Packages Limited Management Report

7/30/2019 Packages Limited Management Report

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PROJECT REPORT

PACKAGES LIMITED- Imagination Beyond Edges

www.packages.com.pk

P a c k a g e s L i m i t eS h a h r a h - e - R o o m i , A m

S i d h u , W a l t o n , C a n t

L a h o r e , P u n j a b , 5 4 7 6

P a k i s t a

+ 9 2 - 4 2 - 3 5 8 1 1 5 4

+ 9 2 - 4 2 - 3 5 8 1 1 1 9

5 / 2 4 / 2 0

.


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ACKNOWLEDGEMENT

We would like to express special thanks of gratitude

to our professor Madam Aqsa Akbarm who gave us

this opportunity to do this project on the Analysis of

an Organizations Management Practices. For the

purpose of this project report we chose Packages

Limited to evaluate their management process. Weare grateful to our professor for providing us with the

opportunity to get hands on insight into the

management processes of an actual company.

We would also like to thank our parents and friends

who helped us to complete this report successfully

and within time. They have provided us support andcare to let us complete this report. We are grateful to

all those who helped us in some way throughout the

course of writing this report.

Regards,Elina Pasha

Zakia Noreen

Syed Raza Abbas Zaidi

Amna Tabassum

Waqas Abid

Hamid Akram

Arslan Arshad


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INTRODUCTION

In light of the topic given to us for this project report, we have covered the various

management practices undertaken by Packages Limited for their decision making process.

There multiple different choices that a manager has to make on day to day basis to ensure that

the operations of each business unit is running smoothly. In order to cover some of the major

details of the operational plans of Packages limited we visited the Packages Limited Factory and

conducted an interview with a manager and some surveys with the employees.

OVERVIEW OF THE ORGANIZATION

History of Packages Limited

Packages Limited was born out of a dream to set up an

industry of excellence based on local raw material and talent.

Packages Limited is a leading packaging manufacturing

company of Pakistan. It is one of the largest industries in

Pakistan serving about 35% needs of the country. Syed Baber

Ali Shah, who was the first managing director of Packages

Limited, went to Sweden in 1954 to negotiate the contract

with AB Akerland & Rausing of Sweden, who were the leadingpaper converters in Europe. Pakistanis needed technical

collaboration with their Swedish partners. In the beginning,

the first problem was the selection of the site. Finally, Lahore was selected due to the following

reasons:

Easy availability of workers.

Easy availability of raw material.

Easy transportation all over the country.

A B Akerlund & Rausing packaging company brought machinery and expert technicians while

the Ali Family provided the necessary capital, land, labor, local expertise and management.

Packages Limited started operating in May 1957 with a paid up capital of Rs. 4.94 million as a

joint venture between the Ali Group and Akerland & Rausing of Sweden. Initially, Packages

produced cartons for the cigarette, tea, confectionery, soap, pharmaceutical products and

other consumer products. These cartons were produced from paper and board supplied from

mills in Chittacong, Khulna, Charsadda and Peshawar. However the quality and quantity of

paper and board supplied was inadequate. Over the years, the company continued to enhance


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its facilities to meet the growing demand of packaging products. Additional capital was raised

from sponsors, International Finance Corporation and from the public in making the total paid

up capital to Rs. 31 million in 1965.

Over the Years

As a first step, Packages commissioned its own paper mill in 1968 having production capacity of

24,000 tons of paper & paper board based on waste paper, agricultural waste, wheat straw and

kahi grass. As the demand continued to grow, it led the company to expand and by the end of

1998 its annual capacity was increased to 50,000 tons of paper & board and corresponding

converting ability.

Since 1982, Packages Limited has a joint venture in Tetra Pak Pakistan Limited with Tetra Pak

International to manufacture paper for liquid food packaging and to sell Tetra Pak packaging

equipment. After Tetra shape, it also introduced brick shape packing. Both shapes are very

popular among liquid preservation industries. The main industries covered by Packages Limited

are, Tea Industry, Tobacco Industry, Food Industry, Pharmaceutical Industry, Sweets &

Confectioneries, Soap Industry, Shoe Industry, and Tissue Industry.

In Tetra Pak Pakistan Limited Packages Limited has 45% shares, 6% shares owned by

Syed Baber Ali Shah and 49% shares are owned by Tetra Pak International.

Since 1957, Packages has been producing inks for its own consumption. In 1993, the company

agreed to form a joint venture with equity participation from Coates Lorilleux, worlds second

largest printing ink manufacturer to produce inks for Packages Limited and the general market.Packages Limited own ink manufacturing facilities now transferred to new company, Coates

Lorilleux Pakistan Limited. In July 1994, Coates Lorilleux Pakistan Limited; in which Packages

limited has 55% ownership, commenced production and sale of printing inks.

Also in 1993, a joint venture agreement was signed with Mitsubishi Corporation of Japan for

the manufacturing of polypropylene films at the industrial estate in Hattar, NWFP. This project,

Tri-Pack Films Limited, commenced production in June 1995 with equity participation by

Packages Limited33%, Mitsubishi Corporation, Altawfeek Company for Investment funds, Saudi

Arabia and general Public.

Another important service department of Packages Limited is its Power Plant. In 1967 they

set up 6 MW power plant, but to ensure a continuous and dependable supply of power for its

production lines, Packages has also established its own 10 MW power plant in 1991, the cost of

which was 180 million rupees. Packages Limited saved a lot of money from this investment. For

example, if they get power from WAPDA, then WAPDA charge more than 6 rupees per unit but

the expenses of its own production are almost 2 rupees per unit.


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In the field of consumer products, Packages Limited has shown tremendous potential and

commendable talent. Consumer Product Division provides 12% share of the Packages total

sales. The consumer products of the company are Rose Petal Tissues. The production of Rose

Petal was first introduction of tissue paper industry in Pakistan. Rose Petal is now the market

leader of tissue paper industry in Pakistan. Rose Petal has more than 80% share of tissue paper

industry in Pakistan. Other consumer products are paper Cups, paper Plates, Paper Napkins,Paper Hot Cups and Wet tissues of Rose Petal have been introduced in the market in 1992.

Now Packages Limited is exporting its managerial skills & technical expertise to the third world

countries like Indonesia, Tanzania, Kuwait, Saudi Arabia, Nigeria, Zambia, Somalia & Russia. It

has also started the export of tissues to Iran, Bangladesh, Sri Lanka, Indonesia, United Arab

Emirates and Maldives.

Packages Limited has a large workshop. This workshop is capable of making, repairing and

replacing the damaged parts. The RD & Control Department were also established to ensure

the quality and standard of the products.

Starting with a work force of 500 workers, now Packages Limited is having 2674 employees. In

this regard, a separate Personnel Department is there, to look after the problems of the

workers. Today Packages Limited is considered to be a leader in Packaging field in Asia.

Packages Limited has established an Effluent Treatment Plant because it is concerned about the

environment and wants to keep it clean.

Packages Limited has completed the balancing, modernization, replacement and expansion

program, which began in 1994. This has enabled the company to minimize capacity constraints

and improve quality to meet local and foreign competition as well as improve its environmental

protection facilities.

Nature of the Organization

Packages Limited is a manufacturing business entity. In manufacturing it is renowned

specifically for its unique ideology behind packaging. Company chose this business because the

evaluation of packaging in essence is the evaluation of mankind. It seems that the earliest cues

were provided by the nature. The form and shape of natures packaging varies from rigid to

flexible, simple to complex. The classic example of natures packaging is an egg.

Basically, Packaging can be described as a coordinated system of preparing goods for transport,

warehousing, logistics, sale, and end use. Packaging contains, protects, preserve, transports,

informs, and sells. It is fully integrated into government, business, institutional, industry, and

personal use.


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Packages limited have extended its expertise to a number of Third World countries in the 1972.

