Group B 1:

Name Aliya Amina Akram Iqra Razzaq Khalid Nawaz H.M.Usman

Roll# MBS-10-22 MBS-10-33 MBS-10-05 MBS-10-59 MBS-10-28

Dedication:

We would like to dedicate this project to our beloved parents and our Sir Riaz hussain.who have always encouraged us thorough out in our project and make possible where we are stand today

Acknowledgement : All praises for ALLAH, the Almighty, who guides us in the darkness and help in difficulties and all respect, and for Holy Prophet Hazrat Muhammad (Peace Be Upon Him) who enables us to recognize our creator, who enlightens our minds to choose the right path of life.The words are meaning less to express our heart full to Mr. Riaz hussain for his outstanding suggestions and kind help at each and every step. It was very difficult we want to say impossible to complete this research report in such a good manner. We feel honor to express our sincere gratitude to Sir.Riaz hussain for this supervision, guidance and encouragement through out this research. We always found him very much alive, full of zeal, vitality and intellectual curiosity. With out his ideas, remarks and endless interest out and completed and thanks to all teachers. Special ovation to our parents they cherished us from our childhood and reminded a source of strength during our studies. We want to thanks our parents for there prays valuable guidance, suggestion and assistance in every moment of life.

Preface: As a world going repetdly, the business also moving the huge one and by that result more and more people want to become master in this business. The main purpose of finance field is to know how the financial analysis is done. we all know that finance is the blood of any business and without it business cannot run. Financial analysis of company is most difficult task. By doing this we are able to know what is financial position and financial structure of the company. Financial statements are able us to analyze the performance of the company and compare with other firms of this industry. Resulting information is useful for the owner, investors and creditors of the company. This report is analysis of financial statements of packages limited Lahore. This report has been prepared with the objective to develop analytical skills to require interpreting the information and measuring the companys performance during the 2006 to 2010.the financial statements analyzed by using the 3

horizontal, vertical and trend analysis. Ratios are important tool to analyze companys solvency, liquidity and profitability. Sincere attempts have been made to make this report error free but if any errors and omission are found then we apologize for that.

Contents: Sr.No. 1 2 3 4 5 6 7 8 9 10 Chapters Executive summary Introduction and history Departments products Financial analysis Horizontal and vertical analysis Ratio analysis Swot analysis Suggestion and recommendations References Page No. 7 9

Chapter 1

Executive summary

Executive summary:

Chapter 2

Introduction and History

Introduction

History Packaging Limited was born out of a dream to set up in Pakistan industries of excellence based on local raw material and talent. Packages Limited is a leading packaging manufacturing company of Pakistan. It is the sole largest industry in Pakistan serving about 35% needs of the country. Syed Baber Ali Shah, who was the first managing director of Packages Limited went to Sweden in 1956 to negotiate the contract with AB Akerland & 7

Rausing of Sweden. AB Akerland and Rausing had been the leading paper converters in Europe. Pakistanis needed technical collaboration with their Swedish partners. In the beginning, the first problem was the selection of the site. Finally, Lahore was selected due to the following reasons: Easy availability of workers. Easy availability of raw material. Easy transportation all over the country.

OVER THE YEARS Packages Limited was established in 1956 as a joint venture between the Ali Group of Pakistan and Akerlund & Rausing of Sweden to convert paper and paperboard into packaging for the consumer industry. Over the years, Packages has continued to enhance its facilities to meet the growing demand of packaging products. The Bulleh Shah Project: Packages is planning to relocate its paper manufacturing facilities from the existing location, which has limited capacity for expansion, to a new site 54 km from the present one. This will enable us to radically increase our paper and paperboard production from 100,000 to 300,000 tonnes per year. The packaging operation shall continue concurrently at the Lahore site. In 2003, Packages entered into an agreement with Vimpex of Austria to provide management and technical assistance to help in the operation, production optimization and capacity expansion of a paperboard mill in Syria. A team from Packages is currently providing these services and is close to optimizing mill production. 8

In 1999-2000, Packages Limited successfully completed the expansion of the flexible packaging line by installing a new rotogravure printing machine and expanded the carton line by adding a new Lemanic rotogravure inline printing and cutting creasing machine. A new 8-color Flexographic printing machine was also installed in the Flexible Business Unit in 2001. Packages Limited has also started producing corrugated boxes from its plant in Karachi from 2002. In 1996, a joint venture agreement was signed with Printcare (Ceylon) Limited for the production of flexible packaging materials in Sri Lanka. Packages Lanka (Private) Limited commenced production in 1998. Packages Limited now owns 79% of this company. In 1994, Coates Lorilleux Pakistan Limited, in which Packages Limited has 55% ownership, commenced production and sale of printing inks. In 1993, a joint venture agreement was signed with Mitsubishi Corporation of Japan for the manufacture of Polypropylene films at the Industrial Estate in Hattar, NWFP. This project, called Tri-Pack Films Limited, commenced production in 1995 with equity participation by Packages Limited, Mitsubishi Corporation, Altawfeek Company for Investment Funds, Saudi Arabia and the public. Packages Limited owns 33% of Tri-Pack Films Limited's equity. Since 1982, Packages Limited has had a joint venture with Tetra Pak International in Tetra Pak Pakistan Limited to manufacture paperboard for liquid food packaging and to market Tetra Pak packaging equipment. Packages commissioned its own paper mill with a production capacity of 24,000 tonnes in 1968. The mill produces paper and paperboard based on waste paper and agricultural by-products like wheat straw and river grass. With growing demand the capacity was increased periodically and in 2003 was nearly 100,000 tonnes per year. The LogoWhat it is all about? In the packages logo, the letter P in the triangle signifies a depth and range of meanings, i.e. progress, people, promptness, prosperity, productivity, power, patience, poignancy, particularity. These words are found and will drive the ideology of the company.

General Information about Company management Top Management Hierarchy of Packages Limited

10

OUR PEOPLE: Our people are our greatest asset. We seek and retain people who feel there is no compromising on excellence, and a corporate culture in which our family can grow and thrive. Heading our multi-talented team is our leadership of experienced senior management. Together, we know how to combine our skills and knowledge to deliver state-of-the-art solutions to our customers Board of directors:

Mr. Towfiq Habib Chinoy Mr. Chinoy, Non-Executive Director, has been associated with the Company as Chairman of the Board of Directors since 2008. He also holds directorship of New Jubilee Insurance Company Limited, Pakistan Cables Limited, BOC Pakistan Limited, New Jubilee Life Insurance Company Limited, International Industries Limited, International Steels Limited, IGI Investment Bank Limited, Pakistan Centre for Philanthropy and HBL Asset Management Limited besides other engagements in several other organizations.

11

Syed Hyder Ali Mr. Ali joined Packages Limited in July 1987 and presently holds the position of Managing Director of the Company. He has done his Masters in Sciences from Institute of Paper Chemistry and has also served as Mill Manager of Paper and Board operations of the Company. He holds directorship in several other companies including IGI Insurance Limited, Nestle Pakistan Limited, International Steels Limited, Packages Lanka (Private) Limited, Sanofi-Aventis Pakistan Limited and Tri-Pack Films Limited. He is also serving on the Board of certain philanthropic, educational, charitable and business support organizations including Pakistan Centre for Philanthropy, World Wide Fund for Nature, National Management Foundation, Syed Maratib Ali Religious and Charitable Trust and Pakistan Business Council.

Syed Aslam Mehdi Mr. Mehdi joined the Company in 1980 and currently holds the position of Director and General Manager of the Company. He has a Masters degree in Business Administration from Institute of Business Administration, Karachi and has served Packages Group companies invarious capacities over the years. Currently, he also holds directorship of DIC Pakistan Limited and Packages Lanka (Private) Limited.

Mr. Khalid Yacob Mr. Yacob joined Packages Limited in 1988 and currently holds the position of Director and Finance Manager of the Company. He is a fellow member of Institute of Chartered Accountants, England & Wales and Institute of Chartered Accountants, Pakistan and has been associated at senior management positions in A.F. Ferguson & Co, Chartered Accountants, Pakistan and Whinney Murray & Co, Chartered Accountants, Riyadh, Saudi Arabia. Mr. Yacob has vast experience in financial planning & budgeting, financial forecasting and analysis, 12

asset investment, taxation, computer services, client development and staff management. He also holds directorship of IGI Investment Bank Limited, IGI Funds Limited, Packages Lanka (Private) Limited and TriPack Films Limited.

Mr. Muhammad Aurangzeb Mr. Aurangzeb is a Non-Executive Director of the Company and has over 24 years banking experience and has served The Royal Bank of Scotland in various positions including Country Manager Pakistan, CFO Financial Markets Business, Global Head Portfolio Management and Global Head Commercial Client Segment. Currently he is serving as the CEO of J.P. Morgans Corporate Bank for Asia. Annual Report of Packages Limited 2010

Mr. Wazir Ali Khoja Mr. Khoja is a NIT nominee Director on Board of Packages Limited. He has over 32 years professional experience in the field of Banking, Finance and Mutual Fund Industry. He is also member on the Boards of other institutions i.e., Bank Al Habib Limited, Fauji Fertilizer Company Limited, Askari Bank Limited, Habib Metropolitan Bank Limited, KSB Pumps Company Limited, Pakistan State Oil, Pak Suzuki Motor Company Limited, Shell Gas LPG (Pakistan) Limited, Sui Northern Gas Pipelines Limited, Sui Southern Gas Company Limited, Pak Telecom Mobile Limited (un-listed) and Sindh Bank Limited.

Syed Shahid Ali Mr. Ali is associated with the Company as Non-Executive Director. He also holds directorship of several other companies including Treet Corporation Limited, Treet Power Limited, Loads Limited and IGI Insurance Limited. He is also actively involved in social and cultural activities and holds senior positions on the governing

13

boards of several hospitals and philanthropic organizations including Gulab Devi Hospital and Liaquat National Hospital.

Mr. Shamim Ahmad Khan Mr. Khan is associated with the Company as Non-Executive Director. He has served various government organizations in different capacities namely Securities and Exchange Commission of Pakistan and Ministry of Commerce. He has also been engaged with consultancy assignments for Asian Development Bank and other organizations. Mr. Khan also holds directorship of Abbott Laboratories Pakistan Limited and IGI Insurance Limited.

Mr. Matti Ilmari Naaka Mr. Naaka is associated with the Company as Non-Executive Director. He also holds senior management position in Stora Enso and possesses immense knowledge and experience in paper industry.

Mr. Shahid Aziz Siddiqui Mr. Siddiqui is associated with the Company as Non-Executive Director since 2008. He holds a Masters Degree from the Karachi University and a Post Graduate degree in Development Economics from the University of Cambridge UK. He also holds directorship of State Life Insurance Corporation of Pakistan, Sui Southern Gas Company Limited, International Industries Limited, Pakistan Cables Limited, Wyeth Laboratories Limited, Fauji Fertilizer Company Limited and Alpha Insurance. He has also served as Managing Director Rice Export Corporation of Pakistan, Chairman National Highways Authority, Director General Ports and Shipping and Director General Hajj, Embassy of Pakistan, 14

ADVISOR SYED BABAR ALI COMPANY SECRETARY ADIJ CAWASJI AUDITORS A.F.FERGUSON & CO. CHARTERED ACCOUNTANTS LEGAL ADVISORS HASSAN & HASSAN- Lahore ORR, DIGNAM & CO.-Karachi BANKERS ABN AMRO BANK AMERICAN EXPRESS BANK LIMITED ANZ GRINDLAYS BANK LIMITED BANK OF AMERICA, N.T & S.A CITI BANK N.A. DEUTSCHE BANK A.G. EMIRATES BANK INTERNATIONAL P.J.S.C HABIB BANK LIMITED MUSLIM COMMERCIAL BANK LIMITED STANDARD CHARTERED BANK THE HONGKONG & SHANGHAI BANKING CORPORATION LIMITED HEAD OFFICE & WORKS Shahrah-e-Roomi P.O Amer Sidhu Lahore-54760 Pakistan PABX : 5811541-46, 5811191-94 Cable : PACKAGES LAHORE Telex : 44866 PKGS PK Fax : (042)5811195, 5820147) REGISTERED OFFICE &REGIONAL SALES OFFICE 1ST Floor, Hilal-e-Ahmer House Khayaban-e-Iqbal Main Clifton Road Karachi-75600 Pakistan PABX : 5863941-42, 5874047-49 Cable : PACKAGES KARACHI Telex : 20315 PKGS PK Fax : (021) 5860251 15

To be leader in the market Packages serves by providing quality products and superior services to their customers while leaning from their feedback to set even higher standards for out products. To be a company that continuously enhances it superior technological competence to provide innovative solutions to customer needs. To be a company that attracts and retains outstanding people by creating a culture that fosters openness and innovation promotes individual growth and rewards initiative and performance. To be a company which combines its people, technology, management system and market opportunities to achieve profitable while providing fair returns to its investors. To be a company that endeavors to set the highest standards in corporate ethics in serving the society. (Management)

16

To position ourselves to be a regional supplier of quality packaging and tissue products To improve on contemporary measures such as cost, quality, service, speed of delivery and mobilization. Keep investing in technology, systems and human resources to effectively meet the challenges every new dawn brings. Develop relationships with all our stakeholders based on sustainable cooperation, upholding ethical values, which the shareholders, management and employees represent and continuously strive for.

