Pak Electron Ltd

8/6/2019 Pak Electron Ltd.

1/34


2/34

Strategic AnalysisPak Electron Limited(PEL)

Presented By:Rashid RaheelBilal Ahmed SheikhSadia JafriMazher AliHumaira Fareed

Data collected from 3 years of PEL Financial ReportsAll rights reserved


3/34

IndustryIntroduction

The industry traces its origins to the invention of the two-element electron tube (1904) by John Ambrose Fleming,and the three-element tube (1906) by Lee De Forest.

These inventions led to the development of commercial radioin the 1920s, which boosted radio sales to $300 million bythe end of the decade

In 1947, the electronics industry made another importantadvance when John Bardeen, Walter Brattain, and

William Shockley invented the transistor. In the 1960s it vastly increased the amount of information that

could be stored on a single silicon chip.

Inaugurated a revolution in the computer industry that led tothe introduction of the personal computer.


4/34

Pak ElectronLtd.

Introduction

In 1948, the Saigols migrated from Calcutta and initiated theirbusiness in Lyallpur (later named to as Faisalabad), thetextile city of Pakistan, under the banner of Kohinoor

Industries Limited. PELs Appliances Division is the flag carrier of the Saigol

Group. This Division of PEL consists of home appliancesmanufacturing.

In 1987, the Saritow Spinning Mills and AzamTextile Mills

were established under the banner of Saigol Group ofCompanies.


5/34

GOLDEN HANDSHAKE

PEL Group overtook the distribution of

LG in Pakistan in this FY.

Change your Life


6/34

BODs

1. Naseem Saigol (C.E.O)

2. Azam Saigol (Chairman)

3. Muraad Saigol4. M. Yousuf Saigol

5. Haroon Ahmed Khan (M.D)

6. Muhammad Raffi Khan

7. Neelofer Hameed

8. Tajammul H. Bukhari9. Wajahat A. Baqai

10.Rizwan Hameed


7/34

VISION STATEMENT

o e x c e l i n p r o v i d i n gn g i n e e r i n g g oo d s a n de r v i c e s t h r o u g h

o n t i n u o u s. m p r o v e m e n t


8/34

MISSION STATEMENT

o provide quality productsnd services to the completeatisfaction of our customersnd maximize returns for alltake holders through optimalse of resources

o focus on personalevelopment of our Humanesource to meet futurechallenges

,o promote good governanceorporate values and a safeorking environment with atrong sense of social


9/34

INTERNAL ANALYSIS

nternal Factor Evaluation Matrix

Strength Weight Rating eighted ScoreStrong brand image .0 10 3 .0 3

Dealer Network .0 10 3 .0 3

Product Quality .0 10 3 .0 3

Rank in Pakistan .0 08 4 .0 32

pioneer of home appliances .0 06 3 .0 18

Management .0 08 3 .0 24

Distribution of authority .0 05 4 .0 2

Free customer service .0 06 3 .0 18

0

0

0:eakness Financial Problem .0 08 1 .0 08

Lack of advertisement .0 06 2 .0 12

System of variation .0 05 2 .0 1

Lack of product Range .0 05 2 .0 1

Less Utilization of capacity .0 13 1 .0 13

0

0

0

otal Weighted Sco re .1 00 .2 55


10/34

EXTERNAL ANALYSIS

xternal Factor Evaluation MatrixOpportunities eight Rating eightedScoreExploration .0 20 4 .0 8

Increase in product range .0 15 3 .0 45

Export opportunity .0 20 2 .0 4

Threats PEL facing tough competition .0 20 4 .0 8

Credit in market .0 05 2 .0 1

Slow growth rate in market .0 10 2 .0 2

Big fever of high credit .0 10 4 .0 4

otal Weighted Score .1 00 .3 15


11/34

SWOT ANALYSIS


12/34

SWOT ANALYSIS

Strengths

PEL has the following strengths and is in more competitiveposition in these areas than its competitors. Followingare the main strong points of PEL:

Strong brand image

Strong dealer network

Good product quality and service

Number 2 in refrigerators in Pakistan

Firm grip in home appliances Strong Management

Distribution of Authority

Free customer service


13/34

SWOT ANALYSIS (CONT.)

Weaknesses

Like other companies PEL has some weaknesses inoperating the business. If PEL overcome on theseweaknesses then it can become a market leader in thehome appliance. PEL lose some competitive edge in the

following points:

Financial Problems

Lack of advertisement

System variations

Lack of Product range

Less Utilization of capacity


14/34


Opportunities

For the PEL there are more opportunities for expansion thebusiness. If PEL realize that opportunities then it will bemore fruitful and profitable for the company. Even ifcompany does not take advantage of these

opportunities then it will lose its competitive position andhigh profit. Its competitors will give PEL tough time topursuing the opportunities that are adopted by them.Following are the opportunities for the PEL.

Exploration of market in Pakistan Increase in product range

Export opportunity


15/34


Threats

PEL Company in such a competitive era has many threatsas well. These threats are for the present situations andfuture. Company should make its policies and strategiesaccording to these threats. So following are the main

threats for the PEL:

PEL facing tough competition.