Management and Technology was sent to Tanzania, Indonesia, Kuwait, Saudia Arabia, Somalia

and Nigeria where packaging companies required assistance in running and managing their

operations. Packages Limited has also provided technical assistance to Tetra Pack for general

packaging in Kuban, Russia and looking forward to expanding its horizons for more multi-

cultural experiences. For the expansion purposes, plans for Syria, Iran and USA are in pipeline.

Joint Venture PartnersName of Joint Venture Joint Venture With

Tetra Pak Pakistan Limited Tetra Pak International

Coats Lorilleux Pakistan Limited DIC Asia Pacific Pvt. Limited

Tri-Pack Limited Mitsubishi Corporation of Japan

Packages Lanka(Private) Limited Print Care Group of Sri Lanka

Global Partners

One of the best ways for a business to leverage its products and increase growth is through

association. Our business alliances help us manage our business more effectively, as well as

helping us and our partners develop and diversify our interests. Customers also benefit from

the increased knowledge base, as we transform our market awareness and shared technology

into innovative and cost effective solutions for customers.


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PRODUCTS OF PACKAGES LIMITED

Paper and Bored:

Packages Limited has been producing high quality paper and board since 1965 using

environment friendly manufacturing processes. They specialize in making a variety of duplex

boards and paper. Their products are tested for high performance in terms of strength, stiffness


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and gloss. From coffee cups to books we read, from Tetra Pak juice containers to huge shipping

containers, paper and board products touch our lives in a thousand ways every day.

Paper:

Paper quality and weight is determined by the clients specific requirements and Packages

ensures this is carried out to the exact specifications provided. Some of the paper produced byPackages Limited includes:

High gloss writing paper

Special poster paper/ machine glazed

Liner for shipping cartons

Wood-free writing/ printing paper

Board:

Packages Limited manufactures several types of boards. Food Board, a basic raw material in

liquid food packaging, is being manufactured since 1979 for Tetra Pak Pakistan Limited. This

material is used for making aseptic packaging for milk, cream, oil, fruit juices and otherperishable food items. Some of the board products of Packages Limited include:

Liquid packing board

Food grade board

Duplex board/chipboard

Bleached board/liner board

Cardboard/ tobacco board

Carton Business Unit:

The carton business unit is an integral part of the manufacturing facilities at Packages Limited.

Constant improvements in technology help the customers exert exact control over each stage

of manufacturing process. The foundations of this business line were laid about 50 years ago

with the formation of the offset printing department. The total board consumption of the

carton line is around 18-20 thousand tons per annum. Following are a few industries that are

customers of the carton business unit.

Food and Beverages

Soap/detergent

Pharmaceuticals

Electronics

Shoes

Tobacco

Paper cup


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Flexible Business Unit:

With improved barrier properties and lower cost compared to rigid packaging, flexible

packaging is steadily gaining importance in the packaging industry. The flexible line makes high

quality packaging films and laminates, and offers other specialized services such as rotogravure

printing and sleeve-making.

Flexible packaging combines different plastic films, aluminium foil and paper to produce

laminates of two or more layers for providing layered protection against moisture, gases and

odours. Used where colourful package design and preserving product quality are important,

such as in the food and pharmaceutical industries, flexographic printing offers economy with

quality. Some of the products where the flexible packaging is used are as follows.

Soap

Tobacco

Tea

Food

Diary Ice-Cream

Milk powder

Confectionery

Shampoo

Pesticide

Pharmaceutical

Consumer Products:

A range of products for those annoying problems in life: The Packages Limited consumer

products feature great ideas for making everyday living easier and more comfortable, both

indoors and out.

Tissue Products Personal Hygiene

Paper Products

Reflecting the core values of exceeding customer expectations through innovation, leadership

and teamwork, the Rose Petal and Tulip brands continue to hold over 80% of the domestic

market share of the tissue paper market in Pakistan. Packages limited also has a leading market


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share in the away-from-home business: they supply custom-printed boxes, table napkins,

coasters and paper cups to institutions such as hotels, fast food chains, restaurants, businesses

and the airline industry.

CORPORATE SOCIAL RESPONSIBILITY

As Packages Limited is a major player in the corporate market, it has a social responsibility

towards the general people. Packages limited:

A plant in Kasur to overcome the growing needs without further disrupting the city

environment

Established schools, medical centre with female doctor to facilitate needs in rural areas

Ali Institute of Training: At first it was a training institute for vocational training but isnow focused on teacher training to ensure quality education

Waste Collection and Paper Waste School Campaigns

RESPONSIBILITY TOWARDS ENVIRONMENT

ISO 14000: Realizing its responsibility toward environment, Packages started its ambitious

comprehensive program on "Environment, Health and Safety". In the past few years, over

US$100 million have been invested on new processes and technology out of which US$20

million were spent exclusively on environmental projects including a chemical recovery plant.

Under this program, they are focusing to improve:

Energy Conservation

Water Management

Effluent Management

ENVIRONMENT, HEALTH AND SAFETY (EH & S) POLICY

Packages LTD. belief that they must do everything practically possible to lessen the load they

place on the environment and make every effort so that sustainable development becomes a

reality. It has formulated its environment, health and safety ( EH&S) policy to address these

issues in a more effective way. It is very clear to them that these objectives cannot be realized

by the efforts of the Management alone.

Management along with the help of all the employees will be required to transform these

ambitions into reality. Packages Limited shall:

Minimize its environmental impact, as is economically and practically possible

Save raw materials including energy and water, avoid waste


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Ensure that all its present and future activities are conducted safely, without

endangering the health of its employees, its customers and the public

Develop plans and procedures and provide resources to successfully implement this

policy and for dealing effectively with any emergency

Provide environmental, health and safety training to all employees and other relevant

persons to enable them to carry out their duties safely without causing harm tothemselves, to other individuals and to environment

Ensure that all its activities comply with national environmental, health and safety

regulations


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ORGANOGRAM

Board of Directors

Advisor Managing Director Executive Board

General Manager

M.I.S Manager Production Manager

R&D Manager Admin.Manager

Power Manager E.H&S Manager

Mechanical Manager Cost & tax Manager

Mill Manager Finance Manager

Deputy G. Manager

H.R.D Manager

Commercial Manager

Marketing Manager

Store Manager

I.R Manager


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DEPARTMENTSIn the company, there are various productions, service, support divisions and their respective

sub-departments, which are as follows:

i. Paper & Board Division

Straw and Linter Preparation, Cooking House, Bleaching House, Chemical House, Waste PaperPlant, Beater House, Machine House, Quality Control, Finishing House, Maintenance and

Instrument.

ii. Business Unit- Carton

Offset, Cutting & Creasing including Dye making, Laminating, Folding & Gluing,

Planning Cell and Offset Department.

iii. Business Unit- Prepress and Logistics

Art & Camera, Reproduction, Paper Stores, Coating, Dispatch Section, Planning

Cell- Prepress Departments

iv. Business Unit- Flexible

Flexible Packaging, Paper Conversion Departments and Planning

v. Corrugated Division

Planning, Conversion Section & Sheeting Section

Vi.CPD Production

PM-IV, Tissue Conversion

vii. Technical- PowerElectrical Department, Air Conditioning Department, Steam Power Plant and Diesel

Power Plant

viii. Technical-Mechanical

Mechanical Workshops & Design Department, Civil & Carpentry

ix. Marketing Division

Sales Office Lahore, Karachi, Islamabad

x. Consumer ProductsSales Office Lahore, Karachi, Islamabad & Multan

xi. Finance Department

Financial Accounts, Cost and Tax, Internal Audit, Accounts and Shares Department

Karachi

xii. Commercial


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Local Purchase Section, Imports Section and Commercial Office, Karach

xiii. Stores & Inventory

Central Stores Packaging and Paper Board, Waste Disposal and Transport

xiv. Industrial RelationsIndustrial Relations, Labor Welfare, Time Office/Establishment and Legal Section

xv. Human Resource Development

Administration & Liaison, Public Relations, Gate Office, Security, Fire Fighting / Safety and

Horticulture

xv. Information Technology

Operations, Development and Network

xvi. Quality and Environment System

Industrial Performance, safety, Health and Environment

xvii. Research Development and Control

Laboratory, Rubber Section & Quality Control

xviii. Medical Unit

Packages Dispensary, 23-Gulber-III, Lahore

VISION STATEMENT

To position ourselves to be a regional supplier of quality packaging and tissue products.

