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FINI619 INTERNSHIP REPORT Telecom Foundation

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Telecom Foundation


No words can adequately express my overriding debt of gratitude to my parents whose support helps me in all the way. Above all I shall be thanking my friends who constantly encouraged and blessed me so enable me to do this work successfully.


All praise to Almighty Allah, the most merciful and compassionate, who give me skills and abilities to complete this report successfully. I am thankful to all my staff members in Telecom Foundation. I found every one very co-operative and helpful for providing me the Theoretical as well as practical knowledge about the function and operation of the Telecom Foundation. I show my great feelings to Madam Aliya. Who was the Person who made me able to write this report, Her teaching method showed the way forward to me to achieve this success. She helped me a lot each time when I went up to her.

Executive Summary

I have been searched on Telecom Foundation. It was great experience to work in Telecom Foundation. In this report analysis, history and structure of Telecom Foundation has been done. The carving of the Telecom Foundation on the mountains region of commercial activities in Pakistan was no doubt a miraculous deed. In this report here is some ratio analysis which shows organization’s position.
The report is divided into 11chapters the area of concentration of this report is confined in investigating different aspects of TF transaction as well problems and prospects and by this I tried to give recommendations for removing the problems weakness and improving the performances.

Brief introduction of the organization----------------------------------------------------08
Overview of the organization-------------------------------------------------------------09
Organizational structure-------------------------------------------------------------------15
Plan of your internship program----------------------------------------------------------19
Training program---------------------------------------------------------------------------20
Ratio analysis-------------------------------------------------------------------------------26
Future prospects of the organization------------------------------------------------------46

Brief Introduction of Organization
Telecom Foundation was established by the Federal Government vide S.R.O No. 1194 (I)/91 under Charitable Endowments Act 1890 in November, 1991 for the Welfare of:
Serving & Retired employees of Pakistan Telecommunication Company Ltd. (PTCL), Pakistan Telecommunication Authority (PTA) National Telecommunication Corporation (NTC) Frequency Allocation Board (FAB) and Subsidiaries of above organizations.

Wife / Wives, dependent parents, dependant sons, unmarried daughters of employees of PTCL, PTA, NTC, FAB & such other relatives of the beneficiaries as may be defined by the Board

To provide high speed data transmission and other communication facilities at competitive rates with constant up-gradation in the service range incorporating the penetrative marketing strategy to broaden the clientele base with optimum satisfaction, safeguarding the interest of shareholders and utilize Company resources ensuring maximum return

Constantly upgrading the technology to meet the challenges of the new millennium.

For the transparent provision of high quality data services to users, all the diverse technologies and transmission methodologies have been interfaced to form a home grown network.

The technologies for a circuit are chosen on the basis of needs of each individual user. The local loop of a d. May be built up on a copper pair using modems, digital line terminal units or spread spectrum radios. The choice depends on the speed, location, distance and data application of users.
To provide enhanced, fast, cost effective and dependable worldwide communication services with optimized return to shareholders of the Company.
Overview of the Organization
Telecom Foundation has constructed a state_of_the art building at a prime location in mauve area Islamabad. The building has a basement, ground floor and five storey’s with covered area of about 100,000 sq.ft. with the completion of the second phase of the building, an additional space of 50,000 sq.ft would be available.
The new era began with the privatization of Pakistan Telecommunication Company Limited (PTCL). In fact PTCL employees along with those of Pakistan Telecommunication Authority (PTA), National Telecommunication Corporation (NTC) and Frequency Allocation Board (FAB) remain our beneficiaries. TF, which was founded in 1991 as a welfare organization, has grown up in these years. Indeed, it is a matter of pride for us to be able to offer widest array of products and services like access network, tower erection/installation, data communication, telephone instruments, pay card phone services and high quality PVC pipes to our esteemed customers.
The history has shown that change only persists and, with the passage of time, it always comes. Keeping in view the need of our valued clients and for constant as well as effective communication of information, we have designed this website to be user-friendly as far as possible.
In our endeavors to pursue the path of excellence, customer’s satisfaction remains our top priority. It will only be possible if we know our customers better and deliver high quality of products as well as services, thereby adding synergy to our existing management expertise, financial strength and profitability. Should our customers approach us for any telecom products or services, we shall strive to ensure quality. It remains our pleasure and pride for contributing in the noble cause of welfare, since our profit is passed on to needy and deserving beneficiaries.
Brief History
It dates back to November 1991 when Telecom Foundation (TF) was constituted by the Ministry of Communications and notified by the Ministry of Health, Special Education & Social Welfare as a Charitable Trust and self supporting legal entity with a clear objective to undertake a variety of Welfare projects. To support the welfare activities for the benefit of retired /serving employees of PTCL on the one hand and nation on the other. The Foundation is also registered with Pakistan Engineering Council. Telecom Foundation is being governed by the Board of Governors comprising of thirteen members. The Secretary, Information Technology and Telecommunication Division (Ministry of Science & Technology) is the Chairman, TF and Managing Director, Telecom Foundation, is member of the Board as well as Chief Executive of the Foundation.

