LOVE

2

COMSATS

Institute Of Information Technology Wah Cantt

Internship Report

On

Askari Cement Nizampur

Group No 01Submitted To: Mr Faheem A KhanSubmitted By: FARYAL ARIF AWAN Reg No: SP06-MBA-016 MBA 4 A (Finance)

Table of Contents

S.NoDescription Page No

1. Dedication3

2. Acknowledgement4

3. Executive Summary5

4. History6

5. Objectives7

6. Overview of Firm8

7. Organizational Structure10

8. Finance Department Structure13

9. Operations Of Finance Department14

10. Functions Of Finance Department15

11. Financial Ratios21

12. Liquidity Ratios21

13. Leverage Ratios24

14. Activity Ratios26

15. Profitability Ratios30

16. Graphical Representation33

17. SWOT Analysis38

18. Internship Experience41

19. Shortfalls of Finance Department44

20. Conclusion and Recommendations45

21. Reference And Source46

22. Annexes46

DEDICATION

I dedicated this work to my parents who are most valuable for us in this world. Teachers and all those friends who help me to accomplish this task. ACKNOWLEDGEMENT

All praises for Allah, Most Beneficent, Gracious and ever Merciful. Who gave us the power to do the sight to observe and mind to think and judge. I wish to express my sincere obligation and appreciation to my teachers whose skillful guidance, sincere encouragement and devotion remain with me.Executive SummaryThe internship report has been prepared on the Finance department of Army Welfare Trust Nizampur Cement Plant in order to comply with the necessary requirement of COMSATS for obtaining the MBA Degree.

In this report a detailed introduction to the organization has been given. Specific consideration is given to the Finance Department. Section wise functions of the department have been discussed in detail.

Financial analysis has been performed using financial analysis technique financial ratios and graphical representations of these ratios are included. Finally short-falls/weaknesses have been given and recommendations and conclusions have also been given for improvement.History

The plant has been installed by Army Welfare Trust. Construction of the Plant was started in 1993. Its first line of the capacity of 2000 tonnes per day was complete and it started production in 1996. Erection/installation of second line also of the capacity 2000 tonnes per day was started in 1997 and was completed in second quarter of 2003. It started commercial reduction with effect from 1st jul 2003. The plant was designed by M/s Tianjin Cement Design & Research institute, China and was supplied by M/s China Building Material Industrial Corporation (CBMC) and local Mechanical Complex (HMC) Taxila, Pakistan. Total Capacity of both lines is 4000 tonnes per day.OBJECTIVES OF STUDYING THE AWTNCPAs per MBA programmed of COMSATS it was the requirement of the University to complete the internship in any organization for a period of at least 4 weeks. The objective of doing internship was to acquire practical knowledge of working / functioning of Finance Department in the real world. It also helps the student of MBA to have understanding about applying theoretical aspects of MBA study.

Overview of AWT Nizampur Cement PlantAskari Cement Nizampur commissioned on June 30, 1996 is one of the industry set-up by the Army Welfare Trust. AWT was founded on October 29, 1971 under "Societies Registration Act". The purpose of having an organisation of this nature was to equip it with willing workers, to generate funds to meet the obligation of welfare and rehabilitation and help the orphans and widows of Shaheeds, disabled and retired persons of Pakistan Army as well as their dependants.

Objectives of the Organization

The objectives of the Army Welfare Trust are:

To generate funds for welfare of retired servicemen and families of shaheeds of Pakistan Army.

To provide employment opportunities for retired servicemen of Pakistan Army.

Nature of the Organization

AWT Nizampur Cement Plant is owned by Army Welfare Trust and falls under the category of cement industry. It produces Ordinary Portland Cement known as Grey Cement. They market their Cement with brand name of Askari Cement.

Business Volume

Revenues generated from the sale of cement are as detailed below,

Year

Revenues

Net Sales (Rs)

2005

426,952,442

2,608,190,0522006

306,815,143

3,666,840,794Profile of Employees

The total number of employees in AWTNCP is as detailed below,

Officers / Executives

99

Workers

305

Total:

404

Employees grades are distributed in following categories of grades,

Management Grades

Executive Grades

Officers Grade

Workers Grades

Product Lines

The sole production item of the factory is Ordinary Portland / Grey Cement.

Organizational Structure AWTNCP

Organization structure is highly formalized. All decision powers lies at Directors level and distributed among them on the basis of financial ceilings such as MD financial power is limited to Rs: 5 Lac, DI upto Rs:2 Lac and DPC upto Rs: 1 Lac. Management style is more autocratic and little bit participative in nature. Information flows downward and little participation of low-level. Main Head Office

Main / Head office is located in the AWT Plaza, The Mall, Rawalpindi Cantt. Following departments are in the head office,

Director Project (Cement) Secretariat

Marketing Department

Finance Department Technical & Audit Department

Administration (HO) Department.

