PNSC- Internship Report

The Islamia University of Bahawalpuur, RYK Campus.

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Internship Report on Pakistan National Shipping Corporation (PNSC).Karachi By:Qaim Deen BBA(Hons). Finance

T H E I S A L A M I A U N I V E R S I T Y O F B A H A W A L P U R R A H I M Y A R K H A N C A M P U S

D E P A R T M E N T O F M A N A G E M E N T S C I E N C E S

2010

15-Aug-10


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By: Qaim Deen Mahar

BBA (Hons) Finance. The Islamia University of Bahawalpur. Rahim Yar Khan Campus.

Status: MBA from Quaid-i-Azam University Islamabad. Spring 2011.

Contact No. 0306-3456787 0300-6714555 [email protected] If you need any help regarding internship in PNSC you can contact.

Thanks.


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Executive Summary

Pakistan National Shipping Corporation was established as a result of merger of the National Shipping Corporation (NSC) and the Pakistan Shipping Corporation (PSC) in 1979, with effect from 1st January 1979. This was done with the view to improve the performance of the shipping and

ocean transport services and to develop of the maritime shipping industry. Pakistan National Shipping Corporation (PNSC) is an autonomous corporation, which functions under the overall control of ministry of Ports and Shipping, Government of Pakistan. Pakistan National Shipping Corporation (PNSC) manages 19 subsidiary companies.

The direction and administration of the affairs of the business of the corporation are maintained by the Board of Directors, which consist of five directors including the Chairman, to be appointed by the federal government directors to be elected by shareholders other than the federal government. For the efficient running of the corporation business distributed among the following four divisions each headed by and appointed directors;

1) Corporation affairs and admin Division

2) Commercial division

3) Ship management Division

4) Special Project and Planning Division

Under these five main directors there are 48 subdivisions or units are present. The report will gave a detailed working of some of these departments and how these departments are working for the overall profitability of the organizat ion. Financial position of the organization is becoming stronger since 2001. Pakistan National Shipping Corporation (PNSC) has great opportunities to capture

maximum market share. The company has great future prospectus because of its long term contract with oil refineries. Company has a sound plan of expansion in near future.


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Introduction


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PNSC Introduction

Company

Profile:

Pakistan

National Shipping Corporation

Ticker: PNSC Exchanges: KAR 2010 Sales: n/a

Major Industry: Transportation Sub Industry: Shipping

Country: PAKISTAN Employees:

Head Office:

Regional Office:

1077

PNSC Building, Moulvi Tamizuddin Khan Road, Karachi 74000 Gulberg Heights, Lower ground

floor , Near sherpao

bridge Gulberg , Lahore, Pakistan

Corporate Information: The corporation is managed by a board of directors constituted by the Federal Government. Five of these Directors including the Chairman are nominated by

Government (majority share holder), while, two Directors are elected by the Shareholders. Corporation share holding as under.

a. Authorized Capital Rs. 2000 Million

b. Paid up Capital Rs. 1320.63 Million

c. Government Share 77.13%

d. PNSC Employees Empowerment Trust

12%

e. Individuals 7.07%

f. Institutions 3.80%


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Pakistan National Shipping Corporation is the National flag carrier managing a fleet of 10 Vessels. The corporations head office is in Karachi. A regional office based in Lahore caters for upcountry shipping requirements. The corporation also have extensive overseas network of agents looking after its worldwide shipping

business. Pakistan National Shipping Corporation (the corporation) and its subsidiary companies (together the Group) were incorporated under the provision of Pakistan National Shipping Corporation ordinance, 1979 and the companies ordinance, 1984 respectively.

The Group is principally engaged in the business of shipping, including charter of vessel, transport of cargo and other related services. It also engaged in renting out its properties to the tenants under the long term lease agreements. Its registered office is situated at PNSC Building Moulvi Tamizuddin Khan Road, Karachi except for Pakistan co-operative Ship stores (Private) Limited which is

situated at 70/4, Timber Pond, N.M Reclamation Kemari, Karachi. The Group owns 55 percent of the share capital of Pakistan co-operative Ship stores (Private) Limited and 100 percent of the share capital of the remaining subsidiary companies. . All the fully owned subsidiaries of the Group operate one vessel / tanker each with the exception of Hyderabad Shipping (Private) Limited, Karachi Shipping (Private) Limited, Lahore Shipping (Private) Limited, Lalazar

Shipping (Private) Limited, Malakand Shipping (Private) Limited, Shalamar Shipping (Private) Limited and Sibi Shipping (Private) Limited which currently do not own any vessel / tanker. Pakistan National Shipping Corporation operates in the shipping industry in Pakistan and internationally. It engages in the charter of vessels, transportation

of cargo, and other related services, as well as in the provision of commercial, technical, administrative, financial, and other services related to shipping to third parties. As of June 30, 2010, the company operated a fleet of 10 vessels, including bulk carriers, oil tankers, and combo vessels with a total carrying capacity of 453,748

DWT. Pakistan National Shipping Corporation also involves in the rental of real estate properties comprising commercial buildings and spaces under lease arrangements; and management of a repair workshop. The company is headquartered in Karachi, Pakistan.