Over a period of Telecom Foundation ha acquired the competence to accomplish the assigned task s well in time in accordance with the high standers of precision and perfection to the satisfaction of our valued clients. Being a progressive and service oriented organization, TF is still endeavoring to attain better result and to acquire better result and to acquire excellence in various fields of telecommunication implementation with its expert service and products and exploring new vistas for the well being of serving and retired employees of Pakistan Telecommunication Company Limited(PTCL) and its subsidiaries, Pakistan Telecom Authority, National Telecom Corporation and frequency Allocation Board.
Our lofty objectives place a heavy demand on the expertise of our employees. By putting in their best for timely completion of mega projects, they not only set exceptional standard of excellence
Within the given parameter but also ensure commercial viability.
The field which have so far engaged our active attention range from access network, data communication, UPVC pipe manufacturing, pre-cast product, tower eration, telecom implementation services, bringing in technically trained man power, training for skill development in the field of IT/Telecom disciplines ,card pay phones, telephones sets manufacturing, and ventures like PTCL calling cards distributionrtc. our participation in some commercially viable Projects related to above fields has yielded substantially for enabling us to plan and execute social welfare programs for the well being of our beneficiaries.
To undertake & execute the turnkey solution in the line of development of new infra structure for telecom service providers, TF has its boarded canvas of telecom implementation expertise and had successfully established business alliances with the leading multinational telecom implementation companies of international repute like Aver ox ,teralight, Noviacom, NCS(SingTel) for capturing business and completing the projects on joint venture basis.

Organizational Hierarchy chart


Business volume
Telecom Foundation captures a huge volume of business through its projects and subsidiaries and has a very impressive repute through its quality products and services. Telecom Foundation is pioneer in providing Pay phone services and Data communication through its subsidiaries TF payphones and PakDatacom Limited. Presently 5,200 payphones are operating in 160 cities / Towns throughout the country and Azad Jammu Kashmir.
TF pipes through its quality products capture major Customer like OGDC, UNICEF, PAEC, SCO, CAA, Beharia Town etc. Company also achieved ISO 9001-2000 certification in November 2003.90% shareholding was made during 1998. It provides different modes of Telephone sets like CLI, Non CLI, stenotype etc. Telecom Foundation works for PTCL throughout side plant and also supplies manpower to them. It also provides quality education through its Schools and Training Institutes.
Product lines
UPVC pipes
Telephone instruments or services like data networks
Payphones operations
Roll out of access network
Installation of DRS, VHF, GSM towers
Civil works of BTS
Our functional strength in services and products improve and streamline our competitiveness in the global market.

Welfare Services:
Scholarships to the children of beneficiaries.
Financial support to the deserving beneficiaries.
A school system spread over 13 different cities providing quality education on subsidized charges.
Medical care through homeopathic dispensaries.
Industrial Homes.
Rest Houses
A housing project for Telecom sector employees is also under consideration.

Brief Introduction of all the Departments
The driving force behind our struggle for excellence remains our commitment to foster the process of national development and modernization of local infrastructure. For taking an active part in the process we have formed sound collaboration with the famous local and international communication companies directly or through our subsidiaries. These subsidiaries apparently represent different industrial and services sectors such as manufacturing of telephone instruments, PVC Pipes & products, high-tech services in Data communication, Pay card operations sectors and the like.
However the diversified operations of these companies are integrated in such a manner that they assist each other to add to total strength of the group. This is no doubt a major reason of our enviable success and we are determined to follow the strategy towards higher echelons excellence in different fields of technology. These subsidiaries represent the range and variety of functions being performed and services being rendered by them.
Pak Datacom Limited (PDL) was established in 1992 to set up a country wide network for data communication, its management, maintenance and operation to serve the needs of its subscribers. The company is also authorized to conduct any business relating to communication and information technologies. PDL is using a wide range of technologies to provide reliable data communication services including VSAT, Fiber Optics and Radio Connectivity. PDL, having presence in all major cities of Pakistan, has established maintenance centers working round the clock. The company proudly claims to be the market leader in Data communication Industry.
PDL has an authorized capital of Rs.100 (M) and Paid up capital of Rs. 71.28 Million. Telecom Foundation has 55% share holding while the remaining 45% is with General Public. The Company is registered on all three stock exchanges of Pakistan. And its shareholders are regularly enjoying dividends for the last 10 yrs.
TF Pipes Limited incorporated in May,1992 under the companies Ordinance 1984 manufacturers top quality pressure and non pressure PVC pipes, bends and sockets with very high chemical resistance, excellent mechanical and hydro mechanical performance and excellent water tightness. The pipes are manufactured on state-of-the art computerized machinery from Cincinnati Milacron (USA) with stringent quality control round the clock under the supervision of qualified professionals. TF Pipes Limited is an ISO 9002 Certified Company w.e.f. 01-01-2002 and got ISO 9001-2000 Certification in November 2003. The rated capacity of the plant is 6500 Tons per year with size range from ½” to 12” Dia for pressure pipes and ¾” to 6” Dia for non pressure pipes. The company came in to being with equity of Rs.41.463 (M), subscribed by TF and PTCL in the ratio of 60% and 40% respectively. The company has the distinction to claim that only its Pipes have been used in cable network of PTCL
TF Pay Phones was established in July 1992 aiming at providing card operated Pay Phone services to the people of Pakistan. TF Pay Phones is the pioneer in Pay Phone industry in Pakistan. It started its operations from Islamabad with two regional offices; one at Karachi and other at Lahore.TF Pay Phones Limited is a wholly owned subsidiary of Telecom Foundation and is registered under the Companies Ordinance 1984. It has an authorized capital of Rs. 80.00 million with paid up capital of Rs. 66.005 million.
Head office of TF Pay Phones is situated at Lahore with its registered office at Plot No. 190, I-9/2 Industrial area, Islamabad. There are 13 regional and 7 sub-regional offices of TF Pay Phones all over Pakistan. It has a countrywide network of 5,200 Pay Phones. The current operations provide coverage to nearly 160 cities and towns of Pakistan and AJK. The company plans to start payphone service to rural areas through VHF Digital Radio Links.TF Pay Phones is also one of the leading distributors of PTCL prepaid calling cards. It also manages selected Customer Service Centers and Telegraph Offices of PTCL in Karachi, Lahore and Islamabad.

