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Final Project on Super Asia Fans 1
Accounting and Costing System analysis at Super Asia Fans
Final Project
Bsc Hons in Accounting and Finance
Submitted By:
Zain Hameed 05108032Mudaser Umer 05108044Zohaib Khalid 05108058
M Dawood 05108105Sharjeel Nasir 05108026
Submitted to:Sir Faisal Munir
Date: September 30, 2009
Group # 4 GIFT University
Final Project on Super Asia Fans 2
Executive SummarySuper Asia is rightly rated as largest growing industry of Gujranwala. It is a true example
of progress made by leaps and bounds. It is engaged in producing a large variety of
products touching the diverse industries like automobiles, electronics, home appliances,
and even food chains. It is a family owned business. Super Asia was found 30 years ago
and started to grow in 1980s. Super Asia is very successful in its various businesses
especially in Home Appliances. It is eagerly looking forward to modernize its culture and
diversify its investments in other areas as food chain. Super Asia believes in individual
importance in collective success. Mutual respect civility, creativity, and collective
activity towards common goals are considered as core values. Ethical behaviors greatly
affect decision making in company. Company believes in growing profitability. Super
Asia is also involved in many after sale and other services along with production, which
differentiate them from their local competitors. Super Asia is divided into units based on
the products e.g. there is different unit for fan and a different unit for motorcycle
production. There are four departments which serve all production units namely:
marketing, HR, sales, and accounting departments. Almost every department except HR
department, which consists of a single HR manager, has a supervising manager and
assisting staff working under him. Marketing department use a wide range of tactics to
enhance sales ranging from TV advertisements to lucky draws. HR department is not
performing all the functions in the manner in which it should perform. Sales department
works parallel to and in collaboration with marketing department and has a sales force as
assisting team to sales manager.
The main focus of the project is the evaluation of accounting system and cost efficiency.
The accounting department is headed by a chief accountant who is also General Manager
of the company. Accounting department serves all production units. Manager Accounts
deals with routine and operational matters of Accounting Department. This department
also performs the functions of Costing, Cost Accounting, and Finance. In its accounting
function, department performs recording, summarizing, classification, and reporting as
well. Company uses an integrated system of accounts with perpetual inventory system. A
customized accounting software, not very different from other available in market, is
used in the company. Costing function is not up to the mark as expected in such a large a
Group # 4 GIFT University
Final Project on Super Asia Fans 3
fast-growing industry. Standard and process costing is used. There is not consistent
policy for costing material issues. No separate material wastage reports are prepared.
Labor costing is done by using payrolls and time records. Manual time records are used.
Factory overheads are absorbed using production as a base. Monthly Budgets are
regularly prepared. Entry for sales is booked when GDN is communicated to Accounting
department by Godown, and entry for purchases is booked when invoice is received from
supplier. There is no defined policy for settling payables and receivables, and settlement
is mostly done on the directions of directors. The detailed production process is explained
in annexed chart.
There were no major flaws found in accounting system of Super Asia with the exception
of some small discrepancies. Costing System was not up to the mark as it should have
been for such a large organization with such huge growing trends. Also, the typical
conservative mentality of owners can be seen in the inadequate and insufficient safety
measures for the working labor on dangerous machines. Less focus on HR functions is
also another example. Company should understand its growing needs and should come
out of the conservative frame of mind of operating business. Their business is growing
and they must modernize their culture and systems to cope for the growing needs.
As a concluding note, it is observed that small businesses, with conservative and with
owners having wither no or traditional education, resent to the modernization of culture
and ways of doing business. When these small businesses grow into large organizations,
their typical mentality is automatically inherited. This is the case with Super Asia. May
be, they are doing a fine business at the present stage, but they have to accept the fact that
a revolutionary change in their organizational culture and structure is required to cope for
the prospective needs of their immensely growing business.
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Project Outcomes
The following outcomes are typically achieved from implementation of relevant and
appropriate accounting techniques that focuses primarily on addressing internal control
system of the company:
1. Effective accounting practices that describe the full picture of the company’s
operations.
2. Clear identification of material, labor and factory overhead costing.
3. The project also describes the common vision and goals for all leaders in the
organization.