Internal Audit Department

Human Resource Department

To facilitate the customers of Lahore and Peshawar Districts, branch offices are located in these cities under the supervision of Marketing Department.

Factory Site

Factory management has been categorized in the following departments,

General Manager (Works)

Administration

Finance & Accounts

Mechanical

Electrical Crusher

Production

Kiln

Packing plant

Dispatch

Factory LocationNizampur Cement Plant is located in Village Kahi / Nizampur, Dist. Nowshera about 22km South-West of Khairabad on right bank of the River Indus.

Marketing Operations

AWTNCP is selling its production under the brand name of Askari Cement. AWT also owns another cement plant of capacity 3000 Tons Per Day, previously known as Associated Cement, Wah. Production from both these plants is being marketed by the combine marketing department headed by Director (Marketing).

Structure of the Finance Department

The Finance Department of AWTNCP is headed by General Manager (Finance). The Organization Structure of Finance department is,

Human Resources of Finance DepartmentThe total number of employees working in Finance Department of AWTNCP is 23. Out of which 18 are in Head Office and 5 at plant site.

Finance & Accounting Operations

Finance Department performs the following operations for the organization,

Provide coordination to higher management in long-term business planning and formulation of financial management strategies in consultation with the AWT Financial Managers.

Funds Management.

Promoting cost consciousness within the organization using variance analysis of budgeted versus actual expenses.

Maintenance of accounting books and preparation of financial statements in accordance with the companys ordinance requirements.

Preparation of various financial reports to the higher management highlighting performance of the manufacturing unit and financial position.

Coordinate with Internal & External Auditors.

Functions of Finance Department

Accounting System of the Organization

The accounting system of the Organization consists of the followings:-

Accounting at Head Office.

Accounting at Plant Site.

Accounting in Head Office

There are different sections in Head Office. Each section is headed by the Assistant Manager. Section wise responsibilities are as hereunder:-

General Ledger Section: Preparation, processing and posting of journal voucher and bank payment vouchers of each transaction.

Maintenance of record for all the JVs and bank payment vouchers.

Maintenance of computerized ledgers.

Settlement of accounts with the site office.

Preparation of final accounts.

Cost & Budgeting Section

Preparation of Annual Revenue & Capital budget on the basis of historical data cost of production reports and markets demand and price forecasts.

Preparation of variance analysis reports.

Allocation of budget provisions on the procurement / work order cases.

MIS reporting

Monthly cost of production report.

Sales Accounting Section

Keep record of orders received, dispatches and payments record.

Interaction with the marketing department for customer support.

Reports preparation pertaining to Sale of Cement.

Bank & Insurance Section

Transfer of funds

Reconciliation of all bank statements

Dealing with banks

Dealing with the insurance matters.

Payment / Payable Section

Maintenance of record pertaining to the contractors / suppliers.

Scrutiny of purchase and work order cases to check financial viability.

Payments to the suppliers and contractors.

Computer Section (Finance Department)

Software development and maintenance of ledger accounting system, sales accounting system, cost accounting system and payroll system.

Taking back-up of data.

Cashier

Maintenance of Cash book

Cash handling

Salary / allowances disbursement.

Accounting at Plant Site

Plant site finance department comprised of following departments,

Payment Section

Making payments to the site contractors and suppliers.

Cash handling

Store Accounting Section

Maintenance of Store Inventory record

Reporting Inventory Positions

Maintenance of record for

Purchase orders

Material receipts

Inspection reports.

Factory Accounting Section

Maintenance of factory ledgers.

Departmental cost determination

Unit cost determination.

Material wise consumption / production reports.

Payroll Section

Preparation of salary sheets of officers, workers and daily wages employees after collecting information from the administration department regarding attendance, leaves etc.

Finance System of the Organization

Board of directors approves the annual budget, which is considered as approval in principle for all the items included in the budget. It determines the yearly finance requirement of the company. The company meets it requirement through the revenue received from the sale of cement and funds received from AWT Head Office.

Use of Electronic Data in Decision Making:

Majority of employees of finance department are provided with computer. There is a dedicated computer programmer for Finance Department, who develops and maintains following accounting systems to facilitate the staff and improve the efficiency of the department manifold.

Ledger Accounting System

Sales Accounting System.

Cost Accounting System.

Payroll Accounting System.

