Aftab AnwarMC100205161MBAFinance

Internship Report Kohat Cement Factory

Brief Introduction of the Organization Brief history Incorporated in 1980, Kohat Cement Company Limited (KCCL) is one of the leading cement manufacturing companies of Pakistan. It is an ISO 9001-2008 certified company, with an annual capacity of 2.8 Million tons of Grey Cement and 150 thousand tons of White cement. The Registered office and the Factory are located at Kohat, whereas the Head Office is located in Lahore.

Business volume Stock in trade was Rs. 500,326,860 in 2012, Rs 737,325,759 in 2013 and Rs. 469,501,350 in the year 2014 according to the Annual Report 2014 and Annual report 2013.

Shareholders equity was Rs. 8,587,467 in 2014 and Rs. 6,041,048 in 2013.

Authorized share capital was Rs. 5 3,000,000,000 in 2014 and Rs. 1,500,000,000 in 2013.

Competitors

There are total 29 plants of cement in Pakistan competing with each other for domestic as will as foreign market. Some big players which holds the majority share of the market are; Lucky cement 20 % DG Khan cement 15 % Best way cement 11 % Maple leaf cement 10 %

Kohat Cement Factory is competing with all these firms to capture the maximum share of the market.

Training ProgramI performed different tasks in my 7 weeks internship program.Here is a snapshot of the tasks I performed;I have prepared following vouchers and reports General Ledger General Ledger- Abstract Bank Transfer scroll Posting NBP Advance Salary Daily Statement Miscellaneous Book End of Day register Monthly return register Check Book Issue RegisterDemand Notices

Some other tasks I performed in the finance department are;

Proper checking and posting of GRN and InvoicesPayments to the drivers through Payment NoteI have performed data entry of Daily Petty Expense Vouchers of all departmentsSalary Sheet preparation for specific periodEmployee wise detail loan/advances preparation

Learning ExperiencesKnowledge Gained

I learned how to make and post a voucher

I learned a significant knowledge of networking

I learned how to communicate properly in a business environment

I learned how to make cheque and how to collect cash from the bank

I learned about production management

Skills Learned

I learned how to install and use the advance accounting software Micro Soft GP which will help me throughout my career.

I learned the skill of making reports to the senior management

I learned the skill of business communication important for any career

I learned the scanning and printing of documents which is the necessary part of any office

I learned how to be a team player. It was really a pleasing experience working in a team for common objective and I enjoyed a lot

I learned how to read financial reports

My project management skill was also improved during the internship program

Attitudes Observed/Values Gained

Handwork: I come to know that hard work is the only key to success. Employers prefer those employees who are hardworking , efficient and save time in performing task by working efficiently

Punctuality: I learned from the internship that being punctual is the way to make a good reputation in the organization. I was available on time throughout my internship period

Trust: Accounts and finance department is the only department where trustworthiness, honesty and integrity matters a lot and I understood this in my internship.

Dependability: I understood the value of responsibility and dependability.

Positive attitude: My supervisor Sir Liaqat Ali thoroughly trained me on keeping attitude positive in any situation. He was himself with a very calm and positive attitude and I copied him will. This is the quality which can put me on the path of success

Loyalty: The ladder to reach to the higher positions in an organization is to be loyal and have an image of a loyal employee towards organization. Employers like this quality very much

Most Challenging Task Performed

The most challenging part of my internship was the learning of Advance accounting software Microsoft GP used in Kohat Cement Company.

I spent 15 hours in learning this. After learning, my supervisor was happy with my performance.

Ratio Analysis1. Kohat Cement Company Limited (2011).Annual Report for the year ended June 30, 2011. [ONLINE] Available at: http://www.kohatcement.com/pdf_files/reports/634950825441718750_annual_report_30thJune2011.pdf. [Last Accessed Jan 2015].

2. Kohat Cement Company Limited (2013).Annual Report for the year ended June 30, 2013. [ONLINE] Available at: http://www.kohatcement.com/pdf_files/reports/635169811031234126_30_June_2013.pdf. [Last Accessed Jan 2015].

3. Kohat Cement Company Limited (2014).Annual Report for the year ended June 30, 2014. [ONLINE] Available at: http://kohatcement.com/pdf_files/reports/635466791376713611_Kohat_Cement_Annual_Report_2014.pdf. [Last Accessed Jan 2015].

For presentation of this portion please view the next slide.

Current Ratio

Quick Ratio

Times Interest Earned

Ratio AnalysisKohat Cement CompanyTimes Interest Earned = Earnings before Interest and Tax / Interest ExpenseYear 2012Year 2013Year 2014Times Interest Earned 2,662,044,784/626,060,398=4.25 Times=4,018,513,140/248,972,932=16.14 Times=4,531,274,925 / 154,675,816= 29.30 Times

Debt ratio

Ratio AnalysisKohat Cement CompanyDebt ratio = Total Liabilities / Total AssetsYear 2012Year 2013Year 2014Debt ratio =5456422052/9,212,877,408=0.59 or 59 %=4753542143/10,794,590,138= 0.44 or 44 %=5563990144/14,151,457,441 = 0.39 or 39 %

Debt / Equity Ratio

Ratio AnalysisKohat Cement CompanyDebt / Equity Ratio = Total liabilities / Shareholders EquityYear 2012Year 2013Year 2014Debt to Equity Ratio=5456422052/3,756,455,356= 1.45=4753542143/6,041,047,995=0.79=5563990144/8,587,467297= 0.65

Net Profit Margin

Ratio AnalysisKohat Cement CompanyNet Profit Margin = Net income / Sales revenueYear 2012Year 2013Year 2014Net Profit Margin =1,660,511,377 / 9,316,380,873= 0.18 or 17.82 %=2,632,632,555/11,297,213,012= 0.23 or 23.30 %=3,154,826,513/12,765,670,059=0.25 or 24.71 %

Gross Profit Margin

Ratio AnalysisKohat Cement Company Gross Profit Margin = (Revenue Cost of Goods Sold) / RevenueYear 2012Year 2013Year 2014Gross Profit Margin =(9,316,380,873-6,463,977,256) / 6,463,977,256=0.44 or 44.13 %= (11,297,213,012-6,936,346,069) / 11,297,213,012= 0.39 or 38.60 %=(12,765,670,059-7,958,970,205) / 12,765,670,059=0.38 or 37.65 %

Return on Assets (ROA)

Ratio AnalysisKohat Cement Company Return on Assets (ROA) = Net Income / Total Average AssetsYear 2012Year 2013Year 2014Return on Assets (ROA) =1,660,511,377/9168639124.5=0.18 or 18.11 %=2,632,632,555/10003733773=0.26 or 26.32 %=3,154,826,513/12473023789.5=0.25 or 25.29 %

Operating Income Margin

Ratio AnalysisKohat Cement CompanyOperating income margin = Operating Profit / Sales RevenueYear 2012Year 2013Year 2014Operating income margin =2,662,044,784/9,316,380,873=0. 29 or 28. 57 %=4,018,513,140/11,297,213,012=0. 36 or 35. 57 %=4,531,274,925/12,765,670,059=0.35 or 35. 50 %

Return on Equity

Ratio AnalysisKohat Cement CompanyReturn on Equity = Net income / Shareholders EquityYear 2012Year 2013Year 2014Return on Equity =1,660,511,377/3,756,455,356= 0.44 or 44.20 %=2,632,632,555/6,041,047,995= 0.435 or 43.56 %=3,154,826,513/8,587,467,297= 0.37 or 36.74 %

Asset Turnover Ratio

Ratio AnalysisKohat Cement CompanyAssets Turnover Ratio= Sales Revenue / Total Assets

Year 2012Year 2013Year 2014Assets Turnover Ratio=9,316,380,873/9,212,877,408= 1.01 Times=11,297,213,012/10,794,590,138= 1.05 Times=12,765,670,059/14,151,457,441= 0.90 Times

Operating Cash Flow Ratio

Ratio AnalysisKohat Cement CompanyOperating Cash Flow Ratio = Operating Cash Flow / Current Liabilities Year 2012Year 2013Year 2013Operating Cash Flow Ratio =2,488,940,280/2,899,295,713=0.86 Times or 85.85 % =3,633,928,124/2,294,226,957=1.58 Times or 158.39 %=4,836,154,298/3,695,536,547=1.31 Times or 130.86 %

Dividend per Share

Ratio AnalysisKohat Cement CompanyDividend per Share = Dividends / Number of SharesYear 2012Year 2013Year 2013Dividend per Share =386271723/128,757,241= Rs 3 or 30%

=772543450/154,508,690= Rs 5 or 50%=309017380/154,508,690= Rs2 or 20%

Earning per Share

Ratio AnalysisKohat Cement CompanyEarning per Share= Net Income Preferred Dividends / Weighted average number of ordinary shares in issue during the yearYear 2012Year 2013Year 2013Earning per Share=1,660,511,377/128,757,241= Rs 12.90=2,632,632,555/154,508,690= Rs 17.04=3,154,826,513/154,508,690= Rs 20.42

ConclusionDuring my 7 Weeks internship program real life experience and analysis of financial statements and auditors report on financial statements, I came to know that the management of Kohat cement company is fully aware of the Companys responsibilities and obligations for compliance with the Code of Corporate Governance and there has been no significant deviation from the best practice of corporate governance.

The quick ratio of Kohat Cement Company is highest in FY14 as compared to FY12 and FY13. Account receivable policy has also been improved in the past 3 years which led to the improvements of quick ratio. The Current Ratio for the year 2012 was 0.80 Times which was improved to 1.89 Times in FY14 In the year 2013 and 2014, the company was in good position of paying its short term liabilities with Rs1.8 and Rs 1.89 of current assets available for paying Rupee 1 of current liabilities. Credit policy of the company was changes in FY12 and the company took a bold step of aggressively de-leverage its Statement of Financial Position with the repayment of PKR 1.9 Billion and the effect of these low liquidity ratios was by-and-large decreased . The Earning Per Share (EPS) was also satisfactory in the FY2014 which is PKR 20.42 which will attract more investors in the future.

Conclusion on the bases of my internship experience:

During my internship period at Kohat Cement Factory, I found some critical areas of the company while working with them.

During my scheduled visits to the production area of Kohat Cement Factory, I found out that the factory workers are provided with safety tools. However after critical analysis, I concluded that such tools provided to the workers are similar irrespective of the kind of work that each of these workers was dealing with. I concluded that this may not be helpful for the workers because therere different stages involved in the production process of cement, each requires different type of works which involves different type of risks. So following a set of standard facilities to workers may not be very helpful.

Kohat Cement is spending a lot on marketing activities. There is also an attractive budget to carry out these activities. But while judging from an external point of view, I conclude that the company should put more energy in reaching out to the perspective customers and informing them about their business. Before joining Kohat Cement as an intern, I did not know many things that I know now.

The working environment of Kohat Cement Factory is very supportive; however I observed that there was an absence of recognition programs for the employees. The recognition of the efforts of an employee and appreciation of his work is very important for motivation. It helps in improving the relationship between an employer and an employee and also helps an employee to understand the pace of his work compared to that of his co-workers. It will also increase job satisfaction and ultimately, it will increase productivity.

Recommendations The company has already improved its debt to equity ratio by lowering it to 0.65 in FY14 but it can be further improved by Using cash reserves to pay its debt and increasing assets without taking debt. Increase of equity into the business by selling off unneeded assets like plant, property or equipment or by disposing of unprofitable operations and increasing profits that are retained in the business.

Addition of more profitable products and finding efficiencies in production can leads to further improvements in the profits.

Recommendations on the bases of my internship experience:

I have discussed this issue with concerned authorities and I came to know that the concerned authorities are already working out to provide different kind of medical, health and security facilitations to their employees depending on the nature of their work. e.g. the person responsible for lab testing doesnt require a medical/health benefit like that similar to a worker involved in grinding the cement in the factory.

For fast implementation, I recommend that the company should focus on new ways of marketing like Google adwords, Face book and twitter advertisement etc. Kohat Cement should publicize more about their activities on its twitter, face book and Linked in accounts and pages. They should publish news about their export activities in these platforms. The company should also inform their customers about the CSR activities that they are doing so actively for the last couple of years

The HR department is situated in the head office Lahore and there is a lack or delay of communication. I recommend the HR Head to introduce some recognition programs for their employees that would highlight their efforts and hence they will be rewarded for their performance. Itll help to motivate the employees to work harder which would result in an increase in productivity and support/further the mission, goals and values of the company. Such programs should be introduced both in the Head Office of the company and the Factory. Employees may be rewarded for their work through a pay raise for "doing as ordered", non-task performance or performance that contributes to organizational maintenance or meeting a target. Small crests or certificates could be given to rank the best employee/factory worker of the month etc.

Thank You