17

OUR CORE VALUES Underlying everything we do and everything we believe in is a set of core values. These guide us to deal with every aspect of any issue we might encounter in our personal and professional lives. These values help us grow inside and outside, personally and as an organization. SMART GOVERNANCE We are committed to running our business successfully and efficiently, providing long term benefits to our employees and shareholders, and enriching the lives of those whom we serve by fulfilling our corporate responsibility to the best of our ability. We expect excellence from all processes, whether they relate to policy formation and accounting procedures or product development and customer service. WORK ENVIRONMENT Our policies and core values are aimed towards creating an informal yet stimulating teamoriented work environment with a culture of sharing and open communication. We cherish the diversity of viewpoint of every individual; we realize this encourages innovation and develops character.All employees have the right to a stress- and injury-free work environment. We ensure our employee safety and health by providing various in-house facilities such as a gym and making sure that all staff understand and uphold our safety policy. All our employees are permitted and encouraged to afford time and attention to personal concerns.  Our people:  conversation

18

OBJECTIVES OF PACKAGES LIMITED Objectives, are the ends towards which activity is aimed. They represent not only the end point of planning but also the end toward which organizing , staffing , leading and controlling are aimed. Packages Limited works with the objective of increase in sales, profit and expansion programs. At the time of establishment the Packages Limited start to work with the objective, To secure a relatively safe and cheap local source of paper, board and plastic film packaging The objectives for which the company is established are: 1. To carry on all or any of the business of manufacturing and printing of cartons, packages, specialized containers for various commodities, utensils and other articles, printers, lithographers, type founders, stereotypes, electrotypes, photographic printers, photo-lithographers, chromelithographers, engravers, die sikers, book binders, designers, paper and ink manfacturer and dealers in or manufacturers of any of them articles or things of a character similar or analogous to the foregoing or any of them or connected therewith; manufacturers importers, exporters, and dealers in raw materials articles and things required for purpose of manufacture and printing of cartons, packages, specialized containers for various commodities, utensils and other marketable commodities and to establish and maintain showrooms for this purpose; and of distributors, suppliers and sellers of the said articles and contractors for supplying them. 2. To carry on all or any of the business of manufacturers of and dealers in paper and board of all kinds and Tetra Paper for making Tetra Pak of any type, description and dimensions, straw board, plain and corrugated duplex board, card board, box board, veneer board, mill board, wall and ceiling paper, grease proof paper and articles made of paper, pulp, paper board specialists and board in all their branches. 3. To carry on business as producers and processors of and dealers in poultry, dairy produce of all kinds and other liquids of every description and to carry on business as cow and buffalo keepers and as manufacturers of all kinds of condensed milk, cream, butter, cheese and other milk products. 4. To carry on the business of planters, growers, cultivators, farmers and dealers in corn, hay and straw and other produce of the soil likely to be used in the manufacturing of paper and to improve protect against fire and wind and other elements of nature and to treat, prepare, render marketable, buy, sell or dispose of otherwise such corn, hay and straw and other products. 5. To carry on the business of stationers, printers, publishers, fancy goods dealers, bill posters and advertising contractors. 6. To carry on the business of manufacturers of an d dealers in chemicals of all kind; paints, varnishes, printing inks and all other things which can be conveniently manufactured or dealt in either wholesale or retail and either as principals or agents. 7. To imports and exports, buy, sell and trade in manufacture and mill supplies, fire engines, trucks, vehicles, machine tools, machine shops, processes and electric supplies and appliances foundry and factory supplies and hardware of all kinds and chemical substances useful for the company. 8. To carry on any other business, whether manufacturing or otherwise, which may seem to the company capable of being conveniently carried on in connection with the above or calculated directly or indirectly to enhance the value of or render profitable to the companys property or rights. 9. To acquire and undertake the whole or any part of the business, property and liabilities of any person or company on any business, which the company is, authorized to carry on, or possessed of property suitable for the purpose of this company. 10. To establish laboratories and research and development centers to perform such research and development as the company may deem advisable or feasible. 11. To train personnel and workers, both in Pakistan and abroad, to obtain technical proficiency in various specialties connected with the paper, board and packaging industries or other business of the company. 12. To carry for purchase or otherwise acquire any patents, brevets invention, licenses, concessions and like, conferring any exclusive or non-exclusive or limited right to use or any secret or other information as to 19

any invention which may seem capable of being used for any of the purposes of the Company, or the acquisition of which may seem calculated directly or indirectly to respect of, or otherwise turn to account the property, rights or information so acquired. 13. To enter into the partnership or into any arrangement fir sharing profits, union of interest, cooperation, joint venture or reciprocal concessions, with any person or company carrying on, or engaged in any business or transaction which this company is authorized to carry on or engage in, or any business or transaction capable to benefit this company and to lend money, to guarantee the contracts of or otherwise assist any such person or company and to take or otherwise acquire shares and securities if any such company, and to sell, hold, reissue with or without guarantee, or otherwise deal with the same. 14. To take, or otherwise acquire, and hold shares in any other company having objects altogether or in part similar to those of this company, or carrying on any business capable of being conducted so as directly to benefit this company. 15. To enter into an arrangement with any government, state or authority, central or provincial, railway, municipal, local or otherwise, that seem conductive to the companys objects or any of them and to obtain from any such government, state or authority any rights, privileges and concessions. 16. To establish and support or aid in the establishment and support of associations, funds, trusts, and conveniences calculated to benefit employees of the employees of the company or the dependents or connections of such persons, and to grant pensions and to make payments towards insurance. 17. To promote any company(ies) for the purpose of acquiring all or any of the property, rights and liabilities of this company, or for any purpose which may seem directly or indirectly to benefit this company. 18. To sell or dispose of the undertaking of the company or any part thereof or such consideration as the company think fit, and in particular for shares, debentures, or securities of any other company having objects altogether or in part similar to those of this company. 19. Generally to purchase, taken lease or in exchange hire or otherwise acquire, any moveable or immovable property and any rights or privileges which the company may think necessary or convenient for the purpose of its business and particular any land, building , machinery, plant and stock on trade. 20. To construct, improve, maintain, develop, work, manage, carryout, or control any manufacturing, warehouse, shops, stores and other works and convenience which may seem calculated directly or indirectly in advance the companys interest. 21. To sell, improve, manage, develop, exchange enfranchise, mortgage, lease, dispose of account, or otherwise deal with, all or any part of the property and rights of the company. 22. To invest and deal with the money of the company not immediately required in such manner as may from time to time be determined. 23. To lend money to such persons or companies and on such terms as may seem expedient and in particular to customers and others having dealing with the company and to give dealing with the company and to give guarantee or become security for any such persons, firms or companies. 24. To borrow or raise or secure the payment of money in such manner as the company shall think fit, and in particular by the issue of debentures or debentures stock, perpetual or otherwise charged upon all or any of the companys property, both present and future including its uncalled capital and to purchase or pay off any such securities. 25. To adopt such means of making known the products of the company as may seem expedient, and in particularly advertising in the press by circulars by purchase and exhibition of works of art or interest, by publication of books and periodicals and by granting prizes, rewards and donations. 26. To underwrite the shares, stocks or securities of any other company and to pay underwriting commission and brokerage or any shares, stocks or securities issued by the company. 27. To subscribe or contribute or otherwise to assist or to guarantee money to charitable, benevolent, religious, scientific, technical, national, public, political or any other institutions, objects or purpose or for any exhibition. 20

28. To receive money on deposit or loan upon such terms as the company may approve, and to guarantee the obligations and contracts of customers and others. 29. To remunerate the directors, officials and servants of the company or any person or firm or company rendering services to the company out of or in proportion to the returns of profits of the company or otherwise as the company may think proper, either by cash payment or by allotment to him or them of shares or securities of the company credited as paid up in full or part or otherwise as may be thought expedient. 30. To undertake and execute any trust, the undertaking where of may seem desirable, and either gratuitously or otherwise. 31. To capitalize such portion of the profits of the company as in not distributes among shareholders of the company in the form of dividends and as the directors of the company may think fit and to issue bonus shares, as fully paid up, in favor of the shareholders of the company. 32. To act as managing agents for any other person, firm or company as may be deemed convenient and upon such terms as may be agreed. 33. To do all such other things as are incidental or conducive to the attainment of the above objects. 34. To develop and build local skills and competence in a sophisticated industry in order to make the country self sufficient in its need for packaging. CORPORATE STRUCTURE: Centralization The flow of command is centralized in Packages Ltd. Basically top management makes all the major decisions and there is less direct involvement of the middle and lower management. The authority flows from top to bottom and less authority and power is delegated. Functional Departmentalization There is functional departmentalization in Packages Ltd. All the departments are responsible for their operations so that there is a better utilization of the resources and easy evaluation of their outputs. Marketing and Sales Packages Ltd. provides packaging solutions to major consumer industries in Pakistan through cost effective packaging. They do not have to extensively practice aggressive marketing or sales, as their position is strong being the only one capable of providing high quality paper and board. Value Chain of Packages Packages Ltd. has the value chain that they used to identify ways to create more customer value. It consists of two activities:

Primary activities 21

Secondary activities

Primary Activities Primary activities deal with the bringing material into business, production to serving them.

Operations Continuous flow is followed in the paper and board mill and assembly in the packaging division as paper board is cut in appropriate sizes, printed and then modified to be folded into the desired shape.

Packages Ltd. has its own ink factory equipped with modern machinery and independent laboratories, which supplies ink for the printing of paper and board. Packages Ltd. also produces polyethylene (pe) from granular plastic on specialized machines in the form of continuous tubes of different weights and widths and uses it as a raw material for different poly-products. Services There is not any dealer network and they do not operate in the consumer market for the production of paper and board except of providing tissue papers and toilet paper. Inbound Logistics Raw material for the production of paper and board is obtained locally through regular purchasing from the agricultural sector and to maintain the quality the ingredients are mixed with imported wood pulp. About 9000 tons of wood pulp and 1500 tons of chemicals (sulphur and raisin) are imported annually. About 98% of total paper and board used for packaging is produced in its own paper mill. Wheat straw and waste paper are the main raw materials, which are locally available. Whereas total wood pulp required is imported from Germany and Sweden. Outbound Logistics The packaging division uses all the paper produced by the paper and board mill, which are stored from time to time to accumulate in the warehouse and prevent from stock outs. Final products are transported from the production department and the warehouse via trucks.

22

Secondary Activities The secondary activities are held as a helper of primary activities. Procurement Raw material purchase is done on a regular accumulating basis from the agricultural sector and a major portion of the raw material is imported. About 9000 tons of wood pulp and 1500 tons of chemical are imported annually. Company Infrastructure The organizational structure is a flat with the Managing Director at the top of the chart followed by the General Manager who is followed by the Deputy General Manager. Then in line are the Technical Manager, Mill Manager, and Finance Manager, Market Manager, Commercial Manager, Industrial Manager, Liaison and Admin Manager and three Production Managers. Total workforce consist of 3126 people, of whom 289 are temporary, 500 are staff while the remaining are permanent workers. Technological Developments Packages Ltd. pledges to provide the market with the best quality products at competitive prices through a customer driven and service oriented, dynamic management team. To meet this obligation, the company will continue updating of employee skills by training, acquisition of new technology, and regular reevaluation of its quality control and assurance systems. .

23

Chapter 3

Departments

Departments PLANNING DEPARTMENT

24

As we know that if we want to increase our efficiency, we should plan with excellence. Planning department is one of the most important departments in an organization. Its main functions are to plan huge operations. In Packages the planning department is also playing an important role. The Planning Manager controls the department. The two main functions of the Planning Department are following: 1. LINK BETWEEN MARKETING DEPT. AND PRODUCTION DEPT. The Planning department acts as a link between Marketing department and the production department as there is no direct contact between the two departments. Planning receives marketing information from the Marketing department and converts it into the Production language i.e. When the orders are placed to the marketing department, the information regarding the order is transferred to the planning department where they design and plan the product according to the specifications required by the customers. 2. OPTIMIZING THE AVAILABLE CAPACITY To optimize the capacity means to utilize the manpower, machines working hours and material Educate ultimate objective of the Planning department is to improve and maximize the profitability. Yearly targets are set during the annual Sales Conference that is held in the month of December. In the sales conference the next five-year targets are set and the last years performance is reviewed. The next years projections are also set in the conference. In the five-year plans the shortfalls which are manpower, materials and machinery are reviewed. Top management is involved in long term planning short term plans which constitute a year are reviewed every quarter. PRODUCTION DEPARTMENT

The role of production department in a manufacturing concern is very important. In Packages the production department is also an important one. The goods for the customers are manufactured according to the desired standards in this department. This department is responsible to plan and organize the allocation of jobs to various machines in a way that their maximum capacity is utilized and that the delivery is given to the customer by stipulated date. The head of the production department is the production manager. The planning department also assists the department. The working procedures are based on week basis i.e. the total no of weeks in a year. The Production Manager looks after the production while the Planning Manager supervises the planning section. The Production, Planning and control unit is also directly under the Production Manager and acts as the brain cell for him. Production Manager prepares internal planning of whole Paper & Board Division. It takes into account the total capacity of the machinery, and manpower. It also arranges the resources to attain maximum utilization. The other goal is to reduce the wastage of resources. The planning department acts as a coordinator between the Marketing and production Departments. This is very Important in the sense that if there is no communication between the Marketing and Production Departments, a lot of confusion will be created. Production department is further integrated into two divisions namely: 1. PACKAGING DIVISION. 25

2. PAPER AND BOARD MILL. PACKAGING DIVISION The packaging division is also called as the Paper Converting Division. Paper Converting Department was established in 1971. This department is second major department in Packages Limited. There are three types of printing in Packages Limited: Off-set Printing Flexo Graphic Printing Roto Gravure Printing The Paper Converting Department converts the paper into packing material. By Flexo Graphic & Roto Gravure Printing we can get paper or bags in reel forms. It only uses paper and other Polly materials. No board is used in this department. Printing in the Paper Converting Department is several forms: Printing & Conversion of Paper Preparing & Printing Polyethylene bags Preparing Aluminum Foils Fine printing is get from Roto Gravure printing, which is expensive, then Flexo method. The operations are carried out on various machines. Operations include printing polyethylene extrusion, cutting, creasing, slitting, bag making, waxing etc. FLEXIBLE PACKAGING DIVISION (FP) As the demand for sophisticated packaging grew, Packages Limited established Flexible Packaging Department in1986 that is fully equipped to manufacture high quality packaging. Molded from synthetic materials, rubber plates are used in Flexography. It uses the Roto Gravure printing technique. This Roto Gravure printing is best for food items, for this type of packaging 98% material is imported as a result it is the most expensive printing technique. One Six Color Roto Printing Machine One Lamination Machine One Rewinding Machine Two Slitting Machines A Shrink Packing Machine This printing is more expensive than stereotype printing. Metallic Cylinder is used in order to get fine printing. This cylinder picks the six color solvent based ink. The materials surface should be 100% glossy and smoother. It processes films whether they are paper, Polly or aluminum foil based, are laminated by containing two or more layers so as t give the required barrier properties against moisture, gases and odors. It produces packaging for soap and confectionery industry. The printing is done in very attractive colors and designs.

26

OFF-SET PRINITNG DEPARTMENT This is the largest printing section of Packages Limited. This department has the largest share in the total Packages Limited sales, which is about 55%. There are 12 printing machines in this section which are used for printing on duplex board. There are two varnishing machines and one laminator machine. This printing facility is available from two to six colors. These machines use oil based ink. Normally they print cigarette cartons, biscuits, shoeboxes and tea boxes. In July 1994 they produced record production of 15200000 sheets. Offset printing is the art of printing from a flat surface. In this method the blanket and transfers to the sheet to be printing first receive the image. The blanket is made of rubber. Off-set printing is based on the principle that grease and water are not readily mix. Printing is done from Mattel plates. The image is put on the plate by a photo chemical process. The image area on the plate is processed so that greasy ink sticks to it but water runs off. The non-image area of the plate processed to pick up and hold water but not ink. Each Off-set machine has different cylinders that is, six color machine has six cylinders, five color has five cylinders and so on. Each cylinder is used for the printing of a specific color. The cylinder takes the ink from the ink pan and prints it on the paper board running on the other cylinder. The paper goes forward and then another cylinder prints another color and so on, until the sheet is printed according to the right format. Regardless of the type, Off-set presses have four basic systems: Feeder System Registration System Printing System Delivery System The Duplex board is used in this form of printing. The weight of board is 240 to 490 grams. They use imported machines, these machines are made by PLANETA, M.A.N, ROLAND AND HIEDLBERG. ROLAND machine is latest and print in five colors.

