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Pakistan Cargo Services

Presented by: Syed Abdullah Rizvi


Hassan Abdullah
Alishba Kaiser
Mohsin Khan
Sara Khan
Abdullah
INTRODUCTION

 An international freight forwarding company


 Main offices in Lahore and Sialkot
 Exists all over Pakistan
 Have a branch in the UAE
 One is about to begin operations in London
 Have agents all over the world providing door to door services
Exposure to exchange rate risk

 Deals in both exports and imports


 Exposed to exchange rate risk when they deal with exporters from outside
of Pakistan who export goods to Pakistan
 Agents take the goods from exporters and make sure the shipment goes
through all the required steps (i.e. custom clearance)
 Payment made is in the currency of that particular country, except for
when the exporter is from Pakistan. They prefer payments to be made in
Pakistani Rupees to avoid exchange rate risk
Managing current transaction
exposure
 Transaction exposure is driven by transactions which have already been
contracted for and hence they are of short term nature
 Faces transaction exposure when they have to deal with the exporter
outside Pakistan
 PCS has its agents all over the world, so they contact their agent in the
country from where the product is to be exported and he deals with the
exporter there
 Use forward contracts
 Rate is decided at the time when the deal is made, the future fluctuation in
exchange rate does not affect the price
 Faces transaction exposure when they have to deal with the exporter
outside of Pakistan
Managing current economic exposure

 Economic exposure is transaction exposure as well as operating exposure


which is related to future cash flows
 PCS being a freight forwarding company, provide logistic solutions to the
exporters and importers of Pakistan
 Operations mainly include picking the product from the exporter and
shipping to the respective country
 Due to this, they hardly face economic exposure
Multinational capital budgeting

 Initial investment in the offices is made from Pakistan; they don’t issue
shares or do joint ventures
 All the investment is made from their reserves & profits
 The multinational branches deal with their expenses and budgeting
separately
 Those branches have their own finance department and multinational
branches have no concern with the revenue of the local branches. In fact
all the branches operate on their own revenues.
Financing international trade

 Their first priority is to make payments to the airlines, which are done on a
fortnightly basis
 No matter how many other expenses they have, they pay the airlines first or
else their shipments are kept on hold
 They do face the problem of late payments from clients, so they keep a
backup for the payments of airlines so that their operations don’t stop
 Other than this they keep their cash flows running; they pay their agents on
time, and very few of their operations are done on credit

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