All these computerized accounting systems give the quick and timely information to the management. Thus use of electronic data plays a very effective role in decision making.

Mobilization of FundsCustomers deposit payments against the cement booking orders through out Pakistan in the nominated bank branches of

Askari Commercial Bank Ltd.

Muslim Commercial Bank Ltd.

Allied Bank Ltd.

All branches have the standing instructions of transferring of daily receipts to the respective main account of AWTNCP keeping Rs: 1000/- as balance with them. Payments received through cross cheque are directly deposited to the main account of AWTNCP. Its the responsibility of bank section to ensure timely bank transfers. Similarly disbursement accounts have been opened in these banks from which company does spending / make payments. Sources of FundsOne source of funds is the sale of cement produced by the company. AWT head office (sponsors) also provides financial assistance to meet the companys short and long-term obligations.Allocation of FundsAnnual budget is prepared in the light of marketing department forecasts about the demand of cement in the market and forecasted price of cement in the market. Then department wise budget was prepared in the light of available forecasts and history data. BOD approves the budget. This forms the basis for allocation of funds to all departments. There are two kinds of budgets,

Capital Budget is prepared for allocation of funds for capital spares for cement plant, furniture and fixture and vehicles.

Revenue Budget is prepared for allocation of funds for the raw materials and spares consumed in the production process.

FINANCIAL RATIOSRatio Analysis is an excellent method for determining the overall financial condition of company. It puts the information from a financial statement into perspective, helping to spot financial patterns that may threaten the health of the company. Ratios are also very useful for making comparisons between companies relevant to the same industry. The analysis of financial statements can provide reasonable insight into a firm's state of affairs. But the statements have inherent limitations, which require care and prudence in their uses.

LIQUIDITY RATIOSCurrent Ratio

Current ration measures the extent of which a firm can meet its short-term obligations.

YearCurrent AssetsCurrent Ratio

Current Liabilities

200510074723231.05

953140550

200614785028381.45

1018808100

Analysis

The current ratio is a measure of liquidity. It helps us to answer the question: If a business had to pay off all its current liabilities tomorrow, would it have enough current assets to make the payments and avoid insolvency? if the current ratio is less than 1, it is in danger of failure. If the ratio is high, perhaps above 2, the business has more than enough current assets. And these surplus funds can be used to improve efficiency. Ideal current ratio for any business entity is 2:1 just enough to be getting on with. AWTNCP is improving its current ratio as compared to previous year and aimed to cross the ideal limit of 2:1. Reason is clearing of timely due payments, which reduces current liabilities.

Quick Ratio

YearCurrent Assets Inventories Quick Ratio

Current Liabilities

200510074723237017638620.32

953140550

200614785028381183678901.33

1018808100

Analysis Quick ratio measures the extent to which a firm can meet its short-term obligations without relying upon the sale of its inventories. The optimal quick ratio is 1 or higher. AWTNCP quick ratio is improving year by year, again for the reason that company is clearing its current liabilities as much as possible. And its current assets also increased.Net Working CapitalYearCurrent Assets Current Liabilities Working Capital

20051478502838 1018808100459,694,738

20061007472323 95314055054,331,773

Analysis

Company faced difficult times in past year in terms of working capital availability. Year 2006 more working capital gives the company a good signal towards having good times in future.

LEVERAGE RATIOSDebt to Equity Ratio

It shows the ratio of funds provided by creditors versus by owners. A high debt to equity ratio could indicate that the company may be over-leveraged, and should look for ways to reduce its debt.

Debt to Equity Ratio = Total Debts / Total Equity

YearTotal Debts / Total EquityTotal Debts / Total Equity

20051288611069 / 17899291710.71

2006936799414 / 21914861530.42

Analysis

Company is facing heavy net losses in past years due to financial expenses, low cement sales and high input costs. In order to give cover to these losses debts are taken to keep the company operational and to avoid insolvency. Time Company is clearing its debt and debt to equity ratio is decreasing year to year.Debt to Total Assets Ratio

It shows the ratio of total funds that are provided by creditors.

