INTERNSHIP REPORT

SUZUKI ISLAMABAD MOTORS, I-9, ISLAMABAD

Mohammad Farhan Akram

Submitted in Partial fulfillment of the requirements

For the degree of Masters of Business Administration

At

National University of Modern Languages

Islamabad, Pakistan
August, 2010

Copyright by Mohammad Farhan Akram, 2010

1
 NATIONAL UNIVERSITY OF MODERN LANGUAGES,
ISLAMABAD
Faculty of Management Sciences

DECLARATION

It is hereby certifies that the report has been thoroughly and carefully read and
recommended to the Faculty of Management Sciences for acceptance of Final Internship
Report by Mohammad Farhan Akram, 9559, session August 2008-May 2010 Morning, in
partial fulfillment of the requirements for the degree of Masters of Business
Administration of National University of Modern Languages Islamabad.

Dated:

Supervisor Name: _______________________

Supervisor Signature: _______________________

Panel Member Name: _______________________

Panel Member Signature: _______________________

Head of Department: ______________________

2
 ACKNOLEDGEMENT

All praises for Allah Almighty, the most Merciful, Who guides me in lacerate and

congenial circumstances, without His help one cannot reach at his destination.

My sincere gratitude to Mr. Nayyer Iftikhar (Managing Director, Suzuki Islamabad

Motors) who provided me with the opportunity to work with the company for a period of

eight weeks as an internee.

Then I would like to thank Mr. Faid Gul, Mr. Adnan Satti, Mr. Abdur Rehman (NUML,

Islamabad) they guided me at every step and provided me with their valuable advice

whenever I needed that I am very grateful for their encouragement, which enabled me to

write this report.

In the end I would like to thank all the staff members of Suzuki Islamabad Motors. They

have provided me with valuable information which helped me a lot in the completion of

this report.

Thank You to all.

3
 EXECUTIVE SUMMARY

Internship is like “The First Flight” for a young business graduate who is to enter his

professional life very soon. It provides a gateway to youngsters and an insight of

corporate world.

The main objective of the internship is to analyze that how the theoretical framework

differs from practical realities. Its main scope is that we get through the detailed study of

Suzuki motors.

The analysis is done about the performance of the Suzuki motors and its departments.

The report begins with the introduction of the automobile industry in Pakistan and its

main contributors. Heading forward specifically to the Suzuki motors who owns the

major share of the Pakistan’s automobile industry, the detailed explanation is given about

its products and services. More detailed analysis is done through financial analysis

statement and its performance is analyzed on the financial side that how company is

incurring profits and what is its financial position in the market.

Last but not the least internship experience is being explained with the description of

activities performed, problem faced by the company and recommendations are given to

improve its status.

The conclusion is drawn that Suzuki motors are working efficiently but they have to

arrange training sessions for their employees, reward system should be introduced in

order to increase the employee satisfaction and loyalty to the organization and also an up

gradation of computer systems are required in this way they can excel more in the market

4
 TABLE OF CONTENTS

Ch No: CHAPTERS Page #

01 INDUSTRY 06
Industry Introduction 07
Beginning of Pakistan Automobile Industry 08
Present Situation of Pakistan Automobile Industry 09
Pak Suzuki Motor Company Limited 10
Islamabad Auto Industry 12
Competitors in Automobile Industry 12
Future Outlook of Industry 15

02
SUZUKI ISLAMABAD MOTORS 17
Company’s Introduction 18
Vision Statement 19
Mission Statement 19
Organizational Structure 20
Organizational Departments 21
Products 23
Services 28
Suzuki Islamabad Motors Competitors 29

03 FINANCIAL SECTION 30
3 Year Income Statement 31
3 Year Balance Sheet 32
Financial Ratios Analysis 33
Vertical Analysis 41
Horizontal Analysis 44
Swot Analysis 46

04 INTERNSHIP EXPERIENCES 48
Duties and Responsibilities 49
Major Responsibilities in Accounts Department 50
Skills Gained 52
Challenges 55
Problems 56
Conclusion 59
Recommendations 60
References 63

5
 CHAPTER 1

INDUSTRY
INTRODUCTION

6
 INDUSTRY INTRODUCTION:

The automotive industry rightly prides itself on being recognized as the “mother of all

industries.” In its folds it carries many different kinds of vehicles to provide mobility to

people and goods. While they may appear to be simple machines, their design and

manufacturing have much deeper roots in all the known technologies. In-depth

knowledge and skillful application of mechanical, electrical, electronics, chemical and a

host of other technologies culminate in achievement and improvement of the

manufacturing base of a country, by focusing on a single product the automobile. This

then provides an opportunity to produce a large number of goods and services for

consumption of the entire community. Use of the word “mother” for automotive industry

is therefore the most appropriate description to define the nature and importance of the

industry.

In recent years, we have witnessed that the industrialization of South East Asian countries

greatly depend on the development of their automotive industry. Similarly, automotive

industry acted as a catalyst in the overall growth of the industry in Japan and Korea and

the consequent well being of their citizens.

In the world trade, Auto Sector is one of the largest segments. It is the major driver of

economic growth and business activities. It puts multiplier impacts on the economy. Day-

7
in, day-out around 200,000 vehicles roll off the world’s assembly lines with car as the

dominant segment of the industry.

THE BEGINNING OF THE PAKISTAN AUTOMOBILE INDUSTRY:

Pakistan is basically an agrarian economy since its independence. In 1947, agriculture

contributed more than 62% towards GDP whereas contribution of manufacturing sector

toward GDP was only 7%. Pakistan inherited only 5% of the large scale industrial

facilities of British India.

First serious effort by government to develop the industry and engineering sector in

particularly was observed in 1950 when a six-year plan (First Development Plan) was

drafted to guide government investment in developing the infrastructure for auto industry,

to overcome the initial difficulties, the government, besides developing infrastructural

facilities established the Pakistan Industrial Development Corporation (PIDC) in 1950.