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The Group: The Group consists of: Holding company

Pakistan National Shipping Corporation Subsidiary companies Pakistan National Shipping Corporation (PNSC) has following Subsidiary Companies:

1. Bolan Shipping (Private) Limited.

2. Chitral Shipping (Private) Limited.

3. Hyderabad Shipping (Private) Limited.

4. Islamabad Shipping (Private) Limited.

5. Johar Shipping (Private) Limited.

6. Kaghan Shipping (Private) Limited.

7. Karachi Shipping (Private) Limited.

8. Khairpur Shipping (Private) Limited.

9. Lahore Shipping (Private) Limited.

10. Lalazar Shipping (Private) Limited.

11. Makran Shipping (Private) Limited.

12. Malakand Shipping (Private) Limited.

13. Multan Shipping (Private) Limited.

14. Pakistan Co-operative Ship Stores (Private) Limited.

15. Quetta Shipping (Private) Limited.

16. Sargodha Shipping (Private) Limited.

17. Shalamar Shipping (Private) Limited.

18. Sibi Shipping (Private) Limited.

19. Swat Shipping (Private) Limited.

Associate: - Muhzammadi Engineering Works (Private) Limited.


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The Group owns 55 percent of the share capital of Pakistan Co-operative Ship Stores (Private) Limited and 100 percent of the share capital of the remaining eighteen subsidiary companies.

All the fully owned subsidiaries of the Group operate one vessel / tanker each with the exception of Hyderabad Shipping (Private) Limited, Karachi Shipping (Private) Limited, Lahore Shipping (Private) Limited, Lalazar Shipping (Private) Limited, Malakand Shipping (Private) Limited, Shalamar Shipping (Private) Limited and Sibi Shipping (Private) Limited which currently do not own any vessel /tanker. Subsequent to the year end a vessel has been disposed off and a tanker has been

acquired.


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Background: Basically Pakistan National Shipping Corporation (PNSC) is the merger of National Shipping Corporation (NSC) and Pakistan Shipping Corporation (PSC).

National Shipping Corporation (NSC): The national shipping corporation (NSC) was established under the National Shipping Corporation Ordinance, 1963, with a view to provide and efficient shipping services. The Corporation was managed by a Board comprising of nine

directors, out of which five including the Chairman, the Managing Director and the Financial Director were appointed by the Central Government and remaining four were elected by the share holders, to from each Province. The authorized capital of the Corporation was Rs. 250 million divided into 25 million and 5 million fully paid up share of Rs. 10/- each and the subscribed

capital was to be Rs. 50 million divided into 5 million shares of Rs. 10/- each. The share of Central Government in the capital was 25% and the balance of 75% was raised from the public in East and West Pakistan on the basis of parity. The Board of Director of the Corporation was authorized to call for public subscribed to such extent within the amount of Rs. 50 million and at such time as the Board thought fit. The initial subscribed was fixed by the Board at Rs. 16 million. The Corporation called for the capital on 4th May, 1964 which was in fact over-subscribed.

Pakistan Shipping Corporation (PSC): In 1974 the Federal Government decided to take over the management and

control of entire shipping in Pakistan, including NSC through promulgation of the Pakistan Maritime Shipping (Regulation and control) Ordinance, 1974 which later on became an Act. In September, 1976 the Federal Government established the Pakistan Shipping Corporation (PSC) under the Pakistan Shipping Corporation Act, 1976, to take charge of ten shipping companies and operate as a parallel corporation with the

National Shipping Corporation (NSC).


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Establishment of Pakistan National Shipping Corporation (PNSC): In 1977, the Federal Government decided amalgamates the NSC and PSC to establish the Pakistan National Shipping Corporation. The Pakistan National Shipping Corporation Ordinance, 1979 was promulgated with effect from 1 st January, 1979. By This Ordinance the NSC and PSC were dissolved as of the 31 st

December, 1978. At the time of the merger the share capital of NSC was Rs. 144,375,000 and that of PSC was Rs. 85,124,350. Both the Corporations had 24 ships each and their Books of Accounts had shown a profit of Rs. 28,713,000 for NSC and Rs. 823,606 for PSC.

As provided for in the PNSC Ordinance, the net worth of the business of NSC & PSC as on 31-12-1978 was evaluated and shares were allocated to the combined shareholders according to the principal prescribed in the Ordinance after the valuation had been approved by the Federal Government. The share capital of PNSC was pegged at Rs. 241,308,000.

So the Pakistan National Shipping Corporation (PNSC) is the combination of the National Shipping Corporation (NSC) & the Pakistan Shipping Corporation (PSC).


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VISION & MISSION STATEMENT

To develop and execute short-term long-term business plans to ensure sustainable growth of the Corporation as the National flag

carrier and a lead player in the shipping industry.


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Organizational Structure


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CHAIRMAN

SA to CHAIRMAN (M)

Executive

Director

Commercial

Division

Executive

Director Finance

Division

Executive

Director Ship

Division

Finance

(GM)

Accounts (M)

Accounts (M)

Finance (DM)

Corporation

Sectt

Secratery

PNSC

CA & Shares

(M)

CA & Share

(DM)

I & C (M)

MR & S (GM)

MR & S (M) Dry

Cargo Vessel

SUPDTS. Dry

Cargo Vessels

(DMs)

Manager Tech.

