MISSION STATEMENT
To achieve our Vision by having

An organizational environment that fosters professionalism, motivation and
quality.

An environment that is cost effective and quality conscious.

Services that are based on the most optimum technology.

'Quality' and 'Time' conscious Customer Service.

Sustained growth in earnings and profitability.
INTRODUCTION
From the humble beginnings of Posts & Telegraph Department in 1947 and
establishment of Pakistan Telecommunication Company Limited, to this very day, ours
is a story of commitment and vision.
PAKISTAN POST & TELEGRAPH (P&T)
The postal and telecommunication services were performed by a single department
known as Pakistan Post & Telegraph (P&T). This department started its telephone
service with only 12346 telephone lines and seven telegraph offices all over Pakistan.
This department continued its business up to 1962. The Government of Pakistan
adopted the Government of India Telegraph act 1885 to control and direct the activities
of telecommunication.
PAKISTAN TELEGRAPH AND TELEPHONE DEPARTMENT (T&T)
Pakistan Telegraph and Telephone Department inherited a small telecommunication
network consisting of only 12,000 lines in 1947. It was the sole Department responsible
for providing telecommunication facilities to whole country. In fact postal services were
also included in its responsibilities. The Pakistan Postal Department was separated
from Pakistan Telegraph and Telephone Department in the year 1962. Like all other
field of newly born nation, there was no established system of telecommunication,
available in the country. However the present system, as well as new installations was
managed by the T&T quiet efficiently.
PAKISTAN TELECOMMUNICATION CORPORATION (PTC)
The erstwhile Telegraph and Telephone (T&T) Department was converted into a
Statuary Corporation on 15-12-1990. It has its own legal identity totally separated from
Government of Pakistan.
RE-STRUCTURING OF PTC
The P.T.C. was further segregated into four separate units in 1996.
1. P.T.C.L.
2. P.T.A.
3. N.T.C.
4. F.A.B.
PAKISTAN TELECOMMUNICATION COMPANY LIMITED (PTCL)
PTCL was incorporated on December 31st 1995 and commenced business on January
1st 1996. The idea behind this was to provide better services to its customers. This was
established to undertake the telecommunication business formally carried out by ExPTC. It was responsible for carrying out all kinds of telecommunications activities in the
country. It was required to look after the existing telecom installations and their
automation and development. It was also to under take development program in
telecom field. All properties, assets, obligations and liabilities of PTC were accordingly
transferred to the PTCL on the 01-01-1996.
The P.T.C.L. is a prestigious organization and telecom services in the country are
getting better and better, since its incorporation.
PAKISTAN TELECOM AUTHORITY (PTA)
Pakistan Telecom Authority (PTA) was established in 1996. It falls under the preview of
Government of Pakistan. It issues licenses to various companies for carry out certain
activities. This authority is responsible to monitor the establishment of telecom related
firms, companies, the import of telecom equipments etc in the country. It is a regulatory
body formed to accomplish rules and regulations relating to the telecommunication
matters.
NATIONAL TELECOM CORPORATION (NTC)
It has been established for installation of telecommunication facilities to the
Governmental organizations. A portion of working lines was initially transferred to N.T.C.
from the P.T.C.L. but now they have established their network. They are totally
independent in providing telephones connections, their look after and generation of
revenue there from.
FREQUENCY ALLOCATION BOARD (FAB)
This organization has been established to allocate Radio and Wireless telecom
frequencies to various organizations/companies within the country. The latest
development in this regard is that F.A.B. is establishing Monitoring Stations in order to
check the validity and legality of the utilization of circuits.
NATURE OF BUSINESS
Pakistan
Telecommunication
Company
Limited
(PTCL)
was
incorporated
in Pakistan on December 31, 1995 and is listed onKarachi, Lahore and Islamabad stock
exchanges. It was established to undertake the telecommunication business firmly
carried on by Pakistan Telecommunication Corporation (PTC). The business was
transferred to the company on January 1, 1996 under the Pakistan Telecommunication
(Reorganization) Act, 1996 at which date PTCL took over all the properties, rights,
assets, obligations and liabilities of PTC except those transferred to National
Telecommunication Corporation (NTC) , Frequency Allocation Board (FAB), Pakistan
Telecommunication Authority (PTA) and Pakistan Telecommunication Employees Trust
(PTET). The company commenced business on January 1, 1996. The registered office
of the company is situated at Block-E, PTCL Headquarter, G-8/4 Islamabad.
Pakistan Telecommunication Company Limited (PTCL) is the main provider of
Telecommunication services in Pakistan. It owns and operates a substantial part of the
telecommunication facilities and provides domestic and international telephone services
and other communication facilities throughout Pakistan.
PTCL'S SUBSIDIARIES
Pak Telecom Mobile Limited (PTML)
PTML is a wholly owned subsidiary of PTCL established to operate cellular Telephony
under the brand name of UFONE.
The company's performance during the current year has been very encouraging despite
the stiff competition in Pakistan's cellular market especially after the emergence of two
new international players in the last quarter of the year. Throughout the year, UFONE
pursued a growth strategy and managed to almost double its revenue compared to last
year. The company successfully increased UFONE's market share from 16% to 22%, a
significant achievement. On June 30, 2005 the total number of subscribers of UFONE
was 2.6 million versus 0.8 million at the same year.
During the year PTML successfully launched its Phase-IV network expansion project
costing more than US$ 160 million. UFONE now covers more than 200 cities and
towns, prominent highways and caters for international roaming with 135 operators
worldwide.
UFONE recorded Revenue of Rs. 8,598 million for the year endedJune 30, 2006 as
compared to Rs. 4,374 million for the previous year, an increase of 97%. Profit after tax
increased from Rs.776 million for the current year. Based on these results a dividend of
Rs. 700 million was declared by the Board of PTML.
Pak net Limited
The fully owned subsidiary of PTCL owns the largest ISP network spread over 2,900
cities/locations with 43 POPs. It has extensive data transmission capabilities but has
been incurring losses due to poor business orientation and excessive overheads.
During the year Paknet recorded sales revenue of Rs. 213.9 million, which is 19% loser
than last year. The company posted a loss of Rs. 42.2 million vs a loss of Rs. 111.5
million last year. The quantum of loss is lower as compared to last year mainly due to
reversal of provisions against doubtful debts of Rs.44.1 million made in prior years and
reversal of deferred tax asset of Rs. 34.9 million in the last year.
PTCL as the sole shareholder of Paknet is highly concerned with the poor performance
of this subsidiary and is currently undertaking a strategic review of this ISP subsidiary of
determine the future course of action
In spite of these subsidiaries there are following product lines.