Debt to Total Assets Ratio = Total Debts / Total Assets

YearTotal Debts / Total AssetsTotal Debts / Total Assets Ratio

20051,288,611,069 / 10,722,697,1730.120

2006936,799,414 / 11,027,731,7630.084

AnalysisIn Year 2005 debt are 12% of total assets now in 2006 debt to asset ratio is 8.4% which shows the decreased of 3.6% as compared to previous year ratio due to yearly payment of debt to borrower. ACTIVITY RATIOS

Total Assets Turnover Ratio

YearSales Total Assets Turnover Ratio

Total Assets

2005 2,608,190,0520.24

10,722,697,173

20063,666,840,7940.33

11,027,731,763

AnalysisThis ratio tells us whether a firm is generating a sufficient volume of business for the size of its asset investment. The higher the ratio, the more efficiently the Company is utilizing its assets to generate sales. Companys asset turnover ratio shows increased as compared to previous year 2005 ratio because sales are increased due to increasing demand in the market. And company used efficiently its asset to generate sales.Receivables Turnover Ratio

YearNet Sales Receivable Turnover Ratio

Accounts Receivables

2005260819005296.41

27052056

20063666840794145.81

25148010

Analysis

This number indicates how quickly customers are paying your business. The greater the number of times receivables turn over during the year, the shorter the time between sales and cash collection. This high ratio is because of cement is mostly sold against Cash / Advance payment.

Net Fixed Asset Turnover Ratio

YearSales Net Fixed Asset Turnover Ratio

Net Fixed Assets

2005 26081900520.26

9715224850

200636668407940.38

9549228925

AnalysisThe net fixed turnover ratio reflects the firms utilization of fixed assets. In 2005 net fixed asset turnover ratio is 26% now in current year it is 38%. 12% increase in net fixed asset turnover indicates that company utilizes its fixed asset well as compared to previous year.Equity Turnover Ratio

YearSales Equity Turnover Ratio

Total Equity

20052,608,190,0521.45

1,789,929,171

20063,666,840,7941.67

2,191,486,153

AnalysisIt is useful to examine the turnover for alternative capital components. The difference between this ratio and total asset turnover is that it excludes current liabilities and long term debt. Equity turnover ratio also increased because sales of current period increased which directly affect the equity turnover ratio.PROFITABILITY RATIOS

Net Profit Margin

It measures Aftertax profits per Rupee of sales

Net Profit Margin = Earning After Interest & Taxes / Net Sale

YearEAITNet Profit Margin

Net Sales

20054269524420.16

2608190052

20063068151430.08

3666840794

Analysis:-

Although current year sales is higher than previous year but net profit margin after tax is low as compared to 2005. Reason of this decreased is taxation, high administrative, selling and distribution expenses.Gross Profit Margin Ratio It measures profitability without concern for taxes and interest. The gross profit margin measures the total margin available to cover operating expenses and yield a profit.Gross Profit Margin = Earning before Interest & Taxes / Net Sales

YearGPGross Profit Margin

Net Sales

2005776821137 0.30

2608190052

20061622646450 0.44

3666840794

Analysis

Gross profit ratio is increased to .44 because sales of current year are higher due to the growth of market and this indicates that marketing department is working good to capture the potential of market.Operating Profit Margin Ratio

Operating Profit margin= Operating Profit / Net sales

YearOperating ProfitOperating Profit margin

Net Sales

20057283406490.28

2608190052

20066789659560.19

3666840794

Analysis

The variability of Operating profit margin over a time is a prime indicator of the business risk for a firm. Operating profit margin ratio is low as compared to previous year although sales are higher but with this operating expense are increased as result these expenses decreased the operating profit so this ratio is declined.

Graphical Representation of Financial RatiosCurrent Ratio:-

Quick Ratio:-

Debt to Equity Ratio:-

Debt to Total Asset Ratio:-

Total Asset Turnover Ratio:-

Net Fixed Asset Turnover Ratio:-

Equity Turnover Ratio:-

Net profit Margin Ratio:-

Gross Profit Margin Ratio:-

Operating Profit Margin Ratio:-

SWOT Analysis

INTRODUCTION

During the internship in Askari Cement I, have found out some problems and weaknesses in the firm, which can be solved with little efforts which will improve the efficiency of the firm and will enable it to achieve its targets.

SWOT consists of four words which are stands for

1. Strengths.

2. Weaknesses.

3. Opportunities.

4. Threats.

Through the SWOT analysis technique one can analyze the present condition and performance of a given organization and can prepares plans for the future. In the SWOT analysis of AWTNCP the following points can be discussed.Strengths

Strong Brand Name.

Adoption of new technological plan.

Experienced Upper level management.

Good distribution Channel.

Quality Product.Weaknesses

Lack of Job satisfaction. Lack of Human Resource department functions.

Lack of skilled labor. Management Issues Absence of pure computerized work

Opportunities

Increasing demand of cement in market.

Coal as substitute of furnace oil. Export growth in cement industry.

Good geographical position.

Upward trend of prices.

.Threats

Entrance of potential competitors. Low price substitute in market.

