against demand finance and charges interest on it. Security can be of different forms like cash, collateral and property. For example one person have dollars but he do not want to spent these, he will give an application to the branch manager, branch manager will take the dollars and will give the Pak. rupees against the dollars. After maturity, when customer will make the payment of advance plus interest then UBL will pay same dollars to the customer. UBL charges interest on advance from 14% to 18.25%. If the securities can be easily convertible into cash, and then the rate of interest will be low, other wise the rate of interest will high.
(b) Cash Finance
UBL gives cash finance only to specific/special persons or customers upon which bank has fully confidence. Cash finance is given against 50% security or greater than 50% security. This security can be SDR (special drawing right) or property. Bank charges interest on advance amount. The interest rate differs in different types of securities, and can be from 14% to 18.25%. If the security is nearest to cash then bank charges nominal rate otherwise the chargeable rate will high.
Cash Finance, is given to the following companies by UBL.
Sole-proprietorship
Partnership Company
Limited Company

(c) Export
Not operated by the Branch

2) Non-Funded Facility
Not operated by the Branch

ICU
DEPARTMENT INTERNAL CONTROL UINIT (ICU)

1-What is ICU:

Internal control unit is an independent appraisal function established to examine and evaluate the adequacy and effectiveness of the Business’s system of internal controls and quality of performance in carrying out assigned responsibilities. It is basically established for performing and monitoring vital independent as well as departmental control functions that are critical to the ongoing health of the branch.
Since the unit works interpedently, its reporting or work should be directly supervised by the Country ICU Head and under no circumstances Branch Management should influence their day to day work.
2. ICU Objectives
Main objectives of ICU are to:-
1.Ensure the reliability and integrity of financial and operating information and the means used to identify, measure, classify and report such information.
2. Review the systems established to ensure compliance with all policies and procedures, and to ensure that all the financials are passed accordingly.
3. Review the means of safeguarding assets and an sap[appropriate, verify the existence of such assets.
4. Review the operations or programs to ascertain whether results are consistent with the established objectives and goals.
5. Maintain high quality of work standards in branches.
6. Identify problems that may result in potential losses or damages to customer services.

4. ORGANIZATION

President

Country Operational Head

Country ICU Head

Branch ICU Staff

5. ICU STAFF
A. ICU staff will maintain their independence by not involving in operations (e.g. processing, supervision and custody functions etc.). They will not have any financial or maintenance access on the system except for inquiries.

B. ICU staff selection criteria, while selecting ICU staff due weight is given to high responsibility level, imaginative and having independent judgment, Rich banking experience and knowledge on laid down policies and procedures.
CONTROL FUNCTION MECHANISM
Followings are the main parts of Internal Control Functions:
Control Verification / Review Charts.
Proof / Balancing Charts.
Departmental Control Function Checklists.
Corrective Action Monitoring.
Work Plan.

A. Control Verification / Review Charts (Departmental & Independent
These documents are the most important records as they list the actual control verifications to be performed by the ICU and operating departments along with important checkpoints. They are split between Daily, Weekly, Monthly, Quarterly, and Semi annually and annually.

B. Proof/Balancing Charts.
In order to check any unusual/unauthorized transaction and to monitor the long outstanding items, monthly balancing proofs will be prepared by the respective departments for all such accounts in which transactions are passed manually. The ICU Head has a listing of all approved General Ledger/Subsidiary Ledger heads against which proofs are to be prepared at required frequencies. Quarterly the chart will be compared to the General Ledger to ensure that it is complete and include all accounts.
D. Corrective Action Monitoring.
A memorandum of exceptions if noted during the verification / reviews, will be forwarded to Branch Manager. Corrective action will be notified to ICU in writing by respective departments. ICU will monitor the pending file and work closely with the various timely manners.

E. Work Plan
At the beginning of each month ICU Head/staff will prepare his work plan for the month, proper planning is done, and copy is sent to ICU Head. Planning should be kept confidential from Branch Manager.

F. Vital Control Functions to be carried out by ICU.
A. Monitoring of Departmental balancing / proofs of General / Subsidiary Ledger heads.
B. Periodical Independent Verifications and Product Reviews.
C. Treasury function Controls.
D. Statement Rendition (mailing statements/balance confirmations to customers).
E. Customers ‘complaints.
F. Management Support Functions:-
¨ Corrective Action Tracking.
¨ Policy / Procedures Deviation Control (where required).
¨ Designations—at the time of changes for keys and other security stationery custody.

FOREIGN EXCHANGE EPARTMENT
At the last stage I have been posted in Foreign Exchange Department of the Branch, where I have experienced for two weeks. During this time what I have learned is as follows:

HERARCHY OF THE DEPARTMENT

FUNCTIONING OF CURRENT DEPARTMENT

Deposit Section:
The customer must have his account with our branch, because without it we cannot enter into the foreign exchange transactions. So a depositor opens an Account with the Bank in any form like:
Individually
Jointly
Partnership
Corporation

Foreign. Exchange Department of the Bank accepts under noted Foreign Currency from account holders. State Bank of Pakistan provides exchange rates on daily basis. And daily transactions are recorded at their current exchange rates.

US Dollar
British Pound Sterling
Japanese Yen
Deutch Mark
Saudi Rial, etc.

Opening of Foreign Currency Account.

Like normal account opening form, an account opening form is provided to prospective customer. At the same time introduction of that customer is important condition so that provided information by customer may be got authenticated. An existing account holder may introduce the incoming customer. The Manager takes new Account holder’s specimen signatures on specimen Card in order to avoid future problems. At the occasion of withdrawal of funds Accountant compares the signatures on cheques to the provided Specimen of Signatures so that genuineness of the cheques may be verified.

At the time of depositing funds the amount of funds is debited to “Foreign Currency On Hand Account.” & Credited the Party’s /Account Holder’s A/C.

At the time of withdrawal of funds the amount is credited to” Foreign Currency On Hand Account. & Debited to Party’s /Account Holder’s A/C.

Remittance section:

Foreign Exchange department remits Foreign Currency through under noted Paid Up Documents:

Foreign Demand Draft
Mail Transfer
Telegraphic Transfer

FOREIGN DEMAND DRAFT:

The demand draft is a written order is being given by the issuing Bank on it’s own behalf to it’s other Branch of the same Bank to pay the certain amount to the concerned person.

PROCEDURE TO PREPARE (F.D.D)

First of all draft application is filled in by the client. This application contains the under noted information.
o Name of the party/Person in who favor the FDD is being issued.
o Date
o Amount to be sent
o Account No if DD is crossed
o Amount of Exchange to be charged by the Bank.
o Name of Branch. Where the FDD is drawn.

1. Then cashier sends the cash receipt to the account department. The accountant records the amount (paid in cash or drawn from the account of the Account Holder) in scroll register.
Accountant gives the FDD leaf along with voucher (which was called FDD application form before the deposit of cash) to Bank’s Assistant who records the particulars of FDD in FDD register. Thereafter the FDD is issued and handed over to the Party/ Client. Now Bank sends advice of the FDD to the concerned Branch where the FDD is to be paid to the Customer OR his Agent OR in favour of whom he insert endorsement of the back of the FDD.

MAIL TARNSFER (MT):

It is the transferring of money from on place Branch to another place of the same Bank Cash transaction is not involved. Advice of the MT is sent along with it. The amount of MT is directly credited to the account of beneficiary’s account. That is why MT can be used to transfer the amount from one account to the account of other Branch of the same Bank.

IMPORTANT

It is proper and pertinent to mention here that procedure of issuance e of MT is same as in the case of FDD.

TELEGRAPHIC TRANSFER (TT)

This is most rapid method to transfer funds. Coding Message is sent through Telegraphic message OR on Phone.

Import Section

If any of our account holders whether single person/organization wants to import any Commodity / Goods from a Foreign Country it approaches to this department. Submits application and full-fills all the formalities conditions levied by State Bank Of Pakistan under F.E regulation Act 1947 and purchases foreign exchange for payment the cost of Goods/ Commodities to be imported. Then the Department opens L.C (Letter Of Credit is infact guarantee to the Foreign Bank for payment of the cost of Goods).

Bank charges like Commission and Exchange for providing this facility are received.

Export Section

If any Person/Organization wants to Export any Commodity / Goods to any Country it approaches to this department. Submits application and full-fills all the formalities conditions levied by State Bank Of Pakistan under F.E Regulation Act. For the export of goods the foreigner party sends an L.C through foreigner Bank in order to receive cost of Goods. Then Bank makes payments of L.C (Letter Of Credit which is infact guarantee to the foreign Bank for payment of the cost of Goods) to the Foreign Bank.

Bank charges Commission and Exchange for providing this facility are recovered.

Bill Of Exchange
Bill Of Lading
Airway Bill
Invoices
Packing List

All these four functions are being performed by the staff manually as well as at Computer in a very systematic way in order to keep the record up to date to avoid any divergence.

SWOT ANALYSIS
Strength
UBL has got a well reputed on –line system in most of its branches. Remittance department is working very efficiently in transferring the funds to peoples due to this system
The bank also has started ATM facility in most of the branches 24 hours banking is now the trend in Pakistan.
Bank is providing quick credit services to all the customers at all branches. Because the credit manager cooperates with the borrowers while making a loan request to the bank.
Weaknesses
The human resource department is not performing well in the organization. Selection process is not done on the merit due to which many competent persons can’t get job in UBL.
Bank is not introducing new products these days, so bank should boost the product development and increase the range of facilities offered for customers. And the rates of interest on its various products have been reduced.
Privatization has adversely affected the morale of the employees because they will not be able to get the expected fringe benefits, so it may lead to job stress.
Opportunities
Government is taking very bold steps to promote IT in Pakistan UBL has an opportunity to improve in IT stock exchange is very volatile and takes immediate effect so in times of crises conservative investors turns to saving deposits.
UBL is surrounded by many competitors it has an opportunity to aggressive marketing to increase its business.
Threats
UBL has many competitors who are continuously increasing their products and marketing aggressively it may cause its customer to shift to its competitors.

Analysis, Suggestions & Recommendations
During my internship at the UBL I find out week areas that require improvements for long-term benefit of the organization. These suggestions and recommendation are as follows:

2. Computerization
IT has changed the old method of making business. So, compuretization in UBL is become the basic need. Though UBL has the computer system yet the system has not totally shifted on computer. Manual procedure is still there, Hence computer facility is not fully availed and many branches are working without computer and computer system, it should be fully availed and system should be fully computerized. Compuretization will save to much timewhich is wasted due to manual procedures.

E-Commerce
This world is now called a globle world becaused it is connected through computer network. In today’s networked world e-commerce is getting importance day by day. All the leading banks of the world are adopting the concept of online banking and they are providing better services to their customers through the Internet. United Bank Limited should also adopt the e-commerce so that it will be able to compete with the national and international banks. Its is only possible when all the branches are computerized.
Performance Appraisal & Compensation
Employee appraisal is an major part good and effective HRM. It consist of systematic evaluation of an individual with respect to his personal traits and characteristics, his on job performance and his potential for development. In Unite Bank Limited there is no appraisal system exists. No relationship has so far been established between appraisal and staff motivation. No weight is assigned to appraisal in making decisions on promotions, postings, etc.
Compensation is a necessary thing for employees satifaction. And UBL has not any proper conpensation plan when ever management decide to give bonus or extra salary to employees it is followed. So there should be proper conpensation plan.
Product Marketing
This is age of competition and every organization is facing hard competition from not only domestic organization but also from the international organizations due to globalization. Due to this competition the marketing department plays a vital role in the success of the organization.
UBL should have a strong marketing department like many other private banks have, for the publicity of their products and make well inform the customers all the services provided by the bank and to conduct detailed market researches to find out new opportunities, needs of the customers and make comprehensive plans to capitalize those opportunities.
Appearance
Physical appearance of the location and inside the building also matters. It helps a lot to attract the customer. Some branches of UBL are very attractive but all the branches should be well dressed
6. Refresher Training Courses
There should be proper staff training refresher courses programs to train the employees latest tool and techniques of the banking. They should be given be given computer training. Most of the employees of the UBL know nothing about the computer and its application in the banking.

Bismillah Textile

BY
Asma Kazmi
SESSION: 2003 –2005

SUPERVISED BY:
Mr. Khalid Aziz

In the name of ALLAH, The Beneficent, The merciful:

“It is not righteous that you turn your faces towards the East And the west but righteousness is this that one should believe in ALLAH and The last day and the Angels and the Book and the Prophet (PBUH) and giveaway wealth out of the love for him to needy and the way-farer and the Beggars and for the way-farer and the beggars and for (the emancipation of) the captives, and keep up prayer and pay the poor rate; and; the performers of their promise, and the patient in distress and affliction and in time of conflicts these are those who are true (to themselves) and these are they who guard (against evil)”

AMIGHTY ALLAH SUBHANA TALAH
&
HIS HOLY PROPHET
MUHAMMAD
(Peace be upon him)
&
ENDLESS LOVE OF MY
PARENTS
WHOSE PRAYERS HAVE ENABLED ME
TO COMPLETE MY PROJECT.

Praise be to God, the Cherishes and Lord of the world-most Gracious and most Merciful.
We are grateful to almighty Allah for enabling us to complete the work presented in this thesis. It is through his unending mercy that this task moved towards success.
This is my first effort of my carrier. And after the God, We will like to admire the personality who is the best gift by the God for me, is my mother whose prayers are always with me and I feel that I am nothing without her prayers.
I also grateful to my honorable teacher Mr. Khalid Aziz for teaching me to see the silver lining in every dark cloud. I also conclude that, This work not has been fulfilled without the advice and help of Mr. Nasir Abbas and my special thanks to Bhai Jawad and Mrs. Nosheen Jamil.

Asma Kazmi

In Master of business Administration,Internship Program is an important part to give students an opportunity to have experience of practical field.Unless and untill the students experience the novelty of practical work.their knowledge of what they study in theoritical courses remains incomplete. The most important point in an Internship Program is that the student should spend their time in a true manner and with the spirit to learn practical orientation of theoretical study frame work .

This internship report is on my eight weeks practical training at National Bank of Pakistan Gulgasht Baranch ,Multan. In this internship report I have tried to give detail about the National Bank Of Pakistan,working and the functions of different departments of the bank.

Soneri Bank Limited

INTERNSHIP REPORT
ON
SONERI BANK LIMITED

Presented to: Mr. Shahid Hussain Nadeem

Presented by: Saleem Hussain

Roll no.58
M.com II
Session 2001 to 2002

Govt. College of Commerce
Bahauddin Zakariya University
Multan

Internship is the most important part of the M.Com studies. In fact internship provides the opportunity to us to implements our bookish knowledge in practice.

More than the internship is also provides the plate form to us to assess our strength and grip toward the concepts of the post graduate knowledge. This report reflects what I have learned during my internship period.

I have spent my time in different departments of the Soneri Bank and I tried my best to get the maximum knowledge during my training period.

I am very thankful to all members of the Soneri Bank for their sincere efforts and devotion for the preparation of this report.

I am also greatly under obligation to Prof. Shahid Hussain Nadeem (Govt. Post Graduate College of Commerce Multan) whose sincere encouragement enables me to complete the whole task.

It’s my pleasure to dedicate of my this minor effort to my

“BELOVED PARENTS”,
“WIFE”
AND MY CAUSE OF LIFE
“MY SWEET DAUGHTER AND MY SON”

I am very thankful to the following person who has given me enough assistance and guidance and spare their valuable time for me during my Internship Period.

Mr. Qamar Azeem Chief Manager
Mr. Malik Zafar Iqbal Assistant Manager
Mr. Saleem Akhtiar Incharge Foreign exchange & Credit
Mr. Sajid Riyaz Incharge Accounts Department
Miss Nadia Noor Assistant Incharge Foreign exchange
Mr. Saadat Ali Incharge Credit
Mr. Syed Ali Naqvi Remittance, clearing Department
Mr. Syed Ali Raza Incharge Cash Department

I am again very thankful to all of them because they are very cooperative to me during my internship

TOPICS PAGE NO.

History 7
Corporate Date 8
Organization Structure 10
Export Department 11
Import Department 18
Advances Department 22
Accounts Department 26
Deposit Department 28
Cash Department 32
Account Opening Department 39
Soneri Future Schemes 42
Branches 50
Financial Analysis 53
Strengths and Weaknesses 62
Suggestion and Recommendation 64
Pattern of Share-holding 65

History of Soneri Bank

Incorporated on September 28, 1991 the first Branch of Soneri Bank Limited formally opened doors for operations in Lahore on April 16, 1992 followed by Karachi Branch on May 09, 1992. The bank now operates with 30 Branches spread all over Pakistan including the   Northern Areas of the country where no other private bank has ventured so far. Expansion of branches is based on a policy of maintaining a balance between the urban and rural areas with a view to offering services even in the remote areas of Pakistan. Pleasant and sophisticated atmosphere has been provided in the branches, which are all fully air-conditioned and computerized. The essence of Soneri Bank business philosophy is to cater to the banking requirements of small & medium sized entrepreneurs, providing them qualitative & competitive services with emphasis on encouraging exports. Nearly forty percent of credit portfolio is related to export financing and credit decisions are taken within 48 hours that is why the slogan of bank is:
We have more time for you

CORPORATE DATA

BOARD OF DIRECTORS

CHAIRMAN

Mr. Badruddin J. Feerasta

CHIEF EXECUTIVE

Mr. Safarali K. Lakhani

DIRECTORS

Mr.Alauddin J. Feerasta

Mr. Nooruddin B. Feerasta (Sr.)

Mr. Amin A. Feerasta

Mr.Abdul Hayee

Mr. Asadullah Khawaja (NIT Nominee)

Mr. Hasan A. Bilgrami (NIT Nominee)

REGISTERED OFFICE

4th floor, IEP building, 97-B/D-1,

Gulberg III, Lahore.

COMPANY SECRETARY

Mr. Abdul Hayee

AUDITORS

Taseer Hadi Khalid & Company

Chartered Accountants

LEGAL ADVISORS

Mandviwalla & Zafar, Advocates

Tahir Ali Tayebi & Co., Advocates

Sheikh Atta-ur-Rehman & Association, Advocates

REGISTRAR AND SHARE TRANSFER OFFICE

THK Association (private) Limited Ground Floor,

Sheikh Sultan Trust Building No.2,

Beaumont Road, Karachi.

Tel.:(021) 568 6658

(021) 568 9021

ORGANIZATION STRUCTURE

Chief Executive

Board of
Director
A president, a secretary, 9 other member

Head
Office
Directors, Senior Executive, vice president

Provincial Headquarters
Senior Executive, vice president, provincial chief

Division
Divisional Chief, Execute vice president

Circle
Circle Execute, Senior Vice president

Zones
Zonal Chiefs, Vice President

Branches
Branch Manager, Officer etc.

EXPORT DEPARTMENT

Export earning and the volume of exports has now become an important factoring deciding the economic fate of numerous people. Soneri Bank is well aware of this fact and it plays their required role in order to boost exports. Soneri Bank also has an export department working under competent experts.

For the export purpose following procedure is adopted
Registration of Exporter
Under the registration (importer and Exporter) Order, 1993, as amended from time to time, no person can export any goods from Pakistan unless he is duly registered as an exporter with the Export Promotion Bureau.
Forms prescribed for declaring Exports
As required under the Federal Government notification dated 1st July 1948 the exporter are required to declare their export to Customs/Postal authority in form ‘E’.
Certification of Export Form by the Bank
Before the export form is lodged by the exporter with the custom/postal authorities all the copies thereof are required to be certified as under by the Soneri Bank.
a). Certified that the above exporter is known to us that he is bonafide businessman in Pakistan.

And that he has made arrangements with us for the realizations of the export proceeds, of the goods declared on this form on the due date from payments or with in six moths from date of shipment/posting, which ever is earlier.

b). we under take to ensure that export proceeds against shipment on firm contract shall be received by us on the due date for payment or with in six months form the date of shipments/posting, which ever is earlier.

c). We under take that in the event of non-realization of export proceeds against shipment on consignment sale within period of six month, we shall obtain from the exporters and furnished to the state bank of Pakistan a full explanation as to the circumstances resting in non-realization.
B) We further undertake that in the event of short realization, we shall obtain from the exporters and furnished to the state bank of Pakistan a fully documented account sale certified by the consignees/Chamber of Commerce of the country of the import.
Printing and Distribution of Export Forms
Central Office of Soneri Bank is maintaining a complete recorded of all export forms printed by them and of then distribution to branches and customers. For this purpose, they are maintaining a stock register which show branch wise distribution of the export form.

Maintenance of Party-wise Record of Certified Export Forms
All Branches of Soneri Bank LTD. are maintain another register for recording the particulars of export forms issued and certified by them in respect of each exporter. In this register they are also maintain record against each from the date of submission of the export documents in cases where shipments have been made or of the surrender of complete set of export forms in cases where goods have not all been entered for shipment or of submission of complete “shutout notice” in cases where the goods have been entered for shipment but have been shut-out.

Functionality Utility of the Copies of Form ‘E’
Form ‘E’ is consisting of the sets of four copies each. The exporter should submit the full set of Form ‘E’ to the Soneri Bank for certification. It has been completed and signed by the exporter himself or his authorized agent. While certifying Form ‘E’. Banks ensure that exporters give only one address in Form ‘E’. After the form is certified by the Bank, it should be submitted to the Customer/Postal authorities at the time of shipment alongwith the shipping bill. The Customer authorities will detach the original copy and after filling in the portion relating to them and affixing their seal and signature thereon forward it to the State Bank. The Customer authorities will return the duplicate, triplicate and quadruplicate copies to the exporter or his authorized agent who will retain the quadruplicate for his own record and submit the duplicate and

Triplicate copies to the Soneri Bank along with the shipping documents within 14 days from the date of shipment. Now the Bank will forward the triplicate copies of the export forms to the State Bank alongwith the monthly return in which realization of export proceeds is reported, retaining the duplicate for his record.

Submission of Export Document to Soneri Bank
All shipping documents covering goods exported from Pakistan and declared on Form ‘E’ must be passed through the medium of Soneri Bank within 14 days from the date of shipment. The exporter must submit the duplicate (bearing Customer seal and signature of Customer officials with Code number) and triplicate copies of Form ‘E’ alongwith the shipping documents, invoices etc. to the bank who had certified the form ‘E’. an extra copy of shipper’s invoices must be attached to the triplicate copy of the Form ‘E’.

Security of Documents
The Bank compare the bills of Lading and/or documents with the relative export form and satisfy themselves that they confirm in all respects to the declarations made on the relative export forms and the amount of bills and invoices is not less than the value declared on them.

Short Shipment
Where a portion of a consignment is short shipped and the exporter consequently draws a bill or papers an invoice for a quantity less than that

Declared on the relative export form, he should produce a notice of short shipment on the prescribed form duly certified by the Customs alongwith the shipping documents. Now Soneri Bank will forward the short shipment notice to the State Bank alongwith triplicate copy of Form ‘E’ while reporting the realization of full value of the goods shipped.

Shipment lost or damaged in Transit
If shipment from Pakistan is lost in transit for which payment has not already been received, the Bank must see that an insurance claim is made immediately the loss is known. The triplicate copy of the relative export form must be endorsed with the narration “Shipment Lost” under the stamp and signature and sent to the State Bank.

Verification of Export Proceeds Realisation Certificate
Sometimes exporters are requested to produce to the Government Department evidence of exports and realization of then proceeds. In such cases proceed realizations certificates may be issued by the Soneri Bank in the prescribed form after getting then authenticated by the State Bank.