Tanker (M)

Ship Store (DM)

ISM Code / TRG

(DM)

Fleet Management

(DM) (Incahrge)

SUPDTS Fleet

Dry Cargo VSLS

(DMs)

Crew Section (M)

Executive

Director Special

project &

Planning

Executive

Director

Administrative

Division

Ship Personnel

SUPDT SP

Workshop (GM)

Commercial

(GM)

Commercial

(M)

Tanker

(M)

Bills (M)

Operation

(M)

Operation

(Port CAPT)

Import/

Export (DM)

TA (East)

(M)

TA (West)

(DM)

Lahore (RR)

Estate (M)

Technical

(M)

Personnel

(M)

Admin (M)

Legal (M)

S. M. O

(DM)

Security

(DM)

Protocol

(DM)

SP & P (M)

SP & P

(DMs)

Librarian

(DM)

M. I. S (GM)

Internal Audit

(M)Report to

Board Audit

Committee

Estate

(GM)


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CORPORATE

INFORMATION


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CORPORATE INFORMATION

BOARD:

Brig. (R) Rashid Siddiqi Chairman

Mrs. Rukhsana Saleem

Member

Mr. Rasheed Y. Chinoy Member

Capt. Syed Akhlaq Hussain Abidi

Member

Mr. Khalid Idress Member

Mr. Jahangir Siddiqui

Member

Mr. Khowaja Obaid Imran Ilyas

Member

AUDIT COMMITTEE OF THE BOARD:

Mr. Rasheed Y. Chinoy Chairman

Mrs. Rukhsana Saleem

Member

Capt. Syed Akhlaq Hussain Abidi Member

Mr. Khowaja Obaid Imran Ilyas Member


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SECRETARY: Ms. Zainab Suleman

HEAD OFFICE:

PNSC Building, Moulvi Tamizuddin Khan Road Karachi-74000

AUDITORS:

A.F. Ferguson & Co., Chartered Accountants.

Ford Rhodes Sidat Hyder & Co., Chartered Accountants

BANKERS: Allied Bank Limited

Bank Al-Falah Limited Faysal Bank Limited Habib Bank Limited

Habib Metropolitan Bank Limited JS Bank Limited

MCB Bank Limited

National Bank of Pakistan Meezan Bank Limited

Royal Bank of Scotland Standard Chartered Bank

United Bank Limited


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Board of Directors

Brig. (R) Rashid Siddiqi

Chairman

Mr. Rasheed Y. Chinoy Mrs. Rukhsana Saleem Mr. Khalid Idrees

Director Director Director

Capt. Syed Akhlaq Hussain Abidi Mr. Jahangir Siddqui Mr. Khowaja Obaid Imran Ilyas Director Director Director


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Management


Chairman


Executive Director (Administration)

Mr. Imtiaz C. Agboatwala

Executive Director (Finance / CFO)

Cdre.S. Mohammad Obaidullah

Executive Director (Special Project & Planning)

Capt. Aftabuddin Siddiqui

Executive Director (Commercial)

Mr. Zaheer Babar Quershi Executive Director

(Ship Management)

Note: Brig. (R) Rashid Siddiqi i s acting as Chairman and also Executive Director of Administration at the same time.


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Real Estate of PNSC


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Real Estate of PNSC: PNSC manages three commercial buildings.

1. PNSC Building

PNSC building is situated at Moulvi tamizuddin Road. The foundation stone of building was laid on 11th May 1968 and this sixteen strayed building (now PNSC building) was completed in the year 1971 at an approximate cost of Rs.30 Million. Huge Fire erupted in this building on Sunday 18 th February, 2007, getting the 10th, 11th, 12th, 13th, 14th, 15th, 16th, floors. Luckily no life lost and no structural damage occurred on the affected floors.

Unfortunately again on Sunday,19th August, 2007 another huge fire broke out, this time destroying 4th, 5th, 6th, 7th, 8th, 9th floor. The Karachi Building control authority after thorough inspection declared the Building safe. The building is under refurbishment/renovation till now.


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2. Muhammadi House:

This building is located at I.I. Chandigarh Road, Karachi. Different companies have Head Offices in this building. It was constructed in 1950 and now it is property of PNSC.


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3. Old Rally building:

This building is located at Talpur Road off I.I. Chandigarh Road and adjacent to

City Railway station. Old Rally Building originally belongs to Chittagong Steamship Company. When shipping was nationalized in 1974, this building was taken over by the government. Now it is the property of PNSC.


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Trade Areas


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Trade Areas:

Trade Area EAST: In the east the business of Pakistan National Shipping Corporation is precede to the following countries:

1. Japan 2. Nepal 3. Sri Lanka 4. China 5. India

6. Indonesia 7. Thailand 8. Hong Kong 9. Philippine 10. Taiwan 11. Others

The purpose of formation of trade area east is to control all the matters of and shipping trade in the eastern side of Pakistan. The main countries in the east to which we have goo and strong relations in trading are:

China (26%)

Japan (15%)

South Korea (11%) And we have agents in east countries for the purpose of

Marketing of Pakistan National shipping corporation

Selling the Freight

Linkage with importer and exporter of Pakistan

For transportation of goods by sea

Conveying different other shipping information

Looking after all vessels


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Accommodating cargo for our ships


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Trade Area WEST:

When Pakistan National Shipping Corporation traded to the west area then the region will be treated as trade area west.