Fixed Telephone ( Analog & Digital)

DSL ( Digital Subscriber Line)

IN Products (Pre-Paid Cards, Calling Cards, Apna Das Calling Card, Phone Bill
Card etc.)

PTCL Wireless.
MODERN SERVICES

DON'T DISTURB

WAKE UP CALL

CALL WAITING

HOTLINE

INTERNET AND E-MAIL SERVICE

DIGITAL LEASED LINES/CROSS CONNECT

CLI SERVICE

CALL FORWARDING ON BUSY TONE.

CALL FORWARDING ON NO REPLY.

CALL FORWARDING UNCONDITIONAL (IMMEDIATE).

DOMESTIC CALL CENTERS

CO-LOCATION CENTER

TELEPLUS (ISDN / BRI)

CONFERENCE CALL

PTCL MESSAGING SERVICE

ABBREVIATED DIALING

TOLL FREE SERVICE – 0800

PTCL MAILBOX

PREMIUM RATE SERVICE-0900

UNIVERSAL INTERNET NUMBER

INTERNATIONAL CALL CENTERS
REGION WISE SEGMENTATION OF PTCL
To provide efficient and smooth services to the subscribers, PTCL has been divided into
almost thirty-two Regions (Nine Development and twenty-three Maintenance Region ).
The Development Regions are normally responsible to accomplish the development
and expansion program of the company and after completing the lying of cable,
installation, testing, commissioning of equipment, they are liable to hand over the
exchange, building, or other installations to the concerned Maintenance Regions.
These maintenance regions are further responsible for the look after, up keep and
maintenance of these assets. They are also required to initiate expansion proposals to
meet the ever-increasing demand of telephone connections.
The overall operations department has been divided into four wings; North, South,
International Communications and Information Technology Training & Research. Each
of these wings is headed by EVP. As PTCL is providing its services to its customers all
over the country, its entire network has been divided into fifteen regions.
Each region is further divided into zones and headed by director. Each director controls
a number of divisional engineers.
BUSINESS VOLUME
Fixed line connections in the country are more than 5.4 million and the cellular connections are
12.7 millions
Currently there are 315 Payphone and over 51,000 Wireless Payphones
There are over 140 Data and Internet service providers (ISP's) to whom PTCL has provided
network infrastructure.
PTCL generated annual Revenue of over Rs. 11 billion from its private sector operating partners.
The PTCL's performance against a key set of parameters is summarized as:
Parameters
Value
Revenue
Rs. Billion 75.97
Profit after tax
Rs. Billion 26061
Earning per share
In Rupees
05.22
Capital expenditure Rs. Billion 12.95
Return on equity
%
24.43
NO OF EMPLOYEES
President & Company Secretary
02
Senior Executive Vice President
07
Executive Vice President
22
Chief Engineers
26
General Managers
94
AGM, DY. GM, Director, System Analysts, Dy. Managers, RTO, CS, SE,
DE, SAO, DM, SRO etc
2500
ADE, AE, SDO, AO, SL, Lect etc
20,000
ES, Assistant. PA, Tech, LM. UDC, KPO,Khakroob, Mali, HC, etc
47,000
(almost)
Total Employees
Note: This figure includes all permanents, contract bases and also
appointed under new terms and conditions during the year 2005.
70,000
(almost)
SERVICES
Corporate Services
Fixed Line Telephone
Wireless Local Loop (WLL)
Consumer Services

DON'T DISTURB

WAKE UP CALL

CALL WAITING

HOTLINE

INTERNET AND E-MAIL SERVICE

DIGITAL LEASED LINES/CROSS CONNECT

CLI SERVICE

CALL FORWARDING ON BUSY TONE.

CALL FORWARDING ON NO REPLY.

CALL FORWARDING UNCONDITIONAL (IMMEDIATE).

DOMESTIC CALL CENTERS

CO-LOCATION CENTER

TELEPLUS (ISDN / BRI)

CONFERENCE CALL

PTCL MESSAGING SERVICE

ABBREVIATED DIALING

TOLL FREE SERVICE – 0800

PTCL MAILBOX

PREMIUM RATE SERVICE-0900

UNIVERSAL INTERNET NUMBER

INTERNATIONAL CALL CENTERS
ORGANIZATIONAL STRUCTURE
Organizational Structure describes the organization's formal framework or system of
communication and authority.
In other words, the organization structure sets forth each principal, management
position and helps to define authority, responsibility and accountability.
An organization chart is essential to the development of a cost system and cost reports
which indicates the responsibilities of individuals for implementing management plans.
In PTCL President / CEO is the head of major functional areas. i,e State management,
Finance, Technical, Operations, HR & Admn and Corporate affairs. So Senior Executive
Vice President who are the head of these units generally reports directly to the
President.
The main purpose of PTCL is allowing them to effectively and efficiently accomplish
organizational goals and objectives. Designing an appropriate structure means that
managers must decide how to coordinate work activities and efforts both vertically and
horizontally.
Organization structure of PTCL can be described as having three components like any
other organizations:
1.
Complexity
2.
Formalization
3.
Centralization
COMPLEXITY
The term complexity refers to the amount of differentiation in an organization. The more
division of labor there is in an organization, the more vertical levels in the hierarchy and
more geographically dispersed the organization's units, the more difficult (or complex) it
is to coordinate people and their activities.
When we analysis the complexity of PTCL, there is big amount about 70,000 employees
and hierarchy is as under:
PRESIDENT  SEVP  EVP  GM/CE  DIRECTOR SE/MANAGER
etc  ENGINEER/AE/SDO/AO ES/ASSISTANT  T.TECH/CABLE JOINTER  L
M/UDC NAIBQASID/FRASH etc.
This is a very large hierarchy, which creates problems for the organizational activities
and coordination's. The result is a slow correspondence between management and
officials at lower levels.The Etisalat (who control the charge of PTCL) is restructuring
the organization and the work is under process.
FORMALIZATIONS
The degree to which an organization relies as rules and procedures to direct the
behavior of employees is formalization. The PTCL organization structure operates with
standardized guidelines, rules and regulations. Each officer/official knows his/her
responsibilities of what he has to do. Due to these strict rules and regulations the PTCL
organization's structure is more formalized.
CENTRALIZATION
The term centralization describes where the decision making authority is.
In PTCL, organization decision making is highly centralized at upper levels of
management. Problems flow up to senior executives, who decides what, should be
done.
In some cases, decentralized policy is used and decision making is delegated to lower
levels of management. Which is not correct and creates problems in the creation of long
term value aided strategies.
MAIN OFFICES