Mostly companies Give High Credit in market and getcurrent market

High Credit market is big fever for the company Slow growth rate in Pakistan

Instability of government

Tax department


16/34


17/34

PORTERS FIVE MODEL

Potential Entrants:

No easy entrance in the industry (Huge investmentrequired)No geographical barriers for this IndustryPEL has a very strong Human Resources ( No Incumbent

Resistance)Easy infra structure availability to Target Markets

Substitutes

Minor Price margin among all rivalry firmsHuge distribution networks availableTrends of such products are rising on daily bases due torapid change in technologyNormal tax bases for the companies but economicalcondition effects the sales of such company


18/34

PORTERS FIVE MODEL

Suppliers

Brand reputation gives a competitive edgeImports and Exports of material is very lowQuality is not compromised against low pricesCustomer loyalty is the key factor for the industry

Buyers

Availability of many ranges in a similar product makesthe buyer go Rational in selection of the productsBuyer size and power is rising slowly due to moredemand of Electrical Products Because it is near to thebasic needs of an individualCost is not elastic to the demand or supply of theProductsServices importance plays a vital role in competitiveedge


19/34

( )PM The Competitive Profile MatrixPEL Waves Dawlance

ritical successfactor Weight Rating eightedScore Rating eightedScore Rating eightedScoreAdvertising .0 17 1 .0 17 4 .0 68 4 .0 68

Product Quality .0 10 3 .0 3 3 .0 3 4 .0 4

Price Competition .0 13 3 .0 39 2 .0 26 2 .0 26

Management .0 12 4 .0 48 3 .0 36 3 .0 36

Financial Position .0 10 1 .0 1 2 .0 2 2 .0 2

Customer loyalty .0 05 2 .0 1 3 .0 15 4 .0 2Global expansion .0 20 3 .0 6 1 .0 2 1 .0 2

Market shares .0 13 2 .0 26 4 .0 52 2 .0 26otal weightedscore .00 .4 .67 .56

COMPETITIVE PROFILE MATRIX


20/34

INDUSTRY LIFECYCLE


21/34

SPACE MATRIX


22/34

BCG MATRIX

Pakistan 91%

GULF 5%

China 4%

.20

0.0

-.20

0.51.0 0.0high

medium lowhigh

medium

low

Relative Market Share Position

In

dustrySales

Growth

Rate(%)


23/34

BCG MATRIX

Pakistans division of sales and profit falls in stars becausePEL is using forward integration and they arepenetrating the market with a huge product range andproduct development.

The Gulf area division in currently falling in Dogs becausethey want high quality with a combination of Low price.The success of PEL in Gulf area is having very lesschances and the BCG also says that they should nowliquidate in Gulf Region.

The China division is under the Question Marks becausePEL is currently penetrating the market of China.


24/34

IE MATRIX (INTERNAL-EXTERNAL)


25/34

IE MATRIX (INTERNAL-EXTERNAL)

Pakistans division of sales and profit falls in the categoryof II because PEL is using forward integration and theyare penetrating the market with a huge product rangeand product development.

The Gulf area division in currently falling II III IV V becausein actual they want high quality with a combination ofLow price. The success of PEL in Gulf area is havingvery less chances but the IE matrix says that theyshould take a chance for penetrating in the market orthey can liquidate from the area, Somehow it is in a

confusion area.

The China division is under II because PEL is currentlypenetrating the market of China.


26/34

FINANCIALS OF PEL


27/34

RATIO ANALYSIS

Debt Ratio = 64.4%The company fully employed capital includes

64.4% contribution of the debt/externalfinancing.

(58.8% is the debt ratio after growth

projection, reduced by 5.6%)Retention Ratio = 80.8%

The company retains 80.80% profit tounappropriated Profit.

Dividend payout ratio = 19.2%The company pays 19.2% of the profits in

dividend.


28/34

RATIO ANALYSIS

Current Ratio = 1.33:1The Company have 1.33 Rs to pay its liabilities of 1 Rs,Whereas the accounting standard says that it should be2:1

(1.52:1 is the Current Ratio after growth projection,increased by 0.19)

Net working Capital = 2,159,872,000The company has 2,159,872,000 Rs as Working

Capital(Increased by 1,443,563,000 After growth projection)

Receivable Turnover = 3.94 times

The company actually recovers the paymentsfrom its customers 3.94 times yearly(Increased by 0.23 times after 20% growth of sales by last

year)


29/34

RATIO ANALYSIS

Equity Multiplier =4.76 timesThe company assets bear 4.76 times the value

of equity(This time company reduced this by 0.41 times)

Cash flow Coverage Ratio = 1.51:1This indicates the ability to make 1$ interest and

principal payments from cash flows of 1.51$(Increased by 0.01 After growth projection)

Financial Cost Ratio =1.28:1

Interest is covering 1 RS to 1.28 RS of earnings(Increased by 0.02 i.e. 1.30:1 after 20% growth ofsales by last year)


30/34

RECOMMENDATIONS

Adopt a true decentralized organization setup which gives

all employees to take part in decision making.The company should have a strong marketing informationsystem to make proper forecasts.

The company should announce two holidays (Saturday and

Sunday) in a week.

Make sure proper functioning of HR department.

More allocate budget to its marketing department.


31/34

RECOMMENDATIONS

More focus on full strategy in its promotion mix.

Shorten its cash conversion cycle.

Should also focus on direct selling of its products to itscustomers.

Should constantly add technology in its products andsystem.

Should speed up its delivery process by establishing andexpanding its stores in areas of high demand.


32/34


33/34


34/34

Documents

Pak Electron Ltd