To improve on contemporary measures such as cost, quality, service, speed of delivery

and mobilization.

To keep investing in technology, systems and human resources to effectively meet the

challenges every new dawn brings.

To develop relationships with all our stakeholders based on sustainable co-operation,

upholding ethical values which the shareholders, management and employees

represent and continuously strive for.


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MISSION STATEMENTPackages Limited strives to be:

A market leader by providing quality products and superior service to our customers,

while learning from their feedback to set even higher standards for our products.

A company that continuously enhances its superior technological competence to

provide innovative solutions to cater to customer needs.

A company that attracts and retains outstanding people by creating a culture that

fosters openness and innovation, promotes individual growth, and rewards initiative

and performance.

A company which combines its people, technology, management systems, and market

opportunities to achieve profitable growth while providing fair returns to its

shareholders.

A Company that endeavors to set the highest standards in corporate ethics in serving

the society.

EXTERNAL ENVIRONMENT ANALYSIS

There are two types of external environment factors that affect a business; micro and macro.Micro are direct and macro are indirect factors that affect the business and the macro factors

are not within the control of the management. There are three ways to conduct an external

environment on the business and following are the Packages external environment analysis.

PEST ANALYSIS

Political and Legal Environment

Packages Ltd. has good relationships with government as they pay taxes regularly. They sharetheir companys information with government through annual reports. Packages initiated Green

Field Project in Kasur. The plan is to shift Paper and Board Mill to Kasur by the end of this

year(2004) because people nearby complain that hazardous chemicals are emitted in theenvironment which is effecting the health of the people .The government, for this reason is

pressurizing the Owners to make Pulp and Paperboard Mill shift to Kasur.


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Environmental Laws

Paper industry is one the most pollution causing industry in Pakistan. The effluent that flows

out of the production processes contains toxic chemicals that can cause damage to crops. The

paper industry has been insensitive to these factors until recently and same has been the case

for Packages. In the last few years there has been growing concern about environmentaldamage caused by industrial production processes all over the world. In Pakistan many people

are becoming more conscious about environmental factors and that is why the rules and

regulations of the government are getting more and more strict day by day and Packages is

facing some problems related to their processes.

Stable Governments

Too often turmoil in the Government causes uncertainty in the Government policies and are

often viewed as not favorable for the market. As far as the paper industry is concerned there

are serious implications for Government policies. For example

1. Throughout the history of Pakistan the governments have not allowed any manufacturing for

newsprint paper fearing that it would cause growth in the Newspaper industry; a threat to the

undemocratic Government in Pakistan.

2. Governments have also used import duty on imported paper (newsprint) to pressurize

newspaper industry.

3. In future the decision of the Government to import paper from India can have serious

complications for the paper industry. Packages produce most of the paper they require

themselves, but these implications have adverse effects as a whole.

ECONOMIC ENVIRONMENT

Market requires purchasing power as well as people. The available purchasing power in an

economy depends upon current income, prices, savings, and debt and credit availability.

Marketers must pay close attention to major trends in income and patterns in consumer

spending.

Followings are the major influencing factors of paper industry. Packages Limited has always

tried its level best to cope with the Economic instabilities whenever and however. An example

which proves the statement is when in 1971, Pakistan was involved in an unfortunate war with

India, which resulted in the loss of half of the country through the creation of Bangladesh. The

government that took over in 1972 had a strong socialist agenda and one of its first orders was

the immediate reinstatement of all industrial workers irrespective of the cause of their

dismissal. The service of about 100 workers of Packages Ltd. had also been terminated over the

years due to reason of gross indiscipline. Later, authorities provided assurance of their peaceful

behaviors and the company was obliged to reinstate all workers again. In this and other similar

occasions, the situation was controlled through proper management without causing any

anxiety to the staff.


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High Interest Rates

Inflated interest rates reduce the buying power and obtaining loan becomes expensive which

affects the industry adversely.

Devaluation of Rupee

Since Packages imports a lot of chemicals and machinery so any devaluation tremendously

increases the operating and fixed costs.

High Inflation

High inflation also reduces the purchasing power of the customers. In Pakistan the inflation rate

has been in the double digits for the last many years so it has affected the sales of the Packages

as well as for other similar industries.

Trade with India

Trade with India can also have serious implications. As India enjoys economies of scale in some

industries so if the government allows import of paper from India the Pakistani Paper industry

can suffer a lot. However if only the raw material import is allowed than the paper industry can

flourish. Same is the case with Packages and the Indian products even after import are cheaper,

that finishes the advantage of having own Paper and Board Mill.

High Electricity Prices

One of the major problems faced by the industry is that the electricity prices are very high. ThePackages has their own electricity plant that saves a lot of money, taxes and provides maximum

consistency in their power supply.

Consumer References

In Pakistan the usage of paper has not picked up because of low literacy rate and less spending

on books and stationery as compared to other consumer items such as food.

SOCIAL AND CULTURAL FACTORS

One of the biggest consumer groups comprises of students, teachers and people related to

publishing industry. Since in Pakistan, the literacy rate has been very low, the market has not

grown much. Due to this factor the industry could not get the desired growth in this regard but

the section of FMCGs and consumer products have increased the demand.


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TECHNOLOGICL FACTORS

Improved production process will accommodate increased productions at lower costs. This willhave a positive impact on industry. In Pakistan there is no attention given to improve the

production systems and we have to rely on the technological innovations of the west. This trend

can be changed by increased interaction of Govt., industry and technical people. For exampleHeavy Mechanical Complex can introduce new production systems for the Pakistan industry.

Still the machinery of most of the organizations is imported from abroad which specifically has

increased the costs for Packages.

Packages Ltd. has invested heavily in technology and it has become a basis of competitive edge

for the company. It has the gearless printing press, which uses an inbuilt electronically driven

and controlled PLC system to print. It is the eight colors Flex Press. After the installation of this

latest technique customers change their designs and include the latest 3D (dimensional) graphicsand vinniarts that were not possible earlier. For instance, National Foods launched its Table Salt

and Iodized bags with entirely new designs on this Flexo; Sufi Soap, Unilever Pakistan, Nestle,

Colgate Palmolive and a few tea customers followed it. Furthermore, they have the latest andcostly software installed which their competitors cannot afford. For instance, earlier they had

Electronic Data Interchange (EDI) but now they have the latest version of it i.e., SAP which is

keeping information flow to and from all directions of the organization. Moreover the Companyhas latest technology for inventory management like VMI (vendor Managed Inventory) that

eliminates the excess cost of inventory from the whole supply chain management system.

LEGAL FACTORS

Packages Limited is a law abiding company and as such follows any new rules or regulationsaffecting the industry, either directly or indirectly.

DEMOGRAPHICSPackages Limited faces a few issues as far as geographical and demographics are concerned. The

factory in Shahrah-e-Roomi, was established over a few decades ago and since then the Cantt

area around it has progressed greatly. To facilitate and respect the wishes of people, Packages

has shifted some of its load to a secluded area in Kasur. Other than that since Packages has nodirect link with the customer market, it faces no other demographic problems and issues.

PORTERS FIVE FORCES MODEL

THREATS OF NEW ENTRANTS

Major players in the industry are well-established firms and have technological advancement

from their experience. The paper industry is already in crisis due to ruthless imports and

unfavorable government policies. However we can still conclude that there is a threat of new


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entrants as the overall demand of paper is more as compared to its supply. This is evident from

the high import of paper in Pakistan.