Chairman Corporate Headquarter, Block-E-, G-8/4, Islamabad

Director Commercial Accounts Nabha Road Lahore.

GM Offices in every Region.

SAO Offices.

Director Offices

Senior Engineer Offices.

Assistant Engineer/ AO Offices etc
ACCOUNTING SYSTEM OF THE ORGANIZATION
The accounting system of PTCL is to comply with requirements of companies'
ordianance, 1984 and approved Accounting standards comprise of such IASs as
notified under the provision of the companies ordinance 1984. International Accounting
Standards (IAS), as applicable in Pakistan in all respects. Wherever the requirements of
the company's ordinance 1984 of directives issued by the securities and exchange
commission of Pakistan differ with the requirements of these standards. Generally
accounts are prepared and maintained on government pattern as well as commercial
pattern on accrual basis of bills receivable and bills payable and also are exhibited the
profit and loss account and balance sheet showing the assets and liabilities.
The revised cash account current (ACE-40) Performa is based on double entry system
which indicates the debit and credit under each head of account viz cash/bank shows
the balance in hand ceiling cash and direct payment and the closing balance. All
Drawing and Disbursing Officers furnish commercial accounts at Lahore, where all
items are separated analyzed and noted in necessary books for preparation of financial
statements.
In the Accounting system of organization, proper books of Accounts have been kept by
the company as required by the companies' ordinance, 1984.
The balance sheet and the profit and loss account together with the notes thereon have
been drawn up in conformity with the companies' ordinance, 1984.
The balance sheet, profit and loss account, cash flow statement and statement of
changes in equity together matches with approved accounting standards as applicable
in Pakistan, and give the information required by the companies ordinance 1984 in the
manner so required and respectively give a true and fair view of the state of the
company's affairs as at June 30 of every year and of the profit, its cash flows and
changes in equity for the year then ended.
FINANCE SYSTEM OF THE ORGANIZATION
The office of the Director General (Finance) controls all financial activities and system of
PTCL. All financing decisions, capital budgeting decisions and processing on real and
financial assets are major responsibilities of finance department of PTCL. Necessary
future plans and projects are analyzed and selected as per their positive results i.e;
(Investment decision) installation of new telephone exchanges and lines.
Lending and borrowing decisions are also made as per loans, interest rates, time period
and lending agencies and banks etc.
Necessary sanctions of writeoff and depreciation rate are also issued by the finance
department.
Finance department also plays a vital role in coordination, with dividend policy matters,
internal and external auditors and share registrars. Pensions, insurance, preparation of
budget and taxation dealings are also important factors of PTCL finance department.
USE OF ELECTRONIC DATA IN DECISION MAKING
Mostly offices of PTCL are well equipped with computers and EDPfacilities.
Data is recorded on CDs and these CDs are sent to Finance department and Director
Commercial Accounts Lahore as cash accounts by regional heads. This data is fed in a
main "SERVER" for use of different sections in decision making. For example balances
of General Provident Fund, House Building Advance and Motor Cycle/Car Advances,
Pay roll, etc are needed in pension section to prepare final emoluments of a retiring
employee. This requisite information's are taken from this "SERVER" (Book & Budget
Record Section) for necessary decision.
PTCL has a sound MIS System which helps all other departments in decision making
and also to preserve it for future needs.Recently, the organization provides a separate
internet connection to all its officers, so that they may connect to higher management
regularly, keep their knowledge fresh about organization strategies/affairs and also for
correspondence to other officers and higher management.
MOBILIZATION OF FUNDS
PTCL purchases raw material from Erricson, Alcatel and AT&T, Italian, Sweden and
American's firms. It also borrows finance from internal and external sources. These raw
material, finance and human resources are put in together in different operational
activities and revenue is earned. After excluding the costs of different expenses from
total revenue, profit or loss is framed for one year. Then net profits are added in
company's reserves. As this phenomenon mobilizes of funds is a continuous process.
Cash  Raw material
Revenue  Operations
GENERATION OF FUNDS
Funds are mainly generated through

Services

Communicating activities.

Sales and Revenue Operations.

Line Rent.

Local and International calls.

Training given to other Organizations by the trained staff of PTCL
As per cash flow from operating activities, different expenses like taxation, depreciation
amortization, pension contribution funds, employees retirement benefits, writeoffs and
other provisions are excluded to know the profit or loss of the company in a particular
year.
SOURCES OF FUNDS
Following are the major sources of funds of PTCL.
1. Issued, subscribed and paid up capital.
2. Long term and short term loans from different syndicate's i.e; Citi
Bank, ANZ Bank, Bankers Equity Ltd etc
3. Income from operations
4. Funds from securities
5. Funds from Gross provident Funds
6. Income from its subsidiaries like CTI & PakNet etc.
7. International telephone represents revenue from foreign networks.
ALLOCATION OF FUNDS
In PTCL funds are allocated by a sound system of charts of accounts. All the Drawing
and Disbursing Officers are assigned their specific coderange through which necessary
budgets and grants are allocated. All the heads have also their code numbers which is
easy to computerize.
NO OF EMPLOYEES IN FINANCE DEPARTMENT
There are about 3600 employees working under the department of Finance. Which
include Senior Executive Vice President Finance, Executive Vice President Finance,
General Manager Finance, Senior Finance Officers, Director Finance and Account
Officers, etc.