CORRUGATED DEPARTMENT For large scale packaging, Packages Limited has been manufacturing Corrugated Carton since 1971. These cartons produced in different sizes, are used for transporting consumer products from manufacturer to retail outlets. The share of Corrugated Department in Packages Limited total sales is almost 20%, which is second after the Off-set department. Corrugated cartons are of great value for the export of fresh fruits, garments and shoes a wide variety of gum tapes for sealing corrugated cartons are also manufactured. Corrugated department has two main wings Solid Board 27

Corrugated Boxes In solid board, the board is stitched in the form of boxes. In corrugated, boxes are made by stitching and gluing. This department producing almost 2.5 to 2.8 million boxes per month. The department packaging material provides greater protection against damages and pile ranges of products. For making a box following are the steps: Making three or five layers sheets from paper rolls. Cutting them in sheets according to the size required for package, which is to be produced. Cutting, Creasing, Printing, Folding and Gluing these sheets to shape it into the box. Then also bundling these boxes in specifies number. ART DEPARTMENT Packages limited has an art department in which qualified, efficient and talented artists and designers are working. The artists and designers in the department are very creative and for most of the time are involved in designing the new packages. Art department gives attention to the advice of the marketing and of the customer. There are two sections in the Art department. Creative (Comprehensive) Section Mechanical Section CREATIVE SECTION The main function of this department is to create new designs in accordance with the customers specifications. When a new order is to be processed the sales officers contacts the creative section to provide basic information about the idea, number of colors and size etc. as requested by the customer. The designer then visualizes the idea and creates four or five Comprehensive designs. These designs (blank samples) are shown to the customers and the best one is selected. All the designs are made on computers. Then hard copy of these designs are made through the use of colored Laser Printer. MECHANICAL SECTION Approved designs from the creative section come in mechanical section. Designs in black and white are prepared in this section. Sensitive black and white films are used for better results for color photograph, which is called a transparency. Coordination between art designers and mechanical artists is very necessary for good designs. The mechanical is then sent to the Planning Department and is checked according to the limitations of the printing, cutting , etc processes. Then sample is sent to the Marketing Department for the customer approval. If the customer suggests some changes, then these changes are made and the whole process of checking is repeated. After the final approval of the customer, it is sent to the Camera Department for making negatives. Art Department uses MACINTOSH computers and other design equipment. CAMERA DEPARTMENT Camera Department makes negatives and color separation from the mechanical by using cameras. Earlier this whole process was done by manually but recently Packages Limited ha bought a sophisticated fully computerized 28

color scanner. Then with the help of scanners and manually, it is found out that how much quantity of each color is required in the design. The department has increased its efficiency and quality of films. In the Camera Section, there are four colors use to get the negatives: Magenta, Yellow, Cyan, and Black. The number of negatives is subject to the number of colors used. If necessary transparencies can also be made of the design. COATING DEPARTMENT When paper & board is manufactured in Paper & Board Mill, its both surfaces are coarse. For printing purpose, it must have smooth finish. For smooth finish, it is send to the Coating Department, where it is processed to a smooth, shinning, extra whit upper layer or both sides. Color coating of paper and board is also available. CUTTING AND CREASING DEPARTMENT (CC) Cutting is the process which gives the carton its shape. For each new product a cutting die is prepared from drawings. This department is equipped with latest cutting and creasing machines having a great efficiency along with accuracy. LAMINATION DEPARTMENT This department has two machines which laminates the paper on single side or double side. This lamination process is started after printing, as the customer requirements. FOLDING AND GLUING DEPARTMENT (FG) Folding and Gluing is last process, which takes place before the completion of the carton. The printed material after passing through the cutting and creasing processes is passed on to the folding and gluing section. A carton, which can not be glued on machine, is glued by hand manually. Last examination of quality control is conducted in this department. From this department, the job is packed in boxes and sent dispatch department.

PAPER AND BOARD MILL DIVISION

DEFINITION OF PACKINGING Packaging is the use of containers and components with the addition of labeling to protect, identify, merchandise and facilitate the use of products. Protection and identification being the overwhelming factors in this process. This obviously facilitates the use of a product of a particular brand. DEFININTION OF PAPER AND BOARD: When the weight of one square meter of sheet exceeds 130 grams, it is termed as Board or Paper Board. Substance lower than 130 grams per square meter is called Paper.

29

Board is basically used in the manufacture of cartons where creasing is also required. It provides necessary strength to the cartons, which are most commonly used in packaging of cigarettes, toiletries and detergents, tea pharmaceutical products, food and other consumer items. The paper and board mill started its production in 1968. At present the production capacity is about 50 thousands tons per year. It full fills the entire requirement of the packing division and surplus quantity is sold to the specific customers who are not their competitors directly or indirectly. The varieties of papers and board produced in mill are as follows. BOARD 1. M.G WHITE DUPLEX BOARD 2. FILE CARD 3. IVORY CARD 4. WHITE CARD 5. KRAFT LINED BOARD 6. GREY CHIP BOARD

PAPER 1. WRITING AND PRINTING PAPER 2. DUPLICATING PAPER 3. IMITATION ART PAPER 4. OFF SET PRINTING PAPER 5. CALENDAR PAPER 6. M.G BROWN WRAPPING PAPER 7. TWIST PROOF PAPER 8. TISSUE PAPER

DISPATCH DEPARTMENT This department dispatches the goods produced by Production Department to the respective clients. The motivation of this departments workers is enhanced due to the incentive scheme. QUALITY CONTROL DEPARTMENT

30

This department examines the quality of products producing by Production Department. They make tests about the quality of printing, grammage of paper or board and compare them with customer specifications and prepare reports about results. TECHNICAL DEPARTMENT This department is responsible for the repair and maintenance of machines and construction of building and roads in the factory. There are 130 employees in this department. It works in two shifts. In case of emergency third shift is carried out. It provides the necessary spare parts and machinery to different departments. Technical Department is responsible for making f Roll Grinders. These orders are accepted only on cash basis. It is divided into small departments, which do specific work. tools and spare parts. Some time it works for other industries.

THE RESEARCH, DEVELOPMENT & CONTROL DEPARTMENT If the industry wants to grow not just survive, then it should take care of its Research and Development Department. World is changing day by day. Development in Packaging material is a continuous process. New materials, films, fibers, chemicals, adhesives and coating always are researched and developed. As Packages Limited wants to retain clients, stay out of court and improve profits, so it gives much consideration on quality of the product. To keep up with new demands, Packages Limited has a Research, Development and Control Department. This department works in close collaboration with Production and Marketing departments. This department has well equipped laboratories and pilot machines, which are used to test various chemical raw materials and machines. It enables Packages Limited to provide better quality and latest packaging to the consumer 31

industry, enabling it to introduce new product lines an develop new materials. The Research, Development and Control Department has three major areas for its activities:

Development Control Research RESEARCH: This section is directly responsible to the Production Manager about his research. In Research, work is done with on the idea, experiment is divided into parts and on each part attention is focused and conclusions or suggestions are given. Packages Limited tries to get as many information and technology which is possible and beneficial to the organization. All such information is collected for research. Some time they receive reports of customers problems and complaints from Marketing Department and advise to them through the same channels. DEVELOPMENT: Development is a continuous process in any organization. A lot of development is the result of feasibility studies, study of new production methods and new products. Packages Limited has a Paper & Board Mill, so it uses largest number of chemicals. The Environment Protection Agency has some standards for reducing pollution. The R,D & Control Department developed new way of reducing pollution and always tries to meet EPA standards.

CONTROL: Packages Limited R,D & Control Department divides term CONTROL into two areas:

Quality Control 32

Process Control Quality is synonymous with Packages limited. Every packages made by Packages Limited guarantees the use of quality materials and processing. This is all due to the strict quality Control Standards, observed at every stage of the production, from raw materials to dispatch Department. This department makes stringent requirements on quality control, which help in working consistently towards attaining better results for customers. To ensure constant quality and improvement this department managed by qualified scientists. Quality Control section has satellite laboratory in every department, which constantly monitor and report. There is on the spot checking and corrective treatment is given to the operators. If the percentage of defective material goes above the permissible limit, the supervisor and machine operator is given a signal to take corrective action.

PERSONNEL DEPARTMENT

Personal department is another one of the most important departments in an organization. The success of an organization is dependent upon a successful personnel department. All the progressive organization give a great attention and importance to their personal department. The prime objective of this department is to manage and utilize the human resources in a fruitful manner. It is obvious that if the employees are good then the pre determined objectives can be easily achieved with efficiency and effectiveness. This department deals with the selection of employees and their working performance. The most important objective of any personal department is how to improve the performance of employees at work. The function performed by personal department are: Recruitment & Selection of Employees. Training and Development of Employees. Planning Work for the Employees. Performance Evaluation and Appraisals. Keeping Attendance Record Keeping Employees Record In the Organization. Compensation Management. Management Labor Relation. Discipline Welfare of Employees. Packages Limited possesses a well organized and systematically operated Personnel Department. The success and effectiveness of this departments policy and programs can be judged from the fact that no problem has come to surface in the recent years. The Personnel Department is headed by Personnel Manager.

33

PERSONEL POLICIES The main personnel policies are given below. 1. Recruitment Policy Packages Limited is more inclined towards employing fresh graduates than highly experienced persons. The main reason behind the policy is that they believe in developing a person on their own grounds keeping in view organizational objectives. 2. Workers Selection All the workers are taken on the designation of apprentice trainee. After the expiry of probation period if the performance of the trainee is found to satisfactory, then he is absorbed in the work force. Efficient and effective workers are promoted regularly after fixed periods upon the recommendation of the superiors. 3. Executive Selection For the selection of executives if any junior executive is found competent, then he is promoted to grade E-III. For selection of executive outside the organization, jobs are advertised in the news papers and candidates are called for the interview. After taking a written test and brilliancy interview the selected candidates appear before the top management for the final selection. 4. Training Training is very important to increase the employee performance. At the beginning of the new jobs, or if the organization adopt the new technology the employees are trained to meet the changes. Packages provide training facilities, which include on job training and of job training and also arranged refresher courses. 5. Organization The selected candidates are utilized for the contribution in the organization. It is referred as compensation and includes monetary rewards and other facilities. Following are the grades in the organization. Workers Grade 1. Grade-1 G-1 2. Grade-2 G-2 3. Grade-3 G-3 4. Grade-4 G-4 5. Grade-5 G-5

Executive Grade 1. Junior Executive (JE) 2. Executive III (E-III) 3. Executive II (E-II) 34

4. Executive I (E-I) Managerial Grades 1. Manager-I (M-I) 2. Manger-II (M-II) 3. Manager-III (M-III) Retirement age for the employees is 58 years and no extension in services allowed. The needed employees are hired on contract basis. Attendance cards issued by the time office to the workers. The cards are punched twice a day in their respective department whereas attendance record of monthly employees is kept in attendance register. Hourly rate workers are paid at the end of paid every fortnight while the monthly staff is given their salaries at each month end. The employees are also given the following allowances. 1. House Rent. House rent is 50 percent of the basic salaries which in some cases is 60 percent of the basic salaries. More than 60 percent of the employees have their own houses. 2. Conveyance Allowance Conveyance allowance is given to the all employees. Loans are provided to the employees to get their own conveyance. Monthly allowances to employees are also given for maintenance of their conveyances. Employees who bring their conveyances to the factory are also given an additional allowance. BENEFITS TO THE EMPLOYEES The Packages Limited has given many benefit to its employees. A number of facilities are provided by Packages Limited for the training and welfare of its employees. Few projects are also working in this context.

Ali Industrial And Technical Institute To maintain the technical level of the employees, an institute naming " ALI INDUSTRIAL TECHNICAL INSTITUTE " was established. This institute trains about 200 technicians annually. The duration of the course is two years and training is provided in different fields. Preference is given to the children of the employees of Packages limited. The students are provided free uniforms, subsidized books, food and milk and a scholarship. After passing out from the institute the technicians are free to seek job in any industry of their choice. Food Food is provided to the employees of packages limited. The food is prepared under most hygienic conditions and is subsidized at highly subsidized rates. There are four messes, which provide meals to the employees These are as follows: 1. VIP Mess 2. Manager Mess 35

3. Supervisor Mess 4. Workers Mess The food is provided at very less cost to employees. The rates are highly subsidized in the each mess. Uniform And Locker Facility Every worker is provided with two uniforms yearly. They are also provided with the locker facility. The company also arranges laundry service. Two soaps are also given to the workers for maintaining their personal hygiene. Provident Fund Each employee of the organization contributes 10 % of the basic salary and the company for the provident fund contributes the same amount. The employees receive this amount at the time of their retirement or when they leave the organization. Pension There are two pension categories organization. One is for the management staff and the other for the worker employees. The first category contribute 13% of their salary whereas the other category contributes 4.5% of their salary. The amount is deposited in the government securities. The employees are entitled to receive this amount after 58 years of age. The employee gets 100% pension up to his life. After employee death his widow gets 50% of pension amount. After wife death the children can take 20% of pension until he is less than 21 years.

Bonus All the employees get handsome bonuses every year, which varies from grade to grade. Group Insurance Companys policy is to have its employees safe and sound financially. The company insures so all the workers and the premium amounts are also paid by the company. Recreational Allowances The company encourages and supports recreational activities. Employees in groups are encouraged to go excursion trips and the expenses towards their transportation etc. are paid by the company. Employees can also use the rest use owned by Packages Limited in Murree. Overtime Workers who work more than regular hours are paid twice of their pay that includes basic pay and the dearness allowance. Employees of E III and E II grade are also entitled for overtime. Welfare Fund It is the duty of the organization to establish a welfare fund in which both company and the workers contribute equally. The heirs of employees are entitled to receive money from this fund. Social Security 36

Social Security is applicable to all workers of Packages Limited who are drawing up to Rs. 1800. Medical facilities are also given to the employees and their families. Medical facilities are also available in the factory's premises. Employees receive free medical treatments from the company's specified clinics and dispensaries. Fair Price Shop A Fair Price shop is present inside the factory from where basic necessities along with the provision of some basic commodities are available on very subsidized rates. Adult Education All the illiterate employees are required to undergo an education program for two years. All the reading and writing material till primary level is provided free of cost. Haj Pilgrimage Scheme Every year three of the employees are selected to go on HAJ. The company pays all the expenses. Any worker who wants to go on HAJ on his own expenses is given one month paid leave. Health Development All the workers are encouraged to participate in sports activities. A sports complex is also available for the employees, which provides sporting facilities of Badminton. Squash Table Tennis, Carom, and Chess etc. Facilities for Hockey, Football, Cricket, volleyball and swimming are also available. Yearly interdepartmental sports competitions are a regular feature. An exclusive children fair is also held every year. Educational Stipends Educational stipends are given to the children of the employees from matriculation to post graduate level. Service Award Employees are awarded different souvenirs after completion of twenty years or more. After twenty-five years of service a valuable wristwatch is also presented to the employees. Loan Facilities For Car/Motor Cycle Loan is granted to the employees for the purchase of cycle, motor cycle and car. These loans are free from interest and all the grades are eligible for these loans. Mosque One beautiful mosque is in the factory area so that everybody can offer his prayers and I observed that considerably large number of employees uses this facility.