Following Countries are included in Trade Area West:

Persian Gulf

European Countries

African Region

USA

Canada

Others


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PNSC Ships


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PNSC Ships:

FLEET:

S. NO Vessel DWT Built Origin IMO Tonnage Length Breadth

1 KAGHAN 65716 1986 JAPAN 8513015 36, 098 225.78 32.26

COMBIES:


1 BOLAN 18144 1980 JAPAN 7822108 12,395 153.00 23.00

2 ISLAMABAD 18204 1983 PAKISTAN 7822706 12,395 153.01 23.00

3 MULTAN 18257 1980 JAPAN 7822093 12,395 153.01 23.00

4 SARGODHA 18242 1980 JAPAN 7822017 12,395 153.01 23.00

TANKERS:


1 JOHAR 86803 1985 SPAIN 7917393 49,688 243.80 39.35

2 SWAT 86593 1985 SPAIN 1917408 49,601 243.80 39.35

3 QUETTA 107215 2003 Japan 9270555 58,118 246.80 42.00

4 LAHORE 107018 2003 Japan 9277541 58,157 246.80 42.00

5 KARACHI 107081 2003 Japan 9257814 58,127 246.80 42.00


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COMBIES:

M.V. BOLAN

SPECIFICATIONS

Call Sign AQOM

IMO Number 7822108

Gross Tonnage 12395

Summer deadweight 18144

Summer draught 9.745 m

Length overall 153.0 m

Breadth 23.0 m

Built KAWASAKI KOBE JAPAN - 1980

Cargo gear CRANES SWL 25 TS x 2 , VELLE DERRICKS DWL 22 TS x 5


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M.V. SARGODHA

SPECIFICATIONS

Call Sign AQOK

IMO Number 7822017

Gross Tonnage 12395




Breadth 23.0m

Built OSHIMA JAPAN - 1980



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M.V. ISLAMABAD

SPECIFICATIONS

Call Sign AQPE

IMO Number 7822706

Gross Tonnage 12395




Breadth 23.0 m

Built KARACHI SHIPYARD PAKISTAN-1983



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M.V. MULTAN

SPECIFICATIONS

Call Sign AQOP

IMO Number 7822093

Gross Tonnage 12395


Summer draught 9.745


Breadth 23.0 m

Built MITUI JAMANO JAPAN - 1980



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Tankers:

M.V. SWAT

SPECIFICATIONS

Call Sign AQPU

IMO Number 7917408

Gross Tonnage 49601




Breadth 39.35 m

Built ASTILLEROS Y TALLERES DEL NORESTE, S.A.(ASTANO),EL FEROL NOV,1985

Cargo gear DERRICKS SWL 15 x 2 , PROVISION DERRICKS SWL 5 x 2


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M.V. JOHAR

SPECIFICATIONS

Call Sign AQPV

IMO Number 7917393

Gross Tonnage 49688




Breadth 39.35 m

Built ASTILLEROS Y TALLERES DEL NORESTE, S.A.(ASTANO),EL FEROL NOV,1985

Cargo gear DERRICKS SWL 15 x 2 , PROVISION DERRICKS SWL 5 x 2


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M.T. QUETTA

SPECIFICATIONS

Call Sign AQQB

IMO Number 9270555

Gross Tonnage 58,118 mt

Summer Deadweight 107,215 mt

Summer Draught 14.798 m

Length Overall 246.80 m

Breadth 42.00 m

Built Imabari Shipbuilding Co. Ltd., Japan 2003.

Cargo Gear Cranes SWL 15 TS x 1


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M.T.LAHORE

SPECIFICATIONS

Call Sign AQQC

IMO Number 9277541

Gross Tonnage 58,157 MT

Summer Deadweight 107,018 MT



Breadth 42.00 m




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M.T.KARACHI

SPECIFICATIONS

Call Sign AQQD

IMO Number 9257814

Gross Tonnage 58,127 MT

Summer Deadweight 107,081 MT



Breadth 42.00 m




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Bulk carrier: M.V.KAGHAN

SPECIFICATIONS

Call Sign AQPY

IMO Number 8513015

Gross Tonnage 36098.00




Breadth 32.26 m

Built NAMURA SHIP BUILDING CO., JAPAN-1986

Cargo gear GEARLESS


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Division and Departments


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Division and Departments

The Management of Pakistan National Shipping Corporation establishes division and Departments to facilitate conduct of the duties. So following division and Departments are established.

Commercial division Finance Division

Ship Management division Administrative Division Special Project& Planning Division Internal Audit Department

Commercial Division: Commercial Division is headed by Executive Director if Commercial Division that is Capt. Aftabuddin Siddiqui. This Department has following sub Sections.

Trade Area (West)

Trade Area (East)

Chartering Department

Tanker Section

Container Logistics section

Regional Office Lahore

Operations

Bill Section


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Finance Division: Finance Division is headed by Executive Director of Finance that is Mr. Imtiaz C. Agboatwala. Finance Division is under his control & he manages all the affairs of Finance Department in Pakistan National Shipping Corporation.

The Finance Division is divided in four major sub Sections:

Finance

Insurance and Claim

Corporation Secretariat

Corporate Affairs and shares

I will explain only Finance and Insurance & Claim Department later.

Ship Management division: This Division deals only with the affaire of Ship. This division is headed by Ship Executive Director of Ship Management that is Mr. Zaheer Babar Quershi. All the issues that are related to the Ship like Vessel Management, Crew

management, Repair and Maintenance of Ship etc are handled under this division. In this Ship Management division following head are included:

Fleet Management

Bunker section

Workshop

Repairs & Maintenance

ISM Code/ Training section

Ship Personnel

Stores Supply Depot


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Administrative Division: Administrative division is headed by Brig. (R) Rashid Siddiqi, Executive Director of Administration and also he is the Chairman of Pakistan National Shipping Corporation.