THREAT FROM EXISTING RIVALRY

Since Packages is involved in using all its paper and board production for its packaging division

no other firm is involved in a similar whole process chain. Quality in such an integrated set-up is

a competitive advantage, which faces no competition from the existing players. The industry is

in troubled waters as most existing paper and board mills are closed down due to financial

reasons and lowering of tariffs for imported paper and board from 145 % some 10 years ago to

nearly 45% at present. There is therefore rivalry with imported paper and board so that to

protect ones standing it has to continuously upgrade its production facilities and be better cost

efficient.

THREAT OF SUBSTITUTES

The raw material for the paper and board mill constitutes a major portion of imported materials

for maintaining quality, as wood pulp is not obtained locally. A substitute for paper or a

decrease in use of paper could affect this industry. Substitutes could be use of electronic means

rather than printing paper and use of polythene, which could be biodegradable for packing or

more emphasis on the use of recycled paper.

BARGAINING POWER OF SUPPLIERS

A major constituent of the paper industry, wood pulp, is not locally available and thus has to be

imported from USA, Canada, Indonesia, Chile, Dubai etc. Wheat straw is easily available in the

market as well as sugarcane and cotton linter. These are usually a by-product waste of the

sugar industry and textile industries and therefore do not bargain a competitive situation. Being

close to these sources is the only advantage that can be availed and is, by Packages Limited.

BARGAINING POWER OF CUSTOMER

The bargaining power of the customer regarding this industry is not very much high. Local

production cannot sustain its present status if major turnarounds are not undertaken to

improve productivity and reduce wastage. Imported paper is available in large amounts yetsupply does not exceed demand and all that is available in the market is readily consumed. The

two customer segments existing are the consumer and industrial buyers. In the consumer

segment offset printing and books require the availability of paper to be used whether of good

quality or bad. Those in this segment that ask high quality opt to use imported paper. In the

industrial segment packing paper, board paper, craft paper is produced far less than the


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demand. And specifically for Packages, demand is high, thus the bargaining power of the

customers is almost negligible.

COMPETITORS ANALYSIS

There are a number of small scale emerging competitions in the market that Packages Limited

has to deal with. Almakkah Press and Saima Packaging are two of the many small scale

packaging industries emerging. Industrial customers can get packing of their products at

relatively lower prices from other organizations. So why most of the clients are ready to pay a

bit higher prices at Packages Ltd? Why is it so that customers perceive its products better in

quality, variety, style and uniqueness? It is all because of the differentiation strategy, which

Packages Ltd is using to have an edge over its competitors. The company is trying to compete

through the ability to offer unique or customized products that can command a premium price on

a broad scope using new and latest technology.

One of the reasons for customer loyalty is that Packages Ltd recruits professionals and specializedpersonnel (who prepare carefully the products for the customers by having check on

departments every time) and provides them with extensive training in related fields.

Employees Knowledge as well as their ability to interact with customers, is the key to hip image

& quality of products that keeps customers coming back. Employees at Packages constantly

interact with their customers throughout the processfrom order taking to order fulfillment- so

that customers can have what they exactly want.

Company is continuously having meetings among its managers of different departments to

explore new and innovative techniques to use technology for the sake of increasing customer

satisfaction as well as productivity.

Packages Ltd is as strong as ever. Companies that have tried to compete have had a tough time.

Differentiation strategy which is working and is successful requires a number of costly activities

such as R&D has to be well equipped, both in terms of human resources and equipment, to

provide technical support to the production and to the external customers, high tech plants,

etc. Its employees are given resources and time to seek novel ideas. There is a strong horizontal

linkage among departments as elaborated above. Employees at different departments and

levels communicate with each other about ideas they have and are awarded if their idea works

because differentiation strategy requires that employees be constantly probing for uniqueness.

Hence, Packages Ltd is trying to gain market share and customer satisfaction by focusing on its

technology and employees.

CompetitorsWe cannot imagine about a business without competition. Packages Limited has also some

competitors for its consumer products. In facial tissues no competitor was exist in 1987 except

the foreign brands. Then companies like FAY competed for some time but Packages Limited


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superseded them very soon and starts enjoying their monopoly. Then it was FLYING TISSUES

which came and captured a lot of market. Flying officers are really giving tough time to

Packages Limited. So far as the Wet Tissues, there is no big competitor. The same is the case a

unique thing as the tissue is imported from Scotland and here they only cut, pack and market.

Packages Limited has defined and identified its target market for its consumer products.

Approach of CompetitorsSince Packages Limited holds the status of being the benchmark in the industry the threat of

competitors is low key. However the approach that the small scale companies have adopted is

to offer the services for lowered costs to their customers. Packages limited being the

experienced and market leader has top brands as its customers and therefore the quality,

quantity and prices are all extensive. This is the approach that competitors are adopting to

lower the costs of the clients in such a turbulent economic scenario. This has led to Packages

ltd. loosing up some of its clientele to these businesses.

Competitive AdvantageThe competitive advantage that Packages Limited holds over any of the emerging competition

is the one roof solution. Packages ltd. offers all the products to its customers under one roof.

Small printing or packaging companies provide either packaging solutions or printing but

Packages ltd offers all of the services under one roof. The target market of Packages Limited is

not the consumer market or the small scale market; it targets the huge market base and as such

is slightly high on costs, prices, quality and quantity.

INTERNAL ENVIRONMENT ANALYSIS

Internal environment are the conditions, entities, events and factors within an organization that

influence its activities and choices, particularly the behavior of the employees. Factors that are

frequently considered part of the internal environment include the organizations mission

statement, leadership styles and its organizational culture.

Value Chain AnalysisThe value chain is a systematic approach to examining the development of competitive

advantage. The chain consists of a series of activities that create and build value. The

organization is split into Primary Activities Support Activities.


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PRIMARY ACTIVITIES

Inbound LogisticsInbound logistics are essential for the production at Packages Limited and to ensure proper safety

and arrival of the raw material, Packages has taken serious steps to ensure safety. Oil, gas andwheat are some of the most essential raw materials for Packages Limited. Considering how

environmental factors affect the crops and plants and how the political factors affect the price

hikes and supply shortages of Oil and Gas, this is a very serious issue for Packages Limited andthey need to plan ahead and store enough of these resources safely to ensure that the company

suffers no set back.

OperationsThis is where goods are manufactured or assembled. Different departments at Packages workseparately unless required join operations, therefore, it is hard to monitor the progress and locate

issues or problems in the chain of processes. The production department works separately but

collaborates with the sales department for orders, the customer relation department for customerfeedback, logistics department for receiving raw material and delivering products and the waste

management department to ensure that any waste accumulated during production is disposed off

without raising any red flag to the environment. Similarly other departments of the company

work individually and collaborate resources information whenever and wherever necessary.

Outbound LogisticsThe finished goods need to be sent along the supply chain to the final consumers. Packages

Limited has two different types of outbound logistics; both come under the department of

Logistics Finished Goods. One is the finished packaging goods to be sent to clients for furtherprocessing such as packaging for ice cream or cigarette and the other are the consumer goods

such as Rose Petal Tissue.


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Marketing and Sales and After Sales ServicesAt this stage the organization prepares the offering to meet the needs of targeted customers. For

the consumer goods this department entails marketing their products and otherwise attractingcorporate customers to avail their packaging services. Once the sales are done, sometimes

customers are dissatisfied or need some sort of modifications, in such cases Packages Limited is

always there to help its customers out.

SUPPORTING ACTIVITIES

Procurement, Human Resource Management and Technology DevelopmentThese are supporting activities of Packages Limited. Procurement means to get all the raw

materials of the highest quality for lowest costs. Technology is very essential as far as Packages

is concerned because they need the latest equipment for their arts and design department as well

the production department. The human resource is a very important and expensive resource tomanage as the human needs and wants are endless and it is essential to satisfy the employees in

order to maximize their output. Also constant and regular training of employees is also necessary

to make sure they are up to date with the advancements in the market.