MARKETING DEPARTMENT

37

We are living in an age of Marketing. You do not sell what you make rather you make what you sell. Today in any organization, Marketing Department is of paramount importance. Because it plays a link between the consumer and the producer. The function of the marketing department works effectively and efficiently, the whole organization is on a smooth run. Like all other departments the Marketing Department of Packages Limited shows a good performance. The marketing department plays a key role in the operations of the organization. The marketing manager is responsible for all the marketing operations in all three offices in Lahore, Karachi & Islamabad. The marketing department of Packages Limited is responsible for sale of industrial & consumer products. Planning division of the Product Department works closely with the Marketing Department to ensure the meeting of established targets. Packages Limited has divided into the three regions i.e., Lahore, Karachi & Islamabad. Each is assisted by the Area Marketing Manager who is second in line of authority, direct under the Marketing Manager. Marketing Manager also look after the Consumer Products Division. Each region is responsible for the sale of its area. All managers are assisted by a team consisting of Regional Sales Manager, Senior Sales Officers, Sales officers and sales supervisor. There are two Regional Sales Managers under the area marketing manager. One for industrial sales and one is for the consumer products. Then there are senior sales officers and sales officers. The Deputy General Manager who is also among the Board of Directors of Packages Limited is often consulted by the Marketing Manager for important managerial decisions concerning Marketing Department. The regional sales manager acts as a coordinator between the sales officers and the Area Manager. Sometimes he is also assigned with some customers but usually not more than one. Each sales officer is allocated a certain number of customers. The respective officer will deal with these customers and solve their problems. In case of some trouble, the Area Manager does involve and tries to settle things. His advice is especially taken while developing, launching and pricing of new products or amending the prices of existing products and so on.

FINANCE DEPARTMENT Finance department has very important role in for any business firm now a days. So Packages Limited has established its own Finance Department on professional basis. Packages Limited has different financial managers who are responsible for the financial aspects of the Packages Limited. This department plays a key role in organizations performance. Finance department is responsible to maintains accounts of all departments within the organization. Major Functions of Finance Department Finance department performs different functions in the organization to run the finance of the organization more effectively. Finance Manager is responsible for the companys financial management. The major functions which by this department are as follows: 38

Calculate different expenses of the organization. Calculation of all incomes, receiving from sales & other resources. Financial planning of the organization. Distribution of profit to the share holders. Getting loans from banks and other financial institutions. Costing the production. To make the efficient use of money of the company. Maintains all the accounts about inventory & imports of material. Maintains all the records about purchases made by organization.

39

The Bulleh Shah Project

The Bulleh Shah Project: In 2005, Packages Limited started a new pulp and paper mill project in Kasur located 50 km south of Lahore. The greenfield site spread on 42 hectares is known as Bulleh Shah Paper Mill coined after a famous Pakistani poet from this region. The greenfield site comprises of two modern paper machines PM6 and PM7 that will enable us to increase our paper and paperboard production from 100,000 to 300,000 tones per year. PM6 already in operation since 2007 manufactures container board.

PM7 which is expected to start production by end of 20008 is a completely rebuilt 4.5m Voith machine shall produce writing printing paper.

40

In addition to the paper machines, there is a modern pulp mill, coater and a corrugators plant installed at the Greenfield site as well. Guest house

GUEST HOUSE

Exclusively for foreign visitors, company has built a 14 room guest house with all required appliances, facilities and services. Each room has own satellite TV, air conditioned and furnished bedroom and washroom.

41

GUEST AREA In common guest area, there is dining room and lounge. In lounge guests can play games, watch satellite TV / DVD moves or read books. Guest house staff is available everyday for laundry, cooking and room cleaning.

For activate persons guest house has some fitness facilities like treadmill, fitness bike and badminton court. For relaxation guests can use traditional Finnish sauna, which is available everyday.

Wireless internet link helps guests to keep in touch with work offices and home. Guesthouse own cook has learned many western food courses, Pancakes, mashed potatoes, barbeque or pasta are available on request when home sickness too overwhelming. Mill area is located nearby Kasur city in case quests need to find doctor, pharmacy or other services. 42

43

44

45

46

Chapter 4

47

Products:

PAPER & BOARD: We are producing high quality paper and board since 1965 using environment friendly manufacturing processes. We specialize in making a variety of duplex boards and paper. Our products are tested for high performance in terms of strength, stiffness and gloss. From coffee cups to the books we read, from Tetra Pak juice containers to huge shipping containers, paper and board products touch our lives in a thousand ways every day.

PAPER We produce: high gloss writing paper machine glazed / special poster paper

fluting paper liner for shipping cartons corrugating medium paper wood-free writing/printing paper Paper quality and weight is determined by the client's specific requirements and Packages ensures this is carried out to the exact specifications provided. 48

Paper is available in the following weights: Type of Paper Test liner Corrugated medium Paper/Fluting Wrapping Paper High gloss writing paper Poster Paper Weight (g/m2) 125-220 120-170 70-90 58-68 40-90

BOARD: We manufacture several types of board. Food Board, a basic raw material in liquid food packaging, is being manufactured since 1979 for Tetra Pak Pakistan Limited. This material is used in making aseptic packaging for milk, cream, oil, fruit juices and other perishable food items.

Some of our board products are: liquid packaging board food grade board duplex board / chipboard bleached board tobacco board and cardboard liner board Board is available in the following weights: Type of White Board Bleached Board Duplex Board Cardboard Liquid Packaging Board Poster Paper Weight (g/m2) 195 - 205 150 - 450 160 - 250 150 - 290 40 - 90

TECHNICAL EXPERTISE: Our production capacities exceed 100,000 tonnes per annum, from four main paper machines of different capabilities. These paper machines are supported by two pulp mills and a chemical recovery and effluent treatment plant alongwith allied support services. Packages Limited is among the first companies in the world to manufacture paper & paper board using a pulp mixture of wheat straw, kahi grass, cotton linter, recycled pulp and wood pulp. These environment-friendly 49

processes use fewer chemicals, resulting in improved strength properties and increased stacking strength of containers.

CARTON BUSINESS UNIT: The carton business unit is an integral part of the manufacturing facilities at Packages. Constant improvements in technology help our customers exert exact control over each stage of the manufacturing process. Our customized packaging and consistent quality giveallour cartons superior shelf visibility. The foundations of this business line were laid about 50 years ago with the formation of the offset printing department. Carton Business Unit production experts work closely with pre-press and technical staff to deliver a durable, aesthetically pleasing and technically sound package to the customer. The total board consumption of the carton line is around 18 - 20 thousand tonnes per annum. The strong backward integration within the Packages value chain has given the carton line a competitive edge in terms of backend material availability. Prompt material availability reduces turn around time and ensures timely delivery.

INDUSTRIES: 50

Food and Beverages Soap / Detergent Pharmaceuticals Match Electronics Shoe Tobacco TECHNICAL EXPERTISE: The Carton Business Unit's technical competence is reflected through two modes of printing: offset and rotogravure. The former is a high end tool for more complex design themes while the latter consistently services high volume orders. Packages expanded the line through installation of a new Lemanic rotogravure printing and inline cutting creasing machine in the year 2000. New lines have been introduced with the addition of a Roland 700 double coater in the Offset Printing department, a Bobst Evoline in the Cutting and Creasing and a Bobst Media 100 in the Folding and Gluing departments. The state-of-the-art Roland 700 with twin coating has enabled Packages to introduce innovative printing with special effect coating and gold coatings. The commissioning of the new in-house CIM Line has made advanced counter milling, laser cutting, and blade bending machines available for high quality die making. Customers can now take advantage of even higher precision and consistency in cutting and creasing.

CORRUWAL BUSINESS UNIT: 51

Packages has been manufacturing corrugated cartons since 1974. Produced in a variety of sizes, these cartons are of great value for in-country goods distribution and export. Capacity increase and product development continue to be of high priority. Corrugated cartons are of great value to our diverse portfolio of customers for secure transportation of their products to local and international markets. With the commissioning of our corrugated plant in Karachi, we have the capability of producing seven million corrugated cartons to cater to the ever-increasing demand of high quality shipping cartons.

INDUSTRIES Textile Food Tobacco Soap Detergent TECHNICAL EXPERTISE Our corrugated finishing division can print in up to three colours. Customers have the flexibility to choose from regular slotted containers (RSC), glued, RSC stitched or die cut cartons. PRODUCT DEVELOPMENT: After customer feedback and extensive research, Packages has developed special liner and fluting that gives extra strength to containers, in particular increasing their stacking strength and their resistance to bursting.

52

FLEXIBLE BUSINESS UNIT: With improved barrier properties and lower cost compared to rigid packaging, flexible packaging is steadily gaining importance in the packaging industry. Our flexible line makes high quality packaging films and laminates, and offers other specialized services such as rotogravure printing and sleeve-making. Flexible packaging combines different plastic films, aluminium foil and paper to produce laminates of two or more layers for providing layered protection against moisture, gases and odours. Used where colourful package design and preserving product quality are important, such as in the food and pharmaceutical industries, flexographic printing offers economy with quality.

INDUSTRIES Soap Tobacco Tea Food Diary Ice-Cream Milk powder Confectionery Shampoo Pesticide Pharmaceutical

53

TECHNICAL EXPERTISE:

Flexographic Printing On our flexographic line, flexographic printing in up to eight colours can be done on paper, poly-coated paper and films. We have the first ever gearless press in the country which has the ability to print lifelike images on materials like Polyethylene, OPP, and Polyester. Rotogravure Printing With the help of latest in-house cylinder making and engraving facilities, customers can choose from up to ten colors Cerrutti presses of very high quality printing results. Commonly used printing substrates on our rotogravures are: PET, BOPP, Metallized OPP, Pearlised OPP, Paper and PVC. Lamination Packages has both solvent based and solvent-less laminators. With the help of our modern machines even complex structures of three to four laminations can be done on our lamination facilities. Equipped with Italian technology, computerized control and auto splicing, we can laminate BOPP, Polyester, Al foil, Met OPP, Met PET, .E. paper as fast as 250 m/min with continuous production. An automatic viscosity control system ensures consistent quality. The R&D center at Packages helps customers develop cost effective laminates to suit their needs. Extrusion We have our own mono- and multi-layer extrusion facility that can extrude polyethylene of different grades and colours. Canadian technology with computerized control and monitoring of each layer on our 3 and 5 layer extrusion line enables us to produce high output to meet our customers' demands and keep up with new market trends. We extrude a number of specialized films which includes oil, ghee, detergent and food films. These specialized films are known for their strength and high barrier properties. We also 54

have an on-line slitting option on our line which makes our system more efficient. Bag & Sleeve making Bag making is an integral part of our Flexible Line. We have the capability to provide the following variety of bag constructions: Side Seal, Double Side Seal, Bottom Seal, Three Side Seal, Bottom Gusset Bags and Side Gusset Bags. We have automated sleeve-making machines on which we make shrinkable PVC sleeves.

CONSUMER PRODUCTS: A range of products for those annoying problems in life: our consumer products feature great ideas for making everyday living easier and more comfortable, both indoors and out. Tissue Products Personal Hygiene Paper Products 55

Reflecting our core values of exceeding customer expectations through innovation, leadership and teamwork, the Rose Petal and Tulip brands continue to hold over 80% of the domestic market share of the tissue paper market in Pakistan. We also have a leading market share in the away-fromhome business: we supply custom-printed boxes, table napkins, coasters and paper cups to institutions such as hotels, fast food chains, restaurants, businesses and the airline industry

56

GLOBAL PARTNERS One of the best ways for a business to leverage its products and increase growth is through association. Our business alliances help us manage our business more effectively, as well as helping us and our partners develop and diversify our interests. Customers also benefit from the increased knowledge base, as we transform our market awareness and shared technology into innovative and cost effective solutions for customers. The Packages Group is proud of its long standing network of friends and family, with key business partners as diverse as Print Care, Coca-Cola, Tetra Pak and Mitsubishi Corporation.

Nestle Pakistan Ltd Tri-pack Films Ltd. Packages Lanka Pvt. Ltd. IGI Investment Bank Ltd.

Tetrapak Pakistan Ltd. DIC Pakistan Ltd. IGI Insurance Ltd. Coca-Cola Beverages Pakistan Ltd.

Nestle Pakistan Ltd Milkpak was established in 1981. It collected milk from the rural areas, processes it by the UHT method, and sells it in Tetra Pak containers. In 1988, Nestle of Switzerland bought into Milkpak and expanded its scope and activities - Nestle now owns 59% of the enlarged company. Nestle sales in year 2009 were Rs.41.1 Billion with 2,422 employees. Public Limited Company. Website: Tetra Pak Pakistan Ltd. Established in 1982, Tetra Pak Pakistan Limited is a joint venture between Packages Limited and Tetra Laval International, S.A., the worlds leading liquid food packaging company. Total number of employees: 300. Private Limited Company. Website:

57

Tri-pack Films Ltd. Tri-Pack manufactures Bi-axially Oriented Polypropylene film (BOPP) with an annual capacity of 34,800 tones. Tri-Pack sales net of sales tax in 2009 were Rs.5.7 billion. The number of employees of the company is 351. Packages Limited has 33.3% ownership in the company while Mitsubishi Corporation of Japan holds 25% shares. The Company has production facilities in Port Qasim (near Karachi) and Hattar NWFP. It is a Public LimitedCompany. Website: DIC Pakistan Ltd. Established in 1994, a joint venture between Packages Limited (55%) and Dainippon Ink and Chemicals Asia Pacific Singapore Pte. Limited (45%). Dainippon Inks and Chemicals is one of the largest printing ink manufacturing groups worldwide. Gross sales for 2009 were Rs.1,790 million. Number of employees: 169. Non-listed publiclimitedCompany.

Packages Lanka Pvt. Ltd. Packages Lanka (Pvt) Limited is based near Colombo, Sri Lanka. It is a joint venture between Packages Limited and Printcare (Ceylon) Limited of Sri Lanka. This project was set up in 1998 for the manufacture of flexible packaging material. Packages Limited owns 79% of this company. Packages Lanka (Private) Limited has an annual capacity of producing 54 million meters flexible packaging. Packages Lanka Private Limited had sales of Sri Lankan Rs.1,184 million in the year 2009. The number of employees of the company is 135. Private Limited Company.

IGI Insurance Ltd.

58

The Insurance company of the Group, IGIIL, was established in 1953. It had a gross premium of Rs.1,152 million in the year 2009. IGIIL holds a very important position in the Group having investments in all Group Companies. Net worth at realizable value is over Rs.9.1 billion Number of employees are 131. IGIIL acquired the insurance business of Pakistan branch of Royal & SunAlliance Insurance Plc in year 2004. IGIIL is global network partner of Royal & SunAlliance Insurance Plc. It is a Public Limited Company. Website: IGl Investment Bank Ltd. Established in 1990, IGI Investment Bank is licensed to carry out all investment finance and leasing operations as a Non-Banking Finance Company. In addition, it also offers corporate finance and advisory equity brokerage, portfolio management and mutual funds advisory services. In 2006, IGI Investment Bank acquired Finex Securities Limited, a brokerage house in Karachi, and has established IGI Funds Limited, an Asset Management Company. The Packages Group owns 48% of the equity. In the year 2008-2009, the Bank had gross revenue of Rs.769 million. The number of employees is 93. It is a Public Limited Company. Website: Coca-Cola Beverages Pakistan Ltd. Packages Group is a minor shareholder in CocaCola Beverages Pakistan Limited (CCBPL) of which The Coca-Cola Company, Atlanta, U.S.A. holds 92% shares. The company has 3,219 employees.