Low profit due to higher CGS

Increase in furnace oil prices

Internship ExperienceHow I got Internship?For internship I applied in different organization when I apply in Askari Cement Head Office in Rawalpindi I have a reference of my uncle, who is marketing manager in Askari Cement. So with his reference I got internship in Askari Cement Nizampur.

Learning:-

During my internship I learned a lot how to work practically in real world and as a result my practical knowledge about working and functioning of finance department is increased and it helps me to understand theoretical aspects of study. Every one in finance department helps me a lot and provides guidance at every step.Working in Finance Department:-I work in following sections of finance department. General Ledger Section

Cost and Budgeting Section

Sales Accounting Section

Bank And Insurance Section

Payment and Payable Section

Cashier

General Ledger Section:-In general ledger section I have posted journal vouchers (JVs) of different account of the company e.g sundry debtor, Sundry creditor, different suppliers A/C, Bank A/c etc both manually and in computer, settle accounts with site office. And also maintain the trial balance.

Cost & Budgeting Section:-In this section I learn how to make budget and how to allocate budget provision on work order cases. At the end of month make cost of production report.Sales Accounting SectionIn this section I spent four days and learn how to prepare record of orders receive, dispatches and payments record.Bank & Insurance SectionIn this section I learn how to deal with banks and how to reconcile bank statements.

Payment / Payable SectionIn this section I learn how to prepare records of suppliers and contractor. And procedure through which payment made to suppliers and contractor.

CashierHere I learn how to maintain cash book. And made cheque for salary and allowancesTiming:-

Timing during internship period

9 am start of work

10.30 Tea Time

1 pm to 2 pm Launch & Prayer break

4 pm End of work Friday Timing

9am to 12 pmOutcomes of Internship I understand how to manage practical life. Gain ability to make decisions. How to manage himself with organization culture

Increase knowledge and skills.

How to deal with peoples in working environment.

Every one provides me guidance.

Its make me punctual and hard worker.

Short-Falls / Weaknesses of the Finance Department

Debt and subsequent funds were borrowed at high interest rates i.e. 18 22% per annum.

Low exports due to high production cost as compare to other cement producing countries.

Workload is not properly distributed among the staff members of Finance Department. It causes frequent late sittings.

Inspite of the fact that all the departments of the organization are equipped with computers, plenty of paper work flows throughout the organization.

Pace of work remains slow due to certain procedural hurdles.

Job satisfaction and job security does not exist, due to stressful working environment and continuous threat of losing job from the higher management.

Fluctuation in AWT management lowers the interest / trust of AWTNCP employees to cope with the financial problems.

Recommendations and Conclusion for Improvement

Efforts should be made to replace the loans borrowed on high interest rates with the loans now available on the low mark-up.

Conversion of fuel system from furnace oil to coal firing system should be done on top most priority basis to save the funds being spent on the purchase of costly furnace oil.

Government should be vigorously pursued for grant of certain tax exemptions in order to fetch export orders, which in turn not only give boost to the sick cement industry but also earn foreign exchange revenues.

In order to distribute workload properly among the staff members, suitable scientific research method should be applied, so that efficiency of the department may increase.

Computers should be utilized at there best to minimize the paper work formalities and to speed-up the work.

Policies regarding promotion and continuity of job should be matched with the cement sector in order to offer job satisfaction and sense of security among the employees.

Autonomy in policy making and long-term planning should be given to AWTNCP management to avoid the impact of change / fluctuation in top management of AWT.

References and Sources Used

In the preparation of this Internship Report help has been obtained from the followings:-

.

Annual Financial statements of AWTNCP.

Web site of Army Welfare Trust Supervision of different instructors Annexes

The following Annexes have been enclosed with the report:-

Annexure # Description

i. Copy of Internship Certificate from GM (Finance), NCP.

AWT Internal Audit Dept.

Managers

Factory Site Dept.

Senior Managers

All Head Office Depts

General Manager (Works)

Director Project (Cement)

AWTNCP

Managing Director

AWT

Director (Industries)

AWT

Board of Directors

AWT

AWT Finance Dept

Assistants / Jr. Assistants

Assistants / Jr. Assistants

Junior Officers

Junior Officers

Banking & Insurance Sec

Cashier

Managers

Asst. Managers

Asst. Managers

General Manager (Finance)

Deputy Manager (Fin)

Head Office

Manager (Finance)

Factory Site

Assistant Managers

Sectional Head

Assistant Manager

Junior Officers

Assistants / Cashier

Cost & Budget Section

Ledgers Section

Sales Accounting Section

Payments Section

Computer Section

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