Punjab Oil Mills Limited

Introduction:

Punjab Oil Mills Limited is a leading manufacturer of edible oils and fats based in
Islamabad, Pakistan. We make and market a wide range of cooking and baking mediums and other
specialty fats under the flagship brand names of Zaiqa and CanOlive. All our products are prepared
under the strict supervision of qualified professionals to ensure the highest quality standards. We
are an ISO 9001 & FSSC 22000 certified company and take pride in making products that
consistently exceed customer expectations. As a result the Zaiqa and CanOlive brands enjoy a
valuable brand franchise today and are synonymous with uncompromising quality and constant
innovation.

Factors in Demand and Supply

Demand Factors:

Following are the demand factors of oil;

1. Price
2. Weather
3. Religious Festivals
4. Population
5. Regulatory
1. Price:
Price is the major factor in the demand of the oil, when the price of the oil increases
the demand for the oil decreases because there is close substitutes for oil due to which the
people will shift to substitute’s product and when the price of the oil decreases then the
demand for the oil will increase.
2. Weather:
Weather also affects the demand of the oil. With the change in the weather, the
demand also fluctuates with this. The demand also shifts from one side to another side.
3. Religious Festivals:
In Pakistan, religious factors also affect the demand of the oil. When the religious
festivals come like Ramzan, Eid etc, the demand for the oil increase during that period.
4. Population:
Population is the major component for the demand of the oil. As the population
increases, demand for the oil increases with increase of the population.
5. Regulatory:
Regulatory system of the country also affect on the demand of the oil. Now days,
the regulatory authority have made quality standard laws due to which many companies
are banned, through which the demand for the oil is decrease. The people have shifted to
the substitutes.

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Supply Factors:

Following are the supply factors of oil;

1. Technology
2. Political Stability
3. Weather Conditions
4. Number of Sellers/Firms
5. Raw Material Prices

1. Technology:

Technology is the major component for the supply of the oil. When the firm uses
the advance technology the production will automatically increased due to which the
supply of the oil also increased.

2. Political Stability:
Political conditions also affect the supply of the company. Due to instable
conditions during few days ago, the supply of the oil was decreased.
3. Weather Conditions:
Weather conditions affect in the production process when the weather is rainy this
will affect the production process due to which the supply is disturbed and the supply
of the oil is decreased.
4. Number of Sellers/ Firms:
As there are too many number of firms which will also affect the supply of the oil.
The supply of the oil increases as the number of suppliers increases.
5. Raw Material Prices:
Raw material prices also affect the supply of the oil as the prices of the raw material
increases which decrease the supply.

Substitutes of Oil:

Following are the substitutes of oil;

1. Olive Oil
2. Corn Oil
3. Dhesi Ghee
4. Vanapati Ghee
5. Musturd Oil

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Complements of Oil:

Following are the complements of oil;

1. Sweets
2. Samosas
3. Traditional/Desi Foods

Methodology:

A system of broad principles or rules from which specific methods or procedures may be
derive to interpret or solve different problems within the scope of a particular discipline. Unlike
an algorithm, a methodology is not a formula but a set of practices. A body of methods, rules, and
postulates employed by a discipline: a particular procedure or set of procedures.

1. Data Source and Type:

There are two types of data, primary and secondary data. The data which is taken by us for
the research and analysis for this study is secondary data., because the data is taken from annual
reports and financial statements of the Punjab Oil Limited.

2. Variables and expected relationship:

Sales is the dependent variable while HRM, marketing and CSR are the independent
variables. According to previous study of investment shows that increase in investment of HRM
may increase the sales, as well as increase in investment of marketing increases sales and increase
in investment of CSR decrease sales. HRM and marketing have positive relationship with sales
and CSR has negative relation with sales.

Variables Expected Relationship

HRM +
Marketing +
CSR -

Methods:

Following are the methods which are we going to discuss.

o Descriptive Analysis
o Regression Analysis
o Forecasting Analysis

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 Descriptive Analysis:

Descriptive analysis is brief descriptive coefficients that summarize a given data set, which
can be either a representation of the entire or a sample of a population. Descriptive statistics are
broken down into measures of central tendency and measures of variability. Descriptive analysis
is used to describe the basic features of the data in a study. They provide simple summaries about
the sample and the measures. Together with simple graphics analysis, they form the basis of
virtually every quantitative analysis of data.