59

Our commitment:

QUALITY POLICY We at Packages Limited are committed to producing quality products which conform to our customer requirements and strengthen our position as a quality-managed company. Our pledge is to provide the market with the best quality products at competitive prices through a customer-driven and service-oriented, dynamic management team. To meet this obligation, the company will continue updating skills of its employees by training, acquisition of new technology, and regular reevaluation of its quality control and assurance systems. Appropriate resources of the company will be directed towards achieving the quality goals through employee participation

60

ENVIRONMENTAL POLICY Packages is committed to the environment. We realize that we live in a world where resources are finite and the eco-system has a limited capacity to absorb the load mankind is placing on it. That is why we make every effort to make sustainable development a reality. The numerous projects and plants implemented in and around our site bear ample testimony to our dedication. Some of our objectives are to increase recycling rates, improve effluent and waste management, and reduce water loss. These and other environmental concerns are exemplified in our environmental policy, which every employee is expected to uphold and implement.ealth and Safety (EH&S) Policy Packages Limited shall: Minimize its environmental impact, as is economically and practically possible Save raw materials including energy and water, avoid waste Ensure that all its present and future activities are conducted safely, without endangering the health of its employees, its customers and the public Develop plans and procedures and provide resources to successfully implement this policy and for dealing effectively with any emergency Provide environmental, health and safety training to all employees and other relevant persons to enable them to carry out their duties safely without causing harm to themselves, to other individuals and to environment Ensure that all its activities comply with national environmental, health and safety regulations This policy shall be reviewed as and when required for betterment of the same.

RECYCLING PAPER Packages has the capability of producing 100% recycled paper. Various grades of paper and board (shipping, cartons, newsprint, magazines, imported waste paper) are collected and then shredded. This is fed to a huge mixer where a controlled percentage of virgin pulp and used paper are mixed together to produce material for recycled paper EFFLUENT AND WASTE MANAGEMENT Discharged water from the paper and board mill goes to a septic tank where heavy, insoluble material settles down and is constantly scooped out. Specialized cleaning equipment removes the residual sludge and suspended particles. The suspended solids are separated and treated on sludge de-watering equipment and thickened for disposal. The introduction of the new method of using wheat straw as a raw material was a bold step partly aimed at reducing the chemical load of the effluent. An even bolder step was taken with the import of Chemical Recovery Plant in 1997. Black liquor, which poses severe difficulties in the effluent treatment system in any pulp mill, is concentrated in this plant to 58% solids and then incinerated in a waste heat boiler, where organic impurities are destroyed and the steam generated is utilized for evaporating the incoming liquor. The ash, containing inorganic compounds, is dissolved in water to recover any available chemicals.

WATER MANAGEMENT This is a recent part of the green policy adopted by Packages. It includes reduction of the usage of water in all stages of its processes. Better water management has led to better utilization of water and other raw inputs. 61

At 300 tonnes per tonne of pulp produced, the quantity of water itself poses serious problems of extraction and disposal. To reduce it, a dissolved air flocculation system and special filters have been added to different streams of reusable water and wherever possible, fresh water in various processes has gradually been replaced with this water. INDEPENDENT ENERGY HOUSE Packages is self-sufficient in its power generation capabilities with an installed capacity of 26MW. A local boiler meets the company's steam demands. RESULTS These efforts were streamlined in 1997 through the formation of a committee of internal experts to look regularly into issues concerning environment, health and safety. The committee is currently involved in the management of fresh water use, effluent management, control on air emissions, energy conservation and maintenance of health and safety standards in the company. It uses guidelines provided by the National Environment Quality Standards (NEQS) as a benchmark, even modifying processes to conform to its objectives. As a result of combined efforts, the quantity of water used, as well as its BOD and COD has been reduced significantly. Steam consumption and heat energy consumption in 2003 have both shown a reduction of over 16% each compared to 1999. The electricity use in the same period has gone down by an impressive 25%. These activities have acquired such importance for the company that out of US$ 100 million spent on new processes and technology in the last few years, 20% were spent on environmental issues alone.

62

63

Financial Analysis Financial analysis means that the analysis of the financial statements i.e Analysis of income statement, balance sheet etc. in financial analysis various ratios and graphs are shown. Which depict the past performance of last 4 or 5 years? The question may arise that what is the benefit of financial analysis? The answer is quite simple that many parties are interested in financial analysis like the investors before making investment in the company see the financial trends of business, because they will invest in those firms which will give them low risk and high return. Moreover the financial institutions before sanctioning loans also evaluate the solvency of the applicant through financial analysis. There are two main tools of financial analysis. Vertical Analysis Vertical as name shows it is y axis analysis of financial statements. It is a useful way of analyzing statements and to convert them into common size statement by expressing absolute rupee amounts into percentages of a base figure. The income statement thus exhibits expense as a percentage of sales, and each asset/liability as a percentage of total assets and total liabilities. Statements so prepared are called common size statements the analysis facilitates the comparison with prior period and also highlights the relative importance of each item the analysis can be equally useful for inter firm comparison. Horizontal Analysis Horizontal as the name shows it is the x axis analysis. The computation of percentage and changes in the same item over time is referred to as a trend analysis this spotlights trends and establishes relationships between items that appear on the same row of a comparative statement there by disclosing changes on items in financial statements.

64

Packages limited Lahore Statement of profit and loss For the year ended December 31, 2006 (Rupees in thousands) Local sales Export sales Total sales Less: sales tax and excise duty Commission Net sales Cost of sales Gross profit Adminstrative expenses Distabution and marketing cost Other operating expenses Other operating income Profit from operations Finance costs Investment income Profit before tax Taxation Profit for the year Earnings per share Rupees 8,869,068 158,820 9,027,907 1,172,430 8,878 1,181,308 7,846,599 (6,551,995) 1,294,604 (349,934) (255,587) (213,475) 252,005 757,613 (78,909) 5,669,136 6,347,840 (247,060) 6,100,780 87.30

65

Packages limited Lahore Statement of profit and loss For the year ended December 31, 2007 (Rupees in thousands) Local sales Export sales Total sales Less: sales tax and excise duty Commission Net sales Cost of sales Gross profit Administrative expenses Distribution and marketing cost Other operating expenses Other operating income Profit from operations Finance costs Investment income (Loss)/Profit before tax Taxation (Loss)/Profit for the year (Loss)/Earnings per share 10,365,224 174,771 10,539,995 1,501,230 10,130 1,511,360 9,028,635 (7,829,362) 1,199,273 (348,064) (240,357) (145,439) 122,185 587,598 (367,378) 4,412,728 4,632,948 (307,000) 4,325,948 Rupees 51.27

66

Packages limited Lahore Statement of profit and loss For the year ended December 31, 2008 (Rupees in thousands) Local sales Export sales Total sales Less: sales tax and excise duty Commission Net sales Cost of sales Gross profit Administrative expenses Distribution and marketing cost Other operating expenses Other operating income Profit from operations Finance costs Investment income (Loss)/Profit before tax Taxation (Loss)/Profit for the year (Loss)/Earnings per share 13,697,837 603,086 14,300,923 2,056,475 19,669 2,076,144 12,224,779 (11,281,480) 943,299 (512,189) (362,425) (324) 336,965 405,326 (1,662,094) 948,879 (307,889) (112,064) (195,825) Rupees (2.32)

67

Packages limited lahore Statament of profit and loss For the year ended december 31,2010 Local sales Export sales Total sales Less:sales tax and excise duty Commisison Net sales Cost of sales Gross profit Adminstrative expenses Distribution and marketing cost Other operating expenses Other operating income Impairment charged on available for sale investment Loss from operations Finance costs Investment income (Loss) before tax Taxation (Loss) for the year (Loss)/Earnings per share Basic Rupees Diluted Rupees (Rupees in thousands) 20,598,198 1,239,235 21,837,433 3,266,556 34,969 3,301,525 18,535,908 (17,740,467) 795,441 (521,269) (565,638) (15,185) 202,368 (104,283) (1,210,323) 997,260 (317,346) (15,079) (332,425) (3,94) (3,94)

68

Packages limited lahore Statament of profit and loss For the year ended december 31,2009 Local sales Export sales Total sales Less:sales tax and excise duty Commisison (Rupees in thousands) 15,775,713 757,575 16,533,288 3,266,556 34,969 2,489,455 14,043,833 (13,736,498) 307,335 (467,582) (444,210) (118,682) 385,299 (1,793,991) (2,131,831) (1,278,433) 9,179,837 5,769,573 (1,705,649) 4,063,924

Net sales Cost of sales Gross profit Adminstrative expenses Distribution and marketing cost Other operating expenses Other operating income Impairment charged on available for sale investment Loss from operations Finance costs Investment income Profit before tax Taxation Profit for the year Earnings per share Basic Rupees 48.16 Diluted Rupees 44.72

Packages limited Lahore BALANCE SHEET For the year ended December 31, 2006 (Rupees in thousands) 69

ASSETS: NON-CURRENT ASSETS Property, plant and equipment Intangible assets Investment property Assets Subject to finance lease Capital work-in-progress Investments Long-term loans and deposits Retirement benefits Total Non current assets CURRENT ASSETS: Stores and spares Stock-in-trade Trade debts Loans, advances, deposits, prepayments And other receivables Cash and blank balance Total current assets Total current and non current assets EQUITY AND LIABILITIES: CAPITAL AND RESERVES Authorized capital Issued, subscribed, and paid up capital Reserves Unappropriated profit Total Equity NON-CURRENT LIABILITES Long term finances Liabilites against assets subject to finance lease Deferred liabilities Total Non current liabilites CURRENT LIABILITES: Current portion of liabilites against Assets subject to finance lease Finances under mark up arrangements-secured Derivation foreign currency forward options Creditors , accured and other liabilities Provisions for taxation Total current liabilites Contingences and commitments Total liabilities and equity

3,071,115 2,532 14,423 1,901 10,143,195 5,775,665 180,618 69,805 19,259,254 485,665 1,647,173 821,160 353,521 106,703 3,414,222 22,673,476

1,000,000 698,795 6,872,336 6,101,666 13,672,797 6,000,000 _ 688,455 6,688,455 851 1,280,857 _ 1,030,516 _ 2,312,224 _ 22,673,476

Packages limited Lahore BALANCE SHEET For the year ended December 31, 2007 (Rupees in thousands) ASSETS: NON-CURRENT ASSETS 70

Property, plant and equipment Intangible assets Investment property Capital work-in-progress Investments Long-term loans and deposits Retirement benefits Total Non current assets CURRENT ASSETS: Stores and spares Stock-in-trade Trade debts Loans, advances, deposits, prepayments And other receivables Cash and blank balance Total current assets Total current and non current assets EQUITY AND LIABILITIES: CAPITAL AND RESERVES Authorized capital Issued, subscribed, and paid up capital Reserves Unappropriated profit Total Equity NON-CURRENT LIABILITES Long term finances -secured Deferred liabilities Total Non current liabilities CURRENT LIABILITES: Current portion of long term finances-secured Finances under mark up arrangements-secured Trade and other payables Total current liabilities Total liabilities and equity

10,361,253 363 26,055 7,800,683 10,080,259 244,166 88,262 28,601,041 715,840 2,206,191 1,288,928 525,421 101,022 4,837,402 33,438,443 1,500,000 733,735 13,110,240 4,326,797 18,170,772 12,346,500 955,790 13,302,290 _ 401,019 1,564,362 1,965,381 33,438,443

Packages limited Lahore BALANCE SHEET For the year ended December 31, 2008 (Rupees in thousands) ASSETS: NON-CURRENT ASSETS Property, plant and equipment 11,285,293 Intangible assets 241 Investment property 25,294 Capital work-in-progress 8,155,293 Investments 8,362,485 Long-term loans and deposits 155,102 71

Retirement benefits Total non current assets CURRENT ASSETS: Stores and spares Stock-in-trade Trade debts Loans, advances, deposits, prepayments And other receivables Cash and blank balance Total current assets Non current assets classified as held For sale-investment in related party Total current and non current assets EQUITY AND LIABILITIES: CAPITAL AND RESERVES Authorized capital Issued, subscribed, and paid up capital Reserves Unappropriated profit /(Loss) Total Equity NON-CURRENT LIABILITES Long term finances secured Deferred liabilities Total Non current liabilities CURRENT LIABILITES: Current portion oflong term finances secured Finances under mark up arrangements-secured Trade and other payables Total current liabilities Liabilities associated with non current asssets Classified as held for sale advance against sale of shares Total current liabilities Total liabilities and equity

127,518 28,111,172 841,487 3,652,261 1,523,049 692,076 199,188 6,908,061

15,400 6,923,461 35,034,633 1,500,000 843,795 15,624,602 (195,825) 16,272,572 12,304,400 840,788 13,145,188 550,000 2,587,819 1,461,904 4,599,723 1,017,150 5,616,873 35,034,633

Packages limited Lahore BALANCE SHEET For the year ended December 31, 2009 (Rupees in thousands) ASSETS: NON-CURRENT ASSETS Property, plant and equipment Intangible assets Investment property Capital work-in-progress Investments Long-term loans and deposits Retirement benefits Total Non current assets 72 19,161,332 137 55,335 65,578 8,099,401 139,577 107,900 27,629,260

CURRENT ASSETS: Stores and spares Stock-in-trade Trade debts Loans, advances, deposits, prepayments And other receivables Income tax receivable Cash and blank balance Total current assets Total current and non current assets

870,951 4,102,396 1,752,216 203,817 593,669 455,720 7,978,769 35,608,029

EQUITY AND LIABILITIES: CAPITAL AND RESERVES Authorized capital 150,000,000 (2009:150,000,000) ordinary share of Rs. 10 each 22,000,000(2009:22,000,000) 10% non-voting cumulative Preference shares/convertible stock of Rs. 190 each Issued, subscribed, and paid up capital 84,379,504(2009:84,379,504) ordinary share of Rs. 10 each Reserves Preference shares/convertible stock reserve Unappropriated profit Total Equity NON-CURRENT LIABILITES Long term finances Deferred income tax liabilites Retirement benefits Deferred liabilities Total Non current liabilites CURRENT LIABILITES: 73

1,500,000 4,180,000 843,795 17,099,138 1,605,875 3,868,099 23,416,907 7,970,577 2,353,000 124,852 10,488,429

Current portion of long-term finances-secured Finances under mark up arrangements-secured Trade and payables Accured finance cost Total current liabilites Contingences and commitments Total liabilities and equity