Remittance of Export Commission, Brokerage and Discount
Banks or any Authorized Dealer is permitted to allow payment of commission/brokerage/discount due to foreign importers or agents by exporters in Pakistan at the following rates:

Maximum rate of Commission etc,

Books, journals and magazines Upto 33 1/3%
Engineering goods (Electrical and Upto 10 %
Non-Electrical)
Sports goods, surgical instruments Upto 7 %
Cutlery, leather goods, ready made
Garments and other textile made ups
Carpets and plastic manufactures.
Cotton Upto 2 %
All other goods except cement Upto 6 %

Method and period of payments
Full exports value of goods exported form Pakistan and declared to the Custom authorities, should be received in an approved manner, on the due date for the payments of with in the six months form the date of shipment/posting, with ever is earlier, or within a period as may be prescribe by the State Bank through specific or general instructions though an Authorized Dealer either in convertible foreign currency in with the authorized dealer maintain accounts or in U.S. dollars or in Pakistan rupee from a non-residence bank account. However, where the term of sale/irrevocable letter of credit provide for payments on 180 days, usance/270 days usance in the case of Hand Knotted Carpets, from the date of shipment/ posting shall be permissible for the exporter repatriate

the export proceeds within 195/285 days form the date of shipment/posting.
Note:
Exports to Afghanistan are not requested to be declared on form ‘E’.

IMPORT DEPARMENT
Trade across the country boundaries when goods come inwards, it is called import. The ministry of commerce, Govt. of Pakistan under export control act 1950, regulates import of goods in Pakistan.
Modes of payments for the Import:

Payment for the import may be made either through letter credit, without letter of credit, documents received for collection on the basis of contracts or as clean remittance without opening of Letter of Credit and with out registration of contract.`

Letter of credit is very important in foreign trade. So the importer request to Bank to open LC in favor of beneficiary. First of all he fills the application for opening of Letter of Credit in triplicate with the following details.

Name and address of importer
Classes of importer
type of industry
Center of import
Sources of import
Value of LC to be establish amount of import fees paid
Description of items with ITC/H.S code number

Freely importable /importable subject to condition
Country of import with name and address of beneficiary
Performa invoice/ indent number
Date, name and address and
Registration number of indenter and in the last
Declaration by the importer.

LETTER OF CREDIT
A letter of credit is just a guarantee given by one bank to a third party i-e., exporter. The guarantee ensures that he will receive payments of his goods provided he performs certain obligations. It also ensures to the importer that payment to the exporter will only by made when goods have been received.

In others words
“Letter of credit is a commitment on the part of buyer’s bank to pay and accept draft drawn upon it provided draft does not exceed a specified amount”.

Types of Letter of Credit
Following are some important kinds of LC.

1- Irrevocable L/C
Such Letter of Credit cannot be modified or cancelled by the opening bank. Here absolute undertaking is given by the opening bank that it will honors the draft presented by negotiating bank.
Revocable L/C
Such Letter of credit can be revoked by the issuing bank at any time. This means that it can be modified and cancelled by the opening bank without giving any notice.
Red Clause L/C
Under such Letter of Credit the opening bank authorizes the negotiating bank to provide finance to the exporter that he can purchased goods for the shipment. Such type of Advances are called pre-shipment advances
Green Clause L/C
Besides containing the provision to issue pre-shipment finance, this letter of credit also provides for storage expenses and where houses charges.
Revolving L/C
Under this type of Letter of Credit the amount of credit is automatically renewed once the credit condition has been fulfilled.
Back-Back L/C
Back to Back Letter of Credit is one where the person in whose favour it has been opened, uses it to established and other credit in favour of an other person. Thus one credit backs another credit. Etc.
Parties involved in Letter of Credit

There are four parties involved in L/C
Importer
Issuing Bank
Exporter
Paying Bank

Bank must insure before opening a letter of credit that in each case a firm commitment exist for this purpose they should insure that an invoice order, or indent has been issued by the indenter.
It is permissible to open a letter of credit on the basis of Performa invoice/order issued/accepted for foreign supplier.
Full description of goods to be imported is given, when the amount of LC is Rs. 1.5 million or over authorized should obtain a confidential report on the exporter from their branches.
Application and agreement for irrevocable documentary credit freely negotiable in beneficiary country (IB8).
IB8 contain the following,
Name and address of opener
name and address of beneficiary
amount of credit
invoice value of shipment
nature of goods
quantity, prices etc.,
name of indenter and reference of invoice/order/indent.
From …….to ………country of destination.

ADVANCES DEPARTMENT

Financing and trade facilitation services have been design keeping in view the needs of business and industry. The aim is to reach out the widest spectrum of business concern there by insuring that the risk effect portfolio of the bank is spread out and serves the country in the best possible manner. For the convenience of the reporting, credit facility granting by the Bank are classified in the heads of accounts appearing in the subsidiary ledger and statement of affairs. However financing broadly classified as follows:
Fund-based facility
Non-fund-based facility
Funds-based facilities largely aim at financing commercial and trade business.
While non-fund-based facilities focus on facilitating and contracting business.
Fund-based facility aim at providing funding support for all possible working capital finance requirement of business and industry including those for:
Accusation of local and imported goods and raw material.
Normal inventory holding period smoothing out their flow to the market.
Direct marketing manufacturing and processing expenses and

Domestic and international trade receiver.

Non-fund-based facilities aim at banking needs of importers and all type of contracting fund by offering a full range of Letter of Credit and Letter of Guarantee.

Types and purposes

Followings are some important type of financing
1. Temporary running finance (TRF)
Customer who maintains satisfactorily conducted accounts at their specific request be accommodated to temporarily overdraw their current balance to met unexpected and urgent financing requirements. The amount to which overdrawing may be permitted, will depend on security coverage, the previous conduct of the account with the Bank as will as the turnover in the account, and average balance maintained in the past..
This facility is extended for a very short period of time or should alternatively be converted in to regular running finance facility.

2.- Running Finance (R.F.)
Most businesses fluctuating financing need arising either from the need to meet temporary funding shortfall in full fling payments commitments to their suppliers or in meting operating expenses pending realization of trade and other receivable. To cater to this working capital needs,

Customers require of fluctuating balance financing facility which could be drawn up to stated limit. It should be granted against the security of tangible assets to a reasonably acceptable extent.
This facility is normally allowed for maximum period of twelve month and is revived once in a year.

3. Demand Finance (DF)
This is a short to medium term finance facility under which the usual maximum term is Upto three years depending on the Bank’s knowledge about the customer, the merits of the proposal and the nature of financing need. This facility may extend beyond the three years period in the Housing Finance facility granted to the permanents staff members of the Bank.

Purpose: This facility is usually finance acquisition of long life assets who pay out period exceed 12 months, or expenditure of capital nature whose benefits will accrue over and extended period.
Re-payment: This facility repayable by customers normally in periodic installments with mark-up being payable normally quarterly intervals.
Security: If the demand finance facility is being recommended for acquisition of fixed assets then it is to be covered by the mortgage charge over the related fixed assets as prime security. If however, it is being extended to finance working capital or investment requirement then the facility will need to be secured by current assets components and by other tangible if and as considered necessary.

4- Term Finance (TF)
This facility should be extended for the purpose is in which re-payment will be extended over a period 18-24 months either is installments or in a lump sum (Balloon payments).

Finance against packing Credit (FAPC)
IN FAPC security lien over L/C or contract this kind of finance facility is favorable for the bank because goods are in the possession of the bank and customer gets goods from bank when they made payment

Finance against imported merchandise (FIM)
In import when importer has no funds to clear the goods then bank will creates FIM account and got the goods under the pledge which may be released to the importer by issuance delivery order by payments.

ACCOUNTS DEPARTMENT

Function & importance of account department.
To collect voucher passed in different departments.
To arrange the voucher and balancing of GL.
Prepare daily statement of affairs.
Prepare daily position.
Prepare Soneri a/c extract.
Prepare periodic statements.
Maintenance of voucher register.
Types of voucher
Simple Cr. Voucher.
This voucher is used for crediting head of a/c where customer a/c is not involved. It may also be used for recovery of mark-up Loan, installment and consumption of stationary etc.
Simple debit voucher.
It is generally use for assets and expense a/c when assets are purchased (e.g.) purchase of furniture.
Party credit voucher.
It is use where a customer a/c is credited and intimation is sent to party. It is prepared in duplicate, original copy is called credit voucher and

duplicate copy is called credit advice. It is used for credited TT receipt, OBC realized etc.
Party debit voucher.
These are used for debiting the customer a/c where customer is to be informed of debit entry. These are also prepared in duplicate, original copy is called debit voucher and duplicate copy is called debit advice.
Cash debit voucher.
It is used for making internal payments in cash.
e.g.
When postage stamps are paid
For the payment of convince charges
For the payment of newspaper bill etc.
Contra voucher .
These voucher are used for recording contra assets and contra liabilities. These voucher records the debit and credit effect.
Essential contents
Voucher must be dated.
Head of a/c & subhead of a/c must be written.
GL code must be written.
Narration is also necessary.
Amount in word and figure must be written.
Signature
Contra head.

DEPOSIT DEPARTMENT

It is the most important department because of its functioning’s. Its function are to issue cheque books after opening their accounts from account opening department and this account opening department issue the account holder a account No. and then it is referred towards the deposit department where this department issue them cheque books and they get a slip of their cheque book serial no. from —–to—– and date and then they handled to them. In this department people deposit their money in current account, saving account, and fixed deposit according to their will. In other words we can say that the fundamental function of any commercial band is the acceptance of deposits. All other function of a bank is based upon this function. Banks accept deposits from those who have surplus money in their hands but they are unable to use it in a profitable way. In order to attract general public and persuade people to deposit money in bank, different way of account are maintained by the Soneri Bank.
These are following
Current account
Current account is such an account in which you can deposit and withdraw money at any time. (Of course during working hours) it is a running account and no interest is paid on its balance. The deposit in this account is called demand deposit.

PLS saving account
These accounts are just like saving deposit. Only difference between is that they are free of interest. The declare profit for such-holder after the close of financial year. Withdrawal from such account can be made only Upto 8 times in a month. In case large amount withdrawal is needed, seven days notice has given to the bank.
PLS Soneri saving account
· Introduced in 1994
· Can be operated like c/d account
· Profit is calculate on daily product basis
· But profit is paid on monthly basis
· Profit rates are given at the end of this dept.
Notes deposit
This will be repaid on receipt of prior notice. Any amount of deposit may be accepted by the Bank for unidentified period. Notice period depends upon the choice of depositor. Profit is paid on daily period basis.
Term deposit
Term deposit is issued for a certain time period. Customer can not withdraw before maturity of period.
Deposit in round figure are accepted for any duration of one month,
3 months, 6 months, one year, 2 years, 3 years.
At least there must be minimum Rs. 1000.
Profit is paid on daily product basis at the rates determined by the
Central office by annually.

In case the depositor wishes to withdraw the deposit before its maturity they will not be entitled to receive the profit.
Term deposits withdrawn after one year, but before maturity will
earn profit for the period deposit remain with the bank.
S.S. card is not required.

Soneri Mahana Amdani Scheme (SMAS)
Soneri Mahana Amdani Scheme is for those who want to get the monthly income for necessities. In this case investment must be in
Minimum amount of Rs. 50,000
Overall it is a part of PLS. In this Soneri Bank provide income to customer monthly.

Profit will paid during the first week of each month.
Minimum period is one year.
Special Notice Term Deposits (SNTD’s)
These deposits are accepted for unidentified period which will be repaid only on receipt of prior notice before the withdrawal.
Date of maturity is not mentioned.
7 days notice and 30 days notice.
At the tome of acceptance notice period will determined.
Profit rate is depends upon the situation.

RATES OF PROFIT FOR DIFFENT TYPE OF DEPOSITS (PROVISIONAL)

Effective: 01-01-2003
Period: January-June 2003

Deposit Category (% p.a.)
PLS Saving Account 5.00
PLS Soneri Saving Account
Up to 20,000,000
4.50
Over 20,000,000 to 50,000,000 5.00
Over 50,000,000 5.50
Notice Deposit
7 days
3.00
30 days 4.00
Term Deposit
1 month
4.50
3 month 5.50
6 month 6.00
1 year 6.50
2 years 6.75
3 years and above 7.00

CASH DEPARTMENT
Cash is a liquid assets, and play as part of blood in the body. All the cash is handled and managed by the cash department.
It is the function of the cash department to make the supply of money regular. The head of the cash department is called chief cashier. There are two cashiers in our branch. One is chief cashier and second is cashier.
Paying side
Cashier can pay up to 50,000 after scrutiny and checking.
Above 50,000 there is a supervisory level.
50,000 to 300,000 ———- Sub manager
300,000 and more ———–Manger

Cash Balance book
In this
Opening balance ­­­­­­­­­­­­­­————
+ Total received ———— with demonstration

– Total payment ———–
Total cash — ———

Received from main branch. xxxxx
Sent to other branch xxxxx

Separate register will be operated with initial of manger which is called “Cash in Transit Register”

In case of any deposits from the customers, when cash is received then it is recorded in “Received Cashier’s Book”
In case of any payment when payments are made to payees by cashier then it is recorded in the “Payment cashier’s Book”

Specimen of ‘payment cashier’s Book’

S. no. Account no. Name Cheque no. Token no. Amount
Rs. Signature

At the end of the day cashier prepare the cash position
Specimen of cash position

Cash Position
Payment made within 3 minutes
Receipt issued within 3 minutes
Opening balance xxxx

Drawn from banks xxxx
Received from clients xxxx
Total xxxxx
Paid into banks xxxx
Paid to client xxxx
Balance in hand xxxxx

Receipt vouchers————– payment vouchers
Chief cashier officer

In case when of cash shortage in cashier a/c

Pass the following entry.

Debited suspense a/c-Sundry debtors
Credit Cash

It means that cash has been paid more than receiving cash

Sundry debtors voucher will be signed by the cashier who will be the victim and verified by the Manager.

All shortage and excess will be reported to G.M office in the same day.
Again clearing the voucher next day sundry debtor a/o of must be finished through the monthly installment.
Recovery of each month

Debit cash a/c
Credit suspense a/c-Sundry a/c

In case of excess of cash a/c
All the same procedure for excess of cash is used as in cash shortage.
Report to the G.M office in same day.
Book balance entry.

Debit Cash
Credit Sundry deposits-sundry creditors

Entry will be in same sundry creditor register.
Excess cash is paid to the true owner after the permission of G.M office. They suggest getting the indemnity.

Reversal Entry.
Debit Sundry deposits-sundry creditors
Credit Cash

Note.
If there is no claimant for this amount this will become the earning of the bank.
And after one year not claiming from any one then contact to G.M office to reverse it. Cr. Income a/c- misc. earning

While making payment cashier must keep in mind the following points.
Note the date of cheque in following manner.
a. Government cheques are accepted within the three months after the date of issue.
b. Depositor Cheque is accepted with in the six month after the date of issue.

c. Treasury Cheque is accepted with in the fifteen days after the date of issue.

Amount in words and figures must be same.
Customer balance must be sufficient to honor the Cheque.
Signature of the drawer. Etc.

While in case of depositing the cash the paying slip must be same dated.

Computer generated balance must be equal to the cash balance book

Manger will sign over the book
Once in a month a surprise counting must be by manger.
Balance book must be sign daily.
Notes properly denomination and properly excise.
Cashier must hand over these notes to customer.
Customer must greet.
No arguments with customer.
Do not misguide the customer

Cashier work is more technical and speedy. So cashier must be skilled in their work

Denomination of notes – should be mentioned on back of pay –in – slip and on Cheque.
1000 * 9 = 9000
500 * 14 = 7000
Check and counter check and after satisfaction of cashier then do entry in computer. All vouchers must be noted in any register.

ACCOUNT OPENING DEPARTMENT

Steps involved in Account opening are following.
1- Filling of Account Opening Form (AOF).
AOF should be completely filled in all particulars.
(e.g.)
(i) Title –Name-Data of Birth- Address- Occupation- NTN # – Type of account – currency – Type of organization – Zakat Deduction – Signature – Details of other bank account – Introducer etc.
(ii) Letter of kinship
Purpose: To give the address and name of any relative to contact after expiry of 3 years of last operation. If any account is inoperative about more than 3 years then the contact given in the letter of kinship is used to know about the customer (but nominated person may not be entitling to the amount contained in the a/c).
(iii) Signature Specimen Card
In CD account two cards are used. First remains with manger and other with cancellation officer.
(iv) A form
A form is used for the purpose of issuance of cheque book.
2- Interview.

Manger will interview with that a/c opening person to judge that, is he suitable for being a customer?

3- Introducer.
Introducer should a well known customer. Introducer is not a guarantor. He only help in identification of the a/c holder in case of any mishaps / fraud.
4-Deposit of amount
Precaution
1- A senior & experience officer or Branch Manger / Assistant Manger handle the account opening department
2- AOF to be taken in duplicate.

Following documents are provided by the Bank.
1- Account Opening Form (AOF).
2- Signature Specimen Card.
3- Letter of Kinship.
4- Rules for account.

Customer must provide the following thing.
In case of individual
(i)-Copy of Identity Card.
Sole proprietor
ID card.
Stamp of business.
Letter head.

In case of Partnership
Stamp
Letter head
Signature of all partner on letter of partnership
Authorized partners sign on S.S. card.
Private Limited company
Letter head
Article of association
Memorandum of association
Stamp of the company
Signature of authorized person
Certificate of incorporation
Public Limited Company
Common seal
Memorandum of Association
Article of Association
Certificate of incorporation with attested copy
Certificate of commencement
Audited Report
Chairman and Directors signature etc.
Resolution passed by the Board of Directors
Letter head

FUTURE SCHEMES OF SONERI BANK

SONERI GHAR FINANCE SCHEME

Soneri Bank is launching “Ghar Finance” early 2003 for low & medium income individuals for purchase of pre-constructed house/flat for self-occupancy. Salient features of the scheme are as under:-
(I). Maximum Individual Finance: Rs. 2.5 M.
(II). Repayment Period: up to 10 Years.
(III). Mark-up Rates: –
1 to 5 Years Finance 5.5% above
Prevailing SBP discount rate minimum 13% p.a.
5 to 10 Years 6.5 % above
Prevailing SBP discount rate minimum 14% p.a.
NOTE
Above mark-up rates are subject to revision on January 01, every year based on the S.B.P. Discount Rate prevailing at the close of preceding year or such mark-up rates as determined by the bank under its sole discretion in case S.B.P. Discount Rate is not prevalent.

Eligible Borrowers:
Employees of reputable legal entities self-employed or business persons
Take Home Salary / Declared Income to be 4 times of monthly repayment installments amount
Borrowers Equity:
A minimum of 30 % of the property price.
Security:
Mortgage of the property
Mortgage Insurance.
Designated Branches: Haidery Branch, Karachi Phone (021) 6638617 & 6630409
Shahrah-e-Faisal Branch, Karachi PH: (021) 4535546 & 4535553
Defence Branch, Lahore PH 🙁 042) 5730760-61
Model Town Branch, Lahore PH: (042) 5889311-12

TELEBANKING FACILITY
At Soneri Bank Customer convenience comes first. With this in mind Soneri Bank
Now offer Round the Clock Telebanking facilities COMPLETELY FREE.

Soneri Round-the-clock Telebanking (SRCT)
Access to SRCT available 24 hours a day and 365 days a year.
A Time Saver
Telebanking saves your
. The hassle of traffic rush.
. Travel time to the bank.
. Que-ing in at counters.
Now the customers can have access to their accounts information while enjoying
the comfort of their home/office or any other place in the world.
Easy to Operate

Dial 021-2400900 & 2400901 and obtain any or all of the following information
. Balances in your accounts.
. Statements of your accounts.
. Information on our various products.
Confidentiality
A unique password known alone to ACCOUNTS HOLDER ensures complete confidentially of information on their account.

Soneri Car Finance 11%p.a.
Soneri Bank is also providing Car financing on the following conditions:
Maximum finance amount Rs. 1 Million for brand new un-registered cars. Repayment within 1 to 5 years in equal monthly installments inclusive of mark-up. Mark-up rate 11 percent p.a. flat.
Down Payment:
Just 15% of Car Price.

Eligibility:
Salaried persons up to 55 years of age in continuous permanent employment for past 2 years with financial institutions/multinational companies/public limited companies/corporate customers of Soneri Bank.
Self employment persons like doctors, engineers, architects etc. registered with professional organizations & business persons who are directors, partners & sole proprietors and corporate customers of Soneri Bank up to 60 years of age.

(3) Monthly installments must be more then 33 percent or declared income in case of self employed Persons. Registration of car would be in bank’s name to be transferred in borrower’s name on full payment of the finance. Comprehensive insurance with Soneri Bank as beneficiary through bank’s approved insurance company. To calculate monthly repayment installment multiply finance amount by the applicable factor given here under:

-1Year 2Year 3Year 4Year 5Year
0.090106 0.048180 0.034200 0.027220 0.023020

SONERI ATM SERVICE
Soneri Bank ATM Cards provide their customers Self-Service Banking 24-Hours-a-day, 365 days a year and offers following services at touch of a button from ATMS,
Cash withdrawal.
You can withdraw cash from your account(s) up to Rs. 20,000 per day in multiples of RS.100, Rs. 500, and Rs.1, 000 currency notes.

Balance Request.
You can see the available balance in your account displayed on the screen or obtain a printed advice.
Mini-Statement.

The ATM shall provide you with an instant mini-statement of your ATM linked accounts (declared by you on the application) listing 10 last transactions in the account(s).
Detailed Statements.
Request for a detailed statement is processed at the push of a button. Requested statement shall be dispatched by your branch at your Registered Address within 4 working days.
Cheque Book Request.
Request for fresh Cheque book may be made through the ATM. The chequebook may be collected from your branch after 3 working days against surrender of duly signed cheque book Requisition slip.
PIN changing facility.
You may change your Personal Identification Number (PIN) through the own ATMs any number of times.

Eligibility.
Soneri Bank ATM Card is available to customers if they maintain a Resident Rupee Savings or Current Account with any of on-line branches.
(For Bank charges on the ATM service please refer to our schedule of charges in force)
Joint Account holders may also have their individual Soneri Bank ATM Card provided either of the two signatories is authorized to operate the account. The second joint account-holder, in this case, shall be provided with supplementary ATM Card.
ATM Switch Shared Network.
Cash withdrawals against a charge of Rs.15/-per withdrawal and Balance
Inquiry services are also available through 80 ATMs of ABN-AMRO Bank,
Askari Commercial Bank and Habib Bank Ltd, located in 10 different cities of Pakistan.

BRANCHES OF SONERI BANK

LAHORE KARACHI
(Main Branch) (Main Branch)
87, Sharae Quaid-e-Azam Adamjee Insurance Building, I.I.
P.O. Box No. 49, Lahore Chundrigar Road, P.O. Box No. 5798
Tel: 6368142-48 Karachi
Fax: 6368138 Tel: 2436990-94,
Telex: 47694 SONRI PK 2425755, 2425877
Email:mainlhr@soneri.com Fax: 2436980 & 2418350
Telex: 20479 SONRI PK 21736 RUPMK PK
LAHORE Email:mailto:Mainlhr@soneri.com
(Defence)
G-14, Commercial Area Lahore Cantt. KARACHI
Defence Housing Authority, Lahore (Aga Khan University)
Tel: 5897181-83,5730760-61 Stadium Road
Fax: 5724325 Karachi
Email:defencelhr@soneri.com Tel: 4852252
Fax: 4852251
LAHORE Email:akukhi@soneri.com
(Gulberg)
90-B-C/II, Liberty Market KARACHI
Gulberg-III, Lahore (Clifton)
Tel: 5713445-48 Shadman Center Block-7, Clifton
Fax: 5713326 Karachi
Telex: 44304 SONRI PK Tel: 5830130 & 5877773/4
Email:gulberglhr@soneri.com Fax: 5860671
Telex: 29790
LAHORE *new Email:cliftonkhi@soneri.com
(Circular Road)
49/2-B, Circular Road Lahore KARACHI
Email:mailto:Defencelhr@soneri.com (Federal B Area)
Hasan Mansion, Block 7 Federal B Area,
GUJRANWALA Near Aisha Manzil Karachi
Rail Bazar, Gujranwala Tel: 6373782-83
Tel: 224674-76 Fax: 6373781
Fax: 224677 Email:fbakhi@soneri.com
Telex: 45298 SONRI PK
Email:maingjr@soneri.com KARACHI
(Garden)
FAISALABAD Silver Jubilee Center
Chiniot Bazar, Faisalabad Britto Road, Garden
Tel: 639877-78 East, Karachi
Fax: 649254 Tel: 7232877-78
Telex: 43320 SONRI PK Fax: 7232876
Email:mainfsd@soneri.com Email:gardenkhi@soneri.com

PESHAWAR KARACHI
Saddar Road (Korangi)
Peshawar Cantt. Plot No. 7, ST 3/1 Sector 15, Korangi
Tel: 273424 & 277914-17 Industrial Area
Fax: 273727 Karachi
Telex: 52505 SONRI PKE Tel: 5066722
Email: mainpsh@soneri.com Fax: 5066731
Telex: 27243
Email:korangikhi@soneri.com
PESHAWAR *new Karachi *new
(Chowk Yadgar) (Haidery)
Shop No. 2400-2401-2402,Chowk Yadgar, Plot No. SF-10, Hussein Square,
Peshawar. Block-E, improvement Scheme No.2
Email:mailto:Korangikhi@soneri.com Haidery-North Nazimabad Karachi.
Email:mailto:Korangikhi@soneri.com
SIALKOT
Mujahid Road, P.O. Box No. 2958, Sialkot
Tel:596992-596983-581250 Fax: 596885. Karachi *new
Telex: 46445 SONRI PK (Jodia Bazar)
Email: mainskt@soneri.com D.S. No 11-B-313 Market Quarters,
Birjee Street Jodia Bazar Karachi.
MIRPUR Email:mailto:Korangikhi@soneri.com
(AJK)
Plot No. 7, Sector B/3 ghazi Manzil Allama SUKKUR
Iqbal Rd P. O. Box 5 Mirpur (Azad Kashmir) Glamour Heights
Tel: 44488 Plot No. C-260/4
Fax: 44588 Muhammad Bin Qasim Road, Sukkur
Email:mainmpr@soneri.com Tel: 22382-22925
Fax: 22704
GILGIT Email:mainsuk@soneri.com
Saddar Bazar
P.O. Box No. 532, Gilgit RAWALPINDI
Tel: 3658 Kitchlew Building
Fax: 3658 Email:mainglt@soneri.com 41-Bank Road
P.O. Box No. 62 Rawalpindi Cantt.
QUETTA Tel: 5522901-103
Shara-e-Iqbal Fax: 5522906
P.O. Box No. 624, Quetta Telex: 54777 SONRI PK
Tel: 821610 & 821641 Email:mainrwp@soneri.com
Fax: 821524
Telex: 78232 SONRI PK ISLAMABAD
Email: mainqta@soneri.com 68-W, Sama Plaza
Blue Area
SHEIKHUPURA P.O. Box No. 2931
Sharif Plaza, Sargodha Islamabad
Road, Sheikhupura Tel: 2277551 & 2272460
Tel: 613570 Fax: 2277550
Fax: 56800 Telex: 4754 SONRI PK
Email:mainshk@soneri.com Email:mainisd@soneri.com

HYDERABAD WAZIRABAD
Dr. Ziauddin Road Bagri Plaza, Lahori Gate
Saddar Main Bazar, Wazirabad.
P.O. Box No. 419 Tel:603703,603704. Fax: 603705.
Hyderabad Email:mainwzd@soneri.com
Tel: 781528-29.
Fax: 781530.
Email:mainhyd@soneri.com
HYDERABAD MULTAN
(Fatima Jinnah Road) Mall Plaza
Defence Plaza, Fatima Quaid-e-Azam Road,
Jinnah Road, Hyderabad Multan Cantt.
Tel:28131,85997 Fax: 785998. Tel: 44884/511022.
Telex: 22097. Fax: 546808
Email:fjrhyd@soneri.com Email:mainmtn@soneri

HUNZA *new SAHIWAL *new
Ali Abad Hunza. 14-Mission Chowk,High Street Sahiwal.
Email:mailto:Fjrhyd@soneri.com Email:mainsahiwal@soneri

FINANCIAL HIGHLIGHT

2001 2000 1999

(000) (000) (000)
Share capital 782,719 626,175 500,940
Share-holders equity 1,543,047 1,272,635 1,101,913
Total assets 20,540,675 20,117,220 17,730,315
Investment 4,494,340 3,165,651 7,116,000
Deposit 16,053,886 14,029,595 12,262,293
Total income (before tax) 551,234 393,922 382,316
Total income (after tax) 270,412 164,386 132,819
Operating expenses 361,912 348,680 285,784
No of accounts 128,598 111,236 95,687

RATIO ANALYSIS

Earning Per Share
The earning per share is a good measure of profitability and when compared with E.P.S. of similar other companies, it gives view of the comparing power of the firm. E.P.S. calculated for a number of years indicates whether or not the earning power of the company has increased.
Formula:-
Earning Per share (EPS) = net profit after tax / number of shares

ITEMS 2001 2000 1999
Profit after tax 270,412 164,386 132,819
Number of shares 78271.9 62617.5 50094
EPS 3.45 p/share 2.10 p/share 2.12 p/share

From the above calculation it is clear that earning power of company has been increased as compared to previous years which are a good sign.
Return on Equity Capital
In real sense ordinary share-holders are the real owner of the company so they are more interested in the profitability of a company and the performance of the company should be judge on the basis on the basis of return on equity capital of the company. Return on equity capital is a relationship between profit of the company and its equity

Formula:
Return on equity capital = Net profit after tax / paid up equity capital*100

ITEMS 2001 2000 1999
Profit after tax 270,412 164,386 132,819
Equity share capital 1,543,047 1,272,635 1,101,913
Return on equity capital 17.52 % 12.91 % 12.05 %

According to the above calculation it is clear that these ratio are more meaningful to the equity who are interested to know profit earned by the company and these ratio are increasing every year it means that company profitability is increasing.

Price Earning Ratio
Price earning ratio is the ratio between market price per share and earning per share. This ratio is calculating to make decision by investor whether or not to buy share of the company. This ratio is also useful in financial forecasting.
Price earning ratio = market price per equity share / earning per share

ITEMS 2001 2000 1999
Market price per share Rs 19.90 Rs 19.94 Rs 22.02
Earning per Share 3.45 2.10 2.12
Price Earning Ratio 5.77 times 9.49 times 10.39 times

Proprietary Ratio
This ratio is also known as equity ratio or net worth to total assets ratio this ratio indicate the long-term or future solvency position of the business.
Formula:
Proprietary Ratio = Share-holder funds / total assets*100

ITEMS 2001 2000 1999
Share-holder fund 1,555,654 1,248,578 1,102,913
Total assets 20,540,675 20,117,220 17,730,315
Proprietary ratio 7.57 % 6.21% 6.22%

BALANCE SHEET AS AT 31 DECEMBER 2001

2001 2000
(Rupees in ‘000)
ASSETS
CASH AND BALANCES WITH TREASURY BANK 6 1,537,466   1,245,437
BALANCES WITH OTHER BANKS 7   1,065,536   713,729
LENDINGS TO/ PLACEMENTS WITH FINANCIAL INSTITUTION 8   1,674,775   3,083,883
INVESTMENTS 9   4,942,340   3,165,651
ADVANCES 10   10,198,907   10,931,001
OTHER ASSETS 11   642,887   528,450
OPERATING FIXED ASSETS 12   327,734   323,947
DEFFERRED TAX ASSETS 13   151,030   125,122
  20,540,675   20,117,220

LIABILITIES      

BILL PAYABLE 14   240,782   335,993
BORROWINGS FROM FINANCIAL INSTITUTIONS 15   2,195,871   4,155,128
DEPOSITS AND OTHER ACCOUNTS 16   16,053,886   14,029,595
SUB-ORDINATES LOANS      
LIABILITIES AGAINST ASSETS SUBJECT TO FINANCE LEASE 17   26,672   21,758
OTHER LIABALITIES 18   467,810   326,168
DEFFERED TAX LIABILITIES     –   –
  18,985,021   18,868,642
NET ASSESTS   1,555,654   1,248,578

PRESENTED BY      
SHARE CAPITAL 19   782,719   626,175
RESERVES   757,818   648,464
UNAPPROPRIATED PROFIT   2,510   996
SURPLUS / (DEFICT) ON REVALUTION OF SECURITIES 20   1,543,047   1,272,635
  12,607   (24,057)
  1,555,654   1,248,578

PROFIT AND LOSS ACCOUNTS FOR THE YEAR ENDED 31DECEMBER 2001

2001 2000
(Rupees in ‘000)
MARK-UP / RETURN / INTEREST EARNED 22   1,893,168   1,845,658
MARK-UP / RETURN / INTEREST EXPENSED   (1,454,885)   (1,391,963)
NET MARK-UP / RETURN / INTEREST INCOME   438,283   424,695

PROVISION AGAINST NON- PERFORMING LOANS AND ADVANCES 10.3   (58,767)   (47,614)
PROVISION FOR DIMINUTION IN THE VALUE OF INVESTMENT   –   –
BAD DEBTS WRITTEN-OFF DIRECTLY   –   –
  (58,767)   (47,614)
NET MARK-UP / RETURN / INTEREST INCOME AFTER PROVISIONS   379,516   377,081
NON MARK-UP / INTEREST INCOME      
FEE, COMMISION AND BROKERAGE INCOME   111,261   98,776
DIVIDEND   –   593
INCOME FROM DEALING IN FOREIGN CURRENCIES 24   347,816   200,791
OTHERS INCOMES   76,906   65,769
TOTALS NON-MARKUP/ INTEREST INCOME   535,983   365,929
  915,499   743,010
NON MARKUP/ INTEREST EXPENSES      
ADMINISTRATIVE EXPENSES 25   (361,912)   (348,680)
PROVISION AGAINST OTHER ASSETS   (1,737)   –
OTHERS CHARGES 26   (616)   (408)
TOTAL NON-MARKUP / INTEREST EXPENSES   (364,265)   (349,088)
  551,234   393,922
EXTRA ORDINARY / UNUSUAL ITEMS   –   –
PROFIT BRFORE TAXATION   551,234   393,922

TAXATION-CURRENT   (315,000)   (268,000)
-PRIOR YEAR   8,270   (958)
-DEFFERRED   25,908   39,422
27   (280,822)   (229,536)

PROFIT AFTER TAXATION   270,412   164,386

UNAPPROPRIATED PROFIT BROUGHT FORWARD   996   8,695

PROFIT AND LOSS ACCOUNTS FOR THE YEAR ENDED 31DECEMBER 2001

REVERSAL OF PROVISION FOR DIMINUTION IN VALUE OF INVESTMENTS   –   5,336
PROFIT AVAILABLE OF APPROPRIATION   271,408   178,417

APPROPRIATION:      
TRANSFER (TO)/ FROM:      
STATUTORY RESERVE   (54,082)   (32,877)
PROPOSED ISSUE OF BONUS SHARES @ 30% (2000; @25%)   (234,816)   156,544
GENERAL RESERVE   20,000   12,000
  (268,898)   177,421
UNAPPROPRIATED PROFIT CARRIED FORWARD   2,510   996
BASIC / DUTIES EARNINGS PER SHARE (Rupees) 28   3.45   2.1

Cash Flow Statement For the Year Ended 31 December 2001

2001 2000
Cash Flow From Operating Activities (Rupees in ‘000)
Profit Before Taxation 551,234 393,922
Dividend Income – (593)
551,234 393,329
Adjustment for Non-Cash Charges
Depreciation and Write Off 59,326 56,200
Provision Against Non-Performing Advances and Others Assets 60,504 47,614
Gain on sale of Operating Fixed Assets (1,678) (3,432)
Finance Charges on Leased Assets 3,069 4,844
121,221 105,226
672,455 498,555
(Increase) / Decrease In Operating Assets
Lending to/ Placement with Financial Institutions 1,409,108 (393,883)
Advances 673,327 (3,181,908)
Other Assets (Excluding Advance Payment) (160,634) (158,931)
1,921,801 (3,734,722)

Increase / (Decrease) in operating Liabilities
Bill Payable (95,211) 32,556
Borrowings From Financial Institution (1,959,257) 410,204
Deposit and Other Account 2,024,291 1,767,302
Other Liabilities (Excluding Current Taxation 88,739 45,328
58,562 2,255,390
2,652,818 (980,777)
Income Tax Paid (209,367) (93,407)
Net Cash Flow From Operating Activities 2,443,451 (1,074,184)

Cash Flow From Operating Activities
Net Investment in Available For Sale Securities (1,740,025) 1,241,129
Dividend Income – 593
Investment in Operating Fixed Assets (63,376) (59,470)
Sale Proceed of Property and Equipment Disposed-off 1,941 3,642
Net Cash Flow From Investing Activities (1,801,460) 1,185,894

Cash Flow From Financial Activities
Receipt / (Payment) of Leased Obligation 1,845 (18,994)
Increase in Cash And Equivalents 643,836 92,716
Cash and Cash Equivalents at Beginning of the Year 1,959,166 1,866,450
Cash and Cash Equivalents at End of the Year 29 2,603,002 1,959,166

STRENGTHS AND WEAKNESSES
Like any other sphere of modern life, banking too has now gone very profound and vast. As the past era witnessed revolution, changes and innovation in every field of life, banking also went through different shares. Through the basic facts remain same but the practice application and operations have taken different shape.
During my internship I noticed some deficiencies of the Soneri Bank which are following
Rate of interest on different financial schemes like Car Financing are higher as compared to Faysal Bank.

Another deficiency is the non availability of on-line banking in Multan branch. Because many of Private Banks are on-line in Multan. If Soneri Bank wants to compete with them, then on-line banking must be immediately introduced in Multan Branch, because it facilitate the customer and helpful to provide the quality services.
Credit card facility is another key deficiency in the Soneri Bank. Now a day’s credit card is very common in our day life. Every well reputed customer want credit card so this facility must be introduced as soon as possible. Through credit card you can enjoy the facility of home shopping by online.

The strengths of the SBL include the rigid hierarchy level but it is a very pleasant sign that the employees of all levels are so loving, friendly and cooperative with each other. They enjoy working with keen interest.

The most important thing that I observe during my internship period is that all the employees are shows and serves the customers with best ethical values that are so important to win the faith and confidence of the valuable customers.

There is another thing goes towards the favor of the SBL is the good working environment for the employees. In the break time the employees have the opportunity to gather for lunch and during the lunch they did the informal talk with each other.

All the complaints from the employees and customers are handled by the operations manager and take the immediate corrective action to address the problem.

SUGGESTION AND RECOMMENDATION

1- Building of the office is compress. It should be wide and opened

2- Bank staff is not Upto the required number. So staff should be immediately increased.

3- We should run with the pace of time, so ATM machine is the requirement of the changing environment of the world.

4- Tele-Banking facility should be immediately introduced in Multan Branch.

5- One branch in Multan city if not sufficient, even now the population of Multan is increased more than 1.4 million. More branches should be opened in the different territory of the city.

6- Out dated token system should be eliminated. A new system in this regard should be introduced to facilitate the respectable Customer.

PATTERN OF SHAREHOLDING AS AT 31 DECEMBER 2001

NO. OF HAVING SHARES SHARES HELD PERCENTAGE
SHAREHOLDER FROM TO
841 1 100 32180 0.0411
2274 101 500 457128 0.5840
472 501 1000 321173 0.4103
3710 1001 5000 5327744 6.8067
143 5001 10000 964503 1.2322
40 10001 15000 486410 0.6214
16 15001 20000 274309 0.3505
11 20001 25000 248807 0.3179
8 25001 30000 218195 0.2788
5 30001 35000 158759 0.2028
8 35001 40000 300235 0.3836
7 40001 45000 295479 0.3775
2 45001 50000 94875 0.1212
2 50001 55000 104113 0.1330
1 55001 60000 59193 0.0756
1 60001 65000 60482 0.0773
2 65001 70000 131430 0.1679
1 70001 75000 75000 0.0958
1 75001 85000 78971 0.1009
2 85001 90000 173878 0.2221
1 90001 100000 90098 0.1151
1 100001 115000 102500 0.1310
1 115001 120000 116531 0.1489
1 120001 155000 121177 0.1548
1 155001 180000 155157 0.1982
1 180001 205000 184593 0.2358
1 205001 210000 206250 0.2635
1 210001 235000 213468 0.2727
2 235001 325000 474374 0.6061
1 325001 330000 329262 0.4207
1 330001 345000 333656 0.4263
1 345001 415000 350000 0.4472
1 415001 495000 415593 0.5310
2 495001 600000 995097 1.2713
1 600001 930000 603451 0.7710
1 930001 975000 934439 1.1938
1 975001 1375000 977375 1.2487
1 1375001 1730000 1378825 1.7616
1 1730001 2140000 1733720 2.2150
1 2140001 3105000 2142870 2.7377
1 3105001 3910000 3106250 3.9685
9 3910001 18220000 35222642 45.0004
1 18220001 18225000 18221683 23.2800
7580 78271875 100

Bank Of Punjab

PREFACE

In Masters of Business Administration, Internship Program is an important part to give students an opportunity to have experience of practical field. Unless and until the students experience the novelty of practical work, their knowledge of what they study in theoretical courses remains incomplete. The most important point in an Internship Program is that the student should spend their time in a true manner and with the spirit to learn practical orientation of theoretical study framework. This internship report is on my six weeks practical training at Bank of Punjab Civil Secretariat Lahore. In this internship report I have tried to give details about the Bank of Punjab, working and the functions of different departments of the bank.

ACKNOWLEDGEMENT

First and foremost all praise be to Almighty Allah to gave me the courage and patience to carry out this responsibility successful.
I also wish to tender grateful acknowledgements with profound respect and gratitude to respected Dr.Muhammad Zaffarullah director of Institute of management Science B.Z.University, Multan& Internship coordinator Mr. Reza Ali for providing me an excellent opportunity to explore ourselves by practical experience of internship.
I am highly indebted to Mr.Shahzad Siddique ( Senior Chief Manager) & Mr.Sohail Tanveer (Operations Manager) of Bank of Punjab Civil Secrtetariat Lahore.
I also feel indebted to all the respected staff of Bank of Punjab Civil Secrtetariat Lahore who gave me very effective guidance to make this work successful.

Executive Summary
Bank Of Punjab has started its work as a non scheduled bank in 1989 and was given the status of scheduled bank in1994.It is performing specialized services to the government of Punjab. It has not able to show a remarkable performance. Further, the privatization of other banks has also created a competitive environment in banking industry.
Bank Of Punjab currently has a wide network of branches in side the province and other province of the country as well. Through this huge network of branches the bank is providing all sort of services that have become part of the modern banking. Bank Of Punjab successfully adopts innovation and new products which are rapidly adding up in the product mix of banking industry, all.
The bank is providing deposits facilities to more than 200000 customers in the country and which is increasing by the time. The bank has been providing a service to the Government of making salary payments to government employees on behalf of the government. These payments are sent to the bank of distribution from the provincial division of concerning departments.
In the deposits area the bank is providing special account such as PLS term deposits, which provides a monthly withdraw able return on the account. And there is a national income daily account carrying hybrid characteristic of saving and current account distributes all profit on daily product basis to the account holders. The bank is trying revolutionizing the services that are provided over the counter and is working for an early change in all branches of the bank.
In the advances side the bank has been successful in deploying its resources in the best way in all commercial, industrial and agricultural sector of the country. The advances have been increasing with the increasing trade and commerce and bank has been able to meet the requirements up to the maximum extent. The introduction of a new setup of services in shape of foreign currency account has further given a sharp rise in the banking field. This has made easy for the formers residing in Pakistan to be encouraged.
The financing process of all international trades, which modern banking made less complicated and more secur have increased with the global villege in the world. For banks it is an oppourtunity to grasp the maximum share as possible through being more
efficient to reach the customer. BANK OF PUNJAB has been providing these financing services with great esteem and devotion to public and private enterprises. Further due to being under the influence the bank has been forced to make unprofitable commitments too.
The management is considering the facts and doing planning for the sake of getting it through the unjustified pressures but still not be able to implement them in good manner. This is a further disturbed by the demotivated an unqualified staff that is workling with the bank.
To be able to regain the level of performance and profitability the bank has to take serious measures to escape from the political influence, build a competent and qualified cool pf employees, make all possible efforts to introduce the modern technology that is serving in the world and to enhance the confidence of the customer, all necessary steps be taken by the bank.

HISTORY OF BANKING
“Bank is a pipeline through which currency moves into and out of circulation.”
Bank accepts deposits and repays cash to its customers on their demand. The Bank borrows money at a lesser rate of interest and lends it to the borrowers at a higher rate. It is thus a profit-lending concern. Bank cannot lend all the money that has been deposited with it. It has to keep a certain portion of the total deposits in cash with them in order to meet the cash requirements of the individuals and business concern.
Banking History
Word Bank is said to be derived from the words Banc us or Banque or Bank.The history of banking is traced to as early as 2000 BC. The priests in Greece used to keep money and valuables of the people in temples. These priests thus acted as financial agents. The origin of banking is also traced to early goldsmiths. They used to keep strong safes for storing the money and valuables of the people. The persons who had surplus money found it safe and convenient to deposit their valuables with them. The FIRST STAGE in the development of modern banking, thus, was the accepting of deposits of cash from those persons who had surplus money with them.
The goldsmiths used to issue receipts for the money deposited with them. These receipts began to pass from hand to hand in settlement of transactions because people had confidence in the integrity and solvency of goldsmiths. When it was found that these receipts were drawn in such a way that it entitles any holder to claim the specified amount of money from goldsmiths. A depositor who is to make the payments may now get the money in cash from goldsmiths or pay over the receipt to the creditor. These receipts were the earlier bank notes. The SECOND STAGE in development of banking thus was the issue of bank notes.
The goldsmiths soon discovered that all the people who had deposited money with them did not come to withdraw their funds in cash. They found that only a few persons presented the receipt for encashment during a given period of time. They also found that most of the money deposited with was lying idle. At the same time, they found that they were being constantly requested for loan on good security. They thought it profitable to lend at least some of the money deposited with them too the needy persons. This proved quite a profitable business for the goldsmiths. They instead of charging interest from the depositors began to give them interest on the money deposited with them. This was the THIRD STAGE, in the development of banking.
By experience the banks came to know that they could keep a small proportion of the total deposits for meeting the demands of customers for cash and the rest they could easily lend. They allowed the depositors to draw over and above the money actually standing to their credit. In Economics terminology we can say that they allowed the overdraft facilities to their depositors. This was the FOURTH STAGE, in development of banking.
When every bank issues receipts and most of them allowed the overdraft facilities, there was then too much confusion in the banking system. The banks in order to earn profits could not keep adequate reserves for meeting the demands of the customers for cash. The failures on the part of the bankers to return money caused widespread distress among the peoples.
In order to create confidence among the people, steps were taken to regulate the banking organization. A conference was held in Nuremberg in 1548. It was decided that a bank should be set up by the state, which should streamline the banking organization and technique. The first central bank was formed in Geneva in 1578. Bank of England was established in 1694. The responsibility of issuing of notes is now entrusted to a central bank of each country.

COMMERCIAL BANKING INPAKISTAN:
At the time of partition total number of banks were 38 only. Out of these Banks the Pakistani Banks were only 2, Indian Banks 29 & Exchange Banks were 7. The total of deposits of Pakistani Banks was Rs.880 Million. & advances were Rs: 198 Million. According to banking companies ordinance Banks are the companies, which transacts the business of Banking in Pakistan.
Commercial Banks have constituted the most important [part of the intuitional credit in the economy of Pakistan. Being the largest source of credits, Banking Industry is a pivot of whole the economic activities in Pakistan. Section 37(2A) of State Bank of Pakistan Act 1965 lays down that the Banks must have paid-up capital & reserve of not less then Rs: 5 Lac & fulfilling certain other requirements for declaring as “Scheduled Bank”.
At the time of independence Bank services was badly affected. But with the passage of time these are improving. The government of Pakistan nationalized all Banks in early 1974. This act was done to minimize control of few hands over banking. But this step was proved e futile for the Banking in Pakistan. So the Govt. had to revise its decision in1990. Two Banks (Allied Bank of Pakistan Limited & Muslim commercial Bank of Pakistan Limited have been denationalized. Since then Banks were working well. Now slogan of the Banks is to serve their customers in the best possible manner.
Professor Berton:
“Banks are the guardian & distributor of money “.
Similarly we can say that it is a pipeline thorough which currency moves into & outside the circle. Banks accept deposited of money and repay it on demand. Bank borrows money at lesser rate of interest & lends it at higher rate of interest. In this way Banks earn money. Bank do not lend all money they collect, they keep certain portion of it as reserve to meet the uncertain demand of the customer.

FUNCTIONS OF A COMMERCIAL BANK
In general terms the functions of a commercial bank can be classified under the following main heads.
1. ACCEPTING DEPOSITS
Some people have an excess money and they want to deposits it to some honest man or an institution which can give them some profit. So the first function of commercial bank is to receive deposit there are three types of deposits.
1.1 Demand Deposits or Current Deposits
Some people deposit their excess money in the current accounts and they can withdraw their money deposited in this account at any time during the banking hours, so bank is not ready to give interest on it.
1.2 Fixed Deposits
These deposits are fixed for a particular period. Commercial banks also pay an interest on these accounts. An important thing related to it is the varying interest rates for the different period deposits. Interest rate increases with the increase in the fixed deposit period.
1.3 Saving Deposits
To create the habit of savings, bank accepts the saving deposits and pays an interest on these deposits. And this rate of interest is greater than the demand deposits.
2. ADVANCING LOANS
Bank also advances the loans to the merchants and charges the interest. It is the major source of its income. It also issues the loan for short term, medium term and for long term. And bank receives the higher interest from the borrower for the long term loans offered.
3. DISCOUNTING OF BILL
Commercial banks also discount the bills and facilitate the business; for example one businessman purchases anything from another person and promises to pay after one month. The seller will write a bill to the buyer and there will be an order that after one month the buyer will pay the amount to the seller. Buyer will sign on the bill. In other words buyer will accept the responsibility of that amount. If seller is in need of money, he will take it to the bank and will receive the money by discounting the bills. The commercial bank also may rediscount it from the central bank.
4. CHEAP MEDIUM OF EXCHANGE
By issuing cheques and drafts bank provides cheap, medium of exchange.
5. TRANSFER OF MONEY
The commercial bank is very helpful in transferring the money from one place to another by issuing the drafts. This is very popular concept in the modern world and widely used in the business community.
6. CUSTODIAN OF PRECIOUS ARTICLES
Banks also provide lockers for the safety of precious articles. So now everyone can secure his precious metals like gold, silver, etc., and bank charges a very nominal charge for this facility.
7. AGENCY SERVICES
Commercial Banks also perform the duty of an agent. It collects and pays on the behalf of the customers.
8. INVESTMENT
On behalf of the customers all the banks also make an investment in different companies and industries. And banks receive nominal charge from the customers.
9. CREATION OF CREDIT
It also creates and extends the volume of credit.
10. FACILITATING TRADE ACTIVITIES
It also provides the finance to the foreign trade. Letter of credits are issued by the commercial banks for the foreign payments.
11. PURCHASE AND SALE OF SECURITIES
The commercial bank purchases and sells the securities, for itself and sometimes on the behalf of the costumes.
12. ACTING AS A TRUSTEE
If a client directs his bank to act as a trustee in the administration of a business, the bank performs this responsibility.
ROLL OF COMMERCIAL BANK IN THE ECONOMY DEVELOPMENT OF PAKISTAN:
Banks play an important role in the economic development of country. If our Banking system is not in accordance to the economic requirement then how it can play a vital role in our developments. The State Bank of Pakistan is at the apex and all the commercial Banks have to follow the rules of State Bank of Pakistan. Role of the banking sector can be judged by the following facts:
SAVING MOBILIZATION:
The commercial Banks namely United Bank Limited Pakistan, Habib Bank Ltd, Allied Bank of Pakistan Ltd. National Bank of Pakistan & Bank of Punjab has opened Branches in urban areas & rural areas to mobilize savings of people.
FINACCING OF DEVELOPMENT PROJECTS:
Banks & other financial institutions like ADBP, IDBP, and PICIC etc. Advances short & medium terms loans for financing of the development projects both in the private & public sectors .So they helping to accelerate the rate of progress (Economic) in the country.
ENHANCING TRADE ACTIVITIES:
The credit institutions collect the savings of people & make them available for facilitating the trade activities both inside & outside the country.
CREATING CLIMATE FOR CAPITAL FORMATION:
A developed baking system stimulates the growth of economy by creating favorable climate for capital formation in the Country.
HELP OF STATE BANK OF PAKISTAN IN ACHIEVING MONETARY PUBLISHES:
Commercial Banks under the supervision & guidance of the S.B.P help in implementing & achieving the objective of monetary policy, which vary from time to time.
ASSISST IN PLANNED DEVELOPMENT:
Commercial Banks are profit-seeking enterprises. In order to maximize profit they have the incentive from S.B.P to maximize the limit of finance. An organized Banking system keeps BOPance between the liquidity * profitability, thus assists in the planed development of the Country.
PROFIT SHARING SCHEME:
Commercial Banks receive surplus BOPance of the households and business & pay interest on the deposit of client. The depositors instead of having a fixed return on the deposit will share in the profit & loss of the Bank. The profit & loss scheme arrangement is the alternative to interest, under an Islamic economic system, which is since on the experimental basis in Pakistan.

On behalf of the Board of Directors, I am pleased to present accounts of the Bank of Punjab for the 1st quarter of the year ended March 31, 2006. Pakistan’s economy is on a high growth trajectory with GDP expanding by 8.4% during FY 2005. While growth has tapered during the first half of FY 2006, most macroeconomic indicators suggest that the economy is in good shape and real GDP growth of 6.0% during FY 2006 is forecasted. Policy makers are faced with the unenviable task of boosting economic growth potential while keeping inflationary pressures under check. The overall balance of payments situation remains manageable as growing remittances and an encouraging jump in both FDI and portfolio investment have helped eased the burden of a large trade deficit. Inflation has picked up after hitting an all time low in FY 2003 and is presently uncomfortably close to double digit levels, driving the SBP to maintain its tightened monetary stance.
The performance of your Bank remained satisfactory during the 1st quarter of the year. The Bank earned a pre-tax profit of Rs.822 million during the quarter as compared to Rs.565 million for the similar period last year indicating 46% growth. Profit after tax of Rs.585 million is 61% higher than the figure of last year’s corresponding period. Despite accounting for the dilution impact of about 58% bonus issue made by the bank for the year 2005, earning per share for the 1st quarter comes to Rs.2.04. Bank’s deposits rose to a level of Rs. 90,089 million at the end of the quarter. Advances portfolio of the bank has increased to Rs.71,385 million showing 12% increase over December 31, 2005. The capital and reserves of your bank have now grown up to Rs.7,362 million with a rise of 9% over the level as of December 31, 2005.
The staff of the Bank also deserve for an appreciation for their untiring efforts to achieve the targeted results.                                           For and on behalf of the Board
                                                                                                         Chairman
INTRODUCTION of BANK of PUNJAB
The Bank of Punjab was established in 16 November, 1989 under The Bank of Punjab Act 1989. Main Branch Lahore was the first Branch that was opened. In 1989 BOP was mended as a non – scheduled bank on in the province of Punjab. In beginning the main deposits were the government. Because it was opened to support the government of Punjab. In 19th Sept 1994 the Bank of Punjab was converted into a scheduled bank, The permission was being given by the Government of Punjab. After being converted into scheduled bank it opened its first branch in the city of Islamabad (Blue Area ) on the date 19th Sept 1994. The total numbers of staff of BOP is approx. 4000 most of the employees are master degree holder and are highly qualified and are working efficiently. It quickly expanded its operations in the Punjab province by opening its branches. Approximately one branch was opened in a day. The strength of branches in the province of Punjab is 255. .Now the total number of branches is 266. Today they established 266 Branches allover the country as:

Names of the cities No. of Branches
Rawalpindi 37
Lahore 67
Gujranwala 45
Multan 63
Faisalabad 43
Karachi/Quetta 05
Peshawar 06
Total Branches: – 266

Bank earned a pre – Tax profit of Rs. 3165million for the year 2005 with aremarkable growth of 82% over the previous year.
The Bank paid-up capital in 2005 Rs. 851.880 million.
Macro economic management is the major concern of an economy. In Pakistan over a long period of time, the gaps in saving and investment and BOPance of trade deficit have become the serious problem to achieve the desire level of growth.
The Bank of Punjab by the grace of ALLAH has the privilege to discharge its responsibilities to words national progress and prosperity with in the little period if its scheduling.
Awards and Achievements
Best Corporate Awards
The Joint Committee of the ICAP and ICMAP selected the BOP for winning 3rd position for The Best Corporate Report Award 2004 for the financial sector
Merit Award by South Asian Federation of Accounts (SAFA)
On the basis of evaluation of the Annual Report 2004, SAFA adjudged the bank of Punjab as the recipient of “Merit Award” under the “Banking Sector subject to Prudential Supervision” category.
2nd Kissan Time Awards
The Bank was adjudged as “Best Agri Loan Bank” and has been awarded 2nd Kissan Time award.
15th Bolan Excellence Award
The Bank was awarded Best bank Award under 15th Bolan Excellence Award distributed in 2005.
Achievement Award
The Lahore Chamber of Commerce & Industry rated the Bank as “Best Performance Bank” In year 2005.

CORPORATE OBJECTIVES
VISION STATEMENT
To be a customer focused bank with service excellence
MISSION STATEMENT
To exceed the expectation of our stakeholders by leveraging our relationship with the Government of Punjab and delivering a complete range of professional solutions with a focus on programme driven products and services in the agriculture and middle tier markets through a motivated team.
GOALS
To achieve this objective the bank aims to:
Ensure that its performance in all facts of its operations more than matches that of its competitors.
Maintains a comprehensive range of domestic and international activities.
Maximize contributions from its key sources of personal machines brands representation and capital.
Be innovative progressive and the need of its customers with in the frame work of operational and prudent risk taker.
Act as a reputable efficient and responsible organization.
Pursue personal policies which recognize the aspirations and performance of individual and which are suited to the devise levels of skills.

Board of Director
The Board of Directors oversees the Bank’s strategic direction, policy formulation, its organizational structure its activity and succession planning of senior executives. The board meeting held in every quarter to review performance of the bank. Additional meeting may be called by the chairman to discuss specific issues of critical importance based on bank’s exigencies. Board committees have been estabilished for more in-depth analysis and review of varius issues. The committees then report to the board aftr each meeting. The Managing Director, who is also the chief executive officer of the bank, is powered for operational issues and day to day running of the bank. In carrying out of these duties the Managing Director is assisted by ateam of professional management through various committees as follows:
Management Committee
Asset liability Committee
Central Credit Committee
Operations Committee
I.T. Steering Committee
Special Management Committee
Corporate Information
Mr. Shahzad Hassan Pervez Chairman
Mr. Hamesh Khan President
Mr. Salman Siddique Director
Mr. Qaiser Zulfiqar Khan Director
Mr. Sikandar Musatafa Khan Director
Mian Muhammad Latif Director
Syed Salman Ali Shah Director
Mr. Shahzad Ali Malik Director
Mr. Gohar Ejaz Director
Mr. Jahangir Siddiqui Director
Mr. Azizul Hameed Secretary to board

Audit Committee
Mr. Qaiser Zulfiqar Khan Chairman
Syed Salman Ali Shah Member
Mr. Shahzad Ali Malik Member .
Salman Siddique Member
Auditiors
A.F.Ferguson & Co. Chartered Accountants
Registered Office
7-Egerton Road, Lahore- Pakistan
PBX-9200421-432
Website:www.bop.com.pk
Organizational Structure
BOP Setup

Management Hierarchy
President

Senior Executive Vice President (SEVP)

Executive Vice President (EVP)

Senior Vice President (SVP)

Vice President (VP)

Assistant Vice President (AVP)

Officer Grade 1 (OG 1)

Officer Grade 2 (OG 2)

Officer Grade 3 (OG 3)

Operational Staff

Branch Level Hierarchy

GENERAL BANKING
General banking area is also call the operations group. It consist on following section

ACCOUNTS SECTION
REMITTANCES
CLEARING SYSTEM
GOVERNMENT RECEIPTS
CONSUMER AND RETAIL BANKING
LOCKERS

Accounts section
Accounts Department of the bank can be considered the most important department. This department is basically concerned with processes and activities of recovering, sorting, summarizing and reporting data resulting from the whole day transactions of all the departments. Actually the process of this activity starts from the preparation of all the required vouchers by
different related departments. When these vouchers are prepared, these are posted into respective computer terminals by the relevant departments. Before merging, a batch list is printed out by Computer Department and duly checked by the respective departments. After this, merging stage comes, after which a proof list is printed out. This is the stage, where Accounts Department starts performing its function. Proof list is checked by the Accounts Department.
This section performs the following functions:
Opening of Accounts
Issuance of checque books
Closing of accounts
Payment of Cheques
Types of accounts
Following types of accounts are open in BOP
Saving account
Current or demand account
Fixed account
Saving account (PLS)  
This type of account is designed to encourage the saving habit of the customer and lead to a long-term banking or investment relationship .Bank saving accounts are in the nature of deposits accounts and are not normally available for drawings. Rates of interest are typically ahead, by a small margin. Saving accounts with the banking sector represent a very small proportion of total deposits. Customer can make any withdrawals from type of account. The cash reserve ratio is typically low them the current account because the withdrawals against this account is very low. The minimum BOPance for this account is Rs.100 and interest rate is  
Current or demand account  
These are those deposits, which can be drawn by the depositor at any time by presenting a cheque to the bank. People deposit their money in this account they gave a ready command on their account in developed and under developed countries of the world, a very significant part of money is kept under current or demand account. On this type of account of interest transfer of cash or by cheque takes place at sight. The cash reserve ratio for this account is very high. The operating cost for the handling of this type of account is very high because withdrawals are very regular.  
Fixed account
Fixed accounts are those, which are deposited for a fixed period of time and are repayable after the expiry of stipulated time to the customers. Those people who have surplus funds and want to have save investments deposit the amount in the fixed account. The rate of interest given to depositor varies with the length of deposit, i.e. it is higher for longer period and lowers for shorter period. The rates on this type of deposits are higher than the saving bank accounts. The cash reserves against this deposit are very low because there is no fear of withdrawal of a month before the stipulated of time. No paying books or passes book or cheque book is issued to the customers against this deposit to the depositors  
 The authorities of bank of Punjab have the right to revise all these rates of interest with out any notice to customers generally rates of interest are revised after six months. The amount deposited for 7 and 30 days short term notice and accumulated for the period exceeding the limit and the customers can get the interest of the extra days of deposit but in the case of months and years the customer did not get any additional interest for the exceeding period of deposit.  
Procedure for Opening an Account
First of all, the customer gets an application from the bank, which requires all information necessary for opening account and also the documents required. An account can be opened as:
An individual account
Joint account
Proprietorship account
Limited company account
Partnership
Club, society, association and trust
Information Required by the Bank
Name
Address
Telephone No.
Currency of Account
Nature of Business
Country of Residency
Special instructions regarding the account
Signatures
Documentation In case of limited company accounts
Photocopy of National Identity Card of each director
Application form
Copy of company’s memorandum and articles of association
List of directors
Copy of board resolution
Certificate of incorporation
Their signature cards
Certificate to commence business
Documentation In case of Partnership Account
Application form
A copy of partnership deed
Signature cards of partners
Registration certificate copy
A copy of National Identity Card of each partner
Documentation In case of Club, Society, Association or Trust
Application form
Copy of rules
Certified copy of resolution
Signature cards
When the concerned officer is satisfied then he opens the account and gives an account number that will be used in all communications with the bank in regard to the account and when making deposits and withdrawals.
Bank has the right not to open an account without assigning any reason or to close the account if it is not operated in a satisfactory manner by the instructions of the head office
Issuance of Cheque Book
After opening the account, a cheque book is given to the customer to sign upon which the number of cheque book issued and the name of the customer is written. Bank issues a cheque book against requisition. A cheque book may be of 25(PLS), 50 or 100 leaves (current A/C). Rs. 3 per leaf as excise duty is charged to the customer.
A cheque book register is maintained by the office. In this register, the cheque book inventory, cheque books issuance is recorded.
Loose Cheques
If any customer forgets or leaves his cheque book at his home, which is far away from the bank or whatever the case may be, the customer applies with the bank for the issuance of loose cheque by the bank as he does not has his cheque book with him and the money is urgently required, the this cheque is called the loose cheque.
Bank issues a loose cheque for Rs. 50 as charges for the issuance of the loose cheque plus Rs. 3 as excise duty.
Payment of Cheques
It is bank’s primary function to repay the money required for its customer’s account usually by honoring his cheques. It is a contractual obligation of a banker to honor its customer’s cheque if the following essential are fulfilled
Cheque should be in a proper form
Cheque should not be mutilated
Cheque should be drawn in this particular branch
Cheque should not be damaged
No unauthorized material alterations
Funds must be sufficiently available
Cheque should not be post date or stale
Cheque should be presenting during the banking hours
Procedure for Closing an Account
The customer can close the account. Customer is required to submit an application for closing the account. Then the account is closed out and his BOPance is paid to him after deducting the closing charges, i.e., Rs. 200 and the application is filed in Account Closing File. Remaining leaves of cheques will also be collected from the customer.
The activities of Accounts Department can further be divided as:
Routing of expenses vouchers
Preparation of daily activity reports
Preparation of weekly and monthly statements
Preparation of statements for tax purpose.
Routing of Expenses
Vouchers of all expenses and material purchases are routed out through this department. As far as the expenses are concerned, they include the heads of salaries paid to confirmed employees of bank, wages paid to employees that are on contractual basis, rent of the building, lease installment and insurance premium paid to insurance company for the insurance of vehicles and cash in safe and counter. Expenses also include the utility bill, which consists of courier, electricity, water and gas bills, medical expenses, which are reimbursed.
Preparation of Daily Activity Reports
As far as the daily activity reports of this department are concerned, these include the following heads:
Voucher collecting of
Loan transactions
General ledger transactions
Foreign currency related transactions
Fixed deposit related transactions
The checking is on daily basis.
Preparation of Daily, Weekly Monthly and Annual Statements
Daily Statements
These statements are sent daily to Main Office Lahore. These are:
Daily Affair Statement, which is same as BOPance Sheet
Statement of Income and Expenditure, which includes the details of income generated and expenses incurred by the bank.
Weekly Statements
These statements are generated on weekly basis for the purpose of sending it to Head Office. These also include:
Statement of affair
Deposit and advances position of the bank
Monthly Statements
These statements are prepared on monthly basis and also sent to Head Office. These include:
Provisional statement of income and expenses. This statement adjusted for accruals and pre-payments.
Monthly BOPance Sheet and Income Statement
Comparative Statement
Statements for Tax Purpose
The department also prepares two statements for the purpose of paying tax on monthly and annual basis. These statements are generated for the purpose of submitting to Central Board of Revenue. These are:
Statement of deduction of income chargeable under the head salary under Section 53 (Tax deducted at source)
Withholding Tax from the payments made to vendors, suppliers and other parties providing various services. The rate of withholding tax is as follows:
Suppliers 2.5%
For other parties 5%
Remittances Section
Transfer of money or equivalent to money from one branch to another branch of the same bank is called remittance. Now it has become an easier and safer method both for the client and banker to transfer their money from one branch to another within the city or Outside City.
PARTIES INVOLVED
In case of remittances normally two banks are involved, are as under:
Originating Bank Branch
It is the branch, which issued the instrument for remittance.
Responding Bank Branch
The branch that receives the instruments for remittances, also known as drawee’s branch:
TYPES OF REMITTANCE
Remittances are classified into the following two types:
Inland Remittance
Foreign Remittance
Inland remittances
It is a transfer of money from one branch to another branch of the same bank within the same country. In this case both the parties will be of the same country and same bank.
Remittances can be made through:
Instrumental transfer
Electronic transfer
Instrumental Transfer
Instrumental transfers are following
Demand Draft
It is an instrument, which is payable on demand and it is only presentable in the city/country. When any draft, i.e., an order to pay money, drawn by an office of bank upon another office of the same bank for a sum of money payable to order on demand, purports to be issued by or on behalf of the payee, the bank is discharged by the payment in due course.
When a person requires a draft, he should be asked to complete the prescribed application form in which he should state the amount of the draft, the name of the payee, and the place of payment. The person to those persons, who have been duly authorized to act on his behalf, should sign this application form. An advice is prepared and two copies of this advice are sent to the Head Office. The bank charges 3% withholding tax and commission according to the rate list (minimum is Rs. 200).
Pay Order
It is an instrument, which is payable in demand and only presentable in city.
Pay order is also called the banker’s cheque drawn upon the issuing bank itself. It is not negotiable and therefore, bankers tend to cross the instrument “Payee’s account only” to avoid the possibility of dealing with instruments with forged endorsement. The pay order is issued favoring individuals, commercial concerns, government departments. On the presentation of pay order, the bank is liable to pay the amount to the customer. Bank charges excise duty of Rs. 4 and service charges of Rs. 100.
Pay Slip
It is an instrument, which is issued by bank and used for expenditure purposes, i.e., electricity bills, maintenance bills, security bills, fixture and fitting, etc.

Call Deposit
Call deposit are not actual deposits of bank. It is in fact the liability of the bank. Call deposit are oftenly prepaid by the bank for contractors
PROCEDRE :**
Following steps are involved
1) Depositor fill the credit vouchers for call deposit. He writes the following information
Name of company
Amount
Date
2) He deposits the cash along with filled voucher in the cash department
Encashment of CD
For the encashment of call deposit needed
5 rupee stamp
two signature of customer on the back side of CD
token issued
accountant make entry in the CD register show that it has returned
Electronic Transfer
Electronic transfer is of following types
Telegraphic Transfer
It is the message, which is sent from one branch to another on the order of payer to payee through wire. It is one of the quickest means to transfer fund through the use of telex/fax/internet or cable. Payment to the beneficiary is affected directly by the drawee office upon identification or through credit into beneficiary’s bank account. As such remitting office is not required to issue any instrument payment to the remitter for delivery to the beneficiary.
Issuance and Payment of Telegraphic Transfer Outgoing
Application form is filled by the client in which the name and account number of the beneficiary, which is to be credited and name of customer is required. For telegraphic transfer, the payment can be made in case or by cheque or by debiting the customer’s account if he is the account holder. The amount of Telegraphic Transfer should be written on the form. The amount is transferred to beneficiary’s account in the other bank. An advice is given to the customer but application is filled in the record of the bank.
If the beneficiary is not the account holder of DBL, bank credits a Telegraphic Transfer payable account and when payment is made to the beneficiary, TT payable account is debited.
Issuance and Payment of Telegraphic Transfer Incoming
When a TT is received then an entry is passed in TT incoming register after verifying the test. When a person comes and wants to encash his TT, bank checks the statements of that person. If the bank finds any account credited to the person’s account against TT, bank prepares a voucher for this payment against that TT. The customer then presents that certificate to the cash counter and collects money.
Mail Transfer
It is the same like TT, but in this type, the message is sent through mail rather than telex. The procedure is same as TT, but the advice is sent through mail rather than wired.
Lockers service
Bank of Punjab also provides lockers facility in the country. The lockers issued only to the depositors. No lockers are issued to any unknown person.
The dual control system is used for lockers. The officer has master key to apply on the locker but he cannot open the locker of any person. The locker holder provides the bank has specimen signature. Whenever the locker holders come to open the locker, his signatures are verified by the officer and then will be able to open his locker. If the key of the locker is lost company providing these lockers breaks the locker and new lock is fitted in its locker and lock is destroyed in the presence of the locker holder and bank charges RS 1200 for that. In case the locker holder dies, the court opens his locker in the presence of his heir as mentioned in his will or and his belongings are given to them and the locker is closed.  
Billing And Government Receipt/Payment
This department is performing following functions
Ø Collection of utility bills
Ø Payment of salaries
Ø Payment of zakat
Clearing Department
The major function of Clearing Department is to receive the cheques, which are drawn on some other bank. The customer can get the money in his account at BOP, from the cheques drawn on another bank. The bank accepts these cheques and collects the amount from that bank on which cheque is drawn through the Clearing House. Bank charges some commission for this function.
Procedure for Clearing the Cheques
Pay-in Slip
The customer fills pay-in slip. This slip is just like deposit slip. The cheque number, date, amount and account number must be written on this slip.
Stamping and Scrutinizing
The officer on receipt of cheques and pay-in slip will stamp the pay-in slip with “cheque received” and give a portion of slip to customer and the remaining portion is attached with the original cheque.
The original cheque will be marked with two stamps.
Bank of Punjab
Clearing Stamp
At the end of day, all cheques are counted and then scrutinized in bank-wise and sent to the Clearing House
BILLS DEPARTMENT
This department basically deals in bills, which come in bank for collection. The bills are cheques, call deposit, drafts and pay order. These bills are from outstation branches of BOP or of other banks. This department provides services to customers at low charges to get their amounts from the nearest branch.
HEADS OF BILLS
There are two main heads of the bills i.e.
Outward Bills For Collection (OBC)
Inward Bill For Collection (IBC)
Outward Bills for Collection
Bills department receives cheques or other kinds of bills from its clients. The condition under Outward Bills for Collection is that the customer must have his account in the branch. This branch forwards the cheque with schedule or covering letter to that branch on which bill is drawn. The checking officer of bills department will cross the cheque with special bank stamp before forwarding the cheque to the other branch.
Outward bills for collection register
Outward bills for collection register is maintained in order to deep the records of all bills for outward collections. This register is updated two times, first at time of receiving the OBCs and secondly at the time when confirmation advice is received from the other branch, either the cheque will be paid or not by the other bank branch. After confirmation of the amount, confirmation advice is transferred to the sender branch. After confirmation of the amount and bills, the account of the customer is credited against reasonable charges, which is income for the bank.
Inwards Bill for Collection
These bills come to branch for payments so branch has to verify these cheques, pay orders, drafts and call deposits etc. The party account must be opened in that branch which sends it to paying branch .The responsibility under IBCs of the branch is to verify all the bills within three days, and should send the bank advice to the originating branch.
Inward bills for collection register
Inward bills for collection register are maintained for future record purposes. Care is made while posting the amount of bills in the register. Each bill is assigned a number according to the register series. Every year the number starts from one and continues for the whole year and next year again from one and so on.
ADVANCES DEPARTMENT
Credit is defined as the sale of goods, services and money claims in the present in return for a promise to pay in the future. While in banking sector advance is the promise that carries the repayment of the original amount plus an interest on the principal amount, extended as advance. The credit/advance is given on the base of the confidence/trust and on the belief that the customer will be able and willing to pay on the demand or at some future time.
The term credit may not be confused with term Debt. Credit and debt are merely the same things looked at from two different points of view. When a lender extends credit, the borrower acquires it. The lender or the creditor has the right to get back payment and the borrower has the obligation to pay back. Credit can be defined in these words: “credit is the right to receive payment or the obligation to make payment on demand or at some future time on account of immediate transfer of goods”. The first phrase right to receive payment is used from the point of view of the creditor, as he is to exchange present goods for the right to receive payment in future. The second phrase, an obligation to make payment on demand, which is from the debtor point of view. The debtor has an obligation to pay in the future for the goods required. Credit and debt are two sides of the same shield.
PROCEDURE FOR ADVANCES
The credit officer will have to see the following information from the company:
Name of the Company
Legal Structure
Names of Principal Shareholders/Directors.
Line of Business.
Financial Standing & Respectability.
Repayment capacity/Behaviour.
Your Credit experience including the use of credit facilities.
For this purpose the credit officer takes following steps before advancing credit:
Step 1: Applicant is required to serve some documents to the credit officer whenever required by him. These documents may include certified Financial Statements, legal documents regarding property occupied by the borrower. And some other certificates required by law and prudential regulations of State Bank of Pakistan like property deed, mortgage of property etc.
Step 2: Now the credit officer will have to analyze the provided financial statements critically. He will have to see the summary of financial health of the company, or partnership or the sole trader ship. Then he will have to fill the form containing information
In ratio anlaysis, credit officer has to see the Liquidity, Marketability, Profitability, and Activity ratios. After this he has to see the comparative Operating/Non-operating Cash generation statement.
Step 3: While doing this job the credit officer will have to see that the financial statements are reflecting the true picture according to the GAAP or not, and must fulfill the requirement of Checklist—-Prudential Regulations. This form consists of three pages regarding the subject matter. For this purpose he has to see the competitors, suppliers, customers and bankers with whom he is dealing.
Step 4: If the credit officer is satisfied with the financial performance of the company and other documents, he will write a credit approval containing the relevant information about the business. He attaches these documents with the proposals he made and forwards to the Zonal Office. The Zonal Office advance department ensures that the requisite documents are in order. Further they applied various financial tests, client business reliability and competitiveness. If the Zonal Chief has the power to sanction the loan, then he will prepare the sanction advice and sent it back to the relevant branch. If beyond his limits/powers then send it to regional office.
ELEMENTS OF CREDIT SELECTION
Five C’s are the main elements used for credit selection:
1- Character
The loan officer checks the character of the applicant, his family background, mode of living, & business.
2- Capacity
The loan officer checks the paying ability of the applicant by his previous experience.
3- Capital
Loan officer checks the business capital and liquid assets worth.
4- Collateral
The loan officer checks collateral like stocks, bonds, B/Es,
5- Condition
The loan officer also checks the economic condition inside the country and outside the country. If economic condition is favorable than loan is sanctioned otherwise not.
SECTORS FOR ADVANCES
There are two main sectors for which BOP is advancing loans. These sectors are:
Consumer Sector
Commercial Sector
These loans are given specially to employees, traders, businessmen, small industrial units, including cottage and small-scale industries, agriculturists. Thus BOP is ensuring an equitable distribution of credit among various sectors of the country’s economy. Different industry codes are used for different kind of industries.
Consumer loans
These loans are given to employees including lower scale employees and higherl-scale employees and other people up to or less than Rs. 50 thousand. Loans amount shall not exceed amount specified by marginal restriction on the type of securities offered. Consumer loans are granted by analyzing the requirements .
Loan period, loans are allowed for a maximum period of 3 years including a maximum grace period of one year. In special cases up to 5 years loan period can be extended, depending on the merit of the case.
Commercial loans
Total principal amount of loans to a single borrower shall not exceed to Rs.0.3 million, including loans to dependent members of the family. Maximum maturity period is 3 years, also depending upon the nature and types of the loans, extended.

Mark-up, will be charged as per existing rate, which is subject to change from time to time. Presently it is 0.51 paisas per day on per thousand/1000. Mode of paying back, the borrowed amount can repay back in the form of quarterly, equal monthly or semi-annually with interest, or as the case decided.
Securities against Commercial Loans
Loan can be made against any or more of the following securities:
Mortgage of immovable property (land and Building).
Pledge of stocks, raw materials and finished goods.
Hypothecation of stocks, raw materials and finished goods

Financial Analysis of The Bank of Punjab
Balance Sheet

Assets Year 2005(Rs.’000′) Year 2004(Rs.’000′)
Cash and Balance wirh treausery banks 8787387 5579566
Balances with other banks 9367595 2118242
Lending to financial instittons 7593681 1019488
Current Asset 25748663 8717296
Investments 18026181 16197505
Advances 63623705 39438923
other Asset 2040568 1277201
Operating Fixed Asset 1715061 689486
Defferd tax Asset – –
Total Asset 111154178 66320411
Liabilities
Bills payable 478001 267113
Borrowings from Financial Institutions 6791007 2831605
Current account balance 15499755 12964045
Current LIABILITIES 22768763 16062763
Deposits and other accounts 72965296 41760266
Subordinates loan – –
Liabilities against Asset subject to lease 55403 81795
Other Liabilities 1474425 567540
Deferd Tax Liabilities 220177 8964
Total Liabilities 97484064 58481328
Net Asset 13670114 7839083
Represented By
Share Capital 2349719 1506230
Reserves 4257337 2770645
Unappropriate profit 169817 143590
Total Profit before taxation 6776873 4420465
Surplus revaluation of asset 6893241 3418618
Total Representation 13670114 7839083
Liabilities + Representation 111154178 66320411

Ratio Analysis

Liquidity Ratio
Current Ratio 1.1309 0.5427
Cash to current liabilities Ratio 0.7974 0.4792
Cash to total asset 0.1633 0.1161
networking Capital 2979900 -7345467
Leverage Ratio
Debt Ratio 87.70166426 88.17998429
Equity Ratio 7.131181496 7.460225641
Equity Multiplier 8.131181496 8.460225641
Profitability ratio
Gross profit 56.42941258 71.85663311
Operating Profit ratio 51.67198278 67.94193748
Net profit ratio 40.81567415 57.52839781
Return on Investment 2.249126434 2.216320704
Return On Equity 18.28805524 31.89145975
Marketability ratio
Price Earning ratio 2.197802198 1.780068729

Horizontal Analysis of Balance Sheet

2005(Rs’000′) 2004(Rs ‘000)
Cash and Balance wirh treausery banks 8787387 57.4923 5579566
Balances with other banks 9367595 342.2344 2118242
Lending to financial instittons 7593681 644.8524 1019488
Current Asset 25748663 195.3744 8717296
Investments 18026181 11.2899 16197505
Advances 63623705 61.3221 39438923
Other Asset 2040568 59.7687 1277201
Operating Fixed Asset 1715061 148.7449 689486
Defferd tax Asset – –
Total Asset 111154178 67.6018 66320411
Liabilities
Bills payable 478001 78.9509 267113
Borrowings from Financial Institutions 6791007 139.8289 2831605
Current account balance 15499755 19.5596 12964045
Current LIABILITIES 22768763 41.7487 16062763
Deposits and other accounts 72965296 74.7242 41760266
Subordinates loan – –
Liabilities against Asset subject to lease 55403 -32.266 81795
Other Liabilities 1474425 159.7923 567540
Deferd Tax Liabilities 220177 2356.2361 8964
Total Liabilities 97484064 66.6926 58481328
Net Asset 13670114 74.3841 7839083
Represented By
Share Capital 2349719 56 1506230
Reserves 4257337 53.6587 2770645
Unappropriate profit 169817 18.2652 143590
Total Profit before taxation 6776873 53.3068 4420465
Surplus revaluation of asset 6893241 101.6382 3418618
Total Representation 13670114 74.3841 7839083
Liabilities + Representation 111154178 67.6018 66320411

Vertical Analysis of Balance Sheet
Bank of Punjab

2005(Rs’000’) 2004(Rs ‘000)
Cash and Balance wirh treausery banks 8787387 7.91 5579566 5.02
Balances with other banks 9367595 8.43 2118242 1.91
Lending to financial instittons 7593681 6.83 1019488 0.92
Current Asset 25748663 23.16 8717296 7.84
Investments 18026181 16.22 16197505 14.57
Advances 63623705 57.24 39438923 35.48
other Asset 2040568 1.84 1277201 1.15
Operating Fixed Asset 1715061 1.54 689486 0.62
Defferd tax Asset – –
Total Asset 111154178 ) 66320411 )
Liabilities
Bills payable 478001 0.4903 267113 0.274
Borrowings from Financial Institutions 6791007 6.9663 2831605 2.9047
Current account balance 15499755 15.8998 12964045 13.2986
Current LIABILITIES 22768763 23.3564 16062763 16.4773
Deposits and other accounts 72965296 74.8484 41760266 42.838
Subordinates loan – –
Liabilities against Asset subject to lease 55403 0.0568 81795 0.0839
Other Liabilities 1474425 1.5125 567540 0.5822
Deferd Tax Liabilities 220177 0.2259 8964 0.0092
Total Liabilities 97484064 100 58481328 59.9907
Net Asset 13670114 7839083
Represented By
Share Capital 2349719 17.1887 1506230 11.0184
Reserves 4257337 31.1434 2770645 20.2679
Unappropriate profit 169817 1.2423 143590 1.0504
Total Profit before taxation 6776873 49.5744 4420465 32.3367
Surplus revaluation of asset 6893241 50.4256 3418618 25.008
Total Representation 13670114 100 7839083 57.3447
Liabilities + Representation 111154178 66320411

Vertical Analysis of Profit and loss Statement
Bank of Punjab

Financial Analysis
Analyzing a company’s financial statements includes the methods of calculating and interpreting financial ratios to compare the company’s performance of the present year with the past and the analysis is also done to predict the future performance. The company whose annual performance you are going to evaluate, its annual report should be fulfilling the criteria:

Financial statement should be audited and prepared by a certified chartered accountant.
Financial statement should be prepared according to the Generally Accepted Principle of Accounting.
The Performance of at least three years is required. These years include the data of past one year and the year of which performance is going to be analyzed.

To assess the firm’s present performance as well as the future, three basic tools are used as:
1. Ratio Analysis
2. Common Size Statement Analysis
3. Performa Analysis

The firms whose performance is going to be evaluated (Bank of Punjab) fulfill these requirements that are why it is chosen to be analyzed. Here in this report, we are using the first two instruments to analyze that either company is best in terms of short term solvency, long term debt paying ability, and the profitability.

Ratio Analysis
Ratio analysis is used to compare the figures of the company’s past year’s performance with the present or to compare one company’s liquidity.

Basically, ratio analysis consist a complex set of ratios which are further divided into categories. These ratios include:

Short Term Debt Paying Ability Ratios
Activity Ratios
Long Term Debt Paying Ability Ratios
Profitability Ratios

SHORT TERM DEBT PAYING ABILITY RATIOS
These ratios measure the efficiency of the firms to pay back the short term contractual obligations on the due date.
The liquidity ratios of Bank of Punjab for the last two years are given below

Sr.
No Ratios 2005(‘000’) 2004(000)
1. Net Working Capital 297900 -7345467
2. Current Ratio (%) 1.1309 .5427
3. Cash to total asset Ratio (%) 0.1633 0.1161
4. Cash to current Ratio (%) 0.7974 0.4792

Working capital

Net Working Capital = Current Assets-Current Liabilities
By seeing at the working capital, it is obvious that company is in a very good position to pay its short-term contractual obligations. Because it is shown from the table that the trend is consistently increasing.
But it is important to note that net working capital is not a very good estimate to assess the short term solvency of the firm that’s why we go for other liquidity ratios.
To analyze the short term solvency ratios of Bank of Punjab we see the current asset structure of this firm which is as follows

Sr.
No Items 2005 2004
1. Cash and Balance with treasury banks
34.12% 64%
2. Balances with other banks
36.38% 24.30%
3. Lending to financial institutions
29.5% 11.70%
4. Total current assets 100% 100%

Analysis of short-term solvency ratios
When we see the over all picture of the firm’s short term solvency ratios we conclude that firm is in a very good position with prospective of short term debt.
The reason is that it’s current, quick and cash ratio is continuously increasing. Now we find out the causes behind them

The current assets are the major part of the total assets. In 2005 the current assets were the near about the 23.15% of the total assets and they were 7.84% in 2004.

Cash ratio has also the increasing trend and the reason is that the contribution of cash is increasing in the total current assets.

The overall all these ratios are showing the very good positive trend and this is mainly due to the reason that shows that management of the company is increasing their efficiency.

LONG TERM DEBT PAYING ABILITY AND COVERAGE RATIO

In the long run, a relationship exists between the reported income resulting from the use of accrual accounting and the ability of the firm to meet its long term obligations. Although the reported income does not agree with the cash available in the short run, the revenue and expenses items eventually do result in cash movements. Because of the close relationship between the reported income and the ability of the firm to meet its long run obligations, the entity’s profitability is an important factor when determining long-term debt paying ability.
The long-term debt paying ability ratios of Bank of Punjab are given below.

Sr.
No Ratios 2005 2004
4. Debt ratio 87 % 88 %
5. Debt equity ratio 71% 75%
6. Debt to tangible net worth 8.13 8.46

ANALYSIS OF LONG TERM DEBT PAYING ABILITY RATIOS

The debt ratio is showing the decreasing trend. This trend is due to liabilities against subject to lease fix asset is decreasing by 32% it is a good sign for the short term & long term investor because firm is going to discharge its leased asst payment but risk is also going to decrease in long run..

It is clear from the table that like debt ratio the debt to equity ratio is also decreasing. The trend is declining and showing that equity proportion is gradually becoming higher as compared to total liabilities. In 2005, the equity was approximately 71 % of the total liabilities and equity but in 2004 it was 75%. This is clear that every year the part of equity in total liability is increasing. This indicates that firm is financed from capital money to finance the assets.

PROFITIBILITY RATIOS

Profitability is the ability of the firm to generate earning. Analysis of profit is of vital concern to stockholders since they derive revenue in the form of dividends. Further, increased profits can cause a rise in market price, leading to capital gains. Profits are also important to creditors because profits are one source of funds for debt coverage. Management uses profit as a performance measure.
So, the profitability ratios measure firm’s efficiency in terms of earning profit by utilizing resources.
The profitability ratios of Bank of Punjab. are given below

Sr.
No Ratios 2005 2004
1. Net profit margin 40% 57%
2. Gross Profit Margin 56.% 72%
3. Operating Profit Margin 52% 68%
4. Return On Asset 2.24% 2.21%
5. Return On Equity 18.28% 31.89%

Analysis of Profitability Ratios

Almost all the profitability ratios have the not favorable trend it means that this company is not highly profitable in 2005.

The net profit margin is decreasing in 2005 and the reason is that each year the markup earning of the company is increasing but they have a not considerable control on the cost of funds. The reason for this inefficient funds management may be that now the company is not utilizing its human resource in more sophisticated for the management of funds.

Form the table it is clear that return on total assets is also decreasing in year 2005. This shows that the company is not utilizing their assets in more efficient manner in year 2005.

MARKETABILITY RATIOS

Sr# Ratios 2005 2004
1. Price earning ratio 2.198 3.78

Ø As earning per share has reduced which because price-earning ratio to increase market price of their stock is also reduced significantly which is not good sign for the company.

Conclusion
Now based on the ratio analysis we will see that whether this firm is attractive for the short-term investor and long-term investor.
Here we will also see whether this firm is attractive for the investing purpose or not.

Short-term creditors point of view

This firm has very good short-term solvency ratios. Even its cash amounts in 2005 and 2004 are higher than its total liabilities. This shows that BOP has a very less chances of technical insolvency. The other important thing is that the firm has considerable facilities of short-term finances under mark up arrangements available from various banks . Therefore, we can say that over all position of the firm is very secure for the short-term creditors and this is a very attractive firm for the short-term investors.

Long-term investor’s point of view

The firm’s profitability ratios are very attractive and almost all ratios have the favorable trend.
So, we can say that it is very good for the long term investors to invest in this firm. The reason is that this is a highly profitable firm.

Horizontal Analysis of Balance Sheet
Bank Of Punjab
2005-2004

Cash and balance with treasury bank increase by 57.49% from previous year due regulatory authority regulations and circulars.
Balance with other banks is increased by 36.38%.
Due to excess of liquidity in the market, bank has reduced its lending to other financial institution as they have liquidity .it is decrease by 44.85% as compare to last year.
Current Asset has increase to 11.29%.
Bank has increased its advances to the people of country by 61.32% in this year 2005
Operating fixed asset has been increased by 48.75% from previous year.
Total asset has been increased by 59.76%.
In this year bank bills payable has been increased by 78.95%.
As cash balance with other bank and treasury has shown that bank has enough liquidation there for bank has decrease its borrowing from other financial institution by 39.83%
Bank has reduced its liability against asset subject to lease finance by 32.26%.
Bank has also reduced its other liabilities by 59.79% which is a healthy sign for the Bank of Punjab.
Total liabilities have been increased by 14.82% but this increase is less than increase in total assets .the increase in total asset is 17.22%.
Share capital is increased by 56% overall there is an increasing trend in profit .

Conclusion
The whole balance sheet also shows that bank assets has been increased as compare to bank liabilities the profit before taxation is also showing an increasing trend which is a good sign. The whole horizontal analysis of the bank is showing the healthy position of the bank .after analyzing the balance sheet horizontally we can assume that bank is doing a very good job in increasing their share holders wealth.

Horizontal analysis of Profit and Loss Account
Bank of Punjab
2005-2004
Bank markup earned from lending is increased by 39.72% which is a good sign for the health of a bank.
Markup Expense has been decrease to 71.135% which is a good sign and showing the management efficiency in the field of deposit collection.
Net Markup Income is also increase by 56.43%.
Bank has controlled its loans to going into bas debts which is showing from decrease of provision against non performing advances that are reduced by 28.94% as compare to previous year.
It is the amazing sign that bank has increase its net markup after provision by 74.71% as compare to last year. That shows that bank is running on profitable path.
Fee commissioned earned brokerage income is also increased by 4.16% as compare to last year.
Profit before tax is also increased by 51.67% as compare to last year it is totally due to bank has reduce its expense in this year and increase its income also.
Profit after tax is also increase by 38.42% as compare top last year .it is higher than last year. That shows the management efficiency and stake holder trust.
Profit available for appropriations increased by 59.27% as compare to last year. This is due to decrease in cost and increase in income of the bank as compare to last year. in this year bank has also decrease its administrative expense which is a good sign.
As bank profit for appropriation is increase due to healthy status in the economy and trust worthiness of the bank the earning per share is also increased by 48.65% as compare to last year its shows that bank is in a good position.
Conclusion
All the horizontal analysis of income statement showing the strong financial position of the bank .bank has cut their cost as well as increases its profit as compare to last year. both short term investor and long term investor can trust on the bank and can invest into the bank .bank is adding value to the stake holder equity. It is increasing the net worth of the investor which is a goal of financial manager. it also shows that bank human resource is doing very well as compare to last yare.
Vertical Analysis of Balance Sheet
Bank of Punjab
Year 2005-2004
Cash and balance with treasury bank is the 7.91% of the total asset in year 2005 and in year 2004 it was just 5.02% of total asset this shows clearly the bank has increase its cash balance with treasury bank. it is due to high liquidation in the market and bank has more deposits bank has to increase its time & demand liability and increase its deposit with treasury.
Balance with other banks in year 2005 is 8.43% and in year 2004 was only 1.91% it is also due to high liquidation and foreign remittances increase .it is a very good sign.
Lending to financial institution was 6.83% in year 2005 of total asset and 0.92% in 2004.this decreasing trend is due to more money come to country in 2004 banks has enough surplus of money to start their projects so bank do not in need of finance from the bank of Punjab there for the lending to financial institution is decreased.
Investment are 16.22% of total asset in year 2005 and 14.5% in year 2004 which shows a decreasing trend in investment it is due to excessive liquidity trend in the economy of Pakistan in year 2005.
Advances are 57.24% of total asset in year 2005 and 35.4% in 2004 this is a big difference between the year 2005 and 2004. Bank has more lend so its profit will also increase in this regard .bank is going in a good direction and it will increase overall worth of the bank in banking industry.
Bills payable are 0 .4903% of total Liability in year 2005 and 0.27% in 2004 very small increase in bill payable liability in 2004.this is due to bank total liability in more increase to its bills payable liability.
Deposits and other accounts all are 74.85% of total liabilities in 2005 and 42.82% of total liabilities in 2004 as you know that deposits are blood of bank therefore increase in term deposit and saving deposits is the good sign for the bank and showing the trust of customer on the bank.
Total profit before tax is 49.57% in total representation in year 2005 while in 2004 it was just 32.34% it is due to more lending and increase in non markup income of the bank. it is a very good sign and showing that bank is in a good financial position and its profitability is increased.
Vertical Analysis of Profit and loss account
Bank of Punjab
Year 2005-2004
The markup expense is 43.57% of total markup earned in 2005 which is less than the previous year it shows that bank management has controlled their expenses very efficiently on its deposits and it is reduced to 17% as compare to previous year although the markup earned is increased.
The decrease in markup expense is cause of increase in net markup income which is 56.43% of total markup earned in 2005 which is 5% more than previous year.
Provision against non performing loan ahs also decreased 5.35% as compare to previous year .the management efficiency is clearly shown by this head.
Fee commission brokerage income in 2005 is 4.16% of total commission earned and 1.84% of total markup earned in 2004 it clearly shown the 3% more income in 2005.
Bank has also decrease its administrative expenses just because of cutting the administrative and deposit expense cost. Other charges are also decrease by .0475%.
Profit after tax is also increase by 38.42% of markup earned which is due to more income and cutting cost of expense. this showing that bank of Punjab management is very efficient in decreasing of cost it can be a competitive edge for the bank

SWOT ANALYSIS
BOP is one of the fastest growing banks in Pakistan. In the light of these situations we can make an analysis.
Strengths:
Bank is supported by Punjab Government
Bank is in its growing stages so there is good financial position.
Professional and Committed workforce
Low cost than other major banks
Increasing the number of branches in the country
Successfully launching new Product Lines
Well experienced and quality staff
Efficient internal communication system
Each department in the bank is fully allowed to take adequate decisions of its own, saving the time and help in achieving the objectives

Weaknesses:
Although the bank is growing fastly but it has some weaknesses which it should remove to make itself further strong.
Less Advertisement
Slow in introducing new products
The staff is not satisfied with the salary structure
Gives its staff less benefits
Opportunities:
Extension of national network of the branches
Introduction of innovative products
Growing market
ATM facility for all customers
Threats:
Uncertain economic conditions
Action taken by competitors

Future Planning
The bank of Punjab’s equity base is good and it plans to expand its expand its business by introducing Islamic banking , deposit and investment new products as well as focusing towards developing business in the consumer finance segment.
They have planned to open more branches in the different cities of Punjab as well as in other Provinces.

SUGGESTIONS AND RECOMMEATIONS

The political influence should be minimized on all type of the operations of BOP.
The customer satisfaction should be guaranteed through rapid delivery of financial products and services.
Implementation on the rules, regulation and policies should be done at all cost.
Advances of the non-productive investment should be stopped.
The influence of the employees union should be minimized.
The bank should develop a comprehensive recruitment policy in order recruit the competent people.
The professional people should be recruited at least executive level.
The employees should be promoted according to their turn.
In order to improve the productivity the pays of employees should be compatible to banking industry.

For checking the implementation of policies task force should be formed.
All the branches of BOP should be computerized.
The bank should spend more on the promotional activities.
For the development of the Human Capital the bank should conduct a series of training program to achieve the mission.

Habib Bank Limited

THE BANK

The term “BANK” is derived from an Italian word “BANKO” which means “Bench” that is where people were meet and solve their financial matters.

The term bank is being used for a long time yet it has no precise definition. The basic reason is that the banks perform not just one but many types of functions originally the banks were supposed to make short term loans to the traders only. The banks now not only make short term loans to the formers, traders , industrialist etc. But also invest in a wide variety of long term earning assets.

The commercial banks also undertake and execute trust, deal in stock, shares and debentures, issue guaranties and indemnities underwrite and sell new securities, and deal in foreign exchange etc.

However some of the definitions of bank from different authors are as follows.

According to Dr. Hart

“Banker or bank is a person or company carrying on business of receiving money and collecting drafts for the customers subject to the obligation of honouring cheques drawn upon them from time to time by customers to the extends of the amounts available on their currents accounts”

In the words of G W Gilbert

“A banker is a dealer in capital or more properly a dealer in money. He is an intermediate party between the borrower and lender. He borrows one party and lends to the another”

TYPES OF BANKS

Central bank or state bank.

Commercial bank.

Exchange bank.

Industrial bank.

Agriculture bank.

Investment bank.

Saving bank.

CENTRAL BANK

Every country has its central bank or state bank. Its major function is to carry out a country’s monetary policy with an aim to safeguard its financial and economic stability. It has the monopoly of note issue. It is also the custodian of money market. State bank is the Banks bank and lender to the government.

COMMERCIAL BANK

Commercial banks are profit earning concerns. They receive deposits and advance loans to the borrows. They greatly help in financing for internal and external trade of the country.

EXCHANGE BANK

The main function of the exchange bank is to finance the foreign trade by the purchase and sale of foreign currencies in the form of drafts, bills of exchange, telegraphic transfers. They also perform the function of commercial bank. Receiving deposits and advancing loans.

INDUSTRIAL BANKS

Commercial bank cannot afford to block their funds in long term investments. The industrial banks receive long term deposits and finance the industries by providing them long term credits. In Pakistan the Industrial bank named as Industrial Development Bank of Pakistan (I.D.B.P) was established in 1961 for this purpose.

AGRICULTURAL BANK

Agricultural bank provides short and long period loans for financing agriculture. The agriculturists need short and long term loans for meeting their day to day and long term requirements for making permanent improvement in the land. In Pakistan Agricultural Bank is named as Agricultural Development bank of Pakistan (A.D.B.P) and it was established in 1961

INVESTMENT BANK

The main function of investment bank the merchandising of shares and other securities, managing and distributing the issue of shares and other securities.

SAVING BANKS

These are the institutions which are sponsored by the government for having facilities to the people and small means. These bank collect small saving of people and allow them to withdraw in small amounts. Also another institution i.e. National Savings is working in the same capacity.

HABIB BANK LIMITED

The working of the Habib Bank Limited was commenced on 25th August 1941 in Bombay and in 1948 it was established in Pakistan. It was the first Muslim Bank in the Subcontinent,

Now there are 1773 branches inside the Pakistan and about 66 Branches overseas providing financial services to its worthy customers.

Habib Bank is working for the last 50 years and become the largest commercial bank in the country. It has the Authorized capital of RS 5000 Million with a paid up capital and reserves of RS 858 Million and its deposits are more than RS 213 billion in approximately 10.7 Million accounts. It has the advances of 131 Million. Habib Bank has innovated a numbers of financial schemes like term deposits, Special notice term deposits, A.T.M. etc. As governments are hoping to be liberal and their policies are innovative and liberal the scope of banking is increasing and Habib Bank is on step ahead if the growth and participating very much in the economic growth of Pakistan.

Habib bank HEAD QUARTER is situated in KARACHI that building has highest number of stories in Pakistan.

Habib bank has basically 9 Regions all over the country those control the entire activity of Habib bank operation is countrywide.

REGIONAL HEAD QUARTERS

ZONES BRANCHES

1 Lahore Region 13 313

2 Faisalabad Region 10 263

3 Islamabad Region 10 274

4 Multan Region 13 261

5 Karachi Region 15 204

6 Hyderabad Region 06 163

7 N.W.F.P. Region 10 261

8 Balochistan Region 02 46

9 Azad Kashmir Region 03 98

MISSION OF H.B.L.

To inherence the corporate culture in business society through quality oriented banking services.

To increase the profitability of our shareholders through investing in financially sound and profit earning projects.

To maintain and increase the reliability and quality services to our accounts holders.

To strengthen the status economy through financing the export under control of state bank of pakistan.

To provide funds for increasing environmentalism, cultural and sociological thinking in society .

Lahore Region

Lahore Zone

Sheikhupura zone

3. Gujranwala zone

Gujrat zone

5. Hafiz Abad zone

DIVISION AT HEAD OFFICE KARACHI

1. Agriculture and small loan division .

2. Audit and inspection division

3. Cash and investment division

4. Computer service division

5. Customer service division

6. Corporate credit division

7. Engineering and Maintenance.

8. Finance division

9. General administration division

10. International division

11. Law division

12. Marketing and development division

13. O and M division

14. Planning development division.

15. Printing and stationary division.

16. Syndicated loans divisions.

17. Trade information division.

18. Training division.

1 AGRICULTURE AND SMALL LOANS IVISION

Divisional Head

Small loans department

2 AUDIT AND INSPECTION DIVISION

Divisional Head Management Audit

Circle Audit circle audit implementation

A & B Karachi (Karachi B & c) Wing

Circle Chiefs Circle Chiefs inspection team

3. CASH & INVESTMENT DIVISION

Divisional Head (SVP)

Vice President.

4. COMPUTER DIVISION:

Divisional Head (AVP)

Lahore Hyderabad Quetta Peshawar Islamabad Faisalabad Multan

5. CUSTERMER SERVICES DIVISION:

Divisional Head

SP & VP

Branch Opening Cell Haij Cell Deptt for T.J Cell

Overseas Pakistan

6. CORPURATED CREDIT DEVISION:

Divisional Head (SVP) (EVP) (AVP)

7. ENGINEERING AND MAINTENANCE DIVISION:

Divisional Head (EVP)

8. FINANCE DIVISON :

Divisional Head (SVP) (EVP) �

9. GENERAL ADMINISTRATION DIVISION:

Divisional Head

|

Purchase and Insurance security war Housing Deptt.

Expenditure cell cell

Control deptt.

10. INTERNATIONAL DIVISION:

Division Head (SVP) (A.P)

11. LAW DIVISION:

Executive Incharge (AVP)

|

Divisional Head (SVP) (VP)

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Litigation Non interest Recovery Zakat

Cell Banking deptt. Cell Cell

12. MARKITING AND DEVELOPMENT DIVISION:

Public relation Protocol/Travel Sports & Credit card

Department.

13. O & M DIVISION:

Divisional Head (SVP &VP)

�14. PERSONAL DEVISION:

INVESTGATION CENTERAL HOUSE Overseas personnel

Department finance committee Cell

15. PRINTING AND STATIONARY DIVISION:

Divisional Head (SVP &VP)

16. SYNDICATED LOAN DIVISION:

Divisional Head (SVP & VP)

17. TRADE INFORMATION DIVISION:

DIVISIONAL HEAD (SVP &VP)

|

Centeral Main Deptt School Banking

18. TRANING DIVISION:

Divisional Head

Trg. Institute Trg. Institute Trg. Institute Trg. Instute

Lahore Islamabad Karachi Multan

�REGIONAL HEAD QUARTER

REGIONAL CHIEF EXECUTIVE

|

GM GM GM GM GM

Account Audit Finance M.I.S Dept. R&D

ZONE

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Zonal Chief

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Staff Manager Staff officer

BRANCH

Manager

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Sub. Manager

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Cashier Guard Assistant

�PRESIDENT

To implement the polices chalked out and decision made by the board of directors

To look after the affairs of the whole origination

To maintain good relation with the big Clint of bank in the interest of the origination

To promote the business activities of the bank

To find new areas for investment

To make liaison with the government and state bank

�BORD OF DIRECATORS

1. To make the policies in order to promote the business of bank.

2. To declare the profits on deposits.

3. To announce the rate of interest on advances and loans.

4. To make the policies for the welfare of bank employees.

�ZONAL CHIEF

To make visit at the branches in order to promote the business activities and make the discussion at the spot under his discriminatory powers.

To promote the business activities.

To make the relation with the industrialist business man Agriculturist etc. for the promotion of banking activities.

To solve the union problems.

To approve loans for heavy industries i.e. big amount of loans.

�BRANCH MANAGER

To look after the affairs of the branch.

To meet the depositor and borrowers and solve their banking problems.

To make try for increasing the profitability of the branch by capturing low cost/cost free deposits and giving the secured advance to the valued clients.

To reduce the expenses of the branch.

To make relation with the industrial business man agriculturist, industrialist of the branch.

To sanction small amount of loans and judge whether the client is genuine.

To solve the problem of the bankers working under him.

HABIB BANK LIMITED NOSHERA VIRKAN BRANCH

H.B.L branch is situated at NOSHERA VIRKAN which is the center of cotton and grain business. According to its location majority of its accounts holders are Cotton Broker , Traders and other business concerns. This branch is working under the experience hand of Mr. Mubashir Iqbal he is very hardworking and friendly to subordinates. He is used to go to his subordinate himself quires and other matters however a complete system of intercom is also installed in the branch in order to make the coordination .As the working of the branch is organized so different are made in order to make the working easier and error free.

The bank also issues creation form for the television license, account opening , deposit slip etc are also available at this place. Cheque books are also made by the persons at the counter.

GENERAL BANKING

Account opening department

This department is under the supervision of Mr. Mubashir Iqbal an ambitions young officer. Applications are received here and after the scrutiny of all the requisites the account is opened. There are mainly two types of accounts.

1-CERRENT DEPOSIT ACCOUNT. (CD)

2-PROFIT AND LOSS ACCOUNT. (PL)

3-CALL DEPOSITS

Now profit and loss (PL) is divided into four types:

1-Profit and Loss Saving Account (PLS).

2-Short Notice Term Deposits Account (SNTD)

3-Term Deposit Account.

4-Golden Investment Scheme.

Now Short Notice Term Deposit (SNTD) is further divided into two:

1-Ordinery Term Deposit Receipt (TDR).

2-Khas Term Deposit Receipt (Khas TDR).

EXPLANATION:

1.CURRENT DEPOSIT:

There accounts are opened by Rs. 500. No profit or interest is given on these accounts. These types of accounts are mostly maintained by the businessmen who may draw money at any time. Zakat is also not deducted on these accounts and no any notice is required for the withdrawal of money.

2-Profit and loss account:

A. PROFIT AND LOSS SAVING ACCOUNT(PLS)

This account may be opened by RS. 500. After every six months profit/interest is given on this account and the rate of profit is declared by the Head Office Habib Bank Limited. This year the management of the Habib Bank has decided to give the profit of 8.10% on their saving depositors . A 7days notice is required to draw the money exceeding RS. 15000, However bankers are used to give the relaxation of two, three thousands to their customers. A cheque book containing 10 leaves is given to the account holder which costs to him for RS 10 Mostly persons on jobs maintain these types of accounts. Zakat is also deducted on these accounts on the first of the Ramzan. A new tax i.e. with holding is also levied on the profit of the saving account. The rate of the with holding tax is 10%.

B. SHORT NOTICE TERM DEPOSIT:

Short notice term deposit accounts are categorized into three categories That are as under:

7-Days notice.

15-Days notice.

30-Days notice.

These accounts are opened for 7, 15,or 30days. But these can be encashed at any time. The rate of interest on these accounts is lesser ordinary PLS. Saving account. If it is encashed before its maturity the rate of profit is further reduced. With holding tax is also deducted on the profit .

This year the rate of interest on SNTD offered by the Habib bank is

From 7 to 29 days 6.00%

For 30 days and above 6.60%

C. TERM DEPOSIT RECEIPT:

These accounts are opened for 1 month, 3 months, 6 months, 1year and so on. The rate of interest/profit goes on increasing as the time /period of the deposit is increased. These accounts can also be encashed at any time and ordinary PLS rate is given if these are encashed before its maturity. With holding tax of 10% is also deducted on the profit of TD RS. The of

Profit/interest announced this years are as under:

PERIOD RATE

01 month 8.60%

02 month 9.00%

03 month 9.40%

06 month 10.50%

01 year 11.00%

02 year 11.60%

GOLDEN INVESTMENT SCHEME:

A Golden investment scheme is offered by the Habib Bank which offers you a rate of 14.50% per annum and the time limit for the said scheme is five years or seven and a half years or so . This scheme doubles the amount after 5 years and in years the amount is three times. But if the amount is drawn before its maturity no such profit is given on this behalf.

CALL DEPOSITS:

These are another type of accounts opened by the Government or companies. Construction companies/organizations require some percentage of total amount of the total contract to be deposited by the contractors as a security. Like when applications for shares are called or when some plots in a housing colony is to be allotted certain amount is called as a security that the applicant is genuine, these accounts are called call deposits. These accounts are refundable and no profit or deduction is made on this account.

FOREIGN EXCHANGE ACCOUNT:

As the Pakistani currency accounts are opened the requirements are same for the foreign currency accounts. All the transactions are made in the foreign currency in which the account is opened.

REMITTANCEDEPARTMENT:

As it is the function of the bank to remit the money to any place where there is a bank. It is the most easiest and safest way to send money to any place. Bank charges menial amount as a commission for the remittance. Here in the Habib bank Branch there is also remittance department. There are mostly four methods to remit the money. They are:

Demand Draft (DD).

Mail transfer (MT).

Telegraphic Transfer.(TT)

Pay Order (PO)

Now these all are discussed here separately in detail:

1. DEMAND DRAFT (DD).

It is the most commonly method used for the remittance of money. It is very simple, firstly a form is to be filled in , in which all details are specified that where and in which branch the draft is to be sent then the money is deposited which is called draft and money can by drawn after showing to the bank of the specified branch of the bank. Only specified person can draw the money on that draft. Another method to secure the payment of the draft could be the crossing of the draft which means that it will only be deposited in the payee’s account.

To make it more secured and safe the bank has coded the amount exceeding Rs.15000. Only the banker or the person knows the actual amount of the draft. In return bank gets a commission which is its mode of earning.

The bank’s commission rate is as under:

Rupees Min. amount %age

Up to 10,000 15 20%

10,001-100,000 20 15%

100,001 of above 150 07%

Now with holding tax is also levied, so bank also gets 20% with holding tax on the sum an excise duty of RS. 1 per leaf.

Now if the draft is to be canceled or duplicate of the draft is to be needed in case of misplacement Rs.20 is to be paid.

2. MAIL TRANSFER (MT)

The money is transferred through mail. One branch of the bank sends advice to the branch of the same bank to credit the account of payee. In this type of transfer the payee must have the bank account . For example, now a days PTV’s licensees are made all over the Pakistan. The cash is deposited in the banks and after a week the bank mail transfers the amount to the PTV’s Islamabad account. Bank also gets commission on the mail transfers, the commission rate is:

Rupees Min amount %age

Up to 10,000 15 20%

10,001- 100,000 20 15%

100,000 or above 150 .075%

The bank also charges the postage expenses of Rs.12 on it.

TELEGRAPHIC TRANSFERS (TT)

It is a good safe and fast method of transferring money from one place to another. The advice is sent through the telegram and the bank to which the advice is made reconfirms that whether the advice is made or not. After the confirmation the money is paid to the payee. Telegraphic Transfer could be made by giving the name and the telephone number of the payee but account number is considered good and sage . The amount exceeding Rs.15000 is coded in order to keep security.

Bank charge commission on TT’s and the rate is as under.

Rupees Min. amount %age

Up to 10,000 15 20%

10,001-100,000 20 15%

100,001 or above 150 .075%

The bank also charge the telegram expenses of Rs.20 TT

PAY ORDER ( PO )

Pay order is less expensive method of transfer money. Normally this method is used to transfer money inside the city. If it is used city wide, it takes a long time.

The bank charge Rs.10 which is flat foe the pay order and an excise duty of Rs.1 per leaf. With holding tax of 20% on the sum is also taken from the party.

Now if the pay order is to be canceled or duplicate of the pay order is to be needed is case of misplacement Rs.20 is to be paid.

LOCKERS AND BILLS DEPARTMENT:

Lockers are also available at Habib bank limited NOSHERA VIRKAN. The procedure to get a locker is same as of account opening and RS 600 is to be deposited as a security fee which is refundable. There are three types of lockers available i.e. small, medium, and large. The bank charges Rs.300 per annum for the small locker, RS 500 the medium and Rs.800 per annum for the large size locker.

People get the lockers for the security of precious items which include jewelry, bonds, documents etc. To ensure safety and security two key system is used. Firstly the lock holder is verified and then in the presence of banker the locker is opened with the help of the key which is in the custody of lock holder and is closed with the banker’s key. Without these two keys it couldn’t be opened or closed.

Bills here doesn’t mean the utility bills like electricity bills or gas bills, but in the bills section those cheque are presented that are for the outstation or in station of any branch of any bank.

Now the procedure of collection is different for in both the cases, the outstation cheques are called the OBC cheque. Which stands for outward bills for collection or these are the collections inside the country or city wide and the in station cheque are those which belongs to the Lahore, may be from the Habib bank or any other bank.

Of the cheque is of Habib Bank, the cheque is sent to the HBL main branch GUJRANWALA the HBL GUJRANWALA branch sent those cheque to the branch where the cheque belongs. And after confirmation, in return, sent the IBCO inter Branch Credit Order. After the reception of the IBCO the HBL NOSHERA VIRKAN branch credit the account of the customer.

Now if the cheque belongs to the GUJRANWALA but the bank is other than

the Habib Bank i.e. UBL, MCB, NBP, etc, those cheque are sent to the

HBL main branch GUJRANWALA and from GUJRANWALA the banker will go to

the collection cell which is located at main branch GUJRANWALA.

Here all the representative from all the banks met and settled their inter

bank transaction after the confirmation from the respective bank. The

amount will be credited in the account of the Habib Bank at State Bank

and from their IBCO will be issued in the name of GUJRANWALA main

branch and further main branch will issue the IBCO to the NOSHERA VIRKAN branch.

Now for the outstation cheque the procedure is different. These cheque are sent to the Habib Bank main branch of that city where the cheque belongs. That main branch collects the money and sends a document which is name as IBCO which stands for inter branch credit order to the Habib bank NOSHERA VIRKAN Branch. Bank after the reception of the IBCO credits the account of the person who presented these cheques for collection. Now there are two types of outstation bills for collection,s . These are as under.

�CLEAN

Clean OBC includes those instrument,s which do not need any documentation to be attached with it for the purpose of collection. This includes cheque draft etc. The bank charge commission on the clean OBC as .20% of the amount of the cheque or a minimum of Rs, 10. An additional amount of Rs, 30 for the Courier or Rs, 12 for the postage as instructed by the customer credit order to the Habib Bank Chowk Azam Branch and bank after the reception of the IBCO credits the account of the person who presented those cheques for collection. Now there are two types of Outstation Bills for Collection. These are as under.

CLEAN

Clean OBC includes those instruments which do not any documentation.To be attached with it for the purpose of collections. This includes cheque Drafts etc.

�DOCUMENTARY

Documentary includes those instruments which includes an additional

documentation attached with that instruments for the collection. The

bank charge commission on documentary OBC as 35% of the amount of

that instrument or a minimum amount of Rs 25 an additional Amount of

Rs 30 for the courier or Rs 12 for the postage as instructed by the

customer .

If the instrument is dishonored or returned handling charges of Rs. 25/= per cheque or any instrument will be charged by the bank.

TRANSIT DELIVERY AND CLEARING DEPARTMENT.

This department deals in those cheque and draft,s which are drawn upon the Habib Bank Branch.

The transit delivery section received those cheque and drafts which are through any branch of Habib Bank after proper verification of the genuine of the draft or cheques , this branch transfers the inter branch credit order IBCO to the main branch which further transfers the IBCO where the cheque or draft was presented the clearing section deals in those cheque and drafts which are drawn on Habib Bank. From other banks like UBL, MCB, NBP, etc.

The procedure is same that after proper verification the IBCO is transfer to the main branch which sends the credit note to the State bank,

And State bank credits the account of that bank with the specified amount the bank charge noting on those cheque which belongs to Habib Bank but if the other bank is involved the bank will charge the commission and courier charges.

�CURRENT DEPOSIT & PLS SAVING DEPARTMENT

Current deposit and profit and losses department at Habib Bank branch is working for the maintenance of the account holder’s record. This department maintains all the record regarding the account of the account holders, specimen signature card is with them and the verify the signature of the account holders.

All cheque drawn of Habib Bank branch are sent to this department and

they properly judge and verify the validity of the cheque and after

verification they sent it to the cash department. Firstly that verify for the

signature then they see whether the cheque is within the due date, is

there a balance in the account of the account holder. After the

verification of all these pre-requisites the cheque is cleared. It is also the

function of this department to maintain the record of all transactions of

the day certain calculation of interest of profit is also made by them.

They also prepare the statement of account holders. All the records of

the account holders their transactions, their profit on PLS accounts

interest on SNIDS, TDRs etc. is maintain by this department.

�CASH SECION

Like all the banks there is cash counter is the Habib bank branch working two or three bankers. They pay the cash to the cheque, which are properly verified from the CD & PLS, Department. People cashier returns a counterfoil of the deposit slip by stamping it with cash receipt stamp.

Cashier also maintained a register in which all the transactions at the cash counter is maintained. At the end of the day cash in hand must tally with the balance in the register.

�TOKEN DEPARTMENT

All the cheque holders go to this department. They present the cheque to the person at the department. He checks that whether the cheque belongs to the same branch, the amount in words and figures is same, cheques is not outdated, there signatures are there etc. Then he allots a number to the cheques and a token is given to the cheque holder and the cheque is sent to the CD & PLS Department. After the proper verification the cash is paid to the cheque holder from the cash counter after taking token from him.

Transfer book is a book in which all the transactions of the day is written and the balance is tally with the cash book. The translator book is also maintained by the said department.

ADVANCES / LOANS SECTION

This dept. has been working under the supervision of knowledgeable experienced & well qualified banker Mr. Saleem Mirza who has been serving this bank for last 20 years.

This Dept. has boon playing one of the primary functions of the bank because a bank is the organization that accept deposits & give advances.

There are basically two types of loans:

Fund base

Non fund base

in fund base the cash is involved.

While is non fund base cash is not involved.

These are following types of advances those are given by the BANK.

Cash Finance (CF)

Running Finance (RF)

Machinery Loan.

International Development Agency Loan(IDA)

Transport Loan.

Staff Loan.

�1. CASH FINANCE (CF)

Cash Finance is the biggest loan given to the businessmen, industrialists, its limit is in crores and bank do require security for this purpose. After the proper investigation and documentation these finances are given and genuine property is pledged as a matter of security.

These loans are taken for the purchase of stocks etc. The bank appoints its staff of two or three persons at the place where that stock is lying. Bank also keeps the record of the stock and current position too. A notice is also written at the place that the stocks are pledged with the bank. To get these types of loans prior permission from the zonal office of the Habib bank is also required. The bank gets back its principal amount and also markup for the loan. The rate of markup is Rs.0.52/1000 per day and to calculate the markup for finance period as per formula is:

Amount of Amount of

Finance + One installment

MARK UP=———————————— Rate of Mark-up

2

Mo. of Period of

Installment one installment

Documents Require for the Loan.

1.Demand Promissory Note(DP Note)

This document is filled in by the party that they promise to pay the amount whenever it is demanded.

2. Facility Letter:

This is the requisition of the finance facilities to the bank By the party.

3. Balance Confirmation:

After the approval of the loan this letter is written by the Party that such amount is in the account of the party.

4. Letter of pledge (IB26)

For the getting of the cash finance a letter of Pledge is to be given to the bank that such property is to be pledged with the bank as a security.

5. Letter of Guarantee(IB29)

A letter for the personal guarantee is also required in which the guarantee from a sound person to the party is attached with the application

6. Agreement for Financing(IB6)

This agreement for the short term medium term/long term on the mark up basis. At most these are the documents required in attaining of the loan.

�2. RUNNING FINANCE:

Running Finances are also given for the purchase of stock etc. But its limit is not too much. Normally upto RS 15,00,000 is given as a Running Finance and no staff is appointed. This is termed as Hypothecation, which means that party is wholly liable for the stock and payment of the principal amount and markup. The procedure is almost same as for the cash finance and the loan is given to those parties which are able to prove its genuineness and satisfies the bank. The bank also pledges the genuine security of the party which normally more valuable then the amount of loan. To get this type of loan prior permission of the zonal office is necessary.

The rate of mark up is RS 0.52/1000 per day and to calculate the mark up for the finance period as per formula is:

Amount of Amount of

Finance + one installment

Mark Up—————————– Rate of Mark up

2

No. of Period of

Installments One Installment.

�Document Required for the Loan:

1. Demand Promissory Note(DP Note)

The party that they promise to pay the amount whenever it is demanded fills this document.

2. Facility Letter.

This is the requisition of the finances to the bank by the third party.

3. Balance Confirmation

After the approval of the loan the party writes this letter that such amount is in the account of the party.

4. Letter Of Equitable Mortgage (IB24)

For the getting of the running finance a letter of equitable mortgage is to be given to the bank that such property is to be mortgaged with the bank as a security.

5. Letter Of Guarantee (IB29)

A letter for the personal guarantees is also required is which the guarantees from a sound person to the party is attached with the application.

6. Agreement for Finances (IB6)

This agreement for the snort term /medium term/long term on the mark up basis. At most these are the documents required in attaining of the loan.

Letter of Hypothecation (IB25)

This letter that for all types of stock the party is liable and bank not needs to appoint any person.

�3. MACHINERY LOAN

Certain loans are given for the purchase of machinery. These loans are called Local Machinery Manufacturing Loan (LMM LOAN). The bank finances for the machinery, which is manufactured in Pakistan. Like other loans after the proper verification and proper documentation and

With the prior approval from the zonal office, these loans are given. The bank pledges some genuine property as a security. Personal security is also required in the getting of this loan. The loan is to repay in certain installments which includes the mark-up also. Normally these loans are for the period of five years and first six or three months are exempted from the installments as the ease or as the terms and conditions may be. The rate of the interest to be paid by the party is 8% per annum.

DOCUMENTS REQUIRED FOR THE MACHINERY LOAN:

1.Demand Promissory Note(DP Note)

These documents filled in by the party that they promise to pay the amount whenever it is demanded.

2.Facility Letter.

This is the requisition of the finance facilities to the bank by the party.

3.Balance Confirmation.

After the approval of the loan the party writes this letter that such amount is in the account of the party.

4.Letter Of Pledge.(IB26)

For the getting of the machinery loan a letter of Pledge is to be given to the bank that such property is to be pledged with the bank as a security.

5.Letter of Guarantee (IB29)

A letter for the personal guarantee is also required, in which the guarantee from a sound person to the party is attached with the

Application

6. Agreement For Financing(IB6)

This agreement for the short term medium term/long term on the

Mark up basis. at most these are the documents required in attaining of the loan.

INTERNATIONAL DEVELOPMENT AGENCY LOANS.

These loans are given for the purchase of foreign machinery , stocks, etc.

Though these loans are not in practice but there is a provision for this loan. The cause of in practicing of the loan may be the unawareness of the people about the provision.

The rate of interest on these loans is 11% per annum.

These finances are provided by the World Bank.

�DOCUMENTS REQUIRED ON/AFTER THE APPROVALOF LOAN.

1.In respect of the applicant.

Sole Proprietorship

Partnership Concern Copy of registered partnership deed.

Limited Company.

– Copy of the Memorandum and Article of Association.

– Copy of the certificate of Incorporation

– Copy of the certificate of Commencement of Business.

– Resolution of the Board of Directors authorizing the management to obtain the loan from the Bank specifying the

purpose of the loan required for.

�MODERN BANKING

1- A.T.M.

2- MASTER CARD

1-AUTO TELLER MACHINE

Now a days banks are going to inter in the world of Computer & technology, Each & every mark which was done by the men is being done through computer

H.B.L. is innovators to introduce A.T.M. facility to its customer first time in Pakistan A.T.M machine basically provide 24 hours cash service

To its customer you just have to enter your code & amount requirement you could get it when ever you want in throughout 24 hours. A.T.M. card facility can be given to all those who are the customer of the bank But having certain average balance.

For getting A.T.M. card simple procedure is adopted.

-Filling of Application for A.T.M. card

-Attestified from two bankers.

-All kind of necessary related documents are also required.

�WITHDRAWL OF CASH

a- On daily bases RS 2000/-

On weekly bases Rs.9000/- can be drawn.

Normally on deposit of 25000/- the limit of with drawl on deposit and RS 3000/- per 30 days

It is limited on the city only card of some city can’t be used in other city.

There are total 20 A.T.M machines working in Pakistan,

Karachi 8

Lahore 4

Islamabad 3

Multan 1

Faisalabad 1

Peshawar 1

Quetta 1

A.j.k. 1

�TERMS & CONDITION

Individuals personal current and PLS saving account holder can get A.T.M Card.

The HBAC shall allow the card holder access to the bank auto cash terminal to

Obtain cash up to previously arranged limit

Request a new cheque book

The HBAC is not transferable and shall be used exclusively by the card holder.

The cerd holder further undertakes to maintain sufficient funds to meet with drawls and he/ she undertakes not to overdraw the account unless over draft arrangements have previously been agreed to by the bank.

In the event of the card holder at any time drawing amount in excess of the credit balance the bank a will be entitled to create an overdraft in his account and card holder agrees to repay.

The card holder irrevocably authorized the bank to debit his/her A/C with the amount of withdraw.

The HBAC issued to the card holder shall remain at all times the property of the bank and shall surrounded to the bank on demand.

�MASTER CARD

Master Card is another modern facility, which is given by H.B.L. Master Card is having following benefits & privileges

1) H.B.L. master card is accepted at over 123 Million establishment’s word wide.

2) Free air travel accident insurance is provided.

3) This is the card having a photograph & signature of the cardholder, which gives the security against misused.

4) On this card cash withdrawal are available over 29000 outlets all over the world.

5) H.B.L. give an essay to manage monthly statement to keep track of your transaction.

�TERMS AND CONDITIONS

The card can be used to individuals on their request having current /PLS saving Accounts.

The card must be signed by the card holder immediately upon receipt

The card is not transferable & shall be used exclusively by the card holder name.

All possible steps shall be taken to safe guard the card.

The cardholder irrevocably and unconditionally authorizes the bank to debt his/her account with the amount of withdraw/ purchase effected through the use of his/her card.

While using the caed, the cardholder should sign the establishment bills and charges slips with the same signature as that on the card.

The cardholder should promptly notify the bankin knitting of any changes in detail of employment/ bussiness or any change in address office/ Residence.

The joining fee, annual and other payments made by the card holder to the bank shall be non refundable

The card remains the property of the bank at all times and has to be returned by the cardholder on the bank’s demand.

CURRENT ISSUE

World trend has been changing very rapidly and competition is becoming more & more stiff. Our country is the tendency towards the privatization now a days.

As we know H.B.L. is an Govt. organization and one of those organization those one suffering loses due to heavy operational & management expenses H.B.L. is bearing of its extra employee those are real cause of heavy management expenses. These expenses are making H.B.L weaker & weaker day by day. Now the Govt. has decided to privatize this org also along with other big organization.

If we technically examine the reason behind the down sizing then we

could see that H.B.L. is increasing 5% operational & management

expenses against the deposit while it 2% all over the world. In down

sizing employees of H.B.L regardless grade designation are offered a

golden shake hand scheme in which people are inviting to great benefits

against taking retirement from the job.

This Golden handshake scheme has following

main features.

�GOLDEN HANDSHAKE SCHEME

The employees may excise their option during the period from

25th August 1997 to 10th Sep 1997.

This scheme is a one time offer . when that much expenses will be incurred these will also add up in loan those are given an normally 18% to 20% when

They will become of 20% to 25% those will be more expensive then that of any other bank which has expenses less than the Habib Bank does.

So now-a-days H.B.L. has been passing through the downsizing process president H.B.L. Mr.. Shasta Tarn has made several refers and it is one of more significant reform.

�INCENTIVES

Three months basic pay for each completed years of service.

An account equivalent to 10 years normal post retirement medical facility will be paid in lump sum to retiring employees.

Benevolent fund grant equipment to 10 years will also be paid in lm sum in advance at the time of settlement dues as a final payment.

The residential facilities for six (6) months after retirement and sale of can if already provided, furniture shall be allowed as a special case to all those executives, who accepts this scheme.

�BALANCE SHEET as At 31st December, 1998

1998 1998

(U.S $000) (Rs.000)

ASSETS

Cash 328,672 14,478,010

Balance with other Banks 372,820 16,422,727

Money at call and short notice 75,566 3,328,669

Investment net of provision 1,262,669 55,620,567

Loans and advances

(Less loan loss provision) 2,712,554 119,488,013

Operating fixed assets 122,282 5,386,508

Capital work in progress

civil works 8,022 353,373

Other assets 920,935 40,567,215

———— —————-

5,803,520 255,645,082

LIABILITIES

Deposits and other accounts 4,800,264 211,451,635

Borrowing from other Banks 431,816 19,021,509

Bills payable 100,334 4,419,732

Other liabilities 284,393 12,527,502

————– —————

5,616,807 247,420,378

————— —————

Net Assets 186,713 8,224,704

————— —————

�Cash Flow Statement For The Year Ended December 31, 1998

1998 1998

(U.S $000) (Rs.000)

CASH FLOW FROM OPERATING ACTIVITIES

Loss before taxation (71,150) (3,134,140)

Add: Dividend income ( 2,273) ( 100,134)

Profit on sale of fixed assets

Profit on sale of shares of Habib Credit

and Exchange

Bank Limited (currently Bank Alfalah Ltd) (27,650) (1,218,000)

———– ————–

(101,462) (4,469,416)

Adjust for non-cash items

Depreciation 4,191 184,627

Provision for diminution in value of

investments 306 13,480

Provision against non-performing loans

and advances 8,289 365,131

Exchange gain on translation of assets

and liabilities of foreign branches 23,168 1,020,549

Provision for gratuity 9,848 433,800

Amortisation of deferred cost 6,581 289,909

———— ————–

52,383 2,307,496

———— ————–

(49,079) (2,161,920)

(Increase)/decrease in operating assets

Government securities 22,517 991,897

Loans and advances (43,067) (1,897,090)

Other assets (excluding taxation, voluntary

golden handshake scheme cost and amount

paid on behalf of Funds) (77,930) (3,432,816)

———— ————–

(98,480) (4,338,009)

�Increase /(decrease) in operating liabilities

Deposits and other accounts 134,350 5,918,076

Bills payable 11,991 528,244

Other liabilities 51,715 2,278,036

———- ————

198,056 8,724,356

———- ————

50,497 2,224,427

Cash inflow/(outflow) before tax and other adjustments

Payment to employees on account of

voluntary golden handshake scheme cost (164,534) (7,247,705)

Payment of retirement benefits on behalf of

funds (63,308) (2,788,743)

Taxes paid (40,192) (1,770,415)

———— ————–

Net cash outflow from operating activities (217,537) (9,582,4360)

———— ————–

�CASH FLOW FROM INVESTING ACTIVITIES

Investments (excluding Government

Securities ) 21,443 944,575

Sale proceeds on disposal of subsidiary 9,535 420,000

Dividend income 2,273 100,134

Fixed capital expenditure (11,084) (488,250)

Sale proceeds of fixed assets 804 35,385

———– ————-

Net cash inflow from investing activities 22,971 1,011,844

———– ————-

�CASH FLOW FROM FINANCING ACTIVITIES

Borrowing from other banks, agents etc. 77,512 3,414,391

———– ————-

(Decrease)/increase in cash and cash

equivalents for the year (117,054) (5,156,201)

Cash and cash equivalents at the beginning

of the year 894,112 39,385,607

———— ————

Cash and cash equivalents at the end of the

year 777,058 34,229,406

———— ————-

Cash and cash equivalents at the end of the year

Cash 328,672 14,478,010

Balance with other banks 372,820 16,422,727

Money at call and short notice 75,566 3,328,699

———— ————-

777,058 34,229,406

———— ————-

�FIVE YEAR PROGRESS

1994 1995 1996 1997 1998

Paid-up-capital 2,478 2,478 2,478 2,478 2,478

Reserve funds 4,308 4,508 4,844 4,862 5,835

Total Assets 288,919 306,851 336,573 328,830 320,634

Total Deposits 166,834 178,647 194,661 213,595 211,383

Advances 102,811 105,502 119,256 121,909 119,758

Investment 57,024 64,874 63,148 60,929 55,445

Total Income 18,752 19,582 22,873 27,714 25,156

Total Expenses 17,986 18,916 22,164 31,121 28,282

�INTERPRETATION

Paid –up- capital remained same during the last four year no minor change has been observes.

Reserves has remained same in 1996 & 1997 but these are increased as compared to 1995 & 1996 the purpose may be was to retain more funds in hand for the planning & development of the bank.

In total assets smooth change can be observed the reason may be the increase of clients of banks because in only 1997 3 million clients bank with H.B.L. within the country & overseas branches.

Total Deposit of the bank has increased in each previous year the main reason of this increase is Bank’s foreign currency deposits in Pakistan have increased.

Advances increased through all four years because banl has continued its policy of supporting the priorities established by Govt. and rendering services to all sectors of the economy with specific emphasis.

THE investment slightly declaimed due to increased diversion of bank’s resources for financing the requirement of priority sectors of the economy.

Total Income & Total expenditure remained slightly unfavorable due to increasingly competitive environment and structural problems of public sector Financial institution continued to put sever strain on the bank’s operation.

�STATUS OF

H.B.L. IN BANKING SECTOR OF PAKISTAN

Total Bank H.B.L.

Acquiring Acquiring

Total Schedule 8718 1773

=Domestic Branches

Total Assets 1540.69 362.33

(Billion) (Billion)

Advances 583.68 131.805

(Billion) (Billion)

Deposits 963.73 213.491

(Billion) (Billion)

Note:

On the bases of this Analysis H.B.L. is rated among the top 7 banks in

Financial set up of Pakistan.

�SWOT ANALYSIS

STRENGTH

H.B.L. has very effective Network of branches all over the country. Every 10th Pakistani is A/C holder of H.B.L. has made huge investment in almost all the important economic sectors of Pakistan. H.B.L. not only has made investment in industry but also in small scale industry as well. H.B.L. has efficient & less bureaucratic set up H.B.L. has introduced monthly income scheme that provides almost highest interest rate .A.T.M. Was introduced in Pak. By H. B. L. master card facilities is also available to the clients.

WEAKNESS

No consumer banking has offered by the H.B.L. to its clients like phone banking evening banking etc.

Bed Debt rate is very high no special effort has been made to recover the bed amounts.

No marketing set up or structure is there. Most of people do not know how they have to promote their activities.

�OPPORTUNITIES

H.B.L. is oldest bank in the country people do rely on this bank with some additional efforts bank can attract high deposit from Pakistan and overseas.

Instead of emphasizing on big & long term projects bank should concentrate on small scale investments heaving small maturity period.

Now-a-days H.B.L. has been investing almost 18% of its total investment on cotton business, along with investment in cotton it should invest in other cash crops, i.e. Rice, Sugar Cane, Tobacco, Wheat etc and there related agro based industry.

THREATS

First threat that bank has to face is the Privatization, down sizing & restructuring these changes could make drastic effects as well.

New incoming local & specialy foreign banks those are main cause of stiff competition in the market

DFI’s are going very well in financial set up of Pakistan. So, these are also effecting on the operations of bank. Along with other threats the threat of corruption has vital importance.

�CONCLUSION

Habib Bank limited was rated among first 500 banks of the world but now it is in among 1000 banks in the world, H.B.L. is not progressing due to political influence, in efficient management & corruption. If these draw backs have removed then bank will not only join its previous position rather we hope it will be rated among world top ten banks.

Khokhar Texile

IN THE NAME OF ALLAH WHO IS MOST BENEFICENT AND MERCIFUL

dedicatIONS

My beloved parents whose encouragement, guidance and presence are assets of my life.

&My teachers who illumined the dark corners of my mind and heart.

�PREFACE

This report describes the effort made by me for the learning by first hand practical experience about a business organization. Today is the era of experience as is said by quotation “Experience makes a man perfect.” No body can deny the importance of practical training and experience.

Through internship students get the first touch of professional exposure of the roles; they have to play during their professional careers. The students not only acclimatize themselves to the corporate environment but also learn to assume responsibility, co-operation and teamwork the hallmarks of modern management.

Having experience of textile industry is really a good experience for me. I am submitting all my experiences. No doubt, omissions and errors are expected but it is requested to ignore the nominal errors.

I was lucky enough to have a chance of doing internship in Fatima Sugar Mills Limited. I learnt a lot about the practical business and above all, the mental discipline and awareness, which are the most useful tools for an executive to raise the organizational structure.

ACKNOWLEDGEMENT

First of all, I want to express all and thanks to ALMIGHTY ALLAH whose blessings are above each and every thing which make me able to present my tiny effort. All prays to Hazrat Muhammad (pbuh) who is the reason for creation of the universe and whose kindness came to my part.

Secondly on the successful completion of my internship program, I whish to express my gratitude and heart worthy acknowledgement to my teachers for full co-operation and helped me in completing this report. I feel utmost pride in acknowledging with sincere gratitude for the valuable guidance I have received from my respected teacher Mr. Muhammad Aamir, He has been a constant source of enthusiastic encouragement through out the internship program. Due to his guidance I have become able to complete internship as well as this report. His advice, criticism and remarks were of the most value to me.

�I am also thankful to following persons:

Dr khalid ahmad khokhar Chief Executive

Zubair ahmad khokhar Executive Director

Shahbaz idrees Engineer

Hussain Sajid kazmi Chief Financial officer

M.tahir Raza Sales manager

Furthermore all the other executives and staff members of Khokhar textile Mills Limited, Head Office and Site deserve my thankfulness for their co-operation and guidance during the course my internship at Khokhar Textile Mills Limited. Finally I would like acknowledging the contributions by many other sources of information used in preparation of this report.

TABLE OF CONTENTS

Sr. No. Description Page No.

1. Preface 1

2. Acknowledgment 2

3. Structure of Management 3

4. Growth of Sugar Industry in Pakistan 4

5. Group Profile 5

6. Board of Directors 6

7. Mission of FSML 7

8. Objectives 8

9. Introduction 9

9. Working Force 11

10. Products of the Company 12

11. Production 13

12. Main Departments 15

13. Departments at Site 16

14. Departments at Head Office 33

15. Banking Section 47

16. Data Administration 51

17. Organizational Incentives 55

18. Quality Management 57

19. Problems of Sugar Industry 59

20. Comments & Suggestions 60

Introduction to Textile sector

Textile includes all the business related with yarn and cloths, so all the business from cotton ginning to cloth and apparel manufacturing comes under the textiles. There are different functions of Textile, which are as under:

Ginning

This is the first stage where cotton is separated from the seeds. Raw material of this stage is cotton seed. Khokhar textile mills does not deal in this function.

Spinning

Raw material of this stage is Ginned cotton. This cotton is spun to make yarn. Yarn produced in various qualities, this is the main Raw material of Reliance Weaving mills, which is purchase from local market. Khokhar Textile mainly deal this function.

Weaving

In weaving unit yarn is converted into cloth through power looms or through hand driven machines. Khokhar textile mills does not deal in this function.

Processing and Dying

Cloth is further processed and it could be used for a lot of purposes, like Bed sheets and Garments.

Cutting and Stitching

This is a final use of cloth in which cloth is cut and stitching is made according to local market or importer requirements.

History of the Textile industry

While farmers were developing new and better methods of agriculture, life in other areas of work had changed little for hundreds of years. Early in the 18th century, most of the population still lived in small rural settlements. Few people lived in towns, as we now know them.

Many people worked as producers of woolen and cotton cloth. They cleaned, combed, spun, dyed and wove the raw material into cloth. They did this work in their own houses.

This type of production has become known by the general term of the Domestic (or cottage) Industry.

Work within the Cottage Industry was usually divided up between the members of one family. The women and girls were responsible for cleaning the sheep fleeces, carding the wool and spinning it. The process of weaving was physically hard work and, traditionally, it was the man who was responsible for it.

Generally, at regular intervals, a cloth merchant visited each handloom weaver’s cottage.

He would bring the raw material and take away the finished cloth to sell at the cloth hall.

As soon as the new wool arrived, it was washed to clean out all the dirt and natural oil.

After this, it was dyed with color and carded. This was the process of combing the wool between two parallel pads of nails, until all the fibers were laying the same way.

Next, the carded wool was taken by the spinner and, using a spinning wheel, the thread was wound onto a bobbin. The unmarried daughters of the household who were called spinsters often performed this part of the process. The term spinster still exists in English to man an unmarried lady. The spun yarn was then taken to the loom to be woven. In a weaver’s cottage, the loom was often to be found on an upper floor. There were large windows in the room to let in plenty of daylight. The loom was worked by both hand and foot movements. Working the loom was quite strenuous work, which is why it was traditionally the work of the men of the household.

Textile Industry in Pakistan

Textile is the important sector of Pakistan’s economy. It playing the important role in economy of Pakistan and fulfilling the 65% export target.

Performance

The textile industry which is endowed with a strong base of weaving had started its journey from almost non existence in 1947 with a meager size of 3000 shuttle looms that is too in the unorganized sector with only 10 textile units. The industry has gone through a long way and now possesses the 220 units, 45000 looms in which include more or less 30000 shuttles looms. The textile industry is not only catering to the entire local requirement but sharing out 65% of the total foreign exchange earning.

Pakistan being the fifth largest cotton producing country provides a strong base for development sustenance of the textile industry. In spite of tremendous growth in all the peripheral areas of the textile industry includes cotton, ginning , spinning, processing and made up sector. This industry which is the main pillar of the economy has not attained its optimum potential so far.

Let have a look on the istalled units and looms and production.

Capacity Installed Operative

Period

Units

Looms

Looms

1994-95 55 6600 5500

1995-96 59 7080 6100

1996-97 91 10920 9128

1997-98 105 13125 11125

1998-99 115 14375 12950

1999-2000 153 19125 19556

2001-01 166 20750 19840

2001-02 157 19480 17850

Production

period grey cloth

in meters(000)

1994-95 602250

1995-96 667950

1996-97 999516

1997-98 1218187

1998-99 1428025

1999-00 2141382

2000-01 2172400

Current position of textile industry

With the exception of the period from 1958-59 to 1974-75; the textile industry could not maintain, a sustainable growth, and registered its growing rate at the nominal level in the country. In the organized sector there are 452 textile companies of which 212 are not listed and 240 textile units are listed on KSE/LSE comprising of 157 spinning units,29 and unlisted is however is around 452 approximately.

The weaving capacity of the textile industry in our country is static at 9000 shutlle looms for past many years. The capacity of conventional looms is also around 19840, which have no match with quantum jump the industry as taken in this spinning sector. Instead of going for value added products the frenzy for setting up spinning projects dictated the mind of the textile industry over the years which took the 4.1 million spindles in 1996-97 instead of going to more value added textile products like dying bleaching units in the country.

CAPACITY UTILIZATION (%)

PERIOD LOOMS

1995-96 79.50

1996-97 81.00

1997-98 82.90

1998-99 85.10

1999-00 86.20

2000-01 88.00

2001-02 90.00

EXPORTS

The textile exports projection in the trade policy 1999-00 worth 6.5 billions $, of major textile products include cotton yarn with the target of 1800 million $, grey cloths 1680 million $ , ready made garments 1050 million $, tent and canvas 55 million $, knit wear 950 million $ and made ups 965 million $.

The industry has to achieve its newly settled targets in the face of difficult trading conditions especially the disturb economies of Asian countries, threat of imposition of anti dumping duties on our gray cloths by the European union countries,(E.U. has withdraw an anti dumping duty i.e. 1.01.2002)cotton yarn of 20/s in Japan and constant decrease in imports from South Korea, all together posting an uphill task of achieving the export targets for the textile industry during the financial year. Duty drawback (rebate)is reducing from time to time and changing in sales tax refund to export oriented units, which is very poor sign for the exporter of the value added items.

PROBLEM OF TEXTILE SECTOR

The textile industry has been crisis ridden for some time because of shortage of raw material due to three successive cotton crop failures. The main problems it is facing are as under:

1) The production of lint cotton remained below the target.

2) The shortage and non-availability of the lint cotton in the domestic market has led to the price-hike in domestic market.

3) Competitor’s installation of over capacity in some production lines or closure of spinning capacity due to higher prices and short supply.

4) Docile labor-intensive technology, needed to be changed to cost efficient capital intensive.

5) Lack of institutional finance for modernization efforts.

KHOKHAR TEXTILE MILLS LIMITED

MULTAN

GROUP PROFILE

CHAIRMAN Zubair Ahmad Khokhar

MANGING DIRECTOR Dr. Khalid Ahmad Khokhar

DIRECTORS Dr. Khalid Ahmad Khokhar

Zubair Ahmad Khokhar

Mrs. Fatima Leghari

Mrs. Shahnaz Kameel

Mrs. Maheer Perwar

COMPANY SECRETARY Hussain Sajid

AUDITORS Mahboob Sheikh & Co.

Chartered Accountants

BANKERS National Bank of Pakistan

The Bank of Punjab

Union Bank Ltd.

Metropolitian Bank Limited

LEGAL ADVISOR Syed Mushtaq Ali Kazmi

Advocate

REGISTERED OFFICE 90-Qasim Road,

Multan Cantt.

MILLS Chak 565 TDA, DD Panah Road,

Chowk Serwar Shaheed

COMPANY PROFILE

Brief Profile of the Companies

The company consists of following concerns:

M/s Khokhar Textile Mills Ltd.

M/s Khokhar Cotton G/P Factory

M/s Khokhar Agri Farms

Khokhar Investments

Tallal Petroleum Services

KK Gases

The following are the main sponsors of group:

Dr. Khalid Ahmad Khokhar

Mr. Zubair Ahmad Khokhar

i) M/s Khokhar Textile Mills Ltd.

The sponsors have well reputed and experienced people of the business of textile, TPS and investment. They engaged in textile business since 1991. The textile spinning having worth of Rs. 650.0 M situated at Distt. Muzaffar Garh.

ii) M/s Khokhar Cotton G/P Factory

The ginning unit situated at Industrial Estate, Multan having net worth of Rs. 50.0 M producing 30% requirement of our spinning unit.

iii) M/s Khokhar Agri Farms

Khokhar Agri Farm consists of 850 acres having net worth of Rs. 430.0 M in which cotton, wheat and vegetables are growing and this farm also consisting of orchard of Mango and citrus etc.

iv) Khokhar Investments

The group is also engaged in the business of property and land development in Lahore and Multan. Recently they set up a residential colony namely Canal Cantt. View, which consists on 20 acres of land.

v) Tallal Petroleum Services

The petrol pump is situated on main Khanawal Multan Lahore going to Lahore. It engaged in the business of sale of petroleum product.

vi) KK Gases

The company has entered in the LPG re-filling business and in addition to this EOI for LPG extraction plant has also been submitted. We are already in process of establishing LPG re-filling station at 19A-Industrial Estate, Multan and 2 acres of land has already been purchased. This plant will fulfill the requirements of South Punjab mainly the area of Multan, D.G. Khan and Bahawalpur.

KHOKHAR TEXTILE MILLS LTD.

ORGANIZATIONAL STRUCTURE

VISION STATEMENT

The company is interested to install complete textile finishing plant including bleaching, dyeing, mercerizing, calendaring, folding, printing plant in the existing yarn units at Multan to make it a complete composite unit, which can explore local and international market of high value products. The company would keep its emphasis on product and market diversification, values addition and cost effectiveness. We want to fully equip the company to play a meaningful role on the sustainable basis in the economic development of the country.

MISSION STATEMENT

The mission of the company is to operate state of the textile plants capable of producing yarn and fabrics.

The company will conduct its operations prudently assuring customer satisfaction and will provide profits and growth to its shareholders through:

Manufacturing of yarn and fabrics as per the customer’s requirements and market demand.

Exploring the global market with special emphasis on Europe and USA.

Keeping pace with the rapidly changing technology by continuously balancing, modernization and replacement of plant and machinery.

Enhancing the profitability by improved efficiency and cost controls.

Recruiting, developing, motivating and retaining the personnel having exceptional ability and dedication by providing them good working conditions, performance based compensation, attractive benefit program and opportunity for growth.

Protecting the environment and contributing towards the economic strength of the country and function as a good corporate citizen.

KHOKHAR TEXTILE MILLS LIMITED

NOTES TO THE ACCOUNTS

FOR THE PERIOD OF MARCH 31, 2007

1. STATUS AND NATURE OF BUSINESS

M/s Khokhar Textile mills Limited was incorporated on May 30, 1990 as a public

limited company (limited by shares) under the Companies Ordinance, 1984. The

principal activity of the company is to manufacture and sale of yarn of all types.

2. SIGNIFICANT ACCOUNTING POLICIES:

The principal accounting policies which have been adopted in the preparation of

these accounts are summarised below:

2.1 ACCOUNTING CONVENTION:

These accounts have been prepared under the historical cost convention.

2.2 STAFF RETIREMENT BENEFITS

No provision is made for gratuity payable to the company’s staff on retirement

or leaving the empolyment of company. The payments, as and when, made are

charged to profit & loss account.

2.3 FOREIGN CURRENCY TRANSLATION

Assets & Liabilities in foreign currencies are converted into Pak rupee at the rate

of exchange ruling on the Balance Sheet date except those covered under the State

Bank of Pakistans. Exchange risk cover scheme which are translated at the covered

rate. Exchange gains/losses and exchange risk coverage fee on foreign currency loans

are capitalised as a part of cost of plant & machinery acquired out of the proceeds of

such loans

2.4 TANGIBLE FIXED ASSETS AND DEPRECIATION

Tangible fixed assets are stated at cost or valuation less accumulated depreciation.

Freehold land is stated at valuation. Plant and machinery is stated at valuation and

includes exchange risk coverage fee on foreign currency loans. It also includes the

amount of surplus on revluation on fixed assets.

Depreciation is charged applying the reducing balance method at the rates

specified in the operating assets note.

Depreciation on addition is charged on the basis of whole year, while no

depreciation is charged on deletion during the year.

Maintenance and normal repairs are charged to current year income as and

when incurred. Major renewals and improvements are capitalised.

Gain or loss on disposal of operating fixed assets are included in current year

income.

2.5 TAXATION

Charge for current taxation, if any, is based on taxable income at current tax

rates after considering the tax credits and rebates. Deferred tax liability, if any,

is accounted for by using the liablity method on all major timing differences to

the extent that liabliyt can be estimated for the foreseeable future.

2.6 DEFERRED COST

Deferred costs ae being charged to profit & loss account over a period of five

years.

2.7 STORES AND SPARES

There are valued at moving average cost.

2.8 STOCK-IN-TRADE

Basis of Valuation

RAW MATERIAL: -At Annual Average Cost

WORK IN PROCESS: -At Raw material and proportionate

conversion cost depending upon the

stage of completion.

FINISHED GOODS: -Lower of the Cost / Net Relisables

Value

WASTE -At Net Realisable Value (NRV)

Cost signifies in relation to finished goods the annual average cost consisting prime

cost and appropriate manufacturing overheads. Net realisable value signifies the

estimated selling price in ordinary course of business less expenses necessary to

be incurred in order to make the sale.

2.9 REVENUE RECOGNITION

-Local sales are recorded on despatch of goods.

-Export sales will be booked on shipment basis, if any.

MARCH 07 2006

Rupees Rupees

3. ISSUED, SUBSCRIBED AND PAID-UP-CAPITAL:

8,490,330 Ordinary shares of Rs. 10/- each issued

for cash. 84,903,300 84,903,300

4. SURPLUS ON REVALUATION OF FIXED ASSETS

Evaluation done by Asif Associated vide their report

dated 19.07.2004. 199,822,736 199,822,736

5. SHARE DEPOSIT MONEY (DIRETORS EQUITY) 108,070,370 100,070,370

6. LOANG TERM LOANS / B.G

Bank guarantee (NBP) (Notes 6.1.5) – 70,000,000

DF (NBP) DF I (Notes 6.1.9) 70,000,000 –

DF (NBP) DF II (Notes 6.1.8) 60,933,333 66,400,000

DF (NBP) DF III (Notes 6.1.10) 3,774,000 –

DF (BOP) (Notes 6.1.7) 30,110,000 38,000,000

164,817,333 174,400,000

LESS: Current portion shown under

current liabilities

DF (BOP & NBP) 33,580,002 11,000,000

33,580,002 11,000,000

131,237,331 163,400,000 10,999,628

6.1 F.A.F.

6.1.1 This finance was rescheduled by Habib Bank Limited by transferring the total

outstanding principal of DF-16A AND FAF-19 as at 30-06-1999. 304,846

#REF!

6.1.2 Down payment of Rs. 52.933950 (M) has been made on 31-12-1999 by equal #REF!

monthly installments commenced from 31-08-1999.

6.1.3 The debt was repayable in 146 monthly installments commencing from

31st January 2000.

6.1.4 No mark-up was charged on the debt.

73,132

6.1.5 The outstanding liability as on 31.12.03 has been resheduled by the HBL on following

terms and condition:

– Settlement amount Rs. 220.0 million

– Down payment Rs. 20.0 million (paid by the company)

– The said DF shall carry nil markup and will be repaid in six installments starting from 1st

November, 2004.

– Principal Rs. 33.800 million, un-debited markup Rs. 99.084 & Rs. 0.706 million being

rescheduling charges will be kept frozen and will be reversed/waived, subject to

regular debt servicing to the satisfaction of HBL.

– Repayments shall be guaranteed by NBP through irrevocable L/g to the satifaction

of HBL.

– All charges will be released on the submission of L/g. (All charges of HBL on fixed

assets has been vacated.

6.1.6 NBP has issued bank guarantee of Rs. 200.0 million against following securities: (14,626)

– 1st exclusive charge on the project:

– Personal guarantees of all directors

– Collateral valuing Rs. 50.00 M

– Cash margin 25%

6.1.7 BOP has sanctioned DF for Rs.38.0 M for the expansion of 4128 spindles with back process :

against following terms and conditions:

– Urban security in the name of directors

– Personal guarantees of all directors

– Repayment by 10 half yearly equal installments.

6.1.8 NBP has sanctioned DF for Rs. 66.40.0 M for the expansion of 4128 spindles with back process :

against following terms and conditions:

– 1st Charge on the Project

– Personal guarantees of all directors

– Repayment by 24 quarterly equal installments.

6.1.9 NBP has sanctioned DF I for Rs. 70.00.0 M for the debt swap of HBL which has now been fully utilized

and HBL long term loan has been cleared. Repayment will be in 6 half yearly installments.

6.1.9 NBP has sanctioned DF III for Rs. 12.00.0 M for the construction of 15 cotton godowns.

Repayment will be in 16 quarterly installments.

RUPEES RUPEES

Long Term Loans 33,580,002 11,000,000

33,580,002 11,000,000

8. SHORT TERM RUNNING FINANCE:

(61,719,822)

Cash Finance (NBP & BOP) (Note-8.1) 216,594,617 146,040,482 (61,719,822)

8.1 CASH FINANCE

8.1.1 This represents the principal amounts of cash finance. 3,499,417

654,871

8.1.2 This finance is secured by way of pledge of stocks. Raw material,

work-in-process, finished goods. This amount forms part of aggregate borrowing

limit of Rs.500.0 (M).

9. CREDITORS, ACCRUALS AND OTHER LIABILITIES 5,000

Creditors 1,989,938

-Trade 4,116,215 4,472,988

-Others 1,050,000 1,688,712 180,342

Mark-up and Others:

Accrued Expenses 21,672,800 1,787,393

Commission on Sale & Purchase 250,400 1,042,652 14,626

Income Tax 2,990,000 3,768,781

30,079,415 12,760,526

11. LONG TERM DEPOSITS

Security Deposits 1,285,065 1,285,065

1,285,065 1,285,065

12. STORES , SPARES & LOOSE TOOLS:

-Stores 8,099,000 6,090,800

-Spares 1,896,520 1,680,900

-Loose Tools 50,600 25,500

10,046,120 7,797,200

13. STOCK IN TRADE

Raw Material 310,094,900 183,702,698

Work in Process 3,187,249 3,155,054

Finished Goods 4,417,600 3,900,000

317,699,749 190,757,752

14. TRADE DEBTORS RUPEES RUPEES

Local considered good (unsecured) 3,679,700 5,699,811

15. ADVANCES, DEPOSITS AND PREPAYMENTS

Adavances:

Employees 1,285,650 1,186,987

Supplies:

-Cotton 1,050,000 2,570,600

-Goods Supply 750,400 856,900

-Commission Agents 56,500 –

3,142,550 4,614,487

Deposits:

L.C. Deposits 164,500 –

Income Tax/others – 4,156,182

164,500 4,156,182

Sales Tax Refundable 1,052,013 1,052,013

4,359,063 9,822,682

16. CASH AND BANK BALANCES

In Hand 2,830 305,060

At Banks 404,580 6,000,400

407,410 6,305,460

17. SALES RUPEES RUPEES

Local 677,685,500 682,954,682

Waste 12,632,347 14,596,955

690,317,847 697,551,637

Less: Commission (1,694,770) (1,455,305)

688,623,077 696,096,332

18. COST OF GOODS SOLD

Raw Material Consumed (Note 18.1) 476,611,345 457,588,749

Packing Material Consumed 8,439,755 6,913,859

Stores, spares Consumed 12,862,334 9,574,308

Wages, Salaries & Other Benefits 24,805,530 33,338,583

Power And Fuel 63,351,083 67,099,253

Repair And Maitenance 515,045 746,249

Insurance Expenses 2,350,360 2,145,355

Depreciation 22,543,519 29,558,026

Misc. Expenses 23,650 47,347

611,502,622 607,011,729

WORK IN PROCESS

Opening 3,155,054 1,696,362

Closing (3,187,249) (3,155,054)

(32,194) (1,458,692)

Cost Of Goods Manufactured 611,470,427 605,553,037

FINISHED GOODS

Opening Stock 3,900,000 5,200,000

Closing Stock (4,417,600) (3,900,000)

(517,600) 1,300,000

Cost Of Goods Sold 610,952,827 606,853,037

18.1 RAW MATERIAL CONSUMED

Opening Stock 183,702,698 133,203,200

Purchases 603,003,547 508,088,247

786,706,245 641,291,447

Less : Closing Stock (310,094,900) (183,702,698)

Raw Material Consumed 476,611,345 457,588,749

19. ADMINISTRATIVE & GENERAL EXPENSES RUPEES RUPEES

Director’s Remuneration 225,000 300,000

Salaries, Wages & Other Benefits 4,023,874 4,283,934

Postage & Telephone 778,399 1,193,421

Electricity Expenses 479,810 611,430

Printing & Stationery 104,379 13,690

Travelling & Conveyance 1,038,774 673,415

Rent, Rates & Taxes 45,000 100,000

Vehicles Running & Maint. 823,730 1,174,071

Legal & Professional Charges 50,000 1,500

Auditor’s Remuneration 75,000 80,000

Repair & Maintenance 274,911 53,509

Paper & Periodicals 31,998 47,205

Fee & Subscription 1,248,386 –

Entertainment 230,440 331,209

Charity & Donation 197,784 218,336

Depreciation 75,859 101,145

Miscellaneous 17,815 6,155

9,721,158 9,189,020

20. SELLING EXPENSES

Local freight, Ortri and Loading 217,050 471,047

Salaries 189,000 243,000

Advertising 30,000 33,420

436,050 747,467

21. FINANCIAL CHARGES :

Interest and Mark-up on:

-Long term Laon 16,888,104 5,607,098

-Short term running finance 27,928,274 23,372,054

-Commission on L/G 2,400,000 72,069

-Bank Charges 210,546 441,572

47,426,924 29,492,793

22. OTHER INCOME:

Profit on profit & loss sharing account 256,400 2,617,489

23. GENERAL

-Figures have been rounded off to the nearest rupee.

-Figures of the previous year have been re-arranged wherever necessary

to facilitate comparision

24. PLANT CAPACITY AND ACTUAL PRODUCTION March, 2007 2,006

Number of spindles installed 31,296 31,296

Average No. of spindles worked 31,296 31,296

Number of shifts worked per day 3 3

Capacity of yarn 20/s count Kgs. 10,061,320 10,061,320

Actual production converted into 20/s count Kgs. 9,582,209 9,582,209

25. FIGURES

– have been rounded off to the nearest rupee.

– of prior year have been rearranged wherever necessary for the purpose of

comparision.