Pakistan Communications Industries (Pvt) Ltd was established in 1995 as a local and export oriented company, having manufacturing license from Nera ASA, Norway, Initially it was established as a joint venture between Nera ASA (Norway), Telecom Foundation and Equinox Marketing (Pvt) Ltd. Presently, It is owned by Telecom Foundation (90%) & Equinox Marketing Services (Pvt) Ltd. (10%).
The factory is located at Mauza Shahpur, Khanpur, 14th K.M. Multan, Road Lahore with a covered area of 20,338 square feet & has the capacity to produce 200,000 Telephone sets per annum on a single shift basis. The production facilities are designed for ample expansion as and when required with respect to both area and the number of shifts.

Comments on the organizational structure
Telecom Foundation has centralized as well as decentralized structure. Because as we know that once the organization grows beyond few people it become impossible for the top Management to make decision about everything, so is the case with Telecom Foundation, the Management have to delegate decision to those who are at lower level in the Organization. However the degrees to which decision are delegated varies from project to project e.g. In Manpower and Training Unit, the decision powers are delegated to Sr. G.M whereas in Out Side Plants (OSPs) powers are delegated to General Managers, to make decision within the line of the rules and regulations provided by the Headquarters. A system has been implemented but no proper checks and balances are available. Management never bothered to visit their projects to check either works done within the defined rules and regulation or not. This system facilitates the Management to some extent but misused by the Management of the relevant projects, they have biased attitude towards their employees, which discourage employees, performance suffered and ultimately projects affected.
In case of subsidiaries, the Foundation plays the role of a regulatory body and provides administrative cover to them. In subsidiaries purely government attitude (which is very lengthy and time consuming) due to which companies several time suffered a lot. For the survival and be major share holder of the market, it is very necessary to implement the commercial environment within the subsidiaries.

Plan of the internship program
Introduction of the department from where I did internship
I did internship from Telecom Foundation Islamabad. I found Telecom Foundation has gained reputation for reliability and resourcefulness since its inception.TF products and services are second to none and are designed to support TF mission. Whether in manufacturing, administration, research and development, they display commitment to excellence, blessings. There are four kinds of subsidiaries Pak Datacom Limited (PDL), TF Pipes Limited, Pakistan Communication Industries (PVT) and Pay Phone Limited.TF also do the welfare work for the whole Pakistan.
TF has provided its employees a better working environment and salary structure and facilities. Incentives and awards were given to promote efficiency and better service to clients. A competitive environment was instrumental in introducing a thorough going professionalism, which in the ultimate analysis transformed the entire outlook of the industry.
Starting and Ending dates of internship
Staring date of internship is 12.11.2010 and ending date is 24.12.2010.
Names of the departments in which I got training
I got training from finance department and administration department.
Duration of training
I did training of six weeks.

Training Program
Description of the activities performed in the department(s)
Finance Department:
Detailed descriptions of the task assign to me are as follows:
While conducting Internship with Telecom Foundation, I came to know that the theoretical concepts help us in every field of Accounts. Theory is the first step or we can say it is the milestone which tells us about the destination, without milestone we cannot reach the destination.
Theory help me to understand the entire system of the Organization e.g. In case of Budget, theory tells the format, Kinds of the Budget but it doesn’t tells us which format is suitable for the organization either it is adopted multi format at a time or a single format, what type of hurdles faced by the organization, allocation of funds, resources etc.
Theory not specifically helps in the field of Finance and Accounts but overall the setup of the Organization but as a major of Finance I emphasis more on Finance and Accounts department.
In the beginning they gave me a brief introduction of all the aspects related to their field of business, their projects, budgetary functions, investments, development impact, and revenue control. I gained in depth knowledge of how a welfare organization like TF is being managed in the wake of today’s turbulent economic conditions and how it is piling up its human resources to keep up in discharging of its functions. To coordinate assigned activities with in institution and outside agencies; and to provide highly responsible and complex administrative support to the CFO and other financial staff members. Financial managers manage the preparation and cash inflow and outflow. A general overview of TF was given in other words. Moreover, I learned how things work in a practical environment. . I learned how economic activities are recorded in the accounting records. Next the recorded data are classified within the system to accumulate subtotals for various types of economic activities. Finally, the information is summarized in accounting reports designed to meet the information needs of various stakeholders, such as investors, managers and governmental agencies for their decision making. The recorded information is based upon past events, for which financial effects upon the business can be measured. However, some other contingents event are also reported in the financial statements which may not affect the bottom line but may effect the decision making process of the stakeholders.
The Accounting cycle of the Telecom Foundation is as under:
Record transaction in the Journal
Post to Ledger Accounts
Prepare a Trial Balance
Prepare financial statement
All the Accounting information developed within Foundation is available to the management. The financial statements are the set of accounting reports. A set of financial statement consists of four related accounting reports that summarize in a few pages the financial resources, obligations, profitability and cash transaction of a business. A complete set of financial statement includes:
Balance Sheet
Income Statement
Owner’s Equity
Cash Flows
In the foundation the basic purpose of financial statement is to evaluate the financial position, profitability and future prospects of the company.