86,496 1,406,516 249,681 1,742,693 _ 35,608,029

Packages limited Lahore BALANCE SHEET For the year ended December 31, 2010 (Rupees in thousands) ASSETS: NON-CURRENT ASSETS Property, plant and equipment Intangible assets Investment property Capital work-in-progress Investments Long-term loans and deposits Retirement benefits Total Non current assets CURRENT ASSETS: Stores and spares Stock-in-trade Trade debts Loans, advances, deposits, prepayments And other receivables Income tax receivable Cash and blank balance Total current assets 74 17,861,486 2,392 31,588 753,328 12,219,037 128,429 94,557 31,090,817 1,049,950 3,669,151 1,643,275 265,361 766,107 1,140,143 8,533,987

Total current and non current assets

39,624,804

EQUITY AND LIABILITIES: CAPITAL AND RESERVES Authorized capital 150,000,000 (2009:150,000,000) ordinary share of Rs. 10 each 22,000,000(2009:22,000,000) 10% non-voting cumulative Preference shares/convertible stock of Rs. 190 each Issued, subscribed, and paid up capital 84,379,504(2009:84,379,504) ordinary share of Rs. 10 each Reserves Preference shares/convertible stock reserve Unappropriated profit Total Equity NON-CURRENT LIABILITES Long term finances Deferred income tax liabilites Retirement benefits Deferred liabilities Total Non current liabilites CURRENT LIABILITES: Current portion of long-term finances-secured Finances under mark up arrangements-secured Trade and payables Accured finance cost Total current liabilites Contingences and commitments Total liabilities and equity

1,500,000 4,180,000 843,795 24,218,774 1,605,875 261,441 26,929,885 7,956,291 2,168,000 167 149,173 10,273,631 14,286 141,231 1,794,059 471,712 2,421,288 _ 39,624,804

75

Chapter 6

Horizontal & vertical analysis

76

Horizontal Analysis (Balance Sheet) 10 vs 09 % ASSETS NON-CURRENT ASSETS Property, plant and equipment Intangible assets Investment property Assets subject to finance lease Capital work-in-progress Investments Long-term loans and deposits Retirement benefits CURRENT ASSETS Stores and spares Stock-in-trade Trade debts Loans, advances, deposits, prepayments and other receivables Cash and bank balances Non-current assets classified as held-for-sale TOTAL EqUITy & LIABILITIES SHARE CAPITAL & RESERvES Issued, subscribed and paid up capital Reserves Preference shares / convertible stock Unappropriated profit / (loss) NON-CURRENT LIABILITIES Long-term finances Liabilities against assets subject to finance lease Deferred liabilities CURRENT LIABILITIES Current portion of long-term finances Finances under mark up arrangements secured Derivative foreign currency forward options Trade and other payables Provision for taxation Liabilities directly associated with non-current assets classified as held-for-sale TOTAL Comments: 09 vs 08 % 08 vs 07 % 07 vs 06 % 06 vs 05 %

(6.78) 1,645.99 -42.91 1,048.75 50.86 -7.99 -12.37 20.55 -10.56 -6.22 29.34 150.18 0 11.28

69.79 -43.15 118.77 0 -99.2 -3.15 -10.01 -15.38 3.5 12.32 15.05 15.23 128.79 100 1.64

8.92 -33.61 -2.92 -4.55 4.55 -17.04 -36.48 44.48 17.55 65.55 18.16 31.72 97.17 100 4.77

237.38 2.48 -85.66 -52.23 80.65 -6.23 -100 -77.85 -23.09 210.62 74.53 732.74 35.18 1,014.93 26.44 15.78 47.39 33.94 56.96 48.63 -5.32 0 47.48 19.2 43.98 4.65 74.43 -94.72 0 95.12

0 0 15 41.64 9.44 19.18 0 100 0 -93.24 2,075.28 -104.53 -0.18 0 -6.48 100 63.28 0 36.81 0 0 11.28 77 -35.22 0 194.71 -100 -96.66 0 13.29 0 -100 1.64 -0.34 0 -12.03 100 545.31 0 -6.55 0 100 4.77

5 90.77 0 -29.09 105.78 0 38.83 -100 -68.69 0 51.8 0 0 47.48

0 14.13 0 500.46 500 100 25.75 -83.5 -20.08 -100 66.42 -100 0 96.12

Assets: Property plants and equipment are decreas in 2008and again increase in2009 and again decrease in2010. Capital work in progress increase in 2010 as compared to previous years. Cash and bank balances also increase in 2010 as compared to previous years. Liabilities: Long term finances decrease but current portion of finances increases, trade and other payables also increase. Equity: Reserves decrease in 2007 to 2009 but again increase in 2010. In 2007, 2008 and 2010 company has faced unappropriated loss and in 2009 has faced unappropriated profit. Horizontal Analysis (Profit and Loss Account) 10 vs 08 vs 07 vs 06 vs 09 07 06 05 09 vs 08 % % % % % 30.57 15.17 32.15 16.87 10.01 63.58 25.62 245.07 10.04 57.03 32.08 15.61 35.68 16.75 10.59 32.46 19.92 36.99 28.04 11.16 49.26 19.11 94.17 14.1 -7.24 31.99 14.88 35.4 15.06 10.53 29.15 21.76 44.09 19.5 14.03 158.82 -67.42 -21.34 -7.36 -4.31 11.48 -8.71 47.15 -7.36 0.97 27.34 22.57 50.79 6.55 15.5 -87.21 36,530.25 -99.78 -31.87 128.62 -47.48 14.34 175.78 -51.51 36.45 -100 (95.11) (5.33) -89.14 -105.5 -99.12 -108.18 0 0 100 0 -625.95 -31.02 -23.08 352.42 867.44 -78.5 -1,973.91 -106.65 -1,622.03 -136.5 -2,175.28 -104.53 0.00 0 0.00 0 0 -22.44 365.57 -22.16 -27.02 24.26 -29.09 0 0 0 -16.05 -57.47 824.75 377.31 -21.46 500.85 0 0

local sales export sales gross sales sales tax and excise duty comission Net sales Cost of sales Gross profit Administrative expenses Distribution and marketing costs Other operating expenses Other operating income Impairment charged on available for sale investment (Loss) / profit from operations Finance costs Investment income (Loss) / profit before tax taxation (Loss) / profit for the year EPS - basic EPS - diluted

Comments: Net sales are increase in 2008 and 2010. Companys profit for the year is decreasing every year because profit before tax is also decreasing each year.

Vertical Analysis (Balance Sheet) 78

2010 % ASSETS NON-CURRENT ASSETS Property, plant and equipment Intangible assets Investment property Assets subject to finance lease Capital work-in-progress Investments Long-term loans and deposits Retirement benefits CURRENT ASSETS Stores and spares Stock-in-trade Trade debts Loans, advances, deposits, prepayments and other receivables Cash and bank balances Non-current assets classified as held-for-sale TOTAL EqUITy & LIABILITIES SHARE CAPITAL & RESERvES Issued, subscribed and paid up capital Reserves Preference shares / convertible stock Unappropriated profit / (loss) NON-CURRENT LIABILITIES Long-term finances Liabilities against assets subject to finance lease Deferred liabilities CURRENT LIABILITIES Current portion of long-term finances Finances under mark up arrangements secured Derivative foreign currency forward options Trade and other payables Provision for taxation Liabilities directly associated with non-current assets classified as held-for-sale TOTAL

2009 %

2008 %

2007 %

2006 %

45.07 0.01 0.08 0 1.9 30.84 0.32 0.24 2.65 9.26 4.15 2.6 2.88 0 100

53.81 0 0.16 0 0.18 22.75 0.39 0.3 2.45 11.52 4.92 2.24 1.28 0 100

32.22 0 0.07 0 23.28 23.87 0.44 0.36 2.4 10.42 4.35 1.98 0.57 0.04 100

30.99 0 0.08 0 23.33 30.15 0.73 0.26 2.14 6.6 3.85 1.57 0.3 0 100

13.55 0.01 0.06 0.01 44.74 25.47 0.8 0.31 2.14 7.26 3.62 1.56 0.47 0 100

2.13 61.11 4.05 0.66 20.08 0 5.85 0.04 0.36 0 5.72 0 0 100

2.37 48.03 4.51 10.86 22.38 0 6.96 0 0.24 0 4.65 0 0 100

2.41 44.6 0 -0.56 35.12 0 2.4 1.57 7.39 0 4.17 0 2.9 100

2.19 39.21 0 12.94 36.92 0 2.86 0 1.2 0 4.68 0 0 100

3.08 30.31 0 26.91 26.46 0 3.04 0 5.65 0 4.55 0 0 100

Comments: Property plant and equipments are increase in 2009 but again decrease in 2010. 79

Intangible assets and investments are increase in 2010. Stock and spares is decrease in 2008 and again increase in 2009 to 2010. Long term finances are continuously decreasing but trade and other payables are decreasing till 2009 but again increase in 2010. Reserves are continuously increasing till 2010. Unappropriated profit decrease in 2008 but again increase in 2009 and again decrease in 2010 as compared to 2009.

Vertical Analysis (Profit and Loss Account) 2010 % 94.33 5.67 100 -14.96 -0.16 84.88 -81.24 3.64 -2.39 -2.59 -0.07 0.93 -0.48 (5.54) 4.57 -1.45 -0.07 -1.52 0 0 2009 % 95.42 4.58 100 -14.92 -0.14 84.94 -83.08 1.86 -2.83 -2.69 -0.72 2.33 -10.85 -12.89 -7.73 55.52 34.9 -10.32 24.58 0 0 2008 % 95.78 4.22 100 -14.38 -0.14 85.48 -78.89 6.6 -3.58 (2.53) 0 2.36 0 2.83 -11.62 6.64 -2.15 0.78 -1.37 0 0 2007 % 98.34 1.66 100 -14.24 -0.1 85.66 -74.28 11.38 -3.3 -2.28 -1.38 1.16 0 5.57 -3.49 41.87 43.96 -2.91 41.04 0 0 2006 % 98.24 1.76 100 -12.99 -0.1 86.91 -72.57 14.34 -3.88 -2.5 -2.36 2.79 0 8.39 -0.87 62.8 70.31 -2.74 67.58 0 0

local sales export sales gross sales Less :sales tax and excise duty comission Net sales Cost of sales Gross profit Administrative expenses Distribution and marketing costs Other operating expenses Other operating income Impairment charged on available for sale investment (Loss) / profit from operations Finance costs Investment income (Loss) / profit before tax taxation (Loss) / profit for the year EPS - basic EPS - diluted

Comments: Local sales are continuously decreasing in every year but export sales are increasing. Operating income increase in 2009 but again decrease in 2010. Company faced loss from operations in 2009 and 2010 and also face Loss before tax in 2010. Company is facing net loss in 2008 and 2010. 80

Trend analysis: Profit and loss account 2006 2007 % 2008 % 2009 % 2010% % 100 116.8 154.4 177.8 232.2 100 110 379.7 477 780.2 100 116.7 158.4 183.1 241.8

Local sales Local sales Export sales Total sales Less: sales tax and excise duty commission

Net sales Cost of sales Gross profit Adminstrative expenses Distabution and marketing cost Other operating expenses Other operating income Loss /Profit from operations Finance costs Investment income 100 Loss /Profit before tax 100 Taxation 100 Loss /Profit for the year

100 100 100 100 100 100 100

128 114 127.9 115 119.4 92.6 99.4

175.4 221.5 175.7 155.7 172.1 72.8 146.3

210.3 263.8 210.7 178.9 209.6 23.7 133.6

278.6 393.8 279.4 236.2 270.7 61.4 148.9

100

94

141.8

173.7

221.3

100

68.1

0.15

55.5

7.1

100

48.4

133.7

152.8

80.3

100 100 100

77.5 465.5 77.8 72.9 124.2 70.9

53.5 2106.3 16.7 -4.8 45.3 -3.20

-281.3 1620.1 161.9 90.8 690.3 66.6

13.7 1533.8 17.5 4.9 6.1 5.4

81

Earning per share rupees

100 58.7 -2.65 55.1 4.5

Comments: Net sales of packages limited are continuously increasing as compared to base year. Gross profit is continuously decreasing due to increase in cost of sales. Profit from operations is decreasing due increase in distribution and marketing cost and administrative expenses. Net profit of company is less as compared base year and in 2008 company has to face loss.

2009 2009 2010 2010 ASSETS: NON-CURRENT ASSETS Property, plant and equipme 3,071, 10,361 0.33737 11,285 367.465 19,161 623.921 17,861 581.5 115 .25 7565 ,293 6599 ,332 0189 ,486 961 nt Intangible assets 2,532 Investme nt property 14,423 Assets Subject to finance lease 1,901 Capital work-inprogress Investme nts Longterm loans and deposits Retireme nt benefits 14.3364 9289 241 9.51816 7457 137 5.41074 2496 2,392 94.47 077

Trend analysis of balance sheet: 2006 2007 2007 2008 2008

363

180.648 175.372 383.658 219.0 26,055 9635 25,294 6687 55,335 0462 31,588 113

10,143 ,195 5,775, 665

7,800, 683 10,080 ,259

76.9055 8054 174.529 842

8,155, 293 8,362, 485

80.4016 0.64652 753,32 65,578 2126 1902 8 144.788 8,099, 140.233 12,219 2625 401 2199 ,037

7.426 93 211.5 607

180,61 8

244,16 135.183 155,10 85.8729 139,57 77.2774 128,42 71.10 6 6473 2 4733 7 585 9 532 126.440 127,51 182.677 107,90 154.573 135.4 8 4586 0 4546 88,262 7994 94,557 588 82

69,805

Total Non 19,259 28,601 148.505 current ,254 ,041 4457 assets CURRENT ASSETS: Stores 485,66 715,84 147.393 and 5 0 7797 spares Stock-in- 1,647, 2,206, 133.938 trade 173 191 0259 Trade 821,16 1,288, 156.964 debts 0 928 2944 Loans, advances, deposits, prepayments And other 353,52 rceivables 1

28,111 145.961 27,629 143.459 31,090 161.4 ,172 8945 ,260 6584 ,817 331

841,48 7 3,652, 261 1,523, 049

173.264 9048 221.729 0473 185.475 3032

870,95 1 4,102, 396 1,752, 216

179.331 6381 249.056 7779 213.383 0191

1,049, 950 3,669, 151 1,643, 275

216.1 881 222.7 544 200.1 163

525,42 148.625 692,07 195.766 203,81 57.6534 265,36 75.06 1 117 6 5881 7 3502 1 23

Cash and blank 106,70 101,02 94.6758 balance 3 2 7603 Total 3,414, 4,837, 141.683 current 222 402 8741 assets Total current and NON current 22,673 33,438 147.478 assets ,476 ,443 2384 EQUITY AND LIABILITIES: CAPITAL AND RESERVES Authorize 1,000, 1,500, d capital 000 000 150 Issued, subscribe d, and paid up 698,79 733,73 105.000 capital 5 5 0358 6,872, 13,110 190.768 ,240 321 Reserves 336 Unapprop 6,101, 4,326, 70.9117 riated 666 797 3132 profit Total 13,672 18,170 132.897 Equity ,797 ,772 2558 NON-CURRENT LIABILITES Long term 6,000, 000