4. This project also describes the production process to guide the management.
6. This project includes the company’s strategy of strong marketing, including research,
advertising and promotions.
7. We also aim that this project enhances the credibility and financial image among
stakeholders.
8. Overall this project includes, more proactive direction-setting, decision-making and
problem-solving.
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Final Project on Super Asia Fans 5
Company Profile
Super Asia is engaged in producing top order home appliances in South Asia.
Recognition of its achievements in quality products are manifested in the form of the ISO
9002 certification. The success tale spread well over 25 years when Super Asia produced
the first washing machine of Pakistan. Later on Super Asia started producing room air
coolers, gas and electric geysers.
Keeping in view the requirements and purchasing power of all the segments of the
society Super Asia has introduced different washing machines to meet their demands.
Super Asia has the honor to produce complete plastic body washing machine for the first
time in Pakistan.
Another hallmark in quality products is introducing the double action washing
technology through side and center Plaster. In Pakistan Super Asia has not only
introduced a large range of Room Air Coolers in plastic body, but in different sizes and
values as well.
Super Asia in order to maintain its superiority in producing public utility products has
introduced hot and cold, and only cold water dispenser. It was an instant success' due to
its design, effectiveness and affordable price amongst the consumers. Similarly the
complete range of super Asia fans is of international standard. There are different sizes,
colors in Ceiling, Pedestal, Bracket, Circu-matic and Exhaust Fans.
Research based products of Super Asia enjoyed a sense of superiority over similar
products in the open market. The objective is, however, to offer consumers products of
international quality at affordable price and this can be judge by the fact that they are
being exported to Saudi Arabia, Dubai, Bangladesh, Sri Lanka and Myanmar from the
last so many years, and their demand is growing day by day.
The success story of Super Asia is due to its chairman Haji Mohammad Yousaf while
Managing Director Haji Muhammad Afzal looks after the production aspects of the
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Final Project on Super Asia Fans 6
factory. He has a critical approach towards the products and their prices offered by their
competitors.
Haji Muhammad Ashraf, Chief Executive of Super Asia has played a leading role in the
marketing aspects of the products. He is fully aware of modern trends in the International
Markets. It will not be out of place to mention the services of Mr. Faisal Afzal, Mr.
Abdul Razaq, Mr. Sohail Yousaf and Mr. Umer Ashraf, that is looking after different
departments of Super Asia. These four young fellows with their higher education and
thriving on the experience of their seniors have produced excellent results.
Apart from looking after the affairs of factory, chairman Haji Muhammad Yousaf is
equally paying his attention towards religious affairs and social work. He has constructed
a Masjid; Mian Muhammad Din Trust Hospital is another example, where free medical
treatment is being provided to factory workers, and the needy of nearby localities. (See
Chart-1)
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HISTORY OF SUPER ASIA
Super Asia is family owned business. It was founded approximately 30 years ago as a
privately held factory of washing machines. The founder of factory was Mr. Haji
Muhammad Din (Late). The main campus of factory with its five departments is situated
near Chun Da Qila GT Road Gujranwala.
The mission of Super Asia focused on becoming a leader in home appliances
manufacturer in Pakistan. The factory carefully managed its production to ensure growth
in both national and international market. Super Asia’s products are very famous both in
Pakistan and worldwide. During the 1980-90s, Super Asia devoted its resources and
develops a huge factory and other businesses to make its place in the competitive
environment of Pakistan
Super Asia has acquired a reputation as a home appliances manufacturer holds a leading
position in the field of home applainces, they have also atarted other businesses like
polythene sheets and CNG stations. They are trying to develop their organisational
culture just like multi national companies.
There are many outlets of Super Asia all over the Pakistan which sold their products
direct to final users. The best-known are household products, sold worldwide under their
brand name in many countries of the world. The company's Corporate Functions
(departments) control, coordinate and monitor the activities of the Group, and provide
advice and support to Group Companies.
With many sales locations in Pakistan and huge exports, Super Asia is present on all of
the world's major markets. The company employs approx. 700 people.