SWOT ANALYSIS

STRENGTHS

Packages Limited enjoys an educated and skilled work force to perform its operations

e.g. in Industrial Marketing Department all new hired sales executives are MBAs. On

technical side Packages has 2-Ph. Ds., 99- engineers and 314-diploma engineers.

To meet the quality requirements of its customers Packages contains the latest paperproducing and packaging technology and most of machinery is imported from different

countries like Germany, USA, Switzerland, etc. They are having the most advanced

sophisticated & up to date machinery in Pakistan and even in Asia.

Packages Limited occupies a respectable and trustable image and market reputation,

serving as a valuable asset for the Packages.

In Packages employees are given necessary and comprehensive orientation before

starting the job. Moreover other training programs are also arranged to keep the skills

of employees up-to-date.

Packages ltd. has its own Paper & Board Mill. They are producing all types of paper and

board packaging. They are having the best positive image & reputation for quality

packaging products in Pakistan. They have ISO 9001 quality assurance certificate. In

compliance with worldwide standards, the ISO-9001 certificate has been awarded to

Flexible line and Carton line of Packaging division.


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Packages having their own Research, Development & Control department.

They are having their own Power Generation Plant.

Since Packages is a giant setup, so it enjoys the economies of large-scale as well e.g. itsfixed cost is reduced as it is spread over more number of units.

In most of the cases and especially from new customers, Packages deals with the

payments in advance. So it has to put fewer efforts to recover the payments.

WEAKNESSES

Information flow between regional offices (of Karachi, Islamabad) and production lines

(Lahore) is not very quick, improper and manual i.e. by post normally.

Packages production facility is inflexible, in a sense that it is unable to operate for small

orders due to increased fixed cost. In this way, a lot of small orders are rejected.

Packages deserve to charge high prices for its quality products but in this way, the

companies who are not financially sound or in development stage cant have access to

the Packages.

Due to a lot of work load, the lead times are mostly longer so creating frustration in

customers and causing dissatisfaction.

Lack of motivation & intrinsic reward orientation among the management.

OPPORTUNITIES

Business activity and investment flow in also increasing day by day, so causing new

business opportunities for whole packaging industry.

Consumers and companies are becoming more conscious about the quality of the

products and Packages is quality leader in Pakistans packaging industry and having

continuous development plans for quality. So in near future it can bring huge revenues

in the Packages.

Demand for flexible packaging is increasing day by day.


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There is a gradual increase in the awareness about Packaging importance among the

industrialists and they are really considering the packaging as the final sales person for

the products. So this awareness will bring more customers to the door of Packages.

THREATS

Packaging (especially flexible or poly packing) negatively influences the environment

by increasing the wastes. So this is a real threat for Packages.

Due to latest printing technology, the demand for offset printing is decreasing day

by day which is a traditional printing mode used in Packages.

Packages are facing a strong competition from the Cottage Industry in Karachi

producing corrugated cartons.

PLANNING PROCESS

As we know that if we want to increase our efficiency, we should plan with excellence. At

Package Limited, each department has its own profit and loss, own planning and implementing

strategies. In this report we will discuss the planning process of a few departments.

STRATEGIC AND OPERATIONAL PLANS

PLANNING DEPARTMENT

Planning department is one of the most important departments in an organization. Its main

functions are to plan huge operations. In Packages the planning department is also playing an

important role. The Planning Manager controls the department. The two main functions of the

Planning Department are following:

Link between Marketing Department and Production Department

The Planning department acts as a link between Marketing department and the production

department as there is no direct contact between the two departments. Planning receives

marketing information from the Marketing department and converts it into the Production

language i.e. when the orders are placed to the marketing department, the information


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regarding the order is transferred to the planning department where they design and plan the

product according to the specifications required by the customers.

Optimizing the Available CapacityTo optimize the capacity means to utilize the manpower, machines working hours and material

Educate ultimate objective of the Planning department is to improve and maximize theprofitability. Yearly targets are set during the annual Sales Conference that is held in the month

of December. In the sales conference the next five-year targets are set and the last years

performance is reviewed. The next years projections are also set in the conference. In the five -

year plans the shortfalls which are manpower, materials and machinery are reviewed.

Top management is involved in long term planning short term plans which constitute a year and

are reviewed every quarter.

Functions of the Planning DepartmentThe work of planning department is initiated from the industrial marketing department. When

the orders are placed to the marketing department, they send out the Internal Sales Order (ISO)

to the planning department. An ISO is an internal document on which the information

regarding the sales or order is mentioned. Its main function is to transfer the information to the

various departments involved.

The contents of the ISO provide the following information.

1. Whether it is a new job or old one.

2. Specifications of the routine order i.e. color, size and quantity etc.

If it is a new order then this order is first sent to the Art and Camera Department for designing

the artwork of the new job. If the job is repeated then there is an approved sample by the

customer. The planning department after receiving this ISO along with the sample sends it to

the production department.

The planning department also provides information regarding production machines, their

capacity, numbers of colors size etc. to marketing department. Information regarding any

machine, which is out of order, is also provided to the marketing department, so that any orders

related to that particular machine may not be expected. They also provide the information

regarding the production capacity so that they are in a good position to analyze the order.

Other Functions

The other functions, which are carried out by the planning department, are as follows:

Maintenance of machinery etc.

To sent daily production reports to the top management.

Overcoming the complaints of the customers and marketing department.


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To plan the long term and short term plans for minimizing loss.

Pursuance of jobs i.e. the current condition of the job.

To set the production targets for different departments on the basis of invoices.

Procurement of raw materials.

To organize the daily program i.e. completion of jobs from shift to shift.

MARKETING DEPARTMENT

The marketing department is responsible for carrying out all the activities necessary to market

the company products; this includes sales promotion coordination and evaluation of the

performance of its sales force and formulating marketing policies and strategies. They also carry

out market surveys for new as well as existing products.

The Marketing Department of Packages Limited, also known as the Sales Department is

believed to be the bread earner of the company. This department is responsible for the sale ofindustrial as well as consumer products. The Marketing Department of Packages limited is

headed by the Marketing Manager, Mr. Sulat Said. Packages Limited has divided the country

into three regions that is Lahore, Karachi and Rawalpindi. Lahore region is responsible for the

sale in Lahore and its civility. Rawalpindi region covers Rawalpindi, Islamabad, NWFP, and Azad

Kashmir. While the Karachi Region covers Karachi, Sindh and Baluchistan. Every regional office

is headed by an Area Marketing Manager. There are two Regional Sales Managers in Lahore

under the Area Marketing Manager. One for industrial sales and one is for the consumer

products. Then there are Senior Sales Officers and Sales Officers.

Marketing Strategy

Marketing Strategy includes the various marketing tools that a company uses to satisfy the

needs of its target customers. Marketing mix has four elements:

1. PRODUCT

2. PRICE

3. PLACEMENT

4. PROMOTION

ProductThe Marketing Department of Packages Limited is divided into two divisions with respect to

their products.

1. Consumer Products Division (CPD)2. Industrial Products Division

THE CONSUMER PRODUCTS DIVISION (CPD)

Since the inception of Packages Limited, it dealt only with industrial goods. In 1981, company

entered into a new era and started dealing in consumer goods as well. Initially, it was decided

that the Industrial Sales Division will also look after the affairs of consumer products. In 1985,


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the distribution functions of the consumer products were handed over to TETRA PAK. But in

1986, Packages Limited got back the distribution facility from Tetra Pak and established a new

division with the name of CONSUMER PRODUCT DIVISION (commonly known as CPD). Since

then CPD is responsible for the consumer products. Major products Of CPD are as follows.

a. Tissue products

Facial Tissues Perfumed Tissues

Wet Tissues

Pocket Packs

Perfumed pocket packs

Table Napkins

Coffee Napkins

Kitchen Rolls

Party Pack Tissues

Toilet Rolls

Handy Packs

b. Paper Products

Paper Plates

Paper cups with handle (Hot Cups)

CPD is responsible from the production to the distribution of all these products. Before the

establishment of CPD products used to take 12-15 days before reaching to the customer who had

placed the order. After its establishment this problem was removed and CPD has around more

than 100 distributors which covers the whole country.