199,18 186.675 455,72 427.092 1,140, 8 1638 0 0218 143 6,923, 461 202.782 7,978, 9766 769 233.692 8,533, 1559 987

1068. 52 249.9 541

35,034 154.518 35,608 157.047 39,624 174.7 ,633 1383 ,029 0668 ,804 628

1,500, 000

150

1,500, 000

150

1,500, 000

150

843,79 5 15,624 ,602 195,82 5 16,272 ,572

120.750 0054 227.355 0362 3.20936 9376 119.014 2149

843,79 5 17,099 ,138 3,868, 099 23,416 ,907

120.750 0054 248.811 1466 63.3941 4514 171.266 3985

843,79 5 24,218 ,774 261,44 1 26,929 ,885

120.7 5 352.4 096 4.284 748 196.9 596

12,346 12,304 205.073 7,970, ,500 205.775 ,400 3333 577 83

132.842 7,956, 95 291

132.6 049

finances Liabilites against assets subject to finance lease Deferred liabilities Total Non current liabilites

0 688,45 5

0 0 0 0 955,79 138.831 840,78 122.126 124,85 18.1350 149,17 21.66 0 1509 8 7911 2 9961 3 779

6,688, 13,302 198.884 13,145 196.535 10,448 156.215 10,273 153.6 455 ,290 3462 ,188 4929 ,429 8824 ,631 025 CURRENT LIABILITES: Current portion of liabilites against Assets subject to finance lease 851 Finances under mark up arrangem entssecured Derivatio n foreign currency forward options Creditors , accured and other liabilities Provision s for taxation Total current liabilites Continge nces and commitm ents Total liabilities

550,00 64629.8 0 4724 0

1678. 14,286 731

1,280,85 401, 7 019

31.3086 2,587, 4726 819

202.038 6.75297 141,23 11.02 0886 1 629 86,496 867

1,030,51 0 6

0 2,312,2 24

0 1,96 5,38 1

0 84.9995 5,616, 9346 873

0 242.920 1,742, 7983 693

0 75.3686 2,421, 9265 288 104.7 168

0 22,673, 476

0 33,4 38,4

0 0 0 147.478 35,034 154.518 35,608 157.047 39,624 174.7 2384 ,633 1383 ,029 0668 ,804 628 84

and equity

43

Comments for trend analysis of balance sheet: Property plants and equipment are decreas in 2008and again increase in2009 and again decrease in2010. Capital work in progress increase in 2010 as compared to previous years. Cash and bank balances also increase in 2010 as compared to previous years. Long term finances decrease but current portion of finances increases, trade and other payables also increase. Reserves decrease in 2007 to 2009 but again increase in 2010. In 2007, 2008 and 2010 company has faced inappropriate loss and in 2009 has faced inappropriate profit. CASH FLOW STATEMENTS (FOR THE LAST FIVE YEARS) Operating activities:

2010 Cash generated from operations 2,048,790 Finance cost paid -988,292 Taxes paid -490,263 Payments for accumulating compensated absences -16,805 Retirement benefits -50,488 paid Net cash from operating activities 502,942 Cash flow from investing activities: fixed capital -633,758 expenditure Investments 50,968 advance against disposal of investments Net dec./inc. in long term loans and deposit 11,148 proceeds from disposal of property,plant and equipment 25,034 proceed from disposal&investment

2009

2008

2007

2006

618,112 -1,479,667 -285,615

-708,816 -1,800,985 -220,937

326,117 -1,051,738 -139,191

774,099 -38,270 -194,335

-6,971 -44,236 -1,198,377

-12,268 -35,564 -2,778,570

-6,783 -30,339 -901,936

-7,299 -27,384 506,811

-972,975 -10,000

-2,447,617

-4,841,392 -12,903

-7,325,683 -20,504

---

1,017,150

15,525

89,064

-63,548

-164,418

23,543 7,865,000 85

21,252

48,401 71,428

12,493

Dividends received 946,292 Net cash genreated from/used in 399,684 investing act. Cash flow from financing activities: payment of long term finances Proceeds from longterm finances proceeds from issuence of preference shares/convertible stock/net proceeds from issue finance Payment of finance lease liabilities proceeds from issuance of ordenary shares DIVIDENT PAID -272,938 Net (decrease) / increase in cash and cash equivalents 629,688 Net cash(used in)/genrated from financing activites -272,938 Net increase/decrease in cash and cash equivalent 369,224 Cash and cash quivalent at the beginning of the year 629,688 cash and cash quivalent at the end 998,912

313,087

948,879

646,650

822,990

7,234,180

-371,272

-4,151,364

-6,675,122

-7,354,400

6,346,500 5,000,000

4,076,452 1,061,208 -851 -5,159 -

-418,194

-417,914

2,757,855

(2,088,634)

874,157

(1,591,384)

-3,277,948

1,061,208

5,927,455

4,576,927

-2,388,631

-299,997

-1,174,154

417,230

2,757,855 369,224

-2,088,634 -2,388,631

874,157 -299,997

-1,591,384 -1,174,154

86

of the year

Statement of Owners Equity

(Rupees in Thousands)

Share Capital

Share Premium

Fair Value Reserve

General Reserve

Balance as on December 31, 2004 Final Dividend for The year ended December 31, 2004 Rs. 8.50 per share Transferred from profit and loss Account Issue of 22.342.427 Ordinary shares of Rs. 10 each fully Paid in cash -net of issue costs Fair value gain during the year Loss arising on marking to Market foreign Currency forward Options entered into as part of forward entered into as part of cash flow hedge for the purchas of plant and machinery (note 11)

475.371 203.589

17.100

2,531,936

559,000

223.424

2,783.364

2,400

87

profit for the year

Balance as in Decembe 31,2005

698.795

2,986,953

19,500

3,090,936 (Continued)

(Rupees in thousands)

Un_appropriated Profit & loss Account

Hedging Reserve

Total

Balance as on December 31, 2004 Final Dividend for the year ended December 31,2004 Rs. 850 Per share Transferred from profit and loss Account

936,864

4,191,860

(404,065)

(404,065)

(559,000)

Issue of 22.342.427 ordinary shares of Rs. 10 each fully paid un cash net of issue costs Fair value gain during the year Loss arising on marking to Market foreign currency Forward options entered into As part of forward options Entered into as part of cash Flow hedge for the purchase Of plant and machinery (Note 11) profit for the year

3,006,788

2,400

(76,092)

(76,092)

1,015,364

1,015,364

88

Balance as in December 31,2005

1,016,163

(76,092)

7,736,255

Statement of Owners Equity

Rupees in Thousands)

Share Capital

Share Fair Value Premium Reserve

General Reserve

Hedging reserve

Balance as on December 31, 2005

698,795 2,986,953 19,500

3,090,936 (76,902)

Final Dividend for the year ended December 31,2005 Rs. 6.00 Per share

89

Transferred from Profit And loss Account

596,000

Fair value gain during The year

178,250

Transferred from Profile And loss Account on disposal of Shares of the resource Group (TRG) Pakistan Limited

697

Gain arising on foreign _ Currency forward options Entered into as part of Cash flow hedge for the Purchase of plant Transferred to CWIP On expiry of foreign Currency forward Options (note 110) Profit for the year

1,905

74,187

Balance as on December 31, 2006

698,795

2,968,953

198,477

3,686,936

(continued)

Statement of Owners Equity

(Rupees in thousands)

Unappropriated Profit & loss Account 1,016,163

Total

Balance as on December 31, 2005

7,736,255

90

Final Dividend for The year ended December 31,2005 Rs. 6.00 Per share

(419,277)

(491,277)

Transferred from Profit and loss Account

(596,000)

Fair value gain during The year

178,250

Transferred from Profit And loss Account on disposal of Shares of the resource group (TRG) Pakistan Limited Gain arising on foreign Currency forward options Entered into as part of Cash flow hedge for the Purchase of plant Transferred to CWIP On expiry of foreign Currency forward Options (note 110) Profit for the year

697

1,905

_ 6,100,780

74,185 6,100,780

Balance as on December 31, 2006

6,101,666

13,672,797

Statement of owners Equity 91

(Rupees in Thousands)

Share Capital

Share Premium

Fair Value Reserve

General Reserve

Balance as on December 31, 2006 Final Dividend for the year ended December 31,2005 Rs. 6.00 Per share Transferred from Profit And loss Account 3,493,975 ordinary Shares of Rs, 10 Each issued as fully Paid bonus shares Fair value gain during The year Transferred from Profit And loss Account on disposal of Shares of the resource group (TRG) Pakistan Limited & Nestle Pakistan limited Profit for the year

698,795

2,968,953

198,477

3,686,936

5,646,600

34,940

2,476,829

_ _

_ _

(1,885,525) _

_ _

Balance as on December, 31 2007 733,735 2,986,953 Statement of owners Equity

789,751

9,333,536

(Rupees in Thousands)

Unappropriated Profit & Loss account

Total

Balance as on December 31, 2006 Final Dividend for the year ended December 31,2005 Rs. 6.00 Per share

6,101,666

13,672,797

(419,277) 92

(419,277)

Transferred from Profit And loss Account 3,493,975 ordinary Shares of Rs, 10 Each issued as fully Paid bonus shares Fair value gain during The year Transferred from Profit And loss Account on disposal of Shares of the resource group (TRG) Pakistan Limited & Nestle Pakistan limited Profit for the year Balance as on December, 31 2007

(5,646,600)

(34,940)

2,476,829

_ 4,325,948

(1,885,525) 4,325,948

4,326,797

18,170,772

Statement of owners Equity

(Rupees in Thousands)

Share Capital

Share Premium

Fair Value Reserve

General Reserve

Balance as on December, 31 2007 11,006,022 ordinary Shares of Rs, 10 Each issued as fully Paid bonus shares Transferred from Profit And loss Account Fair value loss during The year Loss for the year

733,735

2,986,953

789,751

9,333,536

110,060

(110,060)

4,326,797

_ _

_ _

(1,072,375) _

_ _

93

Balance as on December, 31 2008

843,795

2,876,893

(912,624) 13,660,333 ( continued)

Statements of Owners Equity

(Rupees in Thousands)

Unappropriated Profit & Loss account

Total

Balance as on December, 31 2007 11,006,022 ordinary Shares of Rs, 10 Each issued as fully Paid bonus shares Transferred from Profit And loss Account Fair value loss during The year Loss for the year Balance as on December, 31 2008

4,326,797

18,170,772

(4,326,797)

_ (195,825)

(1,702,375) (195,825)

(195,825)

16.272,572

94

Profit & Loss account

(Rupees in thousands) Local Sales Exports sales

2009 15,775,713 757,575 16,533,288 2,466,027 23,428 2,489,455 (14,043,833) 13,736,498

Less; Sales & Excise Duty Commission

Cost of sales

Gross Profit

307,335

Administrative expenses Distribution & marketing cost Other operating expenses Other operating income Impairment charged on available for sale investment

(467,582) (444,210) (118,682) 385,299 (1,793,991)

Loss from operations

( 2,131,831)

Finance costs Investment Income (Loss)/Profit before tax

(1,278,433) 9,179,837 5,769,573

Taxation (Loss) / Profit for the year (Loss) / earning per share Basic Diluted

(1,705,649) 4,063,924

48.16 44.72

95

Statement of Comprehensive Income

(Rupees in thousands) (Loss) / Profit after taxation

2009 4,063,924

Other Comprehensive income; Surplus / (Deficit) on re-measurement of available For sale financial assets Implement loss transferred to profit & loss account Other comprehensive income for the year

319,455 1,793,991 1,474,536

Total comprehensive income for the year

5,538,460

Statement of Owners Equity

(Rupees in Thousands)

Share Capital

Share Premium

Fair Value Reserve 96

General Reserve

Preference Shares/

Convertible Stock Reserve

Balances on December 31, 2008

843,795

2,876,993

(912,624) 13,660,333

Equity components of Preference shares/ conVertable stock as referred To in note 72 (net of Transaction cost)

1,605,875

Total comprehensive Income for the year

1,474,536

Balance on December 31, 2009

843,795

2,876,993

561912

13,660,333

1,605,875

(continued)

Statement of Owners Equity

(Rupees in Thousands)

Unappropriated (loss) / Profit

Total

Balances on December 31, 2008

(195,825) 97

16,272,572

Equity components of Preference shares/ conVertable stock as referred To in note 72 (net of Transaction cost)

1,605,875

Total comprehensive Income for the year

4,063,924

5,538,460

Balance on December 31, 2009

3,868,099

23,416,907

Profit & Loss account

(Rupees in thousands Local Sales Exports sales

2010 20,598,198 1, 239,235 21,837,433

Less; Sales & Excise Duty Commission

3,266,556 34,969 3,301,525 18,535,908 98

Cost of sales

(17,740,467)

Gross Profit

795,441

Administrative expenses Distribution & marketing cost Other operating expenses Other operating income Impairment charged on available for sale investment

(521,269) (565,638) (15,185) 202,368 .

Loss from operations

(104,283)

Finance costs Investment Income (Loss)/Profit before tax Taxation (Loss) / Profit for the year (Loss) / earning per share Basic Diluted

(1,210,323) 997,260 (317,346) (15,079) (332,425)

(3.94) (3.94)

Statement of Comprehensive Income

(Rupees in thousands)

2010

(Loss) / Profit after taxation

(332,425)

Other Comprehensive income; Surplus / (Deficit) on re-measurement of available For sale financial assets

4,119,636

Implement loss transferred to profit & loss account 99

Other comprehensive income for the year

4,119,636

Total comprehensive income for the year

3,787,211

Statement of Owners Equity

For the year ended 2010 (Rupees in Thousands) Share Capital Share Premium Fair Value Reserve General Reserve Preference Shares/ Convertible Stock Reserve 1,605,875

Balance on December 31, 2009

843,795

2,876,993

561912 13,660,333

Transfers from profit & loss account

3,000,000

Final dividend for the Year ended December 31, 2009 Rs. 3.25 per Share

Total comprehensive Income or ( loss) for the 100

Year

4,119,636

Balance on December 31, 2010

843,795

2,876,993

4,681,548 16,660,333

1,605,875

(continued)

Statement of Owners Equity

(Rupees in Thousands)

Unappropriated (loss) / Profit

Total

Balances on December

3,868,099

23,416,907

Transfers from profit & loss account

(3,000,000)

Final dividend for the Year ended December 31, 2009 Rs. 3.25 per Share

(274,233)

(274,233)

Total comprehensive Income or ( loss) for the Year

(332,425)

3,787,211

Balance on December 31, 2010

261,441

26,929,885

101

Chapter 7

RATIO ANALYSIS
102

Ratios Analysis: Ratio analysis involves methods of calculating and interpreting financial ratios to analyze and monitor the firms performance.