Senior Executive Vice President Finance
01
Executive Vice President Finance.
Accounts
Finance
Revenue
03
General Manager Finance /DirectorFinance/Chief Engineers
20
Senior Account Officers
75
Account Officers etc.
175
Assistant Director, Assistant, Clerks, etc
3600
CRITICAL ANALYSIS OF THEORETICAL CONCEPTS RELATING TO PRACTICAL
EXPERIENCES (FINANCE DEPARTMENT)
In my opinion, The Finance Department of the Company has complied with all the
material requirements of the Code of Corporate Governance. Proper accounting system
is followed to record, classify, and summarize accounting data and information in
conformity to Companies Ordinance 1984 and International Accounting Standards as
applicable in Pakistan. My findings are as follow:

Proper books of accounts of the company have been maintained.

The financial statements prepared by the management of the Company present
fairly its state of affairs, the result of its operations.

Appropriate accounting policies have been consistently applied in the preparation
of financial statements and accounting estimates are based on reasonable and
prudent judgment.

International Accounting standards, as applicable in Pakistan, have been
followed in the preparation of financial statements and any departure therefrom has
been adequately disclosed.

The system of internal controls is sound in design and has been effectively
implemented and monitored.

There are no significant doubts about the company's ability to continue as a
going concern.

There has been no material departure from the best practices of corporate
governance, as detailed in the listed regulations.
The company is not fully computerized yet and for this reason there are few problems
like slow reporting, less efficiency, etc. further more all employees of finance
department do not have sufficient computer skills to carry out the routing work of the
finance department on computer based system which in turn reduces the overall
efficiency of the finance department of the company. The company is not providing any
proper training to the staff of finance department on new technologies to update their
knowledge which also affects the performance of the finance department. All accounts
and finance offices are not interconnected due to this reason communication between
these departments gets slow that affects performance of the department. Receivable
management of the company is not very good as there are huge amounts of
outstanding bills are over due and yet to be collected.
RATIO ANALYSIS
Horizontal and vertical analyses compare one figure to another within the same
category. It is also essential to compare figures from different categories. This is
accomplished through Ratio Analysis.
Ratios may be classified in number of ways. Different kinds of ratios are selected for
different type of situations.
BALANCE SHEET RATIOS
These ratios are also called financial ratios. The components of these ratios are drawn
from the balance sheet.
PROFIT & LOSS ACCOUNT RATIOS
These ratios are also called operating ratios. The items used for the calculation are
taken from profit & loss account statement i.e. Gross Profit Ratio, Stock Turnover Ratio
etc.
INTER-STATEMENT OR COMBINED RATIOS
The information required for the computation of these ratios is normally drawn from both
Balance Sheet and Profit & Loss Account. For Example: Net profit to fixed assets,
Debtors turnover ratios etc.
The company uses the following ratios in order to arrive at definite conclusion
concerning liquidity and solvency.
GROSS PROFIT MARGIN
The gross profit margin reveals the percentage of each rupee left over after the
business has paid for its goods. The highest the gross profit earned the better. Gross
profit equals net sales less cost of goods sold.
2006
2005
2004
2003
2002
47.86 56.58 52.24 48.07 49.29
COMMENTS
The PTCL is constantly showing a good gross profit margin ratio. During the year 2004
its gross profit margin has maximum value.
NET MARGIN
The ratio of net Profit after tax to net sales is called the Net profit margin. It indicates the
profitability generated from revenue and hence is an important measure of operating
performance.
2006
2005
2004
2003
2002
35.02 39.35 34.35 29.83 29.26
COMMENTS
PTCL has shown a good improvement in its Net profit margin ratio. During the year
2005 company has shown a phenomenal growth of 39.35%.
RETURN ON INVESTMENT
Return on investment (ROI) is a key, but rough, measure of percentage. ROI shows the
extent through which earnings are achieved on the investment made in the business.
There are basically three ratios that evaluate the return on investment. These are:
 Return on total operating assets
 Return on equity
 Return on capital employed
RETURN ON OPERATING ASSETS
2006
2005
2004
2003
2002
36.47 38.51 28.69 24.04 23.22
The return on total assets (ROA) indicates the efficiency with which management has
used its available resources to generate income.
COMMENTS
PTCL has shown a remarkable improvement in its Return on total assets ratio. This
means that PTCL is effectively using its all available assets to generate revenue. During
the year 2005, this ratio is 38.51% which is maximum among the analysis years.
RETURN ON EQUITY
ROE measures the overall firm performance. ROE compares net profit after taxes
(minus preferred stock dividends, if any) to the equity that shareholders have invested in
the firm:
2006
2005
2004
2003
2002
25.43 28.20 24.75 23.33 23.51
COMMENTS
This ratio tells us the earning power on shareholders book value investment and is
frequently used in comparing two or more firms in an industry. A high return on equity
often reflects the firm's acceptance of strong investment opportunities and effective
expense management.
RETURN ON Capital
The relationship of net profit after taxes to total capital is known as the Return on
Capital.
2006
2005
2004
2003
2002
22.79 25.03 20.31 16.51 15.23
The value of this ratio is increasing every year from 2001 to 2004. But in 2005 value of
this ratio decreases with respect to previous year.
LIQUIDITY RATIOS
Liquidity is a company's ability to meet its maturing short – term obligations. Liquidity is
essential to conducting business activity, particularly in times of adversity, such as when
business is shut down by strike or when operating losses ensue due to an economic
recession etc. Liquidity ratios are static in nature as of year-end. Therefore, it is
important for management to look at expected future cash flows. If future cash outflows
are expected to be high relative to inflows, the liquidity position of the company is
deteriorate.
CURRENT RATIO
Current ratio is equal to current assets divided by current liabilities. This ratio is used to
measure the ability of an enterprise to meet its current liabilities out of current assets.
The formula can be written as:
2006 2005 2004 2003 2002
1.91
2.78
2.02
1.72
1.21
COMMENTS
By comparing the results of analysis years it is known that for Each 1 rupee in liability
the company have 1.21 up to 2.78 times in current assets.
QUICK RATIO
The quick ratio, also known as the acid-test ratio is strongest test of liquidity. In it more
liquid current assets are divided by current liabilities. It can be written as:
2005 2004 2003 2002 2001
1.74
2.67
1.91
1.61
1.15
COMMENTS
By comparing the figures of analysis years, the ratio is declining in 2005 as compared to
2004.
PRICE EARNING RATIO
The market price per share of a firm's common stock divided by the most recent 12
months of earning per share.
2006 2005 2004 2003 2002
9.01
4.88
3.86
2.82
2.85
COMMENTS
Table shows the P/E ratio of years from 2002 up to 2006. This ratio is maximum during
the year 2006 and minimum during the year 2003.
DEBTORS TURNOVER RATIO
The relationship of net sales to total debt is known as the Debtors Turnover Ratio.
2005 2004 2003 2002 2001
4.9
COMMENTS
4.32
4.60
3.73
3.34
Table shows the values of debtor's turnover ratios of the organization. The value of this
ratio is gradually increasing from 2001 up to 2003 and then in 2005 but in 2004 the
value of this ratio decrease with respect to the previous year.
FIXED ASSETS TURNOVER
The relationship of net sales to total assets is known as the Fixed Asset Turnover.
2006 2005 2004 2003 2002
1.04
0.98
0.84
0.81
0.79
COMMENTS
Table shows the values of fixed asset turnover ratios of the organization. The value of
this ratio is gradually increasing every year from 2002 up to 2006.
DIVIDEND YIELD
Labeled "YLD %" is the dividend yield. This is found by dividing the stated dividend by
the closing share price.
2006
2005
2004
2003
2002
2.85
11.86
12.3
16.03 13.37
COMMENTS
Dividend Yield has a large value through 2002 up to 2005 but in 2006 its value
decreases with a big change.
BREAKUP VALUE
The value of a firm measured as the sum of the values of its operating units if each is
sold separately.
2006
2005
2004
2003
2002
19.63 21.39 19.17 17.39 15.91
COMMENTS
Breakup value is maximum in 2005 and least value of Rs. 15.91 in 2002.
LEVERAGE RATIO
Leverage equivalent to solvency or long-term debt. Solvency is a company's ability to
meet its long-term obligations as they become due. An analysis of solvency
concentrates on the long-term financial and operating structure of the business. The
degree of long-term debt in the capital structure is also considered. Further, solvency is
dependent upon profitability since in the long run firm will not be able to meet its debts
unless it is profitable.
These ratios help in measuring the financial contribution of the owners compared with
that of the creditors, also the risk of debt financing.
DEBT / EQUITY RATIO
The debt/equity ratio is a significant measure of solvency since the high degree of debt
in capital structure makes difficult for organizations. Excessive debt will result in less
financial flexibility .Debt/equity ratio equals to total liabilities divided by equity.
2006
2005
2004
2003
2002
13.06 13.33 16.39 24.60 28.22
TOTAL ASSET TURNOVER
The total asset turnover ratio is useful in evaluating a company's ability to use its asset
base efficiently to generate revenue. A low ratio may be due to many factors, and it is
important to identify the underlying reasons.
2006 2005 2004 2003 2002
0.55
0.54
0.52
0.49
0.44
EARNINGS PER SHARE (PRE TAX)
Earnings per share indicate the amount of earnings for each common share held.
Earnings per share are useful indicator of the operating performance of the bank.
2006 2005 2004 2003 2002
7.79
8.63
7.37
6.54
6.30
EARNINGS PER SHARE (AFTER TAX)
Earnings per share indicate the amount of earnings for each common share held.
Earnings per share are useful indicator of the operating performance of the bank.
2006 2005 2004 2003 2002
5.22
5.72
4.53
3.88
3.56
COMMENTS
The firms earning per share are generally of interest to present or prospective
stockholders and management. The Earning per Share (EPS) represent the number of
rupees earned on behalf of each outstanding share of common stock. They are closely
watched by the investing public are considered an important indicator of corporate
success. The value of EPS is maximum in 2005 and minimum in 2002 in pre tax and
after tax cases. And this value decrease in 2006.
DIVIDEND PAYOUT RATIO (BEFORE TAX)
Indicates the percentage of each Rupee earned that is distributed to owners in the form
of cash, calculated by dividing the firm cash dividend per share by its earning per share
2006
2005
2004
2003
2002
25.66 57.91 47.49 42.08 38.09
DIVIDEND PAYOUT RATIO (AFTER TAX)
Indicates the percentage of each Rupee earned that is distributed to owners in the form
of cash, calculated by dividing the firm cash dividend per share by its earning per share
2006
2005
2004
2003
2002
38.34 87.42 77.34 70.79 67.42
COMMENTS
Creditors and investors use the following ratios to see if the company has adequate
cash flow for invest or dividend. There exists a rise in percentage in every year from
2002 to 2005. Dividend payout ratio is maximum in 2005. But in 2006 sudden
decreases of value exist. This decrease of percentage is very low as compared to
previous years from 2002 to 2005.
NET WORKING CAPITAL
Net working capital is equal to current assets less current liabilities. Current assets are
those assets that are expected to convert into cash or used up within 1 year. Current
liabilities are those liabilities that must be paid within 1 year; they are paid out of current
assets. Net working capital is a safety cushion to creditors.
2006
2005
2004
2003
2002
18657 30925 16816 13891 7192
COMMENTS
PTCL is expanding its operations throughout the Pakistan, quite rapidly; one of the key
indicators of growing business is the Working Capital of PTCL. From the above
analysis, we can depict that PTCL is progressing.
TIME INTEREST EARNED RATIO
The times interest earned ratio measures the firm's ability to make contractual interest
payments. The higher the value of this ratio, the better able the firm is to fulfill its interest
obligations.
2006
2005
2004
2003
2002
87.35 65.33 36.67 13.69 10.16
COMMENTS
The values show that the company is in good condition to fulfill its interest obligations.
The value of Time interest earned is in increasing mod in every next coming year from
2002 to onward.
PRE TAX MARGIN / OPERATING PROFIT MARGIN
The operating profit margin / Pre tax margin measures the percentage of each sales
remained after all cost and expenses other than interest and taxes are deducted.
It represents the pure profits. Operating profit is pure because they ignore any financial
and governments charges (Interest & Taxes) and measure only the profit earned on
operations. A high operating profit margin is preferred.
2006
2005
2004
2003
2002
52.32 59.41 55.93 50.17 51.79
COMMENTS
Table shows the pure profits of company, which shows a good percentage in every next
coming year. Operating profit is pure because they ignore any financial and
governments charges (Interest & Taxes) and measure only the profit earned on
operations. A high operating profit margin is preferred. Pre tax margin is maximum in