Accounting Software
Madam Alia teaches me some of the main functions of this software. In the start she told me to make a new company so that I can easily understand how to use this software. Madam told me that just keep in mind a small company and gather data to make the charts of accounts of that company, the chart of account is the main part of the Peachtree Software. Every head of account is assign an id for example we have Cash, bank, assets, liabilities and expenses and in chart of account we assign each head an unique id such as 10101, 10201, 10301. 10401, 10501. 10101 to cash and 10201 to bank and so on. Such as the assets, income, expenditures and liabilities. After competing my first task of gathering data and enter these in the heads in the chart of accounts and provide them a code such as 0001 to assets and 0020 to liabilities. If some edition in the chart of accounts so that a new code is available for that head. After completing the chart of accounts madam teach me how to enter data in the software.
Data Entry:
In this software I have to enter the daily activities of the finance department and in the end of every day. The daily expenditures and income are entered in the software such as Cash received (amount charged) on deposits from clients been credited to the bank account as income. Expenses on the bank account been debited to the bank account as expense
Accounts payable functions include vendor defaults, adding vendors and beginning balances for vendors.
For accounts receivable, how the customer statement and invoice defaults are set up, how to add customers and set up beginning balances for customers.
My instructor Madam Alia Khan tells me how to open a new account in the software and enter ads and edit the Charts of Accounts. According to the transaction enter the different Accounts types.
General Journal Entries:
Create the General Journal entries and see the effect on the trial balance and balance sheet how to enter the data in his account. Such as some stationary was brought on cash. The journal entries for this is to Debit the stationary expense account and Credit the cash account. This will increase the overall expense toward stationary head and reduce the cash in hand. This will carry on to 2 weeks and during this two weeks she tell me the how to manage the data in the existing account.

Trial balance and balance sheet:
After transferring data MS excel to Peachtree. I prepare the trial balance and the balance sheet which is already made through Peachtree. I have to print these details and sign it from the head of the finance department and put it in the file to save the record
Voucher making:
Voucher making is a process of making written evidence of cash received from customers, expenses on the bank account and income to the bank account. Cash received (amount charged) on deposits from clients been credited to the bank account as income. Expenses on the bank account been debited to the bank account as expense. In TF three types of voucher are used:
Journal Voucher
Cash payment Voucher
Bank payment Voucher
Accountant of the TF help me allot to voucher making. I make only two vouchers. I made the voucher of company’s daily expenses, company income cheque books issuing voucher etc. The accountant of the company helped me to do this.
Inventory record:
TF daily inventory record is maintained in the register. TF new projects is under construction so every day the inventory used in the projects is recorded and incase if more material is required the finance department asked to estimate the charges on the new required inventory. I was asked to record the daily inventory charges and other expenses.
The payroll unit maintains the pay process by gathering data on employee time and attendance, calculating various deductions and taxes, and generating periodic pay cheques and employee tax reports. I was asked to assemble the data of employees during the month and saved it data on computer and prepare their pays and then forward to the manager for the transfer of pays into the employees account.
Administration Department
In Administration department I have to maintain the record daily
Fuel consumption:
Company has its own transport which gives benefits to the employees of the telecom foundation for pick and drop service. I was asked to make a report of one week for the daily consumption of fuel on pick and drop services for staff. At the end of the week I have all the records of the fuel consumed by the vehicles of pick and drop services. I prepared this report in a pie chart format by using MS Excel and submit it to my supervisor
Stationary used:
I also used to maintain the record of the office stationary items like files, folders, and pen and office papers needed by the other departments, which were used and consumed in the offices on daily bases. The printing paper is frequently consumed so I also used to maintain the record of it that how many rims were consumed.
Mess items:
I used to maintain the record of mess items. Mess items are used to consumed after every 2 or 3 days daily. So I was asked to maintain the record of each and every item used in the mess. I also used to make the bills of those items which are consumed and passed the bills to the finance department for fund.
Courier services record:
One of the main working unit of HR department is to maintain the record of daily courier received by the company and deliver the received letters to the concerning department. I used to maintain the record of letters received by the company. And I report to the HR manager.

Ratio Analysis

Current Ratio
Formula: Current Assets / Current Liabilities
Year 2009 Year 2010 Year 2011
CA 595,908,520 682,999,749 597,918,420
CL 340,263,989 322,733,705 246,560,487
Numerator / Denominator 595,908,520/340,263,989 682,999,749/322,733,705 597,918,420/246,560,487
Current Ratio 1.7513:1 2.12:1 2.42:1
Graphical Presentation:

This ratio shows the ability of the company to cover its current liabilities from current assets. Current ratio measures “general liquidity” It is used to make the analysis for the short term financial position of a company. The benchmark for this ratio is 2:1. In year 2011 company had high current ratio as compared to other years, but is acceptable which means company is evaluating its assets efficiently. In year 2010 company had accurate current ratio according to the benchmark. And in the first year 2009 company current ratio is decreasing which means that company is facing problems in meeting its short-term obligations.