Administration Division covers the following areas:

Personnel

Administration

Estate

Security

Public Relations

Legal sections

Medical sections

Contributory provident fund functions

Special Project& Planning Division: Special Project& Planning Division is headed by Cdre. S. Mohammad Obaidullah, Executive Director of Special Project& Planning Division.

This Division has the following sections:

Special Projects Planning Management Information System


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Internal Audit Department: Internal audit department is headed by Manager of Internal audit, reporting direct to the Board audit Committee.

Internal Audit is the main internal control process of any organization. The main functions of the internal audit are to examine the financial transactions according to laws, regulations, policies and accounting standards. Pre Audit:

In pre audit all the transactions are verified before its enforceability, just for minimizing risk of frauds and mistakes. In pre audit we check following list of titles:

Volume of amount involve in transaction

Party details

Deadline for maturity of contracts

Signature of guarantors if any

Bank Guarantees if any

Chairman Authority to sign the document of transaction

After all examination it will be passed for enforceability. Post Audit:

Post audit examines the after affects of transactions settlement. It is confirmed that funds are reached to the real party or the loan that was acquired is consumed at right place.


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Commercial Division/Department:

Commercial department of PNSC is the backbone of the organization. Commercial department performs worldwide and chartering operations. The basic function of commercial department is to promote and enhance fleet and cargo trading. The commercial division deals with normal daily business related to the organization.

The commercial Department is sub divided in 5 main categories

1. Trading 2. Chartering 3. Tanker Line 4. Containers 5. Bills

1. Trading:

Trading can be sub divided in two regions:

Trade Area East Trade Area west

Trade Area EAST: In the east the business of Pakistan National Shipping Corporation is precede to the following countries:

12. Japan 13. Nepal

14. Sri Lanka 15. China 16. India 17. Indonesia 18. Thailand 19. Hong Kong

20. Philippine 21. Taiwan 22. Other


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The purpose of formation of trade area east is to control all the matters of and shipping trade in the eastern side of Pakistan. The main countries in the east to which we have goo and strong relations in trading are:

China (26%)

Japan (15%)

South Korea (11%) And we have agents in east countries for the purpose of

Marketing of Pakistan National shipping corporation

Selling the Freight

Linkage with importer and exporter of Pakistan

For transportation of goods by sea

Conveying different other shipping information

Looking after all vessels

Accommodating cargo for our ships

Trade Area WEST:

When Pakistan National Shipping Corporation traded to the west area then the region will be treated as trade area west. Following Countries are included in Trade Area West:

Persian Gulf

European Countries

African Region

USA

Canada

Others Most of the time Oil is imported by PNSC oil tankers.


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2. Chartering: Most of the tome a party or parties charter the ships for the voyage and freight is received to PNSC. Two types of contracts can be done when chartering ships that

are:

Time charter

Voyage charter In Time Charter the main thing is focused is time. In this case the ship is chartered for a specific time period, no matter how many voyages are completed.

In Voyage Charter the freight is taken on the voyages that are completed or made. Freight is due on every voyage that is made. There can be one or more parties that can be involved in acquiring or taking ship, cargo or tanker by time or voyage charter.

Mostly in case of voyage charter 90% of the freight that should be paid is normally paid in advance. In case of time charter 100% full amount is paid at advance before going to voyage.

2. Tanker Line: Tanker Line is related to Liquid cargo. The need of Government of Pakistans crude oil is normally carried through PNSC. The following Companies need Crude oil:

Pak Arab Limited

National Refinery Limited

Pakistan Refinery


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In a month 10 tankers fulfill the demand of the above companies. Major exporters of oil are following:

Saudi Arabia

United Arab Ammarat

Iran Most of the oil is imported from Saudi Arabia region. Name of the PNSC Tankers are:

Johar

Swat

Lalazar

3. Containers: Containers are the Boxes that load goods have some specific sizes. There are three types of Boxes:

Dry cargo ( 20 Fitters & 40 Fitter dry boxes including open top )

Bagged cargo

Drums

4. Bills: This section of commercial department deals with the recovery of freight and other tariff charges regarding contracted dealings. They also provide special services to military of Pakistan. Items of military are

provided to authorize dealers. Bills have to be sent to listed dealers for payments.


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Working on Various

Departments


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Finance Department: The Finance Department is divided into several sections. Each section is directed its own Assistant Manager and these AMs are directed by their respective Deputy

Managers. Sections are listed below:

1. Freight Section 2. Port Section 3. Assets Section 4. Spares Section

5. Insurance & Claim Section 6. Payrolls Section 7. Remittance Section 8. Tax Section 9. Bill Section 10. Cash Section 11. Book Keeping Section

12. Afloat Section 13. Mess Committee Section 14. Workshop Section 15. Store Account Cell Section

I will provide detail of some of the sections of Finance Department where I have spend some time or the sections that were visited by me during my Internship in Pakistan National shipping Corporation.


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Mess Committee Section: Mess committee is the section of Finance department which is related to mess expenses or food expenses of all the employees that are working on the ship. So obviously there would be expenses of food for the people that are on the ship and going for any voyage.