1. Liquidity ratios: The liquidity of a firm is measured by its ability to satisfy its short term obligations as they come due. Liquidity refers to the solvency of the firms over all financial position the ease with which it can pay its bills. a) Net Working Capital: The formula for Net Working Capital is: 103

Net Working Capital = Current Assets Current Liabilities It is a safety cushion to creditors. A large balance is required when the entity has difficulty on short notice. s years 2006 2007 2008 2009 2010

Net working capital(Rs in thousands)

1102998

2872,021

1306,588

6236,000

6113,000

Interpretation: It is a safety cushion to creditors. A large balance is required when the entity has difficulty on short notice.Net working capital has increased from 2006 to 2007, but again decrease in 2008,because in 2008 its current liabilites increased as compared to previous years to greater extent.again in 2009 this ratio increased due to incresase in current assets and decrease in current liabilites.company paid its current liabilites and purchase some new current assets which is a good sign for packages.in 2010 current assets are greater than 2009 but current liabilites are also increased due to which this ratio is less than 2009.

b) Current ratio: 104

This ratio, which is subject to seasonal fluctuations, is used to measure the ability of a firm to meet its current liabilities out of current assets. Generally, the higher the current ratio, the more liquid the firm is considered to be. The formula for Current Ratio is: Current Ratio = Current Assets /Current liabilites

years

2006

2007

2008

2009

2010

Current Ratio(times) 1.48 2.46 1.23 4.58 3.52

Interpretation:

105

This ratio, is used to measure the ability of a firm to meet its current liabilities out of current assets. Generally, the higher the current ratio, the more liquid the firm is considered to be.Current ratio has increased from 2006 to 2007, but again decrease in 2008,because in 2008 its current liabilites increased as compared to previous years to greater extent.again in 2009 this ratio increased which means packages is more liquid in 2009.in 2010 current assets are greater than 2009 but current liabilites are also increased due to which this ratio is less than 2009.

c)Quick or acid test ratio: Acid-test or quick ratio or liquid ratio measures the ability of a company to use its near cash or quick assets to extinguish or retire its current liabilities immediately. Quick assets include those current assets that presumably can be quickly converted to cash at close to their book values. A company with a Quick Ratio of less than 1 can not currently pay back its current liabilities.

years

2006

2007

2008

2009

2010

Quick Ratio (times) 0.55 0.97 0.43 1.72 1.57

106

Interpretation: Quick ratio of packages limited is increasing from 2006 to 2007 but decrease in 2008 which means company can not pay back its liabilites in this year.in 2009 this ratio again increases which means company has enough assets to pay back its current liabilities.in 2010 this ratio is again more than 1. 2) Activity ratio: Activity Ratios are used to determine how quickly various accounts are converted into sales or cash. a) Inventory turnover ratio: If a company is holding a access inventory it means that funds which could be invested else where are being tied up in inventory. In addition, there will be high carrying cost for storing the goods, as well as the risk of obsolescence on the other hand, if inventory is too low the company may loose customers because it has run out of merchandise. The formula for inventory turnover is: Inventory turnover= cost of goods sold/average inventory years 2006 2007 2008 2009 2010

Inventory Turnover 6.14 5.36 5.02 5.52 7.52

107

b) Average age of inventory Ratio: : The number of days inventory is also known as average inventory period and inventory holding period.A high number of days inventory indicates that their is a lack of demand for the product being sold.A low days inventory ratio (inventory holding period) may indicate that the company is not keeping enough stock on hand to meet demands. years 2006 2007 2008 2009 2010

Inventory Turnover (Days)

72 59 68 66 48

108

Interpretation: Average Inventory period is increasing from 2006 to 2008 ..in 2009 and thiss period again decrease,which shows that its products demand again increased but campany has not enough stock to meet this demand.

b) Fixed Assets Turnover Ratio: Fixed assets turnover ratio is also known as sales to fixed assets ratio. This ratio measures the efficiency and profit earning capacity of the firm.Higher the ratio, greater is the intensive utilization of fixed assets. Lower ratio means under-utilization of fixed assets. Formula of Fixed Assets Turnover Fixed Assets Turnover Ratio = Cost of Sales / Net Fixed Assets

109

years

2006

2007

2008

2009

2010

Fixed Assets Turnover Ratio(times)

2.92

1.01

0.86

0.86

1.22

Interpretation: Fixed asset turnover ratio is higher in 2006,after that it tends to decrease in 2007,2008 and 2009 again increase in 2010 but this increase is less than 2006.which means packages has to incraese its efficiency to utilize its fixed assets to earn profit.

c) Total Asset turnover: It is helpful in evaluating a companys ability to use its asset efficiently to generate revenue. The formula for total asset turnover is: Total Asset turnover = Sales / Total Assets years 2006 2007 2008 2009 2010

Total Assets Turnover

0.4

0.32

0.46

0.46

0.55

110

Ratio(times)

Interpretation: Total assets turnover ratio is continuously increasing from 2008 to 2010. 3. Profitability Ratios: An indication of good financial health and how effectively the firm is being managed is the companys ability to earn a satisfactory profit and return on investment. a) Gross profit margin: The gross profit margin measures the percentage of each sales rupee remaining after the firm has paid for its goods. The higher the gross profit margin, the better position of company would be. The formula for gross Profit Margin is: Gross Profit Margin = Gross Profit / Sales years 2006 2007 2008 2009 2010

Gross Profit Ratio (%)

14.34

11.38

1.86

1.86

3.64

111

Interpretation: Gross profit margin is decreasing from 2006 to 2010.which is not a good sign for packages limited. b)Return on Assets: The return on total assets (ROA) indicates the efficiency with which management has used its available resources to generate income. It is also called Return on Investment. If ROA ratio decreases over the year, it indicates inefficient use of assets. The formula for ROA is: ROA = Net Income / Average Total Assets years 2006 2007 2008 2009 2010

Return on Assets(%)

27

13

11

11

(1)

112

Interpretation: Return on assets ratio is continuously decreasing from 2006 to 2010 .which shows inefficiency of its employees. b) Return on Equity: ROE measures the return on common stockholders investment in the firm. Generally, the higher this return, the better off is the owners. The formula for ROE is: ROE = Earnings available for common stockholders / common stock equity years 2006 2007 2008 2009 2010

Return on Equity (%) 14.8 4.39

(1.20) (13.05) (1.23)

113

Interpretation: Return on equity is continuously decreasing from 2006 to 2010.which is due to the decrease in net income of packages limited.

4. Leverage Ratios: a) Debt ratios: It can be defined as how much sufficient our assets are in retrieving the total debts. It indicates the firms long run debt paying ability. The formula for debt ratio is Debt ratio=Total liabilities/total assets years 2006 2007 2008 2009 2010

Debt ratio % 39 45 53.5 34 32.03

114

sInterpretation: Debt ratio of packages is increasing from 2006 to 2009 which is good for stockholders of packages.but not for its creditors. In 2009 and 2010 debt ratio again decreased.which is not good sign for packages stock holders.

5. Market Value Ratios: Market ratios relate to the firms market value as measured by its current share price, to certain accounting values. a) Earning Per Share: It indicates how much amount firm is earning on its one share. Earning per share is useful indicator of the operating performance of the company as well as of the dividends that may be expected. The formula for EPS is: EPS = (Net income Preferred Dividends) / Common stock outstanding

years

2006

2007

2008

2009

2010

Basic EPS (Rs.) 30.05 40.6

(2.32) 48.16 (3.94)

115

Interpretation: Earning per share increase in 2007 but decrease in 2008,again increase in 2009. In 2010 earning per share again decrease.ss b) Price/Earning Ratio: It measures the amount that investors are willing to pay for each dollar of a firms earning; the higher the price earning ratio, the greater the investors confidence. The formula for Price Earning Ratio is: Price Earning Ratio = Market Price per share / Earning per share years 2006 2007 2008 2009 2010

Price Earning Ratio

(34.98) 58.96 58.96 2.99 (32.65)

116

Interpretation : Price to earning ratio is continuously decreasing from 2007 to 2010.which is not a good sign for packages limited.s c) Dividend Yield Ratio: Dividend yield ratio is the relationship between dividends per share and the market value of the shares.Share holders are real owners of a company and they are interested in real sense in the earnings distributed and paid to them as dividend. Therefore, dividend yield ratio is calculated to evaluate the relationship between dividends per share paid and the market value of the shares. Formula of Dividend Yield Ratio: Following formula is used for the calculation of dividend yield ratio: Dividend Yield Ratio = Dividend Per Share / Market Value Per Share

years

2006

2007

2008

2009

2010

Dividend Yield (%) 2.41 6.17

2.26 2.53

117

118

SWOT Analysis
119

SWOT ANALYSIS

STRENGTHS WEAKNESESS

---------------------------------

TO BUILD ON TO COVER ON TO CAPTURE TO DEFEND ON

OPPORTUNITIES ----------------THREATS -----------------

Strengths

Weaknesses

Opportunities

Threats

Where there is a company in operation it has to work in two kinds of environment i.e. The external environment The internal environment of the company.

120

For a company to avail maximum and avoid maximum, it has to know what it has to avail and what it has to avoid. The external environment has to be scanned by the management for any arising opportunities or any critical threats. The resources of a company constitute its strengths and weaknesses. External factors are broadly categorized into; Economic forces Social, cultural, demographic, and environmental forces Political, governmental and legal forces Technological forces Competitive forces etc Internal factors are;

Marketing strength of firm Financial/Accounting resources Management Computer information system Production/operations etc The internal and external situation analysis produces a large amount of information, much of which may not be highly relevant. This analysis classifies the internal aspects of Packages Limited as strengths or weaknesses and the external situational factors as opportunities or threats. Strengths serve as a foundation for building a competitive advantage, and weaknesses hinder it. By understanding these four aspects of its situation, we can better leverage its strengths, correct its weaknesses, capitalize on golden opportunities, and discourage potentially devastating threats. Internal Analysis The internal analysis is a comprehensive evaluation of the internal environment's potential strengths and weaknesses. The internal analysis of Packages Limited is done considering the following factors: y y y y y y Packages culture; Packages image; Organizational structure; Human resources; Access to key resources; Operational efficiency; 121

y y y y y y y y y y y y y y y y

Operational capacity; Market share; Financial resources; Exclusive contracts. Access to international market Product Line Financial Position Brand Image. Economy of Sales ISO Certification incentives to middle men Pricing employee turnover advertising Centralized System Environmental Constraints

The SWOT analysis summarizes the internal factors of the firm as a list of strengths and weaknesses. External Analysis An opportunity is the chance to introduce a new product or service that can generate superior returns. Opportunities can arise when changes occur in the external environment. Many of these changes can be perceived as threats to the market position of existing products and may necessitate a change in product specifications or the development of new products in order for the firm to remain competitive. Changes in the external environment of Packages Limited are related to the following: y y y y y y y y Customers; Competitors; Market trends; Social changes; New technology; Economic environment; Political and regulatory environment. Increasing Production Capacity 122

y y y y y y y y y y y y y

new markets WTO Pharmaceutical and Cosmetics Expansion Increasing Demand inflation rate Per unit cost is increasing political situation international politics Trade and Terrorism economic structure Government restrictions prices of Raw Material

The SWOT analysis summarizes the external environmental factors as a list of opportunities and threats, which are summarized in the following table: Strengths: 1. Largest Packaging Producer 2. Market Share 3. Growing Sales 4. Enjoying Economy of Sales 5. Brand Image 6. Strong Financial Position 7. Corporate Culture 8. Strong Distribution Channel 9. Wider Product line 10. ISO Certification Weaknesses 1. High rate of employee turnover 2. Huge inventory stock of raw material 3. High Pricing 4. Low incentives to middle men 123

5. Order Fulfillment 6. Low advertising campaigns 7. Poor Record Keeping 8. Centralized System 9. Environmental Constraints

Opportunities 1. Increasing Production Capacity in existing plant 2. Increasing Demand of Paper Products in EU market and in USA markets 3. Building the better and soft strategies regarding Consumer, Employee & Middlemen 4. Opening new marketing office in foreign countries to improve the marketing campaign 5. Advertising in international media and magazines in increase the market share 6. Increasing sales by implementing the credit policy strategies 7. WTO in 2005 (no quota Restriction) more chances of export 8. Increased demand of Pakistan products in foreign market 9. Pharmaceutical and Cosmetics is a big fish in the pond 10. Expansion though Joint Ventures T h re ats 1. Tough competition with India and China 2. Domestic Competition, entry of new and well financed organization in packaging sector 3. High inflation rate 4. Per unit cost is increasing, reduction in profits 5. Instable political situation in county 6. Instability in international politics 7. Pakistan, Trade and Terrorism 8. Weak economic structure of Pakistan 124

9. Government restrictions on import and tax related decisions 10. Increase in the prices of Raw Material

CHAPTER 9

Suggestions and Recommendations

125

Suggestions and Recommendations People are the main asset of a manufacturing firm,so In order to get cometitive advantage and to use its assets and resources efficiently packages has to hire more innovative people externaly.

Packages should have to change its policy to fill its vacancies only by existing employees. Packages has to resahape its human resource department. Provide proper training to its employees to make efficient use of its assets.

 Packages should try to expand the market by exploring new areas.  Save time by minimizing the official procedures.  The company should add more features to their products. People are attracted towards a product with unique features and something that would make the customers feel that they have got their moneys worth.  Incentives should be given to motivate sales and recovery teams at initial stages.  Develop proper goals and objectives for every member of team and department.  The company should take measures to improve the quality of their products. Thus the company is advised to take steps towards improving the quality of its products; otherwise it will lose a lot of potential customers to their competitors. 126

 Consumer Product Divisions more focus should be on electronic media to get competitive advantage over the competitors. They have to increase their advertising expenditures  The company must give more incentives to the dealers and sales officers so that they remain loyal to the company and promote the products.  The company should also focus on direct selling of its products to its customers through online auction or through any other source, although Consumer Marketing

Department is doing so but at a very meager level.  The company should develop systems for identifying opportunities, ranking them and choose the best ones.

Conclusion Concluding, we found that the people are main asset for a firm to use its assets effectively.in last some years packages profit is also decreasing due to inefficient use of its resources so,packages has to put attention for its employees training and development.we also found that people while purchasing for a certain item take great interest in the brand name, quality, and features. People have a strong faith in this brand name, partly due to its high quality and features and partly due to the brand image that it has created during all these years. All the other factors like price, advertisement, word of mouth, dealers etc. dont have that much importance during the buying process. Packages is also targeting its consumer product customers through advertising, by coordinating their marketing efforts, take advantage of synergy among various communication tools, and develop more efficient and effective marketing 127

communication programs.

References : http://www.accountingformanagement.com/operating_ratio .htm http://www.crfonline.org/orc/cro/cro-16.html http://www.ventureline.com/accounting-glossary/B/basicearnings-power-definition/ http://www.buzzle.com/articles/horizontal-analysis.html http://en.wikipedia.org/wiki/Quick_ratio http://www.finance-lib.com/financial-term-horizontalanalysis.html http://www.investopedia.com/terms/v/vertical_analysis.asp

128