The main objective of PIDC was to play the pioneering role of establishing such

industries which the private enterprise was unable to undertake either because they were

technologically complex, needed large capital or were less profitable. These steps results

in growth of the industrial sector resulting 56.62 % growth of the manufacturing sector

from 1949-1955. Investment in the automobile industry in Pakistan started in the mid-50

when Kandawalla Industries established its units for assembling buses and trucks, the

company's name was later changed to Naya Daur Motors.

8
National Motors took the indigenization when it came out in the 60's and was said to

have reached above 80% deletion of the Bedford lorries and trucks before it closed down.

Kandawalla Motors on its part came up with ‘Nishan’, a jeep copied on the pattern of

Willeys Jeep of USA by the Pakistan Army, it was said that the project was successful

but was killed before the commercial production could begin.

PRESENT SITUATION OF AUTOMOBILE INDUSTRY IN

PAKISTAN

It is indeed heartening that the mother has once again smiled at Pakistan. Fortunately the

last 3 years have witnessed phenomenal growth in the industry in terms of technological

advancements and production/sales volumes with the local contents rising as high as

90%. The industry is already employing 120,000 people, contributing more than 12

billion Rupees to GDP, contributing more than Rs. 30 billion to the national exchequer in

terms of duties and taxes, attracted investment worth Rs. 52 billion including a

substantial foreign investment.

Today the customers have choice to pick from a wide range of products including

motorcycles, trucks, buses and cars of premier Japanese and Korean brands at

internationally competitive prices which has only become possible due to local contents

and availability of highly productive and inexpensive human resources. In Pakistan the

automobile components manufacturing industry consists of mainly units producing

9
original components for assembly and units produce reconditioned and original

components for local use.

There are more than 800 vendors in the country with a total investment of over eight

billion rupees; they are engaged in the manufacturing of original components for the

assembly operation as well as producing reconditioned and original components for sale

in the local market.

They manufacture and supply the local car assemblers with auto parts such as pistons,

engine valves, gaskets, camshafts, shock-absorbers, struts, steering mechanism, cylinder

head, wheel hubs, brake drums, wheels, bumpers, instruments and instrument panels,

gears of all types, radiators, cylinder liners, blinkers, lights, doors and door locks as well

as auto air conditioners.

PAK SUZUKI MOTOR COMPANY LIMITED-PSMC

In Year 2009 the demand for automobile was sluggish .The industry for cars and light

commercial vehicles experienced 29% decline in the sales volume. The industry sold

107,768 units during the year against 151,517 units last year. The demand has depressed

during the year due to cost push inflation resulting from depreciation of Pak rupee,

limited financing by banks/leasing companies and general economics recession. Suzuki

product remain popular .Despite sluggish market demand for automobile, Pak Suzuki

remain market leader with 48% market share. The company launched new 1300cc car

(SWIFT) in January 2010. This has been well accepted by the customers. Imported used

10
cars do not really pose any threats to Suzuki products. Availability of spare parts at

economics prices and reliable after sales service are the strength of Suzuki products. The

export of Suzuki Ravi pickup to Bangladesh and exports of sheet metal parts of Suzuki

Cultus to Europe going well.

Revenues

450000000

400000000

350000000

300000000

250000000
Revenues
200000000

150000000
100000000

50000000

0
1 2 3 4

As we can see in the chart above the year 2009 revenues decreased like 20 % of the

previous years but the projected revenue of the year 2010 in exceeding all previous years.

Despite of the sluggish demand the projected revenues of the company depict the high

hopes of the management.

The Pak Suzuki Motors Company’s major revenues are collective from the Authorized

dealerships across the country. So if the PSMC (Pak Suzuki Motors Company Limited)

continues to meet the customer’s requirements it will also enable the dealerships to work

in profitability because the dealership’s profitability (Suzuki Islamabad Motors, I-9

Islamabad) is directly related with the production of PSMC (Pak Suzuki Motors

Company Limited) as per customer and societal demands.

11
 ISLAMABAD AUTO INDUSTRY:

Islamabad the capital of Pakistan has millions of auto vehicles running on its roads each

day and night. For meeting the requirements of people of Pakistan, the major players of

the Pakistani Automobile Industry (Suzuki, Toyota, Nissan, Mitsubishi, and Daihatsu etc)

have developed and established their dealerships with the local businessmen. The

industry has provided the showrooms with their vehicles in various sectors of Islamabad.

Most of them are located in the Industrial Area of Sector I-9, Islamabad.

As Islamabad is considered to be a city of rich people so the industry players are putting

their special efforts on the availability of their vehicles to the customers. They also

interact with their customers through their authorized dealerships located at various

places in the city.

COMPETITIORS IN AUTOMOBILE INDUSTRY

The Automobile industry has been an active and growing field in Pakistan for a long

time, however not as much established to figure in the prominent list of the top

automotive industries. Despite significant production volumes, transfer or technology

remains low. Most cars in the country have dual fuel options and run on CNG

(Compressed Natural Gas) which is more affordable than petrol in the country.

12
There are only three major passenger car assemblers in the market; Pak Suzuki Motor

Company, Indus Motors and Atlas Honda. Paksuzuki has an almost complete monopoly

in the small car segment as it faces almost no competition other than the single odd

Daihatsu Cuore produced by Indus Motors. In the Subcompact Sedan segment Toyota

Corolla, Honda Civic, Honda City, and the Nissan Sunny are currently the only cars in

production. There are still no locally made SUV (Support Utility Vehicle) , Mid or Full

sized sedans available.

As of 2010, Pakistan has not adopted any automotive emission or safety standards.

Therefore, most cars manufactured and sold in the country are still carburettor based and

do not meet any international emission standards. Many locally made cars such as Suzuki

Mehran, Suzuki Cultus, Suzuki Ravi, Suzuki Bolan, Daihatsu Cuore, etc are globally

obsolete cars from the 1970s or 1980s which are no longer produced or sold in any

country other than Pakistan.