Acid Test Ratio
Formula: Current Assets – Prepaid Expenses / Current Liabilities
Year 2009 Year 2010 Year 2011
CA 595,908,520 682,999,749 597,918,420
Prepaid Expenses 40,974,890 141,588,809 139,192,716
CL 340,263,989 322,733,705 246,560,487
Numerator / Denominator 595,908,520-40,974,890/340,263,989 682,999,749-141,588,809/322,733,705 597,918,420-139,192,716/246,560,487
554933630/340,263,989 541410940/322,733,705 458725704/246,560,487
Acid Test Ratio 1.63:1 1.68:1 1.86:1
Graphical Presentation:

A stringent indicator that determines whether a firm has enough short-term assets to cover its immediate liabilities without selling inventory. The acid-test ratio is far tougher than the working capital ratio, primarily because the working capital ratio allows for the inclusion of inventory assets. The company has zero levels of inventory . In 2009 and 2010 Pak Datacom had high acid test ratio which indicates a high financial position this means that company’s recourses are not fully utilizing and it was not earning profit. In 2011 the acid test ratio is 1.86:1 it means it is still increasing. Pak Datacom needs efficient management steps to utilize all its current assets to reach to the bench mark and make them profitable for the company.

Working capital
Formula: Current Assets - Current Liabilities

Year 2009 Year 2010 Year 2011
CA 595,908,520 682,999,749 597,918,420
CL 169,454,060 322,733,705 246,560,487
CA - CL 595,908,520 -169,454,060 682,999,749-322,733,705 597,918,420-246,560,487
Working capital 426,454,460 360,266,044 351,357,933
Graphical Presentation:

Working capital measures a company’s potential excess sources of cash which are available for the upcoming expenses. The higher the ratio, the more liquidity the operation has to meet current obligations. This means the organization has sufficient funds to meet its short term debt and expenses. In the year 2009, the company has less working capital as compared to other two years but company is able to meet its short term obligations with the cash available. In the next two years, company’s working capital ratio is increasing which indicates that the company has an increasing trend in this ratio which shows the company is more liquid to meet its obligations.

Time Interest Earned
Formula: EBIT / interest expenses

Year 2009 Year 2010 Year 2011
= Profit before tax + Finance cost 248,946,998 + 583,803 249,540,788 + 722,255 28,946,036 + 1,192,707
interest expenses 583,803 722,255 1,192,707
Numerator / Denominator 249530801/583,803 250263043/722,255 30138743/119,2707
Times Interest Earned 427.42:1 346.50:1 25.27:1
Graphical Presentation:

This ratio measures the company’s ability to meet its interest requirements. The interest is paid out of EBIT. It indicates the extent of which earnings are available to meet interest payments. This ratio measures the ease with which a company can meet its interest requirements, since interest is paid out of EBIT. When coverage is high, the debt is of high quality and is likely to be highly rated. When it is low, a sudden downturn in EBIT could lead to debt servicing problems. The above ratio shows sharp decrease in interest cover in the year 2011 as compared to previous years, which is again due to sudden fall in the revenue of the company in the said year.

Debt Ratio
Formula:(Total Liabilities/Total Assets)*100

Year 2009 Year 2010 Year 2011
TL 409,899,419 392,555,157 316,361,950
TA 1,001,173,350 1,080,196,100 970,546,039
Numerator / Denominator (409,899,419/1,001,173,350)
*100 (392555157/1080196100)
*100 (316361950/1,001,173,350)
Debt Rat 40.94 % 36.34 % 32.59%
Graphical Presentation:

Debt Ratio is a financial ratio that indicates the percentage of a company's assets that are provided via debt. It is the ratio of total debt (the sum of current liabilities and long-term liabilities) and total assets (the sum of current assets, fixed assets, and other assets such as 'goodwill'). In 2009 the company has debt ratio of 40%, which is higher as compared to 2010 and 2011 as the firm was consuming more debt to supporting its assets as compare to the year 2010 & 2011. In 2010 and 2011this percentage is decreasing because the firm injected new capital to support its increased capital base, resulting in decrease in debt ratio.

Debt / Equity Ratio
Formula: Total liabilities / Total Equity
Year 2009 Year 2010 Year 2011
Total liabilities 409,899,419 392555157 316361950
Equity 591,273,931 687,640,943 654,184,089
Numerator / Denominator 409,899,419/591,273,931 392555157/687,640,943 316361950/654,184,089
Debt / Equity Ratio 0.6932 Times 0.5708 Times 0.4835 Times
Graphical Presentation:

Debt-equity ratio determines the relationship between borrowed funds and owner’s funds. It shows how much firm can borrow money from out side. The ratio measures how the company is leveraging its debt against the capital employed by its owners. If the liabilities exceed the net worth then in that case the creditors have more risk than the shareowners.

Net Profit Margin
Formula: (Net Income / Net Sales)*100
Year 2009 Year 2010 Year 2011
Net Income / (Loss) 161,815,549 159,093,412 17,508,346
Net Sales ( Revenue ) 1,042,099,160 1,058,615,961 675,118,707
Numerator/ Denominator (161,815,549/1,042,099,160)
*100 (159,093,412/1,058,615,961)
*100 (17,508,346/675,118,707)
Net Profit Margin 15.53% 15.03% 2.59%
Graphical Presentation:

Net profit margin ratio measures the relationship between the net profit and the level of the sales. This ratio is used to distinguish the net profit after taxes to revenue. It shows how effectively a company controls its direct and indirect costs. In 2009 net income is high as compared to other two years which shows that company is controlling its cost effectively and generating high revenue. In 2010 net income decrease but still almost have same ratio as 2009. The net income and the sales of 2011 decreased with a very high ratio due to which the company operating costs increased and had less cost control capability in this year as compared to previous year.

Gross Profit Margin
Year 2009 Year 2010 Year 2011
Gross Profit 227,642,607 306,606,030 85,295,349
Net Sales 1,042,099,160 1,058,615,961 675,118,707
Numerator / Denominator (227,642,607/1,042,099,160)*100 (306,606,030/1,058,615,961)*100 (85,295,349/675,118,707)*100
Gross Profit Margin 21.84% 28.96% 12.63%
Graphical Presentation:

Gross Profit margin can be defined as the amount of contribution to the business enterprise, after paying for direct-fixed and direct-variable unit costs, required to cover overheads (fixed commitments) and provide a buffer for unknown items. It expresses the relationship between gross profit and direct expenses to provide services. It is a measure of how well each Rupee of a company's input cost is utilized to cover the operational & overhead expenses. The gross profit margin of the company is higher in 2010 as it 28.96% and in the previous year of 2009 the profit margin decrease to 21.84%. In the year 2011, decrease in sales resulted in higher decrease in gross profit margin as compare to previous year because of fixed direct cost, which the company is bound to incur irrespective of volume of sale.

Return on Assets
Formula: (Net Income / Total Assets)*100
Year 2009 Year 2010 Year 2011
Net Income / (Loss) 161,815,549 159,093,412 17,508,346
Total Assets 1,001,173,350 1,080,196,100 970,546,039
Numerator / Denominator (248,946,998/1,001,173,350)
*100 (159,093,412/1,080,196,100)
*100 (17,508,346/970,546,039)
Return on Assets 16.16% 14.72% 1.80%

An important test of management’s ability to earn a return on funds supplied from all resources is the rate of return on total assets. The above percentage shows the overall efficiency of a firm and the primary objective of the business has been achieving because there is a net profit in and they are having the sufficient profits and continue using their assets and due to that the company is achieved profit. In 2009 the net income is highest and total assets are lowest in comparison with other years, giving highest return in assets. In 2010 the net income of the company decrease as compared to the previous year due to which this ration gets decreased almost 1.44% as compared to 2009 but it’s still favorable for the company. However in 2011 net income decreased with a very high ratio due to decrease in sales and assets did not fully utilize in this year as a result of which ROA decreased with a very high ratio.

Operating Income Margin
Formula: Operating Income / Net Sales * 100
Year 2009 Year 2010 Year 2011
Operating Income/(Loss) 227,642,607 227,093,566 8,067,882
Net Sales/Revenue 1,042,099,160 1,058,615,961 675,118,707
Numerator / Denominator (227,642,607/1,042,099,160)
*100 (227,093,566/1,058,615,961)
*100 (8,067,882/675,118,707)
Operating Income Margin 21.84% 21.45% 1.195%
Graphical Presentation:

This ratio measures the profitability return of per Rupee of gross revenue. It is expressed as a percentage of sales and shows the efficiency of a company controlling the costs and expenses associated with business operations. In 2009 and 2010 the company has highest operating income but in 2011 due to decrease in sales operating income reduced and the margin falls up to 1.195%. However in 2009 although sales increased but operating expenses are also increased leading to constant margin of 21.84%.

Return on Total Equity
Year 2009 Year 2010 Year 2011
Net Income / (Loss) 161,815,549 159,093,412 17,508,346
Equity 591,273,931 687,640,943 654,184,089
Working Working
Numerator / Denominator (161,815,549/591,273,931)*100 (159,093,412/687,640,943)*100 (17,508,346/654,184,089)
Return on Total Equity 27.37% 23.13% 2.67%
Graphical Presentation:

Return on equity (ROE) measures the rate of return on the ownership interest (shareholders' equity) of the members of the company. ROE is referred to as Shareholder's return on investment, it tells the rate that shareholders are earning on their shares ( also known as net assets or assets minus liabilities). ROE shows how well a company uses investment funds to generate earnings growth. There is a decrease in ROE in 2011 as compared to 2010 due to increase in equity from 591,273,931 to 687,640,943and partially due to decrease in net income

Total Assets Turnover
Formula: Sales / Total Assets
Year 2009 Year 2010 Year 2011
Sales/Revenue 1,042,099,160 1,058,615,961 675,118,707
Total Assets 1,001,173,350 1,080,196,100 970,546,039
Numerator / Denominator 1,042,099,160/1,001,173,350 1,058,615,961/1,080,196,100 675,118,707/970,546,039
Total Assets Turnover 1.0409 Times 0.980 Times 0.6956 Times
Graphical Presentation:

Asset turnover measures a firm’s efficiency at using its assets in generating sales or revenue. Higher number is better. It also indicates pricing strategy. In 2009 the company has higher turnover ratio as compared to other two years. In 2010 the Company has less than turnover ratio it means the company is not using its assets efficiently. In 2009 the Company has comparatively better turnover ratio as compared to 2010 and 2011.

Operating Cash Flow Ratio

Formula: Cash Flow From Operation/Current Liabilities
Year 2009 Year 2010 Year 2011
Cash flow From Operation 342,816,951 119,766,445 140,20,161
Current Liabilities 340,263,989 322,733,705 246,560,487
Numerator / Denominator 342,816,951/340,263,989 119,766,445/322,733,705 140,20,161/246,560,487
Operating Cash Flow 1.0075:1 0.3710:1 0.05686:1
Graphical Presentation:

A ratio of a company's operating cash flow to current liabilities. Operating cash flow is a measure of how much cash a company has on hand, while current liabilities show expenses it must pay in the near future. The operating cash flow ratio thus shows a company's ability to meet these liabilities without having to sell assets or take any similar actions. In 2009 company OCF is 1 which is favorable situation. In 2010 and 2011company’s OCF is less than 1.0 the company is not generating enough cash to pay off its short-term debt which is a serious situation. It is possible that the firm may not be able to continue to operate.

Dividend per share
Formula: Dividend Amount / Number Of Equity Shares
Year 2009 Year 2010 Year 2011
Dividend 44,613,610 63,983,203 50,319,726
Number Of Equity Shares 7,840,800 7,840,800 7,840,800
Numerator / Denominator 44,613,610/7,840,800 63,983,203/7,840,800 50,319,726/7,840,800
Dividend per share 5.689:1 8.1602:1 6.4176:1
Graphical Presentation:

This is an important shareholders’ ratio, particularly for small investors. It is simply the total dividend declared by a company divide by the number of share the business has issued. Dividend are form of profit distribution to the shareholders. Higher dividend per share can be a sign that the company’s management believe is that the growth can be sustainable. The above ratio signifies that the company’s dividend payout was stable in the first two years due to higher earning but failed to maintained the same in the year 2011 due to significant decrease in the residual profit for the said year, which can be attributed to sharp decline in the revenue for the year.

Earning per Share
Formula: Net Profit Available For Shareholder / Number Of Equity Shares
Year 2009 Year 2010 Year 2011
Net Profit/ (Loss) 161,815,549 159,093,412 17,508,346
Number Of Equity Shares 7,840,800 7,840,800 7,840,800
Numerator / Denominator 161,815,549/7,840,800 159,093,412/7,840,800 17,508,346/7,840,800
Earning per Share 20.64:1 20.29:1 2.232:1
Graphical Presentation:

The earning per share is a good measure of profitability. The earnings per share ratio is mainly useful for companies with publicly traded shares. But if compare it to the EPS from a previous quarter or year it indicates the rate of growth a companies’ earnings are growing (on a per share basis. The above percentage shows that earning per share of the company has significantly dropped to a lavel of Rs. 2 in the year 2011 from Rs. 20 noted in previous years. This free fall in EPS can only be attributed to sharp decrease in revenue in the year 2011, which might be either due to restructuring the price of services of the company due to new entrant of competitors in the market or obsolescence of technology being used by the company.

Future Prospects of the Organization
As we already know that PTCL is in the phase of privatization but Foundation is not much more affected by it because it is not completely dependant on it and TF is equipped with the requisite infrastructure, experience and human resource to take up the challenges in the post privatization. In this regard, TF seeks to remain in existing telecom business without totally relying on PTCL and also explore new business avenues to support its welfare activities for only retired employees of PTCL.
Telecom Foundation future is very bright because of their diversify investment As the education is commercialize, TF Public Schools, in various cities, will also capture major share of the market due to quality education, affordability and economical.
As the PTCL privatize, the private companies like Warid, Telenor and etc requires an established setup of installation and commissioning of ducts, Optical Fibre etc in which Telecom Foundation not only a leading organization but have a rich experience.
Telecom Foundation has a state-of-the-art building, which is very much impressive and attractive for the multinational companies.
In the Light of Subsidiaries:
Pak Datacom Ltd.; providing data communication services.
TF Pay Phones Ltd.; operating manned / unmanned PCOs network and having distribution of prepaid calling cards.
TF Pipes Ltd.; manufacturing high quality PVC products.
Pakistan Communications Industries (Pvt.) Ltd.; manufacturing telephone sets and electronic equipments.
In short we can say that Telecom Foundation is very bright only because of their in time and accurate investment and decisions and will be the leading company in all fields of investment.
As an internee I concluded that good Accounting is a base for good governance and can serve as an aid to effective management of human and financial resources, committed to achieve economical and social welfare of people. The existing system of the Foundation is not matching the current requirement it means the existing system has shown significant inadequacies in meeting the national and international requirements of fiscal reporting.
Telecom Foundation has just started its way on the new discipline of the Information Technology (IT) systems. But unfortunately in Telecom Foundation, Information Technology has not much more weighted as it deserve. in Telecom Foundation, most of the data processing was made manually but now the trend has been changed. Electronic data is promoted with in the organization. Most of the accounting department works on PEACH TREE (an Accounting software which gives the prompt and accurate result and helps the decision makers) but not to the extent that the transactions take place electronically. The internal users cannot access and transfer electronic information and make online transactions. Within the organization, the flow of electronic data is not take place. In short i can say that the concept of electronic data in decision making is at a very initial stage and required full devotion and time for complete electronic environment with in the organization. To compete with the growing economies of the world, Telecom Foundation needs to educate, train and bring its work force to the international educational standards, incorporate new technologies and modern management practices in to its industry and bring intense focus on building an information based economy by up grading the technical and management skills of its people.

Conclusion Based On Ratio Analysis (Pak Datacom)
The above overall analysis shows that the company is performing better in terms of liquidity and financial ratio over the years but failed maintain its profitability. In spite of improving short term liquidity position the company must ensure the liquidity ratios must not cross the benchmark, which may result into tying up resources of the company in no profit generating assets. The falling debt equity ratio over the year signifies that the company has started to rely more on owners fund than the borrowed funds leaving its profitability less vulnerable. However, in that scenario the company will lose the tax benefit on incremental interest cost. The profitability of the company faced the major blow in the year 2011 leaving only EPS Rs. 2 from Rs. 20 in previous year. This free fall in profit can only be attributed to much lower sale then that of previous year. This decrease in sale might be due to entrance of competitor in the market of services of the company getting obsolete for its targeted customer. The company should take serious measures to reverse this trend and to avoid any going concern issue.

Recommendations for Improvement
Following are the few recommendations, including the Management and Financial weak areas along with their solutions, for improvement of the Foundation:
Computerized environment is the current choice of many developing and developed organizations to upgrade their economies and become competitive in the global market place. The computerized based organizations not only save time but also money. It helps management to take prompt decisions. Timely reporting will not only increase the efficiency but also reliability in the market. Telecom Foundation needs to create computerized revolution which will not only given vision but also made possible creation, valuation and exchange of these complex financial information on global basis.
Change human component through proper training and education. Skill and Knowledge must support through change in attitude, change in vision, and change in thinking. National and international seminars are a step towards achieving this goal.
PakDatacom is constantly facing the shortage in its current assets due to which the firm is unable to meet its short term obligations. PakDatacom should have to increase its funds from different sources in order to increase its current assets.
To set performance bench marks for both, qualitative and quantitative, to access progress in achieving its strategic goals and objectives. Collectively these help to demonstrate the degree which provides timely quality service and to helps the foundation to meet 21st century challenges by transforming its role and ways of doing business.
PakDatacom has not had sufficient capital so that’s why the profit of the company is not consistent. During my internship I noticed that the main for not having sufficient capital is that the recoveries of the company is not at a time due to which company new projects do not have sufficient capital. I must suggest that increase the number of partners. They may also need to strict their recovery policies in order to meet their capital
Following policies help us to motivate human resource for better results:
Helping employees balance work and personal lives through flexible work schedules and on-site services.
Investing in employee’s continuous learning and improvement through training and mentoring programs.
Rewarding High performing individuals through a pay-for–performance system and incentive awards.
Control environment would include both the system and transaction controls. Internal controls means a continuous monitoring about Rules, Policies, Procedures and International Accounting standards are strictly followed by all branches of Accounts and Finance or not. Internal control environment is very essential for the organization for minimizing the risk factor.
The establishment of the Internal Audit cell is the requirement of the system. Internal Audit cell means an independent, objective assurance and consulting department designed to add value and improve a Foundation operations. It helps the Foundation to accomplish its objectives by bringing a systematic, disciplined approach to evaluate and improve the effectiveness of risk management, control and governance process.
To ensue only the authorized budgets get implemented
The authorized budgets get implemented in the correct accounting heads
Co-ordination and communication links through which budget gets communicated and implemented are secure, efficient and effective.
Budget gets implemented timely
Information available to decision makers regarding implementation is reliable.
More than 50% of the employees have Master or professional degrees from leading universities and institutions in the areas of public administration, business, computer sciences, accounting, economics and the social sciences. Their major career tracks includes; Analyst, Financial Auditor, and area specialists (economists, Communication analysts, IT specialists). Individual development plans, tracking of work experience and job rotation within the team or among different Projects.
In short
Duties may be properly delegated and outline for job duties will also be defined for each and every post. Each and every employee should know about their responsibilities and duties.
Properly delegated the authority and responsibility it means who should authorize and responsible for what or we can say that the when some postings/transfers are made, the charge may be properly handover to the authorize person. Also made him well informed about their powers, duties and responsibilities.
A proper system of authorization is implemented and also quarterly monitored by the responsible persons.
Weekly meeting should be held among projects to create co-ordination among them. These meetings also help to improve their performance.

Recommendations Based On Ratio Analysis (Pak Datacom)
On the base of ratio I recommend that Pak Datacom to take these steps to improve the company.
The company Acid test ratio is high as compared to benchmark; company should fully exploit its current assets to earn profit.
The deteriorating debt equity ratio can be improved by issuing equity shares to earn more profit to mitigate the high gearing ratio.
The profitability ratios of the company are in falling trend. Return on Assets ratio falls with a great measure in 2011 as compared to previous years. Company total assets also fall but company net income decreases with a very high ratio which means company need a funds as well as management efficiency so that it can utilize all its assets to increase its sales and profit.
Net profit margin of the company decline very sharply in the year 2011. Company sales decreased considerably thereby affecting the net profit of the company. Company should better utilize its financial resources to increase its sales.
To improve profitability ratios, company should increase its operating assets by offering shares publicly and by utilizing its total assets so that company could be able to enhance its profitability to match the past.
This free fall in EPS can only be attributed to decrease in revenue in the year 2011. Company should adjust its pricing policy.

Reference & Sources


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