 Regression Analysis:

Y=a+b1 HRM +b2 Marketing + b3 CSR

HRM, marketing and CSR are independent variables.

 Forecasting:

Y=a+ b (t)

The objective is to see type of fluctuation in the data.

Forecast analysis:

Years Sales HRM Marketing CSR Forecasting Time Fluctuation

2008 2501790859 50487349 154929981 1076534 2638057419 1 0.95
2009 2809909510 71694625 223589009 2019086 2856529907 2 0.98
2010 3018441736 111801131 236058211 1587223 3401882807 3 0.89
2011 3710266602 130871534 271449919 2204507 3490764318 4 1.06
2012 4168048880 138946650 297517213 1792468 3969895867 5 1.05
2013 4525960699 194180525 499504364 3878035 4927620796 6 0.92
2014 4772826452 166316993 402150955 3510185 4131448514 7 1.16
2015 4210607625 249412619 512296462 6207205 4136913854 8 1.02
2016 4254101191 276373668 560301147 6912540 4331244051 9 0.98
2017 4441220968 328834026 550458610 6912540 4529618716 10 0.98

The objective is to see fluctuation in the data. From the given data, it is conducted that it
is irregular fluctuation. We will use smoothing technique for forecast.

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Regression Line:
Model Summary

Adjusted R Std. Error of the

Model R R Square Square Estimate

1 .922a .850 .776 375745333.765

a. Predictors: (Constant), CSR, Marketing, HRM

Coefficientsa

Standardized
Unstandardized Coefficients Coefficients

Model B Std. Error Beta t Sig.

1 (Constant) 1590542581.93
427318585.150 3.722 .010
7

HRM 5.391 5.588 .613 .965 .372

Marketing 8.579 2.862 1.642 2.998 .024

CSR -514.435 206.062 -1.482 -2.497 .047

a. Dependent Variable: Sales

The overall model is significant; as the value of R square is 0.850 which is greater than 0.5
and the value of F- statistics are 11.369 which are greater than the value of 7.5. In our model, the
value of t-statistics of marketing and CSR is 2.998 and 2.497 respectively which are greater than
1.96 which show marketing and CSR are significant. The value of Human resource management
in t- statistics is 0.965 which is less than 1.96 which shows insignificant. Marketing and Human
resource management coefficient have positive coefficient in regression line that’s why it has
positive or direct relation with the sale. CSR has negative coefficient in regression line that’s why
is has negative or indirect relation with the sale.

In article Muhammad Hamid do research. In their research human resource management

are insignificant in their regression analysis. As well as in our regression analysis the value human
resource management is insignificant. Human resource is insignificant because the value of t-
statistics is 0.965 same as in the article, the value of human resource management is 1.222 (hamid,
2017). In another article, Ahmad, S., & Shahzad have researched the insignificant value of HRM.
The value of human resource management is 0.67 as in our research the value is 0.965 which is
less than 1.96 (Ahmad, & Shahzad, 2011).

In other article, Danielsen do research. In their research, marketing is significant in their

regression analysis. As well as in our regression analysis, the value of marketing is significant. In
other article marketing is significant because the value of t- statistics is 2.56 same as in our

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regression model the value of t-statistics of marketing is 2.998 (Danielsen, 2012). In Swaminathan,
& Moorman article, the value of marketing in t statistics table is also significant. As the value of
our research is 2.998 in t-table like that the value in Swaminathan & Moorman article is 2.369
which is also significant because that is above than the value of 1.96 (Swaminathan, V., &
Moorman, 2009).

In other article, Elliott, Jackson, Peecher& White do research. In their research, CSR is
significant in their regression analysis. As well as in our regression analysis, the value of CSR is
significant. In other article CSR is significant because the value of t- statistics is 2.122same as in
our regression model the value of t-statistics of marketing is 2.497 (Elliott, W. B., Jackson, K. E.,
Peecher, M. E., & White, B. J, 2013). In Rhou, Singal & Koh article, the value of CSR in t statistics
table is also significant. As the value of our research is 2.497 in t-table like that the value in In
Rhou, Singal & Koh article is 2.003 which is also significant because that is above than the value
of 1.96 9 (In Rhou, Singal & Koh ,2016).

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Variable Cost
Variable Expenses 2015 2016 2017
(in Rs) (in Rs) (in Rs)
Sales 4210607625 4254101191 4441220968
Packing 292,295,607 265,548,407 256,996,721
Repair and maintenance 5,184,845 10,015,875 11,657,867
Loading 27,008,360 32,160,851 40,744,572
Salaries, wages and benefits (Production Workers) 24,015,643 23,305,535 27,786,839
Travelling (Production Workers) 3,330,775 3,412,910 4,063,873
Outward Carriage 33,696,103 37,616,341 39,775,653
Total 4596138958 4626161110 4822246493

Fixed Cost
Fixed Expenses 2015 2016 2017
(in Rs) (in Rs) (in Rs)
CHIEF EXECUTIVE (salaries and expenses) 6,090,197 8,414,762 10,215,512
DIRECTORS (salaries and expenses) 20,583,743 18,831,388 18,134,046
EXECUTIVES (salaries and expenses) 24,445,018 28,843,400 56,950,267
Salaries, wages and benefits (marketer) 43,085,731 47,259,865 50,207,291
WORKERS' PROFIT PARTICIPATION FUND (WPPF) 9,215,240 13,020,288 12,565,225
Advertisement 139,888,246 206,463,624 199,415,072
Directors' meeting fee 680,000 860,000 2,080,000
Directors' remuneration 26,673,940 27,246,150 28,349,558
Salaries, wages and benefits (staff) 39,799,594 44,797,027 50,014,122
Travelling and conveyance (for office staff) 5,921,379 6,067,395 7,224,662
Entertainment (for employee) 816,708 906,274 1,196,916
Printing and stationary 1,680,577 1,523,562 1,530,746
Postage, telephone and telex 2,796,940 3,223,392 3,561,457
Rent, rates and taxes (for office) 12,086,556 8,353,045 10,676,599
Fees and subscription 2,457,550 2,606,477 2,872,274
Legal and professional charges 3,176,175 4,228,683 3,528,496
Vehicle running and maintenance 9,296,791 9,393,591 11,856,910
Repair and maintenance 1,728,281 3,338,625 3,885,955
Power, fuel and lubricant 2,095,550 1,957,528 1,917,794
Office expenses 1,498,483 2,389,595 2,406,420
Auditors' remuneration 755,000 755,000 835,000
Advertisement (for job) 5,873,475 8,602,651 8,308,961
Workers' welfare fund 6,207,205 6,912,540 6,912,540
Total 366,852,379 455,994,862 494,645,823

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Total Cost Analysis:

In the above table, there are the increasing and decreasing trends of fixed and variable
costs. Fixed cost is not related to the production processes. CHIEF EXECUTIVE (salaries and
expenses),DIRECTORS (salaries and expenses), EXECUTIVES (salaries and expenses), Salaries,
wages and benefits (marketer),WORKERS' PROFIT PARTICIPATION FUND
(WPPF),Advertisement, Directors' meeting fee, Directors' remuneration, Salaries, wages and
benefits (staff),Travelling and conveyance (for office staff), Entertainment (for employee),
Printing and stationary, Postage, telephone and telex, Rent, rates and taxes (for office), Fees and
subscription, Legal and professional charges, Vehicle running and maintenance, Repair and
maintenance, Power, fuel and lubricant, Office expenses And Auditors' remuneration are not
directly associated with the production of the company. In fixed cost advertising expenses are
increasing because the more company produce, the more marketing expenses will produce. The
variable cost is directly associated with production of company. There is increasing trend in
variable cost for instance; Salaries and wages are increasing because of hiring of new employees
in the company. The increasing in production will leads to an increase outward carriage, loading
and traveling of labor. Packing, repair and maintance, outward carriage, loading and traveling of
labor are directly related to the production which is related to variable cost.

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References:

Ahmad, S., & Shahzad, K. (2011). HRM and employee performance: A case of university
teachers of Azad Jammu and Kashmir (AJK) in Pakistan. African journal of business management, 5(13),
5249-5253.

Swaminathan, V., & Moorman, C. (2009). Marketing alliances, firm networks, and firm value
creation. Journal of Marketing, 73(5), 52-69.

Elliott, W. B., Jackson, K. E., Peecher, M. E., & White, B. J. (2013). The effect of corporate social
responsibility performance on investors' estimates of fundamental value. The Accounting Review, 89(1),
275-302.

Rhou, Y., Singal, M., & Koh, Y. (2016). CSR and financial performance: The role of CSR
awareness in the restaurant industry. International Journal of Hospitality Management, 57, 30-39.

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