List of currently assembled passenger vehicles:-

1. Suzuki Mehran

2. Suzuki Alto

3. Suzuki Cultus

4. Suzuki Ravi

5. Suzuki Bolan

13
6. Suzuki Liana

7. Toyota Corolla

8. Honda Civic

9. Honda City

10. Nissan Sunny

11. Daihatsu Cuore

AUTOMOBILE ASSEMBLERS IN PAKISTAN

The following are the automobile assemblers in Pakistan

• Adam Motors

• Al-Ghazi Tractors

• Atlas Honda

• Audi

• Dewan Farooque Motors (including BMW Pakistan)

• Dongfeng Motor Corporation

• Ghani Automobile Industries

• Ghandhara Industries

• Ghandhara Nissan

• Hinopak Motors

• Hyundai Motors

14
 • Indus Motors Company

• Master Motors

• Millat Tractors

• Pak Suzuki

• Sigma Motors

• S.N. Kawasaki

• Volvo Pakistan Limited (VPL Limited)

• TCM Automobiles

FUTURE OUTLOOK AUTOMOBILE INDUSTRY IN PAKISTAN

The Automobile industry has been an active and growing field in Pakistan for a long

time, however not as much established to figure in the prominent list of the top

automotive industries.

Surprisingly, despite its large size in terms of production volume, only a few car models

are assembled in the country and customers have a very small variety of vehicles to

choose from. The lack of competition in the auto industry due to the dominance of a few

players, and restrictions on imports in the form of heavy duties has resulted in very high

prices of Cars in the country.

Most cars in the country have dual fuel options and run on CNG (Compressed Natural

Gas) which is more affordable than petrol in the country. Despite deteriorating air quality

in various Pakistani cities reaching dangerous levels, Most cars produced in Pakistan still

utilize decades old carburetor based engines which have been phased out the world over

15
for quite some time. While the world is now focusing on implementing Euro V emission

standards, Pakistan has failed to adopt even Euro II emission standards as of December

2009. It has missed the earlier deadline, which was July 1, 2008 for Euro-II compliance

in the case of petrol and a new deadline was set on July 1, 2009, which has yet been

missed again.

But on the other hand Pakistan has the right target market and potential to match new

product development, innovation and global strategies of the world automakers for Asian

markets. The need in Pakistan is to take a positive step towards creating a long-term

industry friendly policy to encourage local production. Joint ventures are taking place

between Pakistani, Korean and Singaporean companies to undertake urban planning and

handle traffic problems. The government approach in the construction of a network of

highways will provide an impetus to local production.

16
CHAPTER 2

17
 SUZUKI

MOTORS

ISLAMABAD

COMPANY’S INTRODUCTION:

Suzuki Islamabad Motors, which is located in I-9 Industrial Area of Islamabad, is the

authorized dealer of Pakistan Suzuki Motor Company owned by Mr.Iftikhar Nayyer and

his son Mr. Nayyer Iftikhar who is a well known business man of a the city Islamabad.

Mr. Nayyer Iftikhar is working on the post of Managing Director (M.D.) for the company

and his father Mr Iftikhar Nayyer owns the post of Chairman of the Suzuki Islamabad

18
Motors. The dealership was acquired from Pakistan Suzuki Motors in year 2006 and from

that year the business is running successfully and providing the products of PSMC (Pak

Suzuki Motors Company Limited) to its customers here in the region of Islamabad.

MAP:

VISION STATEMENT
“To be excellent all around”

MISSION STATEMENT
19
 “To provide our principal’s products to their customers in
Islamabad region, and act as an efficient agent between the industry
and the ultimate consumer.”

ORGANIZATIONAL STRUCTURE

20
 The Chairman

Managing Director

Finance Service Sales and Marketing Body Shop

Finance Body Shop

Service Manager Sales Manager
Manager Manager

SUPPORTING STAFF

The flow of information starts from The Chairman Mr. Iftikhar Nayyer which then

reaches The Manager Director Mr. Nayyer Iftikhar. The Managing Director of the

controls the company as a head of all 4 departments of the organization. The information

then floats down to the concerned departments i.e., Finance, Service, Sales and Body

Shop.

ORGANIZATIONAL DEPARTMENTS:

21
FINANCE DEPARTMENT:

The Finance Department is headed by Mr. Nayyer Iftikhar who is holding dual position

in the organization i.e., The Managing Director and the head of Finance Department. He

looks after the financial matters of the company as the head of finance and looks after the

smooth running of the business as the Managing Director. His supporting staff in finance

department includes Mr. Mohammad Khan & Ms. Beenish. The head of Finance

department reports to the Chairman.

SERVICE DEPARTMENT:

The service department is managed by Mr. Basharat Hussain. He is working with the

organization for more than 2 years now. Service department of the organization includes

all the maintenance services that are being provided to the customers. The supporting

staff of the Mr. Basharat Hussain includes a foreman, service advisor, warranty advisor

and labors. The Service Manager, reports to the Managing Director.

SALES & MARKETING DEPARTMENT:

Sales & Marketing department of the organization is headed by Mr. Kazafi. His service

for the organization comprises of 4 years. The supporting staff includes Mr. Tayyab

Abbasi, Mr. Junaid Zia & Ms. Sumera Sarwar. This department is responsible for

developing the business and increasing the sales of the organization. The department has

also hired agents to work on behalf as B.D.O. (Business Development Officer).

22
BODY SHOP:

The body shop department is headed by Mr. Rameez Khan. His service for the

organization comprises of 3 and a half years. The major responsibility of this department

is to provide body parts installation and delivery of the vehicle to the customers. This

department comprises of a foreman and various laboring individuals.

23
 PRODUCTS

Suzuki Islamabad Motors sales following vehicle products of Paksuzuki Motor Company

Limited-PSMC:

Swift (1300cc)
Price: Rs. 1,049,000/-

The European inspired exterior gives

Swift a distinctive look. A unique
stylish and design that turns a head
where you go. The spirited engine makes
for exhilarating drive and gives you
ultimate freedom where the road takes you.
Colors: Pearl Red, Graphite Grey, Solid
white,
Indigo, Silky Silver, Aqua Blue, Eminent
Blue
Liana (1300 &1600cc)
Price: Rs. 1,230,000/-

The Suzuki Liana available in 1300 cc

manual transmission and 1600cc automatic
transmission
takes you out of ordinary and into the
realm. Liana is entirely different car, its
style; dimension and comfort will inspire
you to see every day as an open door to a
new age.

24
Cultus (1000cc)
Price: Rs. 897,000/-

Cultus is the blend of space and craft.

Its trim body Conceals ample space &
flexblity for both passenger and storage.
Cultus ensures everyone, exceptional
Value and quality.

Colors: Pearl Red, Graphite Grey, Solid white,

Indigo, Silky Silver, Aqua Blue, Eminent Blue
Mehran (800cc)
Price: Rs. 514,000

Unrivalled in its class, Mehran is Pakistan’s

largest selling car. More smart features like
head turning lamp, matching front grill and a
two spoke steering wheel gives it the tidy look.
Functional economy, peak performance or
unmatched fuel efficiency, Mehran VXR is the
leader.
Colors: Pearl Red, Graphite Grey, Solid white,
Silky Silver, Eminent Blue

25
APV (1500cc)
Price: Rs. 1,775,000
APV 1500 cc (Imported) The New APV gives
you everything you ever wanted in your
vehicle. Spacious interior for comfort, tough
engine to carry large loads and plenty of room
for passengers to enjoy a comfortable day long
ride.
Colors: Pearl Red, Graphite Grey, Solid white,
Indigo, Silky Silver, Aqua Blue, Eminent Blue

Bolan Van
Price: Rs. 609,000
The Suzuki Bolan Hi-roof gives you
everything
you ever wanted in a van. Spacious interior for
comfort, tough engine to carry large loads and
plenty of room for passengers to enjoy a
comfort
-able day long ride. Air-conditioned model

26
Ravi (800cc)
Price: Rs. 489,000
RAVI Pick Up 800cc Suzuki Ravi is the
veritable cargo vehicle with an amazing
capacity for load bearing and durability.
Undoubtedly, the unrivalled commercial
vehicle in its class, Ravi is the bread winner
for millions in Pakistan. This light
commercial vehicle referred to as the mini
revolution, replaced the animal-drawn
vehicles in Pakistan.
Colors: Pearl Red, Solid white, Silky Silver
Jimmy (1300cc)
Price: Rs. 1,850,000

Jimmy 4x4 Jeep 1300cc imported steady,

sturdy and smart with new white tread brings

you the ultimate pleasure of a real 4-wheel

drive.
Alto 1000 cc
Price: Rs. 680,000 /-

Smooth-riding comfort. Functional and easy

to use. Sharp looks. Offering maximum

efficiency and powered by a 1.0-litre engine

delivering peppy acceleration and responsive

performance, the Alto fully responds to

today’s driving needs in smart and stylish

fashion. An exciting set of new features now

make the Alto even more stylish, more

27
convenient and more comfortable.

LUBRICANTS

Shell Automobile Lubricant:

Price Ranging from: Rs. 600 - 3000

Caltex Automobile Lubricant:

Price Ranging from: Rs. 800 - 3000

PSO Auto Lubricants:

Price Ranging from: Rs. 600 – 5000

Attock Petroleum Auto Lubricants:

Price Ranging from: Rs. 800 – 4000

28
 SERVICES

Denting

Painting

Maintenance

SUZUKI MOTOR’S ISLAMABAD COMPETITORS

29
SUZUKI FEDERAL MOTORS:

Plot No. 8-Khayaban-e-Suharwardhy, Sector G-6-1/1, Islamabad.

SUZUKI AZIM MOTORS:

94-B, Street No. 7, I-10/3, Islamabad

30
 CHAPTER 3

FINANCIAL

SECTION

3 YEAR INCOME STATEMENT

ITEM 2008 2009 2010

REVENUE: Rs. Rs. Rs.

31
Commission from sale 8,850,000 5,500,000 7,575,340
From Labor Services 4,880,000 4,220,000 5,360,222
From Lubricants 1,050,000 770,650 1,185,967
From Used Cars 7,470,000 6,885,357 5,540,657
Total Revenue 22,250,000 17,376,007 19,662,186
Less: Cost of Sales 12,390,000 9,350,000 10,520,666
Gross Profit 9,860,000 8,026,007 9,141,520
Less:
Salaries 1,112,000 1,210,000 1,150,000
Admin Expenses 550,320 520,900 510,963
General Expenses 532,491 490,556 390,365
Freight Expense 1,536,689 1,480,058 1,658,657
Depreciation 322,000 322,000 306,640
Utilities 804,000 915,430 1,005,562
Total Expenses: 3,857,500 4,938,944 5,022,187
EBT 6,002,500 3,087,063 4,119,333
Less: Taxes @ 35 % 2,100,875 1,080,472 1,441,766
Net Profit 3,901,625 2,006,591 2,677,567

3 YEAR BALANCE SHEET OF THE

COMPANY:

32
 ITEM 2008 2009 2010
ASSETS: Rs. Rs. Rs.

CURRENT ASSETS:
Cash/Bank 5,000,000 6,500,000 5,200,000
Accounts Receivable 2,500,000 2,153,000 2,300,000
Prepaid Expenses 500,000 350,000 375,000
Automobiles 14,000,000 9,000,000 18,450,000
Inventory ___180,000 ___380,000 ___420,000
Current Assets 22,180,000 18,383,000 26,745,000

FIXED ASSETS:
Land 8,000,000 8,000,000 8,000,000
Building (Less: Depreciation) 4,885,000 4,770,000 4,655,000
Furniture Fixtures &
Computers (Less: 685,000 670,000 655,000
Depreciation)
Tools and Equipment _2,400,000 _2,208,000 _2,031,360
Fixed Assets 15,970,000 15,648,000 15,341,360
TOTAL ASSETS 38,150,000 34,031,000 42,086,360
LIABILITIES:

CURRENT LIABILITES:
Notes Payable 7,000,000 5,900,000 6,350,000
Accounts Payable 4,500,000 3,200,000 3,800,000
Other short term liabilities 12,500,000 11,000,000 _3,000,000
Current Liability 24,000,000 20,100,000 23,150,000

CAPITAL:
Owner’s Equity 10,248,375 11,924,409 16,268,793
Add: Retained Earnings 3,901,625 2,006,591 _2,677,567
14,150,000 13,931,000 18,936,360
TOTAL LIABILITIES 38,150,000 34,031,000 42,086,360

FINANCIAL RATIOS & TREND ANALYSIS:

33
 LIQUIDITY RATIOS

CURRENT RATIO:

Current Assets / Current Liabilities

YEAR RATIO
2008 0.92
2009 0.91
2010 1.15

Current Ratio

1.4

1.2

0.8
Ratio

Series1
0.6

0.4

0.2

0
1 2 3

Year

INTERPRETATION:

An indication of a company's ability to meet short-term debt obligations; the higher the

ratio, the more liquid the company is. Here in Year 2008 the ratio was 0.92 : 1 which

means the company has Rs. 0.92 to pay off their short term liabilities of Rs. 1. In year

2009 it reduced 0.1 but in year 2010 it increased to 1.15, this means the company has Rs.

1.15 assets to pay off their short term liabilities of Rs. 1

QUICK RATIO:

Quick Assets / Current Liabilities

YEAR RATIO
2008 0.89

34
 2009 0.87
2010 1.12

Quick Ration

1.2

0.8
io
t 0.6
a Serie s1
R
0.4

0.2
ACKNOWLEDGEMENT
0
1 2 3
Year

Quick Assets = Current Assets – (Inventory + Prepaid Expenses)

INTERPRETATION:

The Quick Assets are those which can be converted into cash with in the period of 90

days. This ratio also means that the company has quick assets in order to pay off their

liabilities. The situation here is the same, in the first two years i.e., 2008 and 2009 the

company has Rs. 0.89 and 0.87 quick assets to pay off their short term liabilities but in

year 2010 the ratio increased to 1.12 means now the company has Rs. 1.12 quick assets to

pay off their short term liabilities of Rs. 1

PROFITABILITY RATIO

NET PROFIT MARGIN:

Net Profit / Sales*100

35
 YEAR RATIO
2008 17 %
2009 11.54 %
2010 13.61 %

Ne t P rofit Margin

18
16
14
e 12
g
ta 10
n Series1
e
c
r 8
e
P 6
4
2
0
1 2 3
Year

INTERPRETATION:

Net Profit Margin Ratio tells us about the percentage of Net Profit in the amount of Sales.

In this case in year 2008 the N.P Margin was 17 % that means it was the percentage of

Net Profit in the amount of Sale. In the next year it reduced to 11.54 % and in third year it

went to 13.61 %

GROSS PROFIT MARGIN:

Gross Profit / Sales * 100

36
 YEAR RATIO
2008 44.31 %
2009 46.19 %
2010 46.58 %

Gross Profit Margin

47
46.5
46
e
g45.5
a
t
n 45 Series1
e
c
re
P44.5
44
43.5
43
1 2 3
Year

INTERPRETATION:

Gross Profit Margin Ratio tells us about the percentage of Gross Profit in amount of

Sales. In this case in year 2008 the G.P Margin was 44.31 % that means it was the

percentage of Gross Profit in the amount of Revenue. In the next year it increased to

46.19 % and in year 2010 it goes 3 year high at 46.58 %.

ACTIVITY ANALYSIS RATIOS:

ASSETS TURNOVER RATIO:

Sales / Total Assets

37
 YEAR RATIO
2008 0.58 times
2009 0.51 Times
2010 0.46 Times

Assets Turnover Ratio

0.7

0.6

0.5

io 0.4
t Serie s1
a
R 0.3

0.2

0.1

0
1 2 3
Year

INTERPRETATION:

The asset turnover ratio calculates the total revenue for every dollar of assets a company

owns. Here in this case, in year 2008 the ratio was 0.58 : 1 which means that by utilizing

Rs. 1 Assets the company generates Rs. 0.58 in year 2009 it reduced to Rs. 0.51 and in

year 2010 it reduced to Rs. 0.46

ACCOUNTS RECEIVABLE TURNOVER:

Sales / Av. Accounts Receivable

38
 YEAR RATIO
2009 7 Times
2010 8 Times

Ac counts Receiva ble Turnover

8.5

8
o
ti Series1
a
R 7.5

6.5
1 2
Year

INTERPRETATION:

By maintaining accounts receivable, firms are indirectly extending interest-free loans to

their clients. This is the ratio of the number of times that accounts receivable amount is

collected throughout the year. A high accounts receivable turnover ratio indicates a tight

credit policy. A low or declining accounts receivable turnover ratio indicates a collection

problem, part of which may be due to bad debts. Here in this case, in year 2009 the

accounts receivable were collected 7 times and in year 2010 the company collected them

8 times

RETURN ON ASSETS:

Net income / Sales x Sales / Average Total Assets

YEAR RATIO

39
 2009 5.5 %
2010 7%

Return on Assets (R.O.A)

8
7
6
5
ti
a4 Series1
R
3
2
1
0
1 2
Year

INTERPRETATION:

An indicator of how profitable a company is relative to its total assets. ROA gives an

idea as to how efficient management is at using its assets to generate earnings. So in year

2009 the return on the assets were 5.5 % and in year 2010 it increase to 7%

RATIO ANALYSIS:

40
 RATIO 2007 2008 2009
Current Ratio 0.92 0.91 1.15
Quick Ratio 0.89 0.87 1.12
N.P Margin 17% 11.54% 13.61%
G.P Margin 44.31% 46.19% 46.58%
Assets T/O 0.58 0.51 0.46
A/R T/O - 7 8
R.O.A - 5.5% 7%

VERTICAL ANALYSIS

Vertical analysis is the procedure of preparing and presenting common size

statements. Common size statement is one that shows the items appearing on it in

percentage form.

INCOME STATEMENT

ITEM 2008 2009 2010

Net Revenue 100 % 100 % 100 %

41
Cost of Sales 55.68 53.81 53.51
Gross Profit 44.32 46.19 46.49
Salaries 5 6.96 5.85
Admin Expenses 2.47 3.00 2.60
General Expenses 2.39 2.82 1.99
Freight Expense 6.9 8.52 8.44
Depreciation 1.44 1.85 1.56
Utilities 3.61 5.27 5.11
EBT 27 17.77 25.54
Taxes 9.44 6.22 7.33
Net Profit 17.53 11.55 13.62

An application of the vertical analysis idea is to place all items on the income statement

in percentage form in terms of sales. Here we can see that the revenue is kept 100 % in all

three years and the percentages of various other items are determined in respect of total

revenue. If we see the item Cost of Sales in all three years, in year 2008 it was 55.68 %

of sales, in year 2009 it reduced to 53.81% of Revenue and in slightly moved down in

year 2010 to 53.51% of sales of the respective years. If we take Gross Profit in year 2008,

2009 and in year 2010 it was 44.32%, 46.19% and 46.49% of Revenue. By subtracting all

the operating expenses we come to net profit in year 2008, 2009 and in year 2010 the net

profit was 17.53%, 11.55% and 13.62 % of Net Revenue

BALANCE SHEET

One application of the vertical analysis idea is to state the separate assets of a company as

percentages of total sales.

ITEM 2008 2009 2010

Current Assets 58.14 54.01 63.54
Non Current Assets 41.86 45.99 36.46
Total Assets 100 % 100 % 100 %

42
Current Liability 62.90 59.06 55.00
Owner’s Equity 26.86 35.04 38.65
Retained Earnings 10.24 5.90 6.35
Total Liabilities 100% 100% 100%

While working in Balance Sheet with Vertical Analysis we keep Total Assets and Total

Liabilities as 100 % and we take out the relative importance of the Current and Non

Current Assets in the company financial statements.

YEAR 2008:

In this year the current assets were 58.14 % of Total Assets where as the Non Current

Assets of the company were 41.86 % of Total Assets i.e., 100 % The Current Liabilities

Owner Equity and Retained Earning were 62.90 %, 26.86% and 10.24% of Total

Liabilities.

YEAR 2009:

In this year the current assets reduced to 54.01% as compared to Year 2008, Non current

assets increased to 45.99 % as compared to Year 2008. And in year 2009 Current assets

and Non Current assets were 54.01% and 45.99 %. Current Liability also decreased to

59.06 as compared to year 2008. Owner’s equity increased and retained earning were

reduced as it was mentioned in the introduction that in year 2009 the automobile industry

faced some depression hence it reduced the company’s retained earnings.

43
YEAR 2010:

In this year we can witness the increasing of Current Assets as compared to previous year

and reduction of Non Current Assets. Current Liability also decreased and a slight

increase in the owner’s equity and increase in the retained earning can be seen as the

demand for the cars in year 2010 increased.

HORIZONTAL ANALYSIS

Comparison of two or more year's financial data is known as horizontal analysis. In this

analysis we keep one year as base and we examine the changed of the respective items in

the next years.

ITEM 2008 2009 2010

Net Revenue 100 % (0.22) (0.12)
Cost of Sales 100 (0.25) (0.15)
Gross Profit 100 (0.19) (0.07)
Salaries 100 0.09 0.03
Admin Expenses 100 (0.05) (0.07)

44
General Expenses 100 (0.08) (0.27)
Freight Expense 100 (0.04) 0.08
Depreciation 100 0.00 (0.05)
Utilities 100 0.14 0.25
EBT 100 (0.49) (0.31)
Taxes 100 (0.49) (0.31)
Net Profit 100 (0.49) (0.31)

In this analysis year 2008 is being kept as base and we see the relative changed in the

next years by keeping it a base. If we assume that the revenue of the year 2008 is 100 %

in year 2009 it reduced by -0.22 % and in year 2010 the reduction of Net Revenue as

compared to year 2008 is by -12% and same goes for the rest of the items.

BALANCE SHEET

ITEM 2008 2009 2010

Current Assets 100 % (0.17) 0.21
Non Current Assets 100 (0.02) (0.04)
Total Assets 100 (0.11) 0.10
Current Liability 100 (0.16) (0.04)
Owner’s Equity 100 0.16 0.59
Retained Earnings 100 (0.49) (0.31)
Total Liabilities 100 (0.11) 0.10

45
Same concept is being followed here in Balance Sheet, 2008 year was kept as base year

and the relative changes are being observed from here. For instance, Current assets were

100 % in year 2008 the reduction in year 2009 was by 17 % and in year 2010 the increase

was by 0.21 % of the base year amount and same goes for rest of the items.

SWOT ANALYSIS

46
 STRENGTHS:

Suzuki motors have following strengths over other companies of same industry.

 Highest Market Share

 Low Price Vehicles

 Highly Innovative and deep product link

 Well Managed and highly competitive staff

 Easy availability of spare parts

 Public demand for Suzuki cars.

WEAKNESSES:

47
  Increasing Accounts Receivable

 Lack of training of employees

 Reflect economic crises

OPPORTUNITIES:

 Increasing Demand for Cars

 Provision of cheap services

 Opportunity to improve skills

THREATS:

• Uncertain economic competition.

• Political instability.

• Increase in cost expenditure of car assembling and making

• Growing global technological advancement.

• Change in preferences of customers.

Suzuki motors can overcome these threats by:

1. Create awareness in the target market with cost effective media promotions.

2. Delivering benefits better than any actual or potential customer.

48
 CHAPTER 4

INTERNSHIP
EXPERIENCES

49
I started working in Suzuki Islamabad Motors on 1st June, 2010 on the post of Internee

Officer for the period of 8 weeks internship for the completion of my Masters of

Business Administration’s degree. Mr. Nayyer, Managing Director of the organization

conducted my interview on the day prior to my appointment as the Internee Officer and

as per my previous work experience and degree field I was posted in the Accounts

Department of the organization.

DUTIES AND RESPONSIBILITIES

ACCOUNTS DEPARTMENT:

I joined the Accounts section of the organization on 1 st June, 2009 and worked under

supervision of Finance Head Mr. Nayyer and in collaboration with Mr. Mohammad Khan

& Ms. Beenish for the period of 8 weeks. I was responsible of recording the accounting

entries directly into the software, their posting into the ledger accounts, extracting trial

balance and making financial reports. I have worked on the accounting cycle which is

very beautifully explained in the following diagram:

50
For the purpose of completing the accounting cycle, Suzuki Islamabad uses computing

software which is named as “Sun Solaris Accounting System” in which all the accounting

functions are built-in.

MAJOR DUTIES IN ACCOUNTS DEPARTMENT:

1. Revenues when received in form cash or in cheque they are transferred into

separate collection account. All these amounts get credited in the system

automatically. For collection company uses 45813 code number, which gets

transferred into the Ledger Accounts automatically. Revenue is the main head

which comprises of many other revenue accounts like Commission from Sale of

Cars, Labor Charges, Revenues from Sale of Lubricants, Revenues from sale of

used cars etc. All of these accounts have their own sub-codes. Revenues are

recorded in their respective codes.

2. Expenses paid through cash or cheques are posted to the main head of expense

account i.e., General Disbursement Account code-45814. Which is comprised of

sub-account with their codes Sub-accounts are like Salaries, Commission, Admin

Expenses, General Expenses, Freight Expense, Depreciation & Utilities Expenses

etc Expenses are charged to their respective codes.

3. Petty cash is also maintained in the accounts section by the system. For this

purpose invoices are attached with the petty cash voucher having details of the

51
 expense along with the details of payee. Now these expenses will be posted in to

the separate petty cash head code number: 92105.

4. At the month end the company obtains the ledger balances of the accounts used in

the month.

5. Using these above ledger balances the system automatically generates the income

statement and the balance sheets.

6. I was also responsible of filing up the documents in their respective files along

with the voucher and attached source documents with the signature of the

accounts head.

52
 SKILLS GAINED

 OFFICE WORKING SKILLS:

I had to maintain vouchers, registers, perform some other documentation, as well

as work on the system. Thus I learned manual as well as the system office

working skills.

 TEAM WORK:

During my stay in the organization I have learned how to work in a team oriented

workplace. Teams work plays an important role in a modern organization. From

software engineers who collaborate to write code to the boards of directors who

gather to make strategic decisions, teams are increasingly being used worldwide

as the foundation of work.

 ORGANIZATION NORMS AND VALUES:

Norms are the general expectations of a demand character for all role incumbents

of a system or subsystem. Values are more generalized ideological justifications

for roles and norms, and express the aspirations that allegedly inform the required

activities. During my stay in the workplace I have learned how to follow the

organization’s norms and values by aligning my self with the organization’s

norms and values. Flexibility in nature is the essence of following norms and

values of an organization.

53
 QUALITY OUTPUT AND COMPETITIVENESS:

Today’s age is full of competition and competitiveness; I have learned that if I

want to stay in the organization and make the management happy through my

performance I should have to give quality output and stay competitive to compete

with my fellow co-workers.

 INNOVATION:

Innovation is the key to success; I have learned how innovation leads to happiness

of management.

 ACCOUNTING SOFTWARE:

Working in accounting software was totally new for me because previously I have

been doing all the accounting work manually. I have learned the ways how to

operate the accounting software in this organization.

 ACCOUNTANCY SKILLS:

I have learned how to use the accountancy skills that I have learned in my study

period. That includes the whole accounting cycle.

 ORGANIZATIONAL BEHAVIOR SKILLS:

I have learned how to behave in the organization which I have studied in the

subject of my final semester i.e., Organizational Behavior, the skills I have gained

during the study period were implemented and went successful.

54
 PRESENTATION SKILLS:

Presentation skills I have gained during my study time were used by me in the

organization.

 COMMUNICATION SKILLS:

Communication skills were also gained during my study time which I used in the

organization for both upward communication and downward communication.

 COMPUTER AND TECHNICAL SKILLS:

Computer and technical skills I have gained from my personal experiences were

also used by me during my stay in the organization.

 SELF-MANAGEMENT SKILLS:

Self-management refers to methods, skills, and strategies by which individuals

can effectively direct their own activities toward the achievement of objectives,

and includes goal setting, decision making, focusing, and planning. I have used

the Self Management skills in order to achieve my goals and objectives for the

period of my internship.

 STRESS MANAGEMENT:

55
 Stress Management is a topic which I have studied in my course of Organization

Behavior and I have implemented it in my course of work during my internship in

the organization.

CHALLENGES:

PRACTICAL WORK AND THE BOOKISH KNOWLEDGE:

Studies educate student about the theoretical features of practical work this is so students

face difficulties in the real life situations of the organization. So being a fresh student I

encountered different sorts of problems that were challenging for me.

ADJUSTING WITH THE EMPLOYEES:

The organization was completely a diverse one, the employees were from diverse

background on the basis of race, color and ethnicity. So I have faced major difficulty in

settling with them.

LACK OF KNOWLEDGE ABOUT THE AUTOMATED ACCOUNTING

SYSTEM:

The organization was using Sun Solaris Accounting System for their accountancy needs,

I had almost no knowledge regarding it. It was a biggest challenge for me to understand

the working of that system.