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CORE VALUES AND BELEIFS
They believe in individual worth and integrity. All jobs within their organization have
real value. All team members deserve respect. They are committed to making a
contribution to their customers, their employees, and environment. Super Asia is focused
on providing better and quality products to their customers as they did not compromise
on quality.
Super Asia is a leader, in its industry and its communities. They pursue their objectives
with constant persistence. They never quit and always strive to achieve balance among
economic, social interests.
They believe in respect and civility. They behave toward each other in a positive,
supportive and dignified manner. Their systems and facilities are designed to provide a
safe and positive working environment. They collaborate actively through common goals,
objectives and solutions. They promote individual initiative and creativity.
Ethical behavior is at the root of all Super Asia’s decisions and actions. It is a basic value
of Super Asia’s that all team members be viewed by others as highly ethical and
thoughtful. Employees do what we say we will do. They actively consider the intended
and unintended consequences of all activities carried out in the company's name and act
accordingly.
Super Asia believes in profitable performance. Sustained growth and profitability are
essential to our health and prosperity as a company. The company uses its growing
profitability to assure that it can efficiently serve its customers, build equity for its
employees, create jobs, pay taxes and uphold our long tradition of service and success.
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PRODUCTS
☼ Air Conditioners ☼ Fans
☼ Washing Machines ☼ Room Coolers
☼ Water Dispensors ☼ Geasers
☼ Microwave Ovens
☼ Motor Bikes
Note: Every product has different models.
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SERVICES
Follwoing services are provided by Super Asia Company:
To provide customer prompt, quality and reliable services at their doorstep Super
Asia has a largest after sales service network through out the country.
To take care of customer appliances all service centers have latest tools,
equipments and machineries.
After sales service team consist of Engineers and highly qualified staff with great
professional approach due to this reason customer feels confident, once their appliance
are being maintained.
Super Asia after sale service also provides the facility to customer of lifting their
units from residence to service center and delivering within 48 hours.
Take care of our customers by remaining in contact with them so that they should
not face any type of problem.
Following are the Address of their branch offices:
Super Asia sales & service 89 temple road lahore. Mob:0300-8406116
Super Asia sales & service 405 jinnah colony Faisalabad. 041-647943
Super Asia sales & service Gulf Plaza Chandni chowk near Gondal CNG Ist floor
Flat no1 rawalpindi. 051-4843187,0321-5181000
Super Asia sales & service Ahmad park colony oppisite Jamia-Saqlain road near
Khanawal road Multan. 061-770225
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SWOT ANALYSIS
Strengths Highest quality products in the market as determined by the customer and
distributor feedback.
Manufturer of mostly the raw materials.
Products rae reliable and according to teh customer needs.
The sales channel of the company is very strong.
The company conducted very strong advertisement for promoting its products.
The company is a market leader in the washing machine sector in the region.
Weaknesses Prices of the products are high.
Some sales segments of the company are weak like in Baluchistan and some areas
of NWFP Province.
Demand and supply of labor.
Need more sales people.
Delivery and other operational staff need training.
Customer service staff need training
Oppurtunities Could develop new products.
Local competitors have poor products.
Profit margins will be good.
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Could extend to other major countries of the world.
Hire new specialist of the relevant field.
Launch more schemes for the products in order to attract customers.
Could seek better supplier deals. Search other suppliers who supplied raw
material at low costs.
Threats Any government legislation could affect the business.
Environmental effects would favor larger competitors.
Existing core business distribution risk.
Market demand very seasonal.
Retention of key staff critical.
Possible negative publicity.
Vulnerable to reactive attack by major competitors.
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MAJOR DEPARTMENTS
Super Asia has four major departments which are given below:
Marketing Department
HR Department
Sales Department
Accounts Department
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Marketing Department
In Super Asia Company Private Limited there is a separate marketing department which
performs all the essential marketing functions that are suitable for the company. In the
marketing department there are 25-30 employees are working. The promotional tools
which are used by the company for the marketing are:
Advertisement including print, electronic and internet etc
Brouchers
Bill Boards etc
There is a fixed budget for the marketing activities in the company. From the total budget
the marketing department consumes the 2.5% to 3.5% of the budget. The important
features of marketing campaigns are:
City Comparison: It means that the company implements its marketing tools from city
to city. They mainly target the large cities like Lahore, Karachi, Islamabad, Faisalabad;
Gujranwala etc. In these cities, the marketing campaigns are very intensive.
Sales Schemes: Company gives schemes on their products in many cities of Pakistan.
Incentives: Company gives incentives to its dealers in every city of the country.
Lucky Draws: In order to attract the customers and dealers, the company introduces the
lucky-draws for both the customers and dealers. The main example is Dealer’s
convention that is held in the company for once a year. These lucky draws are launched
in the large cities as well as small cities of Pakistan.
According to the marketing department of the company, the main purpose of their
product is to provide quality and durability to its customers. They are also concerned with
the appearance and packaging of their products. According to their view, their product
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Final Project on Super Asia Fans 16
should not only work accurately but it must look beautiful when placed in the house or in
the shop. The company targets the middle class families in all over the country but these
criteria are changed from city to city and products to products depending upon the per
capita income of the people of that city. Mostly the customers of the company are the
middle class families.
There are many outlets in approximately every city of Pakistan. In every outlet the
customer can purchase all the products of the company. The new models, which are
newly launched, first come to the large cities and then to the small cities, but they are
easily available everywhere in Pakistan. As described in the above methods of
advertisements for the company’s product, the main channel of advertisement is
electronic then print and then other miscellaneous methods. (See Chart # 2)
In the long run, the products of the company, saves the money, and cost of the company.
However the company’s products are little bit costly but they provide quality in their
products like fans, washing machines, air conditioners etc. People who purchase their
products feel ease of using their products in the long run. For example the washing
machines of the company will last for 20-25 years working efficiently in the houses. The
major benefit of the products is that they reduce the bills of the electricity.
The things which make their product really different, new better and unique as compared
to their competitors are:
Basic quality of their products
Repeating customers
More publicity
New designs
Innovation etc.
The company won many wards like:
Brand wards,
Export trophy in their washing machines,
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Yearly brand wards,
Quality standard awards etc
To handle the complaints about the product in any city, there are complaint centers in
Karachi, Lahore, Rawalpindi, Faisalabad and Multan. So the customers can satisfied by
their nearby complaint service centers. If there is complaint of serious nature then the
concerned manager is sent from the head office to resolve the complaint.
It is necessary for the company, to spend on advertisement for remain in the market
relative to their competitors. The biggest selling points of the company are Lahore,
Karachi, Rawalpindi, Faisalabad, Peshawar etc, but this also depends upon the per capita
income of the people living in that city. The company conveys their goodwill, past
experiences and quality with their products to their customers. There is no fixed time to
run the advertisement both on print and electronic media. It mostly depends upon the
season. If there is the season of the product then the advertisement runs but after the
season they will drag the advertisement and launch the new one for their next seasonal
product.
According to the marketing department of the company, it is strongly important that a
beautiful model displays their product in the advertisement because the people get very
satisfaction when they see that a popular model uses their products. So, it is an
encouraging tool for promoting their sales. The company also performs the international
marketing by giving their advertisements in the international channels like HBO, Star
World, Filmax etc and the internationally watched Pakistani channels like ARY Digital
network, GEO TV network etc.
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Human Resource Department
An HR manager is there to perform the functions of HR department. They believe that
such neglected size of HR department is sufficient in such a large ad fast-growing
organization to fulfill the needs of HR. The company wants that their employees are
professional, competent and have discipline in their work and manners.
Company provides the training and develops their employees where necessary. The
management is sent for doing courses like quality standard courses and other
management and computer courses. The employee performance is measured through
their performance evaluation forms that are provided to HR manager. These forms are
confidential and just remain in the hands of the Board of Directors and HR managers of
the company.
The work environment in Super Asia is reasonably good for the employees. It was told
that employees feel good while working in the premises of the company. The mission and
policies are documented and are pasted in many locations inside the company’s premises.
The employee records are maintained through company’s software. That software is
specially designed for performing that task.