Competitors

Packages Limited has also some competitors for its consumer products. So far as facial tissues

are concerned, there used to be no competitor in early 80s except the foreign brands. Then

companies like FAY, MOVITA competed for some time but Packages Limited superseded them

very soon and started enjoying their monopoly. Then it was Flying Tissues which came, and

captured a lot of market. Flying people are really giving tough time to Packages Limited but CPD

staff was reluctant to accept this reality. There are no major competitors for paper products but

many small scale manufacturers cater for a lot of market share.

Target Market

Packages Limited has defined and identified its target market for its consumer products. Targetmarket for facial tissues includes all classes. Market for napkins, and tissues includes all the

restaurants, hotels and some industrial markets. Paper cups and plates are aimed for the

people who are either at picnics or engaged in some sort of recreational activities.

Branding

Every company tries to establish its brand in order to maintain a brand loyalty. A

good brand name is the good will of the company. Again the selection of the brand


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name is the responsibility of the marketing people. Packages Limited has the policy

of separate family names for each of its product line, for example in case of facial

tissues the family brand name is Rose Petal and Tulip.

THE INDUSTRIAL PRODUCTS DIVISION

Industrial Product Division is responsible for the industrial goods that is, the packaging industry.

This division is concerned with the packaging needs of printed cartons of various industries.

The sale people are responsible for all the sales.

There have two types of orders:

1. Repeated Orders

2. New Orders

In case of the repeated order, what the sales people do is that they get the order from the

customer who already buys from Packages Limited and all the terms are already settled. So the

major job is to get the order and produce it and deliver it. As far as the new orders are

concerned, sales people will go to the new client and will try to sell their products to him. If the

customer agrees to buy from Packages Limited then it is the job of the sales people to

coordinate with the customer and the ART & CAMERA DEPARTMENT for the design of the new

order. First priority is to develop according to the ideas of the customer, in other cases the sales

people use their own expertise and design a suitable package for the customer.

The industrial sales in Packages Limited accounts for more than 70% of the total sales. It is their

primary concern. Packages Limited is the market leader of the packaging industry of Pakistan by

having 30% market share of the packaging industry. It manufactures a wide range packagingmaterial which covers paper & board, corrugated board, plastic packing etc. Major clientele of

Packages Limited consists of multinationals as their major concern is quality. The key customers

of industrial products of Packages Limited are:

Pakistan Tobacco Company

Lever Brothers

Service Shoes

Bata

Pak Elektron Company

LU Biscuits Lipton

Brook Bond etc

Industrial goods of Package Limited serve the following industries:

Cigarette Industry


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Soap/Detergent Industry

Food Industry

Shoe Industry

Match Industry Etc.

Market ShareAccording to Packages people they have more than 30% of the total market share as a result

they are the single largest packaging unit of Pakistan. There are a lot of small manufacturers

which are much cheaper. Although their quality is not of that far, but due to low prices they are

there. However, in case of ROTO GRAVURE PRINTING, Packages Limited has the absolute

monopoly. As it is the latest addition in the packaging industry of Pakistan and only Packages

Limited has machines to make it. It is very expensive and 70% of the raw material is imported.

Packages Limited is the market leader and enjoys an excellent rapport in the market.

Maintenance of this status quo is not an easy task. They have to find, develop and add new

types of packaging material to their product lines. Apart from this fact, they have to pay specialattention on the quality standards. The market of Pakistan is expanding over the period of time

so as the demand of the products of Packages Limited. Marketing people are well aware of this

fact and they are emphasizing to expand the production facilities in order to bridge the gap. .

QUALITY VARIATION

A margin of 10% of variation in the quality is considered as a normal variation and the customer

has to accept the order as such.

CLAIMS

The customer can only claim for his order if the rejections of the supplied goods exceed 2% of

the total order and the claim should be made with in period of two weeks.

PRICE

PRICE DETERMINATION

The basic formula for price determination is:

COST + PROFIT = PRICE

The first aim is to cover the cost. After this a reasonable amount is charged in the name of

profit. There are certain factors which affect this profit margin. These are:

a) Quantity of the order

b) Number of color to be used in printing

c) Time of completion


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d) Future prospects

The basic objective behind the price determination of consumer products is to

maximize the market share. The company actually wants a higher turnover. Prices

are set by the marketing people by considering the following factors.

Cost of Production

Consumers Purchasing Factor

Pricing Policies of Competitors

Government Taxes

Area Pricing

PLACEMENT

DISTRIBUTION STRATEGIES

We know that channel of distribution means:

"the sequential linkage of the organization and relationship through which a product

flows from the producer to consumer"

Distribution Policy for Industrial Products

In case of industrial goods no middleman is involved. Company's sales force directly

goes to the final customer and gets order form them. In this regard, Packages

Limited has a direct marketing approach. Packages people believe that direct

marketing is quite cheap for industrial goods. In case of repeated order or routine job the

customer can acknowledge his order through phone, fax etc.

Distribution Policy for Consumer Products

As far as the consumer products are concerned, Packages Limited uses dealer or

distributors. The company believes that the use of middleman is much more

economical for the consumer products. Packages Limited has a net work of

distributors, which covers the whole country. At present Packages Limited have more than 100

distributors, in more than 100 cities. Only in Lahore, there are two distributors. Company has a

policy to sell its products to all those cities having population more than 200000 through itsdistribution system. The distributor then, supplies these products to the whole seller, who in

turn supplies

the stuff to the retailer. And finally, the retailer sells the product to the final consumer.

PROMOTION


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PROMOTIONAL STRATEGIES

It is the job of Marketing Department to promote the business of the organization. In Packages

Limited, marketing people have different promotion plans for industrial and consumer

products.

A. PROMOTIONAL POLICIES FOR INDUSTRIAL PRODUCTS

So far as the promotion of the industrial goods is concerned, Packages Limited has

not assigned any budget for it. And in a way they don't promote the industrial sales.

But no organization can survive without promotion. The only promotional strategy which

Packages Limited undertakes is personal selling. The company does not need to fix any

promotional budget because it is the job of sales officers. Moreover, The Industrial

Sales Division is successful enough to keep the production process always working,

so the management thinks that there is no need for any other promotional activity.

B. PROMOTIONAL POLICIES FOR CONSUMER PRODUCTS

Without promotion, no consumer product can be successful. Promotional activities

are an integral part for marketing consumer products.

The objectives behind the promotional activities are:

Increase the sales

Outpace the competitor

Increase the market share Higher turnover

Informing the consumers

Building of goodwill

The management fixes the promotional budget. The basic premise is that

whether the organization can afford the budget or not. Apart from this fact, there are

a lot a of other factors which the marketing people have to consider, these are;

Cost of media

The number of products already in the market

The number of new products the company is going to launch

1. ALLOCATION OF THE PROMOTIONAL BUDGET

There are number of tools that are used to promote a business. These include;

i) ADVERTISING


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Advertising accounts for about 80% of the total promotional budget. Advertising is the most

popular and effective media to the advertising campaign of Packages Limited and which

includes the following

a) BROAD CAST MEDIA

The largest share of advertising budget is allocated to the media because it is themost interesting media with far reaching effects. Although, it is the most expensive

media, but the nature of the products requires its use. It includes;

TV

Radio

Packages Limited extensively uses the TV while radio is not used very much. The budget for TV

is about 65% of the advertising budget.

b) PRINT MEDIAPrint media is also an important part of promotional technique. it includes;

Newspapers

Magazines

Direct mail etc.

Packages Limited only places its advertisement in the magazines. Normally, newspapers are not

used. It accounts for about 20% of the total advertising budget.

c) OUT DOOR MEDIA

Marketing people normally don't prefer its use because they think that it is not very effective. It

has a very nominal share in the budget. It includes billboard, road side signs etc.

Personal Selling

Public Relations

POLICIES

PERSONNEL DEPARTMENTPersonal department is another one of the most important departments in an organization. The

success of an organization is dependent upon a successful personnel department. All the

progressive organization give a great attention and importance to their personal department. The

prime objective of this department is to manage and utilize the human resources in a fruitful

manner. It is obvious that if the employees are good then the pre determined objectives can be

easily achieved with efficiency and effectiveness. This department deals with the selection of


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employees and their working performance. The most important objective of any personal

department is how to improve the performance of employees at work.

The functions performed by personal department are:

Recruitment & Selection of Employees

Training and Development of Employees Planning Work for the Employees

Performance Evaluation and Appraisals

Keeping Attendance Record

Keeping Employees Record In the Organization

Compensation Management

Management Labor Relation

Discipline

Welfare of Employees

Packages Limited possesses a well organized and systematically operated Personnel Department.

The success and effectiveness of this departments policy and programs can be judged from the

fact that no problem has come to surface in the recent years. The Personnel Department is headed

by Personnel Manager.

The above mentions functions are performed by the four wings of the personnel department.

Personal Staff Wing

Establishment Wing

Law Wing

Welfare Wing

PERSONNEL POLICIES

The main personnel policies are given below.

1. Recruitment Policy

Packages Limited is more inclined towards employing fresh graduates than highly experienced

persons. The main reason behind the policy is that they believe in developing a person on their

own grounds keeping in view organizational objectives.

2. Workers Selection

All the workers are taken on the designation of apprentice trainee. After the expiry of probation

period if the performance of the trainee is found to satisfactory, then he is absorbed in the work

force. Efficient and effective workers are promoted regularly after fixed periods upon the

recommendation of the superiors.

3. Executive SelectionFor the selection of executives if any junior executive is found competent, then he is promoted to

grade E-III. For selection of executive outside the organization, jobs are advertised in the news

papers and candidates are called for the interview. After taking a written test and brilliancy

interview the selected candidates appear before the top management for the final selection.

4. Training


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Training is very important to increase the employee performance. At the beginning of the new

jobs, or if the organization adopt the new technology the employees are trained to meet the

changes. Packages provide training facilities, which include on job training and of job training and

also arranged refresher courses.

5. OrganizationThe selected candidates are utilized for the contribution in the organization. It is referred as

compensation and includes monetary rewards and other facilities. Following are the grades in the

organization.

Workers Grade

Executive Grade

Managerial Grades

Retirement age for the employees is 58 years and no extension in services allowed. The needed

employees are hired on contract basis. Attendance cards are issued by the time office to the

workers. The cards are punched twice a day in their respective department whereas attendancerecord of monthly employees is kept in attendance register.

Hourly rate workers are paid at the end of paid every fortnight while the monthly staff is given

their salaries at each month end. The employees are also given the following allowances.

1. House Rent.

House rent is 50 percent of the basic salaries which in some cases is 60 percent of the basic

salaries. More than 60 percent of the employees have their own houses.

2. Conveyance Allowance

Conveyance allowance is given to the all employees. Loans are provided to the employees to get

their own conveyance. Monthly allowances to employees are also given for maintenance of theirconveyances. Employees who bring their conveyances to the factory are also given an additional

allowance.

MANAGERIAL POLICIESThe major managerial policies as adopted by Packages Limited are as follows:

The price of the Companys products is same for all areas of Pakistan.

The Company accepts only large orders of high monetary value.

An order, which has once been confirmed by the customer, can only be canceled at thewill of the company and not the customer.

In case of consumer product, agreement with customer is made once and for all.

No discounts are offered to the customers. Goods are sold against 100% advance

payment.

The company does not pay freight when its industrial products are shipped to the

customer.


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Punctuality is strongly emphasized.

Once the goods are in transit, they become the property of the customer.

Customer can only claim for defective goods if they exceed 2% of the total order and the

claim is made within two weeks after the delivery.

For routine purchases, multiple suppliers are maintained to reduce dependency on any

one particular supplier. Any alteration in the approved sample shall be charged extra.

Workers are encouraged to produce more through a well-organized incentive system.

Selection of executives is done strictly selected on merit and no approach is entertained

in this regard.

Investment is made in those projects, outside the line of the company, which can later

improve the sales of the company.

In all the production processes both quality and quantity are emphasized upon.

Workers are encouraged to reduce the wastes and costs.

Only those workers are recruited who have some relationship with the current

employees of the company. Smooth relationship between supervisors and the subordinates is emphasized.

Company makes capital investment equal to the depreciation every year.

ACCOUNTING POLCIES

The following are Packages Limited major accounting policies:

Taxation: The charge for current taxation is based on taxable income at the current rates of taxation

after taking into account tax credit and rebates realizable, if any. The company accounts for

deferred taxation, using the liability method, on all major timing differences.

Fixed Capital Expenditure and Depreciation: Operating fixed assets except land is stated at cost less

accumulated depreciation. Land and capital work-in-process ate stated at cost. The management

carried out a comprehensive review of the useful lives of major items of plant and machinery

in1985. Depreciation in respect of such assets is charged in annual installments so as to write off

their yearend book value over their remaining re-estimated usefullives.

Long Term Investment: These are stated at lower of cost and market value determined on a

portfolio basis. Provision is made for permanent diminution in the value of any investments.

Stores and Spares: Usable stores and spares are valued principally at moving average cost, while

items considered obsolete are carried at nil value. Items in transit are valued at cost comprising

invoice value plus other charges paid thereon.

Stock in Trade: Stock of raw materials, except for those in transit, work-in-process and finished

goods are valued principally at the lower of average cost and net realizable value. Cost of work-in-


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process and finished goods comprise cost of direct materials and labor and appropriate

manufacturing overheads. Materials in transit are stated at cost comprising invoice values plus

other charges paid thereon.

Foreign Currencies: All assets and liabilities in foreign currencies are translated at exchange rates

prevailing at the balance sheet date except for foreign currency long-term loans covered underState Bank of Pakistan risk cover scheme. Exchange differences on loans utilized for the acquisition

of plant and machinery are capitalized up to the date of commissioning of the assets.

Staff Retirement Benefits:

Contribution Pension Fund scheme administrated by the Board of Trustees and covers all the

management staff. The scheme is funded and is approved by the Central Board of Revenue.

Contributions by the company included in salaries, wages and immunities are based on actuarial

valuation using the projected benefits valuation method. Gratuity Fund is administrated by the

Board of Trustees and covers all the employees with qualifying service period of ten years. There is

an approved contributory provident fund for all employees. Retirement benefits are payable to staff

on completion of prescribed qualifying period of service under these schemes.

Revenue Recognition:

Revenue is recognized on dispatch of goods or on the performance of services except for

management fees which are recognized on receipt.

Long Term Loans, deposits and Repayments

Loans to employees are secured by joint registration of scooter or motor cycles in the name of the

employees and the company. The remaining loans are unsecured. No loans to employees

outstanding for a period exceeding three years.Trade Debts: All debts are considered good and include secured debts of Rs.6.864 million (1997: Rs.

3.665 million). Trade debts include amounts due from associated companies Rs. 52.136 million

(1997: Rs. 62.510 million) and the maximum aggregate amount outstanding against them at the end

of any month during the year was Rs. 81.887 million (1997: Rs. 72.554 million).

STANDARD OPERATING PROCEDURES

PRODUCTION DEPARTMENTThe role of production department in a manufacturing concern is very important. The goods for the

customers are manufactured according to the desired standards in this department. This

department is responsible to plan and organize the allocation of jobs to various machines in a way

that their maximum capacity is utilized and that the delivery is given to the customer by stipulated

date. The head of the production department is the production manager. The planning department

also assists the department. The working procedures are based on week basis i.e. the total no of


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weeks in a year. The Production Manager looks after the production while the Planning Manager

supervises the planning section. The heads of following departments are directly answerable to

production manager and they have to present their special problems to him for advice and help:

Paper Converting department

Off-set Printing

Coates Lorilleux (Ink Factory) Art Department

Flexible Packaging Division

Camera Department

Coating Department

Cutting & Creasing Department

Lamination Department

Folding & Gluing Department

Dispatch Department

Quality Control Department

The Production, Planning and control unit is also directly under the Production Manager and acts

as the brain cell for him. Production Manager prepares internal planning of whole Paper & Board

Division. It takes into account the total capacity of the machinery, and manpower. It also arranges

the resources to attain maximum utilization. The other goal is to reduce the wastage of resources.

The planning department acts as a coordinator between the Marketing and production

Departments. This is very important in the sense that if there is communication between the

Marketing and Production Departments, a lot of confusion will be created.

PRODUCTION PROCEDURE

The sale staff is in direct touches with the customers and solicits business. After the business hasbeen finalized, an Internal Sales Order (ISO) is sent direct to the Production, Planning and Control

Departments for checking and planning out the production schedule. The planning officer and his

staff communicate and correspond directly with sales staff. Sales staff also deals with Art

Department in the initial stages of the business negotiations for the approval for the customer.

The direct link of the Art Department ceases after the customer has approved the comprehensive

for submitting proofs of the made job reference to the Planning Department for finalizing the

ultimate shape of the product. The order received by the customer to Marketing Department may

be:

New job

Modify the old job

Repeating job

Production department is further integrated into two divisions namely:

1. Packaging Division

2. Paper and Board Mill


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The Paper & Board Mill works under the planning department. Marketing Department projects it

prospective sales for the coming year. These projections are then sent to Planning Department

which plans the production schedule for the Mill. In the Paper & Board Mill this whole year plan is

broken into monthly plans. The Mill staff then, fined out financial needs and these needs are

passed to the Finance Department. Following are three sections of Paper & Board Mill.

1. Pulp Section2. Paper Section

3. Utilities Section

DISPATCH DEPARTMENT

This department dispatches the goods produced by Production Department to the respective

clients. The motivation of this departments workers is enhanced due to the incentive scheme.

This section has three main functions:

Store of Paper

Finishing of Paper

Dispatching Paper & Board

QUALITY CONTROL DEPARTMENT

This department examines the quality of products producing by Production Department. They

make tests about the quality of printing of paper or board and compare them with customer

specifications and prepare reports about results.

Quality Control

Various tests, e.g. water and oil absorption test, bursting strength test, are done in this section to

ensure the desired quality of paper and board. This section is also responsible for keeping the Mill

working. Its jobs are: Replacement

Maintenance

New Installations

TECHNICAL DEPARTMENT

This department is responsible for the repair and maintenance of machines and construction of

building and roads in the factory. There are 130 employees in this department. It works in two

shifts. In case of emergency third shift is carried out. It provides the necessary spare parts and

machinery to different departments. Technical Department is responsible for making tools and

spare parts. Some time it works for other industries. It normally accepts the orders of Roll

Grinders. These orders are accepted only on cash basis. It is divided into small departments, which

do specific work. These are:

Mechanical Workshops


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It is concerned with the manufacturing of spare parts and the installation and maintenance of new

machines. Lately it has installed the new Paper Machine 4 (PM4) successfully. The Design Office is

directly under this section.

Design & Development

The design & development department of Packages Limited is under the Technical Department.This department designs buildings, roads, spare parts and machines. For this purpose, several

draftsmen are working in this division. This department is responsible to develop and update new

and second hand imported machines. The design department of Packages Limited has successfully

made various machines. In this department designing is done both by manually and on computers.

For this purpose they are using AutoCAD.

Workshop

It works under the design department. The machines designed in the design department are

manufactured in the workshop. The work in the workshop is carried in two shifts of eight hours.

Over time is given to the workers but no special incentives are given.

Civil Department

This department is concerned with the construction of building and roads. Packages Limited is

growing day by day. So it also needs new buildings and plants. The building and roads constructed

by the Civil Department. Export architectures are working in this department, they work on

building by keeping in view the future needs.

Air Conditioning & Electricity

Technical Department is responsible for the supply of electricity and maintenance of air-

conditioning system. Technical Department also leads its services to other industries. If any

industry calls Packages Limited for any type of maintenance or construction, the TechnicalDepartment provides its services with open heart.

PLANNING TOOLS AND TECHNIQUES

THE RESEARCH DEVELOPMENT AND CONTROL DEPARTMENTPlanning ahead is what keeps Packages Limited on top of its game. The research, development and

control department assists in this section of the planning process at Packages Limited. If the

industry wants to grow not just survive, then it should take care of its Research and Development

Department. Development in Packaging material is a continuous process. New materials, films,fibers, chemicals, adhesives and coating always are researched and developed. As Packages

Limited wants to retain clients, stay out of court and improve profits, so it gives much

consideration on quality of the product. To keep up with new demands, Packages Limited has a

Research, Development and Control Department. This department works in close collaboration

with Production and Marketing departments. This department has well equipped laboratories and

pilot machines, which are used to test various chemical raw materials and machines. It enables

Packages Limited to provide better quality and latest packaging to the consumer industry, enabling


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it to introduce new product lines an develop new materials. The Research, Development and

Control Department have three major areas for its activities:

RESEARCH:

This section is directly responsible to the Production Manager about his research. In Research,work is done with on the idea, experiment is divided into parts and on each part attention is

focused and conclusions or suggestions are given. Packages Limited tries to get as many

information and technology which is possible and beneficial to the organization. All such

information is collected for research. Some time they receive reports of customers problems and

complaints from Marketing Department and advice to them through the same channels.

DEVELOPMENT:

Development is a continuous process in any organization. A lot of development is the result of

feasibility studies, study of new production methods and new products. Packages Limited has a

Paper & Board Mill, so it uses largest number of chemicals. The Environment Protection Agency

has some standards for reducing pollution. The R,D & Control Department developed new way of

reducing pollution and always tries to meet EPA standards.

CONTROL:

Packages Limited R&D & Control Department divides term CONTROL into two areas:

Quality is synonymous with Packages limited. Every package made by Packages Limited guarantees

the use of quality materials and processing. This is all due to the strict quality Control Standards,

observed at every stage of the production, from raw materials to dispatch Department. This

department makes stringent requirements on quality control, which help in working consistently

towards attaining better results for customers. To ensure constant quality and improvement thisdepartment managed by qualified scientists. Quality Control section has satellite laboratory in

every department, which constantly monitor and report. There is on the spot checking and

corrective treatment is given to the operators. If the percentage of defective material goes above

the permissible limit, the supervisor and machine operator is given a signal to take corrective

action.

In Process Control, the process of production is carefully monitored. Samples from every

department, e.g. Pulp Section, Beater House etc. are taken to quality control department and

tested for standard. R&D & Control Department is divided into different sections for copying

different types of problems. The sections are: Rubber Section

Physical Paper & Polly Packing Section

Pulp Section

Chemical Section

Development Section

Microbiology Section


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Library

CONTINGENCY PLANNINGThere is always a need for a backup plan in case of sudden changes in any factor. In our visit to the

factory of Packages limited we talked to the Logistics Manager, Finished Goods and this is what we

found out about the contingency planning in the logistics department.

LOGISTICS DEPARTMENT

Each department of Packages Limited operates under its own rules and regulations and has

control over the planning of their own departments. The logistics department is basically

responsible for transferring the goods from the factory to the customers. At times the

transportation is unavailable due to the drivers not being present or the vehicle not in a position,

in such cases the logistics have back up vehicles ready to ensure that the products reach the

customers on time.

CONTROLLING

Types of ControlEach department of Packages Limited works under its own management and has its own finances

and management to control. The company uses the System Application Procedure (SAP) system to

organize, control and communicate within the department and outside each department. This

system software enables all of the departments to coordinate with one another in a computerizedsystem. All of the data about the production, the orders, inventory, customers, logistics and all the

details are en

Packages Limited Management Report

Text of Packages Limited Management Report

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Packages Limited Management Report

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