56
 PROBLEMS:

I have faced the following problems during my stay in the organization:

 OFFICE ENVIROMENT:

The environment of the company is very political and professional jealousy also

exists in the organization.

 DISTRIBUTION OF WORK:

Distribution of work is not proper. Some people are overburdened with work.

 OBTAINING THE SOURCE DOCUMENTS & MISAPPROPRIATION OF

THE EXPENSES MADE:

The problem I have faced most is obtaining of the source documents of the

expenses made which was a major responsibility of mine. I was required to file up

the expense voucher with the source document in the file.

 DELAY IN DECISION MAKING:

The company is following a semi centralized structure in the organization it takes

days to make a decision because of complex organizational structure.

57
 EMPLOYEE PARTICIPATION IN ACR’S:

Employees were not given complete knowledge about their ACR’s. They were

not aware of the basic elements on which the ACR’s are based upon.

 LOW LOYALTY OF EMPLOYEES:

The loyalty of employees was low due to lack of confidence over the employees

by the management.

 LACK OF TRAINING PROGRAM:

The organization does not provide proper training to employees of service and

body shop department as they are the back bone of the second highest revenue

generation head of the company. Company also lacks training programs for their

sales staff.

 LACK OF HEALTHY ENVIRONMENT:

In the office section the organization maintain the healthy environment for the

employees but on the other hand the situation in the workshops is opposite of it

the labor lack basic kits. First aid kits are not provided either.

 OUT DATED COMPUTER SYSTEMS:

The computer systems which are in use are mostly out dated, they take lots of

time in executing the commands like printing, scanning etc.

 UNFRIENDLY ENVIRONMENT OF THE MANAGEMENT:

58
 The organization is not keeping a friendly environment with their employees; they

often complain about this system with each other, this is also reducing the

employee loyalty.

 LACK OF SECURITY MEASURES:

Terrorism problems are increasing with every passing day the premises of the

organization lacks security measures.

 INCREASING OPERATING EXPENSES:

Company’s Operating expenses are increasing from year 2008 to year 2010.

 LACK OF REWARD SYSTEMS:

Rewards are a mean of increasing the employee’s loyalty to the organization and

the company lacks this system.

59
 CONCLUSION:

From the above analysis and my working experiences in Suzuki Islamabad Motors I can

easily say that the organization is using modern day techniques in operations & in

working. As we know that no such organization in the world is free from problem. It is

the responsibility of management to cope with the problems and resolve them for the

growth of the organization. The managers realize the problems but they have not given

proper opportunity to implement their strategies in their respective departments. The top

management also has to realize the prevailing situation in the organization; they have to

listen to their employees as they are the major stakeholders of the policies which are

being implemented by the organization.

Upon some problems the organization also has some good aspects of it like, beautiful

premises, strong customer relations, deep product line of Pak Suzuki Motors Limited is

placed in the organization’s showroom.

During my internship I have learned many new things in spite of the knowledge gained at

university and also came to conclusion that education alone is not enough, practical

training in every field is crucial to become a successful manager.

60
The automobile sector is one of the fastest growing sectors of the country, but the

implication of new taxes by the government will surely going to hurt it, which will

ultimately reduce the profits of dealership businesses like Suzuki Islamabad Motors.

RECOMMENDATIONS:
Following are the recommendations to the above stated problems:

 The problem of obtaining the source documents and misappropriation of expense

from can be solved by issuing the expense voucher before making the actual

expense by forecasting the expense amount and they should be paid in advance.

 The delay in decision making is being caused by the complex centralized

structure of the organization. The organization can solve this matter by giving

autonomy and liberty to the managers so that they can make timely decisions

regarding their department matters.

 The biggest problem regarding ACR’s is that the employee does not know that

which factor contributes most in his ACR, whether its punctuality, output,

obeying of orders, general behavior etc. The employees should know about the

factor that is contributing in making his ACR so the managers should let the

employees know about the contributing factor on which the ACR is based.

61
 The loyalty of the employees was extremely low the reason was they were not

being trusted by the management. The management should put their trust on the

organization’s employees in order to gain the organizational loyalty.

 Training polishes the individual’s skills and also helps them in obtaining the new

skills. For the body shop and the maintenance department the company should

appoint a well-trained instructor for the illiterate denters and painters so that he

could watch the workers and observe their problems and give proper training to

them by arranging training sessions and same should be adopted for rest of the

staff.

 Environment plays vital role in the productivity of an employee, the organization

lacks the proper kits for the workers they should be provided their proper kits with

gloves and helmets and they should ensure the safety of the employees by

installing fire extinguisher in the premises especially in the work shops.

 Most of the clerical work is being done over the computers and most of them

were out dated. The organization should scrap the previous computer systems and

replace them with new and latest ones, in order to get maximum out of it.

 The environment of the organization should be made friendly with the employees

by giving them proper time, listening to their problems and solving them in the

best way the managers can.

62
  Company is lacking the security measures, walkthrough gates should be installed

along with other metal detectors to ensure the safety of the employees as well as

the building.

 The operating expenses are increasing, most of the employees waste printing

papers and other stationary items. There was no proper check and balance over it.

Company has to focus her attention towards it by implementing proper check and

balance.

 The reward systems should be implemented in the organization, intrinsic or

extrinsic rewards should be given in order to gain more loyalty of the employees,

which could be gained by making a monthly prize of employee of the month

award from each department.

Above are the recommendations that I would make to the company. Acting upon them

will surely increase their employee satisfaction, loyalty and their interest in work also

their productivity which will ultimately increase the company’s productivity in means of

profits and also in means of the good will.

63
 REFERENCES:

Ghani M.A Advance Accounting 3rd Edition

Sondhi Fried Analysis of financial statement 3rd Edition

Brigham & Houston Fundamental of Financial management 10th Edition

Brealey Myers Marcus Fundamental of Corporate Finance 4th Edition

Uma Sekaran Research Methods for Business 4th Edition

Fred Luthans Organizational Behavior 11th Edition.

64