The attendances of the employees are maintained through time card machine and through
punching system. If the employee of any department wants to get leave he will meet to
the concerned manager in that department. He will provide a leave certificate for an
evidence of the leave. If an employee comes late frequently then he will be fined by
deducting the amount for being late from his salary. But, this policy was not found as
implemented properly.
There is no special dress code in the company. The employee and management personal
can wear both Shalwar Qameez and Pent Shirt while working in the company. There is
no equal employment opportunity provided to the employees. As described about the
workplace is sufficient for the employees to work.
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The HR Manager designs all the jobs and assigns the responsibilities to every employee
and management personnel. The job redesigning is not practiced in the company like job
rotation, job enlargement, and job enrichment. The work timings are fixed. Mostly the
work is done through shifts and every shift has fixed hours. There is no concept of team
work in the company. Only when the new product is launched, a meeting is held in which
the director of the concerned department briefs the employees and management the
specifications of the products and receives their feedback.
There is no customer service division in the factory. The attitude of the employees
towards work is serious. They are bound to work in their concerning department. No
employee shall be allowed to waste time during working hours otherwise he will face
penalty. The company evaluate the job of any employee by the reports made by his
concerning supervisors and output generated by the employee.
There are approximately 1300 employees working in the factory including top
management. From 1300 employees, 1000 are on contract basis and 300 are on salary
basis. The salaries are given to the management through banking channel and the wages
of the workers are given in cash. The wages are paid 2 times in a month i.e. after 15 days.
The salary is paid to the management at 21st of every month. There are certain bonuses in
the factory but it is in limited amount i.e. Aftari in Ramzan, Eid bonuses and 15 days
bonus salary. If the management personnel do not want to work in the company, he will
put his resignation before the Human resource manager and quit his job.
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Sales Department
In Super Asia Company Private Limited, there is a separate sales department. The
supervision of that department is in the hands of sales-promotion manager.
Sometimes he reports to the directors, probably more often to general manager. Sales
management performs function mainly of directing and controlling the details of their
sales activities. Sales promotion is chiefly concerned with devising plans for stimulating
sales and methods for putting these plans into operation.
Because of the stress of competition, it has become increasingly necessary to equip
salesmen with more assistance by the way of improved equipments, portfolios, kits, sales
manuals, bulletins, house organs and advertising booklets, and to provide the stimulus of
special sales campaigns and contests. Following are the key functions of the sales
department of Super Asia Private Company Limited:
Recruiting salesmen and also setting up their compensation
It also assigns the sales region to the salesman.
Training the sales person in knowledge of the goods and in methods of selling
them.
Supervising and directing the sales activities.
Supervising and checking the expense accounts, route lists, detailed reports and
daily letters from the customers or dealers
Determining sales quotas, providing bonuses and prizes, conducting sales contests
and special sales campaigns.
Preparing, or directing the preparation of, sales manuals, or salesmen's
handbooks, giving detailed information about the company, the products, and the sales
principles and methods involved in selling.
Cooperate with the marketing department and sell the company's products relative
to the advertisements.
Obtaining reports from different sales region concerning the reaction to the
company's advertising and that of competitors.
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Cooperate with the production department in the matter of qualities, quantities,
containers, packages, sizes and seasonal goods, and reporting their reaction on dealers
and consumers.
Making investigations of the products or offering to discover new uses and new
appeals to dealer or consumer.
Conducting, or arranging for, special market surveys and analyses of sales region
with a view to discovering new markets for the goods or new methods of developing old
markets.
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Accounts Department
The accounting department of Super Asia is practicing the integrated system of
accounting. The general manager of the company acts as the chief accountant. No other
chief accountant is there for this matter. General Manager reports to the company head.
And sub heads i.e. directors. The costing methods used in company are:
Standard Costing
Process costing
The accounting department can be further divided into three parts on the basis of
functions performed by it namely:
Accounting
Costing
Finance
Accounting
This function is concerned with the:
Recording of transactions in the proper books at the proper time
Booking Receivables and payables
Maintenance of accounting records
Recovering Receivables and paying payables according to directors’ directions or
company policy whichever is applicable
Preparing periodical mandatory and ad-hoc reports
Preparing Financial Reports
Dealing with Taxation Authorities
Preparing Payrolls
Working on Customized Accounting Software
Customized Software
Company uses customized software to fulfill its accounting needs. This software is not
very different from many other software used in the market but is slightly altered to fulfill
the special needs of the industry and especially the company. This software is capable of
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Final Project on Super Asia Fans 25
dealing with perpetual inventory system and integrated books of accounts. This software
also provides many reports automatically like variance report.
Costing
See the Cost Sheet (Chart # 12)
Under this heading, the accounting department in Super Asia is performing the following
functions:
Annual Budget Preparation
Costing of Products
Preparation of Variance reports
Ensuring flexibility in standard costing system
Estimating overheads and deciding the basis of their absorption
Classification of costs
Ensuring Cost efficiency
Collection, evaluation and analysis of cost records
The costing can be divided into three major areas.
Material Costing
The company issued the raw material mostly on the basis of First in first out (FIFO) and
Average cost method but it also issues the material on the basis of Last in first out (LIFO)
in special circumstances. In process costing, the losses and wastage of material is also
calculated at the time of the loss or wastage and it is added in the operational cost of the
product. No separate cost reports are made for the losses and wastages. Store ledger cards
are maintained electronically. The complete cycle for recording of material costs can be
seen in Chart-2
Labor Costing
Labor handling varies from process to process. Standard Costing is used and a variance
report is generated at the end of each desired period.
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Final Project on Super Asia Fans 26
Work center is defined for the labor.
Labor is bound to work in their work hours at their work places.
There is two kinds of labor: the permanent and on contract
The contractual labor is under control of contractors
There is 60% labor that work on piece rate and remaining 40% work on the
salary.
Overtime payments are made for extra work done to salary workers only but at
normal time rates.
Payroll of labor
As there is an integrated system of accounting, Payroll sheets are prepared by the
accounts department. It includes the following data:
Date of payment
Total hours worked
Daily attendance
Production units
Name of the concerned department in which the person is working.
Factory Overheads (FOH)
Factory overheads includes following expenses:
Depreciation
Cleaning and lubrication of machinery
Tools and equipments
Electricity
Gas
Oil etc.
Overheads are absorbed on the basis of production.
Budget
Like every company, Super Asia also makes the budget for the production requirements.
The budget may be of three types:
Monthly budgets
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Half yearly budgets
Annual budgets
Seasonal budgets
Monthly budgets are made more frequently by the company. Remaining four is rarely
made. These budgets cover the production estimates on the basis of estimated sales.
Material and labor requirements are also set on the basis of decided production.
Payables and Receivables
Recording and settling of payables and receivables is an important decision in any
company. It puts a great impact on the current financial position and liquidity position of
a company.
Accounts receivable
Sales Department receives sales order from customer and communicate it to Accounting
Department and Godown. From Godown, goods are delivered to customer and a GDN is
communicated to Accounting department. On the basis of GDN, Accounting department
generates an invoice and books the entry. (See Chart-4)
Accounts payables
Factory, when required, communicates, informally, a requisition for material to store
room. Store room communicates this requisition to purchase department. Purchase
department places an order with supplier for the required items. Supplier delivers goods
along with a GDN from supplier. Goods are received and inspected at gate and sent to
store room. A GRN is communicated to Accounting department. Supplier also sends an
invoice to accounting department after receiving the signed GDN returned by Gate.
Accounting Department books entry on its basis. (See Chart-5)
Payments
There is no defined payment policy of the company. Payments are made by Accounts
department but on the directions of the directors. Mostly, directors decide the terms of
payments and no defined policy is followed in this regard.
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Receipts
There is no defined receipt policy. This function is also performed by accounting
department. It is done on the directions of the directors and not by following some
defined policy.
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Production ProcessIt includes all the processes from procuring raw material to the delivery of final and
finished product to the customer. All this can be explained by viewing chart -3 and Chart-
7
Procurement/Production and storage
As it can be seen in this chart, production process of a fan starts with following basic
elements
Fan body
Rotor
Copper wire
Unbent blades
Miscellaneous parts
All of these things are available in local as well as foreign markets and are purchased on
competitive rates. Fan Body and rotor are also produced in factory by using Roller Die
Casting method. Billets are purchased from local market to be used as raw material in this
process. Now, Fan body and rotor are not stored and are sent directly to production
facility for further processing. Copper wire, blades, and other miscellaneous parts are
stored in a store room.
The procurement process can be understood in detail in Material costing chart.
Threading and Finishing
This process can be further split into two sub-processes
Internal threading and finishing
External threading and finishing
External threading and finishing
In this process fan body is fitted on a lath machine by a worker. This machine rotates the
body at high speed. While rotation, a tool is touched with this body, which not only
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ensures that it comes into right shape but also finishes it. It caters only the external part of
body.
Internal threading and finishing
This is similar to external threading. The difference is only that in this process the
internal part of the fan body is threaded and finished.
Drilling and Tapping
In this process, holes are made in the fan body as desire by using latest drill machines.
Both single and punch drilling is used for this process. Then after checking, this body is
taken to the fitting department.
Rotor turning
In this process, Rotors are threaded and finished to make sure that they will be easily fit
in the fan body.
Rotor Grinding
This process is concerned with grinding any undesired parts of rotor. It means it is done
to fit i9t in the fan body and to ensure efficient winding on it.
Winding
The rotor, which is finalized after grinding and checking, is then brought for winding. In
this process copper wire is issued from store room and is wound on the rotor by using
machines. Insulators are also paced between the winded wire and the router surface to
avoid short-circuit. Two machines are used for complete winding of the rotor. This
winded rotor is then taken to fitting department to be placed in the fan body.
Fitting
In this process, the winded rotor, stator, barring and other miscellaneous parts are fitted in
the fan body to complete it. Fan body is also balanced in this process. After fitting and
Group # 4 GIFT University
Final Project on Super Asia Fans 31
balancing, this body is again checked finally. Defected pieces are sent to concerned
departments for rectification.
Blade Bending
Unbent-blades are issued form store and are bended on machines. This process takes
place parallel to threading, grinding, winding etc.
100% testing before packing and paint
When fan is complete, it is sent for 100% final testing. In this process blades are fitted for
some time to check the rpm and other variables. Slight changes in the shapes of blades
are made on spot for rectification. When finally passed, blades are removed and are sent
separately along with the body to for paint and packing.
Paint and packing
When finally passed in testing, body and blades are sent for paint. After paint, these are
again sent for packing. Blades are packed separately from body.
After packing, these are sent to Godown. From here, fans are issued when sold.
Note: A detailed process flow chart of ceiling fan production can be seen in Chart-13
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Final Project on Super Asia Fans 32
Conclusion and Findings
Accounting Function is not wrongly labeled as the back bone of a company. If not
properly done, it can cause disruptions and deterioration in other functions as well as
overall efficiency of the organization. Regretfully speaking, accounting function has
never gained as much importance in the minds of the owners and investors on SMEs as it
should have been given. Change and innovation is always difficult to accept especially
for people from conservative societies and with either no or only traditional education;
consequently this resentment to change coupled with ignorance of benefits becomes
responsible for such neglected status of accounting function in SMEs. When these SMEs
grow into larger companies as family owned businesses, this frame of mind towards
accounting function is automatically inherited. This is the case with Super Asia and will
be discussed in detail afterwards.
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Final Project on Super Asia Fans 33
Key Problems and Solutions
There is no uniformity in costing the materials issues. FIFO as well as LIFO and
even weighted average method are also used at time. According to management, these
methods are used for profit-smoothing.
Suggestion: This is a clear violation of IAS-2, which prohibits LIFO as a method of
costing material issues. This practice also violates Framework and IAS 8, which require
the policies to be consistent unless change is compelled by reasonable circumstances.
This practice should be abolished as no material benefits are gained from it.
Production facility is not in ideal format. The layout is not designed intelligently.
For eg. Fan body first has to go for threading and then for drilling. But in production
layout, drilling section comes before the threading section. Painting and production
departments are distant. This reduces the efficiency and wastes precious time and
energies.
Suggestion: Layout should be designed intelligently. Though not much needed, but if
company feels, a specialist can be hired temporarily to design the layout. It will certainly
save a lot of cost by improving efficiency.
There is no special arrangement to keep an eye on the labor. Many departments
are distant from each other and some supervisors are not enough to keep an efficient wath
on such scattered production facility.
Suggestion: Cameras should be placed in production facility to keep an eye on the labor.
By this, efficiency of labor definitely increases. It also ensures that labor is using safe
work practices.
Time in and out is marked and recorded manually. This is not an efficient
practice. It also requires manual work and records.
Suggestion: Card punching system should be used instead. Separate software, parallel to
but connected with the accounting software, should be used. It will also remove or at
least reduce many problems of costing labor and generating payrolls.
Safety measures are not up to the mark in production processes. Labor force is not
equipped with proper safety equipments and dresses. This increases the chances of
accident, causing increase in cost. Also, it is a severe violation of labor laws and law of
Group # 4 GIFT University
Final Project on Super Asia Fans 34
morality. Providing labor with such equipments creates a sense of satisfaction in their
mind that their company cares for them; consequently, they are motivated and work with
better efficiency.
Suggestion: Labor should be provided safe environment and equipments. A separate
team can be made to ensure safety measures.
Company can be regarded as a company with all powers concentrated in few
hands. Yes! Decision making is highly centralized. This centralization even causes a
disregard with company policy when directors’ orders confront with it. Mostly, directors’
orders are preferred to company policy. Managers become loyal to directors and not with
company.
Suggestion: Powers should be delegated to lower ranks to ensure faster decision making
and innovation. Owners should fight the fear in their minds that empowering employees
will cause their powers to die. This approach is not good universally.
Costs of Production reports are not regularly prepared. This is not merely a
documentary deficiency. It cannot be decided that which material is being wasted and
which one is being used efficiently. Also efficient or otherwise purchasing is not pointed
out.
Suggestion: A proper cost of production report should be maintained at least monthly.
This will ensure strict watch on the wastages and would definitely provide benchmarks
for improvement. Continuous cost efficiency is not possible without such practice.
In Super Asia Company, there is no separate head of department for Accounts,
Marketing and Purchase departments. Only lower managers are handling these
departments. They report to the directors of the company directly, most of the times. The
lack of proper chain of command coupled with absence of proper qualified person on the
head seat of each specialized function causes problems in chain of command and
improvement methodologies.
Suggestion: There is a need of separate Head of Department for every department which
would not only run the operations of the department but will also report to the director of
the company. That will increase the efficiency of the operations of the department and
also make a proper chain of command in that organization. This will also increase the
chances of improvement and advancement of functional areas.
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Final Project on Super Asia Fans 35
The allocation of the budget to marketing department is insufficient. The
company allocates 2.5% to 3.5% of their total budget to their marketing department. This
budget is very low for running their marketing and promotion campaigns. This causes a
potential decrease in sales causing per unit fixed cost to rise.
Suggestion: Increasing marketing budget will boost up the sales. The increased amount
of sold units will cause a reduction in per unit fixed cost resulting in better price
competitiveness.
There is no separate Human Resource Department in the company. Only a Human
Resource Manager is there who handles all the responsibility of that department. The HR
functions are not performed properly causing inadequate hiring and performance
evaluation. This results in unskilled people to take their place in company without
passing a proper channel. Also de-motivation is also a fruit of such practices.
Suggestion: HR functions should be performed in a better manner. Hiring should be done
through a proper and merit based channel to ensure right people are present at the seats.
Fixed Asset handling in not adequate. No fixed asset register is maintained.
Depreciation methods are not properly defined.
Suggestion: There should be a separate Fixed Asset officer to take care of and keep
records of the precious Fixed Assets of the company to ensure better handling
documentation along with avoidance of maintenance and theft losses.
Group # 4 GIFT University
Final Project on Super Asia Fans 36
References www.superasia.biz
Interview with Human Resource Manager(Major Muhammad Zubair)
Interview with marketing Manager(Mr. Hafiz Shabbir)
Interview with Accounts Manager (Mr. Muhammad Iqbal)
Group # 4 GIFT University