2005 and its value is minimum in 2003.
EARNIGN POWER (GROWTH)
Neither the net profit margin nor the total asset turnover ratio by itself provides an
adequate measure of overall effectiveness. The earning power of investment capital or
return of investment (ROI) provides the answer.
2006
2005
2004
2003
2002
-8.79 26.38 16.50
9.13
36.18
COMMENTS
The net profit margin ignores the utilization of assets, while the total asset turnover ratio
ignores profitability on sales. The return on investment ratio or earning power resolves
these shortcomings.
The value of Earning Growth is maximum %age values during the years 2002 and 2004
which are respectively 36.18 and 26.38.
During the years 2003 & 2004 company has %age values 9.13& 16.5. In year 2005 this
%age value is least one and has negative %age value of 8.79.
An improvement in the earning power of the firm will result if there is an increase in
turnover on assets, an increase in net profit margin or both.
DIVIDEND PER SHARE
Cash payments declared and paid by the corporation to stockholders.
Dividends are the only cash payments regularly made by corporations to their
stockholders. They are decided upon and declared by the board of directors and can be
range from zero to virtually any amount the corporation can afford to pay.
2006 2005 2004 2003 2002
2.00
5.00
3.5
2.75
2.4
COMMENTS
Table shows the Dividend per share paid by the corporation during the years 2002 up to
2006. This value is maximum Rupees 5.00 in 2005 and minimum in 2006.
HORIZONTAL ANALYSIS / COMMENTS
Horizontal analysis is used to evaluate the trend in accounts over the years. This helps
in disclosing changes on the items in financial statements over the years. In horizontal
analysis, any one year is taken as base year and all items are compared with
corresponds items in base year.
Horizontal analysis of PTCL under my discussion provides the information about the
organization where it stands in its financial status from 2002 to 2006. Whether it
improving it position or not, all this is know through this analysis.
During my analysis 2002 is taken as base year and all other year figures are compared
with this base year.
ANALYSIS
SHAREHOLDERSEQUITY&LIABILITIES
By comparing the data from 2002 to 2006, it is clear that reserves are increasing with
respect to base year 2002, but in 2006 the value is reduced as compared to 2005. The
reason is that during this year, the capital of the company remains same, reserves
increase but the value of profit decrease during this year, which affects the overall value
of 2006.
Non current liabilities are reducing during the analysis years with respect to base year.
During the years, Suppliers credit, deferred taxation and long term security deposits are
reduced but the retirement benefits increased in 2006, which affects the over all value of
this year.
By comparing the figures of Current Liabilities of these years w.r.t base year, it is clear
that during the years 2003-2006 Payables / Borrowing increase gradually with respect
to 2002 but the Interest and Markup accrued, Taxation decreased with respect to base
year. The over all value of Current liabilities decrease w.r.t base year.
The overall value of Equity and Liabilities remains less during the years 2003, 2004 and
2006 but in 2005 increase to some extent. This shows the stability in Equity and
Liabilities during these years.
TOTALASSETS
The overall value of Fixed Capital decreases with respect to base year. The value of
Property, Plant, and Equipment during these years' decreases but the value of Capital
work in progress increased during 2005-06. On the other hand the value of Intangible
assets increases much more during 2006.
The overall value of the long term investment and loans increased with respect to base
year 2002. During the year 2006 this value reduces 127.97 from 147.19 in 2005. The
reason behind this that during 2006, there was not as such investment occurred and
value of loans also reduced as compared to previous years.
The overall Current Assets decrease during the year 2003, 2004 & 2006. but increase
during the year 2005. This shows that in 2007 the Receivables are almost double but
Cash is much less as compared to 2006.
Hence overall situation is not as good as compared to base year.
PROFIT&LOSSACCOUNT
From horizontal balance sheet, it is clear that Revenue of the company is increasing in
the coming years with respect to base year 2002. This increase in value of Revenue
shows that company is moving in the right direction and showing best results for
investors and stockholders. Operating cost is increasing with respect to base year with
the passage of time.
Comparison shows that operating profit is increased every year with respect to base
year. In 2005 Operating Profit was maximum but in 2006 this decrease from Rs. 137.11
million to Rs. 118.88 million. The overall value of Profit is increasing during the analysis
years. Maximum profit occurs during 2005 but it reduces its value in 2006 as compared
to 2005.
RESULT
The overall Horizontal analysis shows that the company is in good condition for its stock
holders and the persons interested in this organization. The company is in running in
profit situation. There is increase in profit in the next coming years. In 2005, the
company gets maximum profit while in 2006; there is decrease in the value of profit as
compared to 2005. The reason behind this is the uncertainty in the process of
privatization scenario, increase in the operating cost, decrease in inappropriate profit,
increase in payables, increase in capital work in progress, less new investment and
loans etc.
VERTICAL ANALYSIS / COMMENTS
In vertical analysis, a significant item on a financial statement is used as a base value,
and all other items on the financial statement are compared to it. Vertical analysis is
used to disclose the internal structure of an enterprise.
In performing vertical analysis for the balance sheet, total assets and Total Equity &
Liabilities are assigned 100 percent. Each account is then expressed as a percentage of
these values. In profit and loss account, Revenue is given the value of 100 percent and
all other items are evaluated in comparison to this Revenue. All this is done for the
purpose of evaluating financial position of PTCL.
ANALYSIS
SHAREHOLDERSEQUITY&LIABILITIES
By comparison it is clear that Share capital & Reserves are increasing from 49.14 to
77.05 during the year 2002 to 2005 and then decrease its %age value in 2006 as
compare to 2005. During the period Reserves are increasing every year, Capital %age
almost remain its value constant i.e. no significant difference. The alarming condition is
about Un-appropriated profit. The profit is maximum in 2005 that is 18.43 as compared
to total Equity & Liability and this value decrease in 2006.
Non current liabilities are also decreasing every year but 2005, a slight rise in value
exist. When we analysis its individual values, it is clear that Suppliers credit is
decreasing significantly but the other values like Deferred taxation , Retirement benefits,
Security deposits have mixed affect. In different years its %age values are different. But
overall liabilities are decreasing.
Current liabilities in base year 2002 are 33.39, its value decrease in 2003, then increase
in 2004 and again decrease and then rise. So have a mixed affect. When we study
individual item in Current liabilities, it shows that Interest & Markup accrued decreases.
Trade & Payables are increasing from 5.36 to 10.89. And other items have mixed affect.
TOTALASSETS
Vertical Balance Sheet shows the %age of Fixed Capital w.r. to total Assets. This value
is 64.91 % in 2002; its value increase to 67.77% in 2003 then decrease to 64.37% in
2004 then reduce to 58.46% in 2005 and again rise in 2006. All other items have a
mixed affect.
Vertical Balance Sheet shows the %age values of Long term assets during the year
2002-2006 with respect to total assets. This value is 5.10% in 2002, 6.78%in 2003 (a
rise of 1.68%), 6.73 in 2004 (a decrease of .05% as compared to 2003) 7.43 in 2005 (a
rise of .70% as compared to 2004) and again decrease .70% in 2006. In 2004 and
2006, these values have same values.
By comparing it shows that maximum current assets are 34.11 % in 2005 and minimum
current assets are25.44 in 2003. In 2004 & 2006 its value is 28.90 % which is same in
both years. When we study the items involved in current assets, it is clear that items
have almost same %age of values in 2004 and 2006. Company bank balances are
maximum 16.97% in 2004 and minimum bank balance was in 2003.
PROFIT&LOSSACCOUNT
During the vertical analysis of Profit and Loss Account Revenue is taken as 100% and
all other items are compared with respect to this Revenue
Operating profit is maximum 52.14% in 2006 and minimum in 2005 with respect to base
value of Revenue. Company earns maximum Operating profit of 56.58% in 2005.
During this year the Operating cost was minimum. Company earns minimum Operating
profit of 47.86% in 2006. During this year the Operating cost was maximum. This shows
that Operating cost & Operating profit are inversely to each other.
Company earns maximum profit in 2005 which is 39.36% of the total revenue. A decline
in profit up to 9.34% exists during the year 2006. This shows the poor condition of the
company during this year. During this decline the Earning per share during this year
also decrease from 5.72 to 5.22.
RESULT
The overall vertical analysis shows that during the year 2005 the company earns
maximum profit during this year the E.P.S was also maximum.
In this year the Operating cost was minimum and its Operating profit was maximum as
compared to other years.
PTCL & STOCK MARKET
PTCL is the largest listed stock in Pakistan in terms of market capitalization &
represents more than 30% of the total capitalization of the Karachi Stock Exchange
(KSE). PTCL's free float is around 11.76% or 600m shares, 83% of which were initially
issued in the form of GDRs. Initially, only one-way convertibility was possible in PTCL's
GDRs (i.e., from GDRs to locally listed shares), but now government and the central
bank have allowed two-way conversion.
SHAREHOLDING STRUCTURE OF PTCL
PTCL's paid-up capital is 51 billion rupees; divided into 3.774 billion classes "A" ordinary
shares (74%) and 1.326 billion class "B" ordinary shares (26%). The class "A" share is
listed on the all three stock exchanges of Pakistan, while class "B" share are not listed
and have been earmarked for future sale to a strategic investor. Class "B" share are
currently sold to UAE company Etisalatt, which take over the charge in March, 2006 and
these "B" shares have four voting rights against one voting right per class "A" share.
The government has sold 11.76% equity of PTCL in two trenches. One million vouchers
(equivalent to 100mn shares) were sold via a local IPO at Rs.30 per share.
Subsequently, another 500mn shares were sold in the form of GDR's to international
investors at Rs.55 per share.
LEADERSHIP OF PTCL IN THE MARKET
PTCL is leading company in the market, Till December 2002 due to its monopoly status
in the country and was the sole and largest Telecommunication services provider
in Pakistan. Now there are five other companies in the market. PTCL aims at using the
latest technology for its services. PTCL is also inducting professionals in the field of
engineering and information technology. It is also getting consultancy from international
companies in order to remain leader in telecommunication sector.
THE BIGGEST FOREIGN EXCHANGE EARNER
PTCL is the biggest source of foreign exchange for Pakistan. Currently, it earns million
rupees from its international traffic.
COMPETITIVE PRESSURE
Before 2002 PTCL had no competitor in the market and other companies are legally not
allowed to enter into competition with PTCL. So PTCL was performing its activities
freely without any pressure. But now PTCL has to change its strategies to face the
competitors because there are competitors such like Mobilink, Telenor, Warid, Word
Call, Insta-One etc in the market to compete the PTCL.
In such scenario the PTCL has to face many problems in the early but no doubt the
PTCL
has
a
strong
powerful
motivate
team
members
to
face
this
challenges/atmosphere and again approves a Market Leader of communication in the
country.
ADEQUATE FINANCIAL RESOURCES
PTCL earns billions of rupees as profit each year and has enough money in its general
reserve. PTCL also has debt as a major source of Capital. These adequate financial
resources not only enable the company to cope with any unexpected event but to
deploy its resources to increase product line and services without feeling any financial
difficulty.
FLEXIBILITY IN OPERATIONS
Because of its adequate financial resources and leadership in the market, PTCL has
flexibility in changing its operations. Marketing department responds to the customers
whenever they contact and ask problems. So, marketing department acts freely and
independently. But for coming days PTA has issued licenses to many companies for
installation of WLL (Recently World Call is in the market) technology switches, surely
PTCL has to face these competitors.
FUTURE PROSPECTS OF THE ORGANIZATION
The overall analysis shows that company is in good condition throughout the analysis
years 2002- 2006. The 2005 is the golden year for the company because in this year
the company earns maximum profit. During this year the Operating Cost was minimum
and its Operating Profit was maximum.
In the next year 2006, there is decrease in the value of profit as compared to previous
year. During this year the Operating Cost was maximum and its Operating Profit was
minimum as compared to previous year. The reason behind this due to uncertainty in
the process of Privatization scenario, increase in Payables, increase in Capital Work in
Progress and less investment during this year.
Earning per share is also increasing during these years for the stock holders and the
persons interested in PTCL investment. Future Prospects of the Organization is to get
more and more profit for its share holder by increasing revenue and operating profit by
reducing its operating costs.
PTCL is a leading Telecomm service provider in Pakistan with its extensive networks all
out the country. There are now five other companies in competition with PTCL. No
doubt the situation is some one critical but either of the companies have not their own
infrastructure by now. It will take long span of time in this sector to come in competition
with PTCL.
It is more over worth-mentioning that PTCL is under going the strategic structural
changing in the sector of Engineering, IT, Marketing and updating the R & D section
which plays a key role for taking long term value projects that are 5 to 10 years. This is
the sole objective of PTCL.
New management namely Etisalat is in collaboration with PTCL with its 5 members in
the Board of Directors and 4 from Govt. of Pakistan. The total restructuring of PTCL is in
full swing & Insha-Allah it will be completed within a fortnight period. It also includes the
Rightsizing of employees. This will no doubt boost up the services as well as revenue.
PTCL has launched U-FONE (Mobile services), V-WIRELESS, andINTERNET (Paknet)
services with old FIXED LINE phones. The other competitors are no doubt in the market
but they are just having one or two services as compared to PTCL. The World Call is
the only competitor with V-Wireless facility. Above all other considerations, the PTCL is
leading and likely to introduce more services like DSL, Cross Connect shortly to
facilitate its valued customers.
As for as Revenue is concerned, PTCL still stands exclusively in the best position
among all other companies. Since its networks are not only in the big cities like other
companies but also in the remote areas of the country. If the situation remains
productive, I can safely foresee that within a decade it will not only maintain persistency
but also grow more in every dimension.
I therefore come to the conclusion that PTCL will only be the company in Pakistan who
is leading one because the facts stated above and with the missionary zeal of its
employees.
SHORT FALLS / WEAKNESS OF FINANCE DEPARTMENT
1.
In Finance department a large number of employees have not sufficient knowledge of computer. So their
performance can be increase by this training.
2.
Data can not update well in time, which creates problems for staff.
3.
The lower scale employees of the Financial Department are not giving any training of modern tolls used in
finance technology.
4.
There exist no interlink between the Finance Offices. If these are connected then most of the problems will
be solved automatically.
5.
Finance related units/offices are not interconnected.
6.
Finance related transactions are not fully computerized.
7.
Data is not fully updated.
8.
Persons working in finance department have not enough knowledge of computer applications. There exist a
large number of employees who do not know the basic knowledge of computer.
9.
Finance related office is not fully computerized till yet.
10.
There does not exist a planned program for their training.
11.
The different offices do not use the same format in financial transactions.
12.
Latest financial techniques and modules are not uses in these departments.
13.
The most of the persons working in the finance department are irrelevant i.e. they belong to other cadres.
14.
Lack of coordination between different departments.
15.
Lack of database management in finance department.
16.
There
doesn't
exist
planned
program
for
the
loaning
policies
of
employees.
SUGGESTIONS
17.
Whole finance related offices should be interconnected.
18.
Latest technology tools and modules should be used in all offices.
19.
Employee should be updated with latest techniques related to finance.
20.
Unique loaning policies should be implemented for all employees.
21.
People working in Finance Department should be trained enough that they have computer knowledge. here
should be proper training regarding computer skill so that they can update themselves according to the updates
22.
Finance Department should be fully computerized.
23.
There should be planned program for the training of the employees
24.
All the finance offices should use the same format of transaction
25.
Latest financial techniques and modules should use in these departments.
26.
Trained staff should work in the finance department.
27.
All Finance office should co-ordinate with other departments.
28.
There should be proper Database management in finance department.
29.
There should be planned program for the loaning policies of employees.
CONCLUSIONS
To fulfill the requirement of the MBA degree program, I have completed my internship
with PTCL for about two months. During this period I have gained a lot of knowledge
and
practical
experience.
I
have
practically
realized
the
importance
of
individual/practical work.
The very important things which I learnt are, like any other basic sphere of modern
socio-industrial activities, Telecommunication is a main and important field for the
development of any country. The staff of organization is highly qualified and their
behavior is friendly. Also the working environment of organization is very good. So I
recommend all students who do their internship in future, should do the training program
with PTCL because this is very good institution of learning.
RECOMMENDATIONS
 In every year PTCL starts new ventures and services in the country but on
the other hand, the people of Azad Kashmir, and many other Rural Areas are
still being neglected. There is a high potential market for value added
services of PTCL in Azad Kashmir and Rural Areas. The company should
start the internet, Pay-card Phone, and Mobile phone services in these areas
in collaboration with private investors.
 There exist a huge amount of outstanding bills to be collected by the
defaulters. The company should frame tight and effective policies to ensure
the collection of its outstanding bills. The revenue officers should be provided
incentives and bonuses on achieving the determined targets of revenue
collection.
 Hundred percent computerization in PTCL would be helpful to save the
time and money and provision of quick services to its valued customers.
 Human resource development is a key component in every organization; In
PTCL this is not going well. So there is an immense need to improve this
department.
 Over employment is main and major problem in PTCL. Reduction / Right
Sizing in over employment can give better results.
 PTCL management should give more emphasis towards customer
satisfaction, delight and retention.
 PTCL higher management should adopt a uniform policy for every region.
 Finally, PTCL revenue is decreasing due to arrival of market competitors in
the country, so the management should adopt special careful steps to face
this competition environment.