Mess committee section is responsible to provide all food items that are required to fulfill the needs of the employees that are working on the ship. The needed amount of money for food or items will estimated on this basis If the voyage is less than 120 days then the daily cost of food per person on ship

will be $4. And if the voyage is more than 120 days then per person cost per day on food will be $5.5. So if the members on ship are 40 and total days of voyage are 110 then total cost of mess will be $17600 = (40x110x4) So all the expenses related to mess/food are handled under this section. When the captain of the ship purchases any mess related item he sends the bill of purchasing that food to the Mess Committee section in the PNSC Karachi, but not

immediately. First of all when the ship is sailing for a voyage from Karachi, at that time all the needed food items are purchased according to the need and according to the estimated days that would be spent on the ship during voyage.

It is tried that all the needed things should be purchased from Karachi because 1st here these will be available on cheap rate as compared to purchasing from another country. 2nd Quality will be better and 3rd own countrys things will be purchased on own money so it will be better for the country that its own wealth is coming back to its own people.

The Mess Committee section will pay that amount to the seller and food items will be sent to the ship. The Mess Committee will charge this to the expenses head. It is also possible that in the ship the food items can be consumed fully before the completion of full voyage or the specified voyage. At that time the ship need food

for its crew. So the country in which they are right at the moment, the Captain will inform to PNSC about their need and the PNSC will ask the bank which will be operating in that country and also will be linked with the PNSC. So the bank


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will provide the needed amount of money to the captain of the ship and required food equipment will be purchased. It is also possible that in that country no bank is linked with PNSC, at that time

the agent of PNSC in that country will be advised to provide the required amount or required products to the ship or captain of the ship. Agent will provide the required amount and food items will be purchased. And the bill will be sent to the PNSC, PNSC will record it into its books of accounts. If there is no agent of Pakistan National Shipping Corporation in that country at

that time London Bank will arrange the money in that country or it will arrange an agent in that country, and the agent will provide required things or money. The amount that will be paid to the ship will be in foreign currency. When they will be sent vouchers to the PNSC, then it will convert it into local currency i.e. in Rupees, and the account will be maintained.


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Insurance & Claim Department:

Insurance means to secure, covering any kind of risk of things against some considerations. In Pakistan National Shipping Corporation insured things or goods are vehicles, fleet, vessels, estate, buildings and machines. In insurance and claim section there are 3 sections that are:

Hull & Machinery section

Cargo section

Miscellaneous section

Hull & Machinery section: The functions of hull and machinery section include:

Collision, fire, breakdown of machinery claims

If there are some general or particular average claims

Premium that is annually payable to National Insurance Company.

Damages claims

Verify the deck; engine rooms repair bills and claims for normal damages for the recovery purpose

Also arrange renewal meeting with National Insurance Company.

Cargo section:

The function of the cargo section in the insurance and claim department are as under:

Assist and arrange annual meeting with National Insurance company

Claims for shortage of cargo

Claims for damages of cargo

Claims that arise out if chartering parties.


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Miscellaneous Insurance section: The functions that are performed by the Miscellaneous Insurance section are as follows:

Insurance of building, workshop, barges, office equipment and others

Workmans compensation

Stowaway cases

Smuggling cases

Repatriation /death compensation claims of afloat staff.

There are basically two type of Insurance:

Asset Insurance

Liability Insurance

Asset Insurance:

Asset insurance is also called Hull insurance. It means that if there is any loss is done to the ship or vessel then it will be asset insurance. If a loss is done to any vessel then National Insurance Company will give the premium to us if the vessel is insured to NIC. All the vehicles are also insured along with the vessels.

The responsibility of the members of insurance claim department will make specifications of the loss that has been occurred and they will send it to the NIC. The members of the NIC will visit the vessel and see the damaged area. After that settlement will be made and transaction will take place with the mutual consent of both parties. The loss to any vehicle of PNSC that is insured is also brings premium to PNSC.

The procedure is same as in the vessel case.

Liability Insurance: If the loss that is beard is due to the negligence of our own, then it will be liability

insurance. Like stowaway cases in which illegal persons come to the vessel because of our own negligence.


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All the expenses of liability insurance are covered by P&I club that is in London. Short Landing:

Short landing occurs when goods that are on the ship are short in quantity. In this situation following documents are required:

Final Outrun Report: It is issued for the arrangement of short lading report and then next steps are taken to fulfill of short landing of goods.

Short landing Certificate: It is an order due to which we can claim on our short landing goods and claim loss to P&I club.

Shortage case: It mean that that the volume is less of product instead its quantity.

Like demand was 50 kg bag but only 20 kg was appeared. In this situation following documents are required:

Provisional outrun report: It is issued for the arrangement of shortage case and then next steps are taken to fulfill of shortage volume of goods.

Joint Survey Report: it is an investigation certificate upon which investigation will be done over vessels.

Bill of Lading: This is the document that tells all the specifications of goods that were loaded to the vessel.


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Freight Section:

In freight section there is checking, analyzing and clearing the freight (rent) of Pakistan National Shipping Corporations vessels and also the freight of subsidiaries of Pakistan National Shipping Corporation. When the client party is going to give all the statements of accounts that will be Time Chartered account. It includes companys General Ledger, Journal Voucher

and chartered hire invoice. Then Pakistan National Shipping Corporation will be going to make the statements or accounts. In which PNSC and its subsidiaries freight earnings are calculated by considering each vessels earning. This will be all included in ageing Schedule In it total earning of each vessel are included on monthly basis and

balance are also included on monthly basis. It includes:

Voyage charter earning (freight on number of Voyages)

Time charter earning ( freight depending upon time period)

Foreign chartered earning (Freight charged on Foreign voyages by taking cargo of customers)

After these three kinds of earning they totaled these earnings and a total earning or total revenue is acquired. When the revenue or freight is received they Debit the Receivables and Credit the income portion when they are going to record the transaction.

Outstanding Schedule of Receivable is the schedule in which the balance that is not collected in that month is settled. The outstanding balance is settled in this schedule. Slot Business means that when PNSC have made the agreement with his

customer to carry his cargo but it did not have any ship to carry the cargo of his customer. At that time PNSC made an agreement to another cargo ship to carry the cargo of its customer on time. For example, PNSC made agreement to carry the cargo of Mr. Michael to Japan for $20000. But At the time no ship was available at that time PNSC will find another ship of other company going to Japan and made an agreement to carry


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Mr. Michaels cargo. Suppose agreement was made 0n $15000. So PNSC is getting $20000 from its customer and giving $15000 to the other company to carry the cargo and having profit of $5000. This is Slot Business.

Time Chartered Voyage is voyage base on time. Chartering the whole ship for a specified time period, no matter how many voyages are completed in that time period l.ike, chartering ship for 200 days. In time chartering the book keeping is made on monthly basis but charges are taken on daily basis. Voyage chartering refers to taking freight on number of voyages that are

completed by a ship. In this chartering the freight is paid on basis of voyage completed. In voyage chartering the book keeping is made on monthly basis and payment is made on voyage basis. The main functions performed by freight section are:

Follow the regulation of State Bank of Pakistan and keep knowledge of fluctuations in the exchange rates for taking freight and other charges according to the change in exchange rates.

Prepare the periodic statements about all the collection of freight and also make statements for outstanding freight for the knowledge and information of management.

Release all the information about the freight and all other receivables from the parties before the release of delivery order for cargo that is being discharged from Pakistan.

Be quick in collecting information and data required from the bill section for the timely preparation of annual business plan, annual strategies and policies.

Also prepare monthly forecast of the cash that is incoming to the Pakistan National Shipping Corporation from the freight that is collected in Pakistan.

Always give detailed and timely response to all the audit queries.


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Bills Section:

Bills section of Finance department in Pakistan National Shipping Corporation is concerned with the bills that are related to the business. All the bills that are local and handled in Pakistan and are in local currency in rupees relate to this section. The responsibility of this section is to clear all types of bills of Pakistan National

Shipping Corporation and its subsidiaries. The bill section actually makes the payments that are payable due to bills. The ill section doesnt receive the bills directly. Bills are all those payments that need payments. Like bill against purchasing of uniform need payment of the bill of uniform.

If the bill is less then Rs. 25000 then no need of quotation. But if the bill is greater than 25000 then the bill section need quotation of all the products that are purchased. At that time requirement of quotation is necessary for the payment made against the bills.

The billing section deals in only Pakistani Rupees not in foreign currency. The foreign bills or payments are handled in Remittance section that is related to all the foreign expenses that are in shape of bills. Pakistan National shipping Corporation defines or fixes a budget every year for different kinds of items or for different kinds of equipment every year. It design budget for every item separately.

Different items or expenses that need bills and need payment are the following items. Pakistan National shipping Corporation set a specified budget each item in the following list has its own budget.

Courier services

Printing and stationary

Repair & Maintenance of different things like office machines

Uniforms for employees

Telephone bills

Computer expenses

Diesel or oil for generator

Postage


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One thing also can be possible that the bill section has less amount or budget for an item but the bill or payment is much more then the budget, at that time the billing section will make request to the General Manager of Finance for the sanction of payment or budget.

But when the payments should be made immediately at that time there is little time of making payments and the budget approved from General Manager of Finance takes time in this situation billing section do another method. The action that billing section take in this situation is that it makes the payments

from another items budget that has sufficient balance. When the payments are made then the budget that is sanctioned from the General Manager of Finance is added to that items budget where from payments were made. The main functions of billing section are as follows:

Clear all types of bills of Pakistan National Shipping Corporation.

Clear all types of bills of PNSC and its subsidiaries.

Give timely response all audit queries.

Prepare periodic statements of bills section.


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Book Keeping Section:

Book keeping in Pakistan National Shipping Corporation is the recording of routine transaction and day to day record keeping normally by an electronic or computer system. In Pakistan National Shipping Corporation Maintenance of record related to finance is kept. All record of the company that is finance related is under this section.

All the other finance sections send their all data related to book keeping department which maintain all the data electronically. The book keeping department is responsible for the preparation of financial statements. Book keeping department firstly record all the transaction and then put these

transaction into general Journal. General Journal is the day to day record of business transactions in convenient intervals, the debit and credit amounts recorded in the Journal (posted) to the accounts in the ledger. After the journal the transactions are pasted to Ledger account from the general journal. The record keeps using track of the increase and decrease in financial

statement items is termed as ledger account or simply an account. The entire group of accounts is kept together in an increasing record called a ledger. After the ledger posting the balances are posted to Trial Balance. In a trial balance, separate debit and credit columns are used to list the balance of the individual balance account.

After completion of trial balance adjusted entries are made. Often a transaction affects the revenue or expenses of two or more different periods. In these cases adjusted entries are needed to assign to each period the appropriate amounts of revenues and expenses. These entries adjust the balance of various ledger accounts.

After all the necessary adjusting entries have been journalized and posted, an adjusted trial balance is prepared to prove that the ledger is still in balance. Once an adjusted trial balance has been prepared, the process of recording changes in financial position for the accounting period for the accounting period is complete. Financial statements are prepared directly from the adjusted trial

balance.


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Now the financial statements like Balance sheet, Income statements, Statement of cash flow, statement of owners equity can be prepared directly from the adjusted trial balance.

After that closing entries are made, Closing entries are the journal entries made at the end of the period for the purpose of closing temporary accounts.

All of this process is done by computer system. In all of this process verification is made and reasoning is checked behind every transaction. Book keeping is made effectively because all these transactions and financial statements will be audited by government. Internal audit department is lying in the Pakistan National

shipping corporation & it also conduct audit in different intervals of time. The record of book keeping is also kept in manual form in the shape of files. There are many reasons to keep the data in manual form. But the most important is that the audit is conducted on manual record of book keeping. Another reason is that this manual data will be available at any time to any

person who needs that data in hard form. So it will be easier to give the data to the people who require it. The book keeping department is the most important and technical work section at all. The entries should be recorded carefully. The thing that made this section complicated is that all the finance sections have to send their data to the book keeping section.

Book keeping section has to arrange all the data of all other 14 sections and it will bring all the data in a mannered way and arrange all those sections in a single section to use all the data of all sections to make the financial statements. The process or system in the book keeping section is same as we have read in the

books. Almost same procedure of accounting that is used in Pakistan National Shipping Corporation that we have taught in our BBA program. But the practical work and experience is much more different from that which we were told before. The things that look so simple are very deep and complicated when we enter in that system.


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Workshop Section:

Workshop section is related to workshop related accounts and all the financial matters that are related to the workshop. Pakistan National Shipping Corporation has its own workshop at the port of Karachi. It has a marine engineering workshop and the basic purpose of that workshop is

to provide the repair and maintenance services to the PNSC own fleet also give services to the foreign ships arriving at the port of Karachi. It make repair and maintenance to the foreign ships also to increase the revenues earned by the workshop of Pakistan National Shipping Corporation and also chance for improving of workshop workforce by examining and making work

to the international and high tech vessels. It also gives the services to the Pakistan Navy Ships. Pakistan Navy also brings its ships to the PNSC workshop if there is any kind of need of repair in the ship. The workshop is now having international standard services in all aspects of its work like in Mechanical and Electrical repairs.

The workshop is located in Kemari. In the workshop section all the data about the workshop is maintained that is related to Finance. Like the assets that are present in the workshop are maintained in books of accounts of workshop section. All the wages and salaries related to the workers that are doing work in the workshop are maintained and kept proper in books of accounts are under

workshop section. The head of Revenues and expenses are also separately maintained and updated in this section that is related to the workshop. Revenues are all those received values that are due to the repair services given to the ships that were bring to the workshop.

All the expenses are also kept in record in this section that is related to the workshop. Like maintenance of workshop, wages and salaries of employees working in the workshop, daily workshop expenses etc.


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The functions of PNSC workshop section are:

For the workman, officers, supervisors, staff, tradesman and apprentices prepare and conduct training programs in the workshop as well as outside

the workshop.

Plan and submit different proposals for the addition, alterations and improvements of the workshop to be the equal of the requirements of new vessels and also to acquire new technology.

Carry out deck, engine rooms and electrical repairs of PNSC vessel at

Karachi as per defect list and advice of Maintenance and repair department.

First plan and then manufacture such workshop equipments which can reduce the cost of repair of the vessel.

Try for the welfare of the workforce in Pakistan National Shipping Corporation workshop.

Carry out test and trials of machinery in association with maintenance and repair department.


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Afloat Section:

Afloat section is related to the wages of the employees that are working on the ship. Like wages of captain or wages of crew that are working on the ship or vessel. The term afloat is related to the ship employees wages. This section of finance department deals with all the matters and affairs of the ship employees wages and their work.

All the members on the ship in voyage didnt need pay in cash because it will be useless for them on the ship. They need no money on the ship; they need only daily usage products and the food when they are on the voyages. So on the ship all the data of a member is maintained that how much he gets

daily usage products from company, like cigarettes, soap etc. The extra work done by any member is also recorded that how much a member works in extra time. The normal work for a member is 6 hour ON then 6 hour OFF. It means that a member will work for 12 hours in a day. If he is agree t do extra work then extra

work will be on pay. When the daily expenses and extra wok revenue is recorded at that time they make all record in a proper way. They see that what the balance is. If their revenues earned are greater than their expenses they add the balance in their basic pay. If the expenses are greater than the extra work earning then the balance is subtracted from their basic salary.

At the end of the voyage the members are paid their wages with their earnings on the ship. The wages are always paid at the end of the voyage except any kind of emergency or uncertainty. Sometime the Pakistan National Shipping Corporation is also gave some benefits

to the members working on the ship, like allowances, daily usage products for free. These expenses are from Pakistan National Shipping Corporation for which it made an agreement with the employees at the time Pakistan National Shipping Corporation was hiring these members into its crew. The salaries or wages that are related to the office work or administration work

other then the ship management is named as Ashore or Pay rolls.


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Payrolls Section:

Payrolls are all the wages or salaries that are related to the office workman. These are also called Ashore section. Like the employees who are working in Pakistan National Shipping Corporation at Main office also including all the employees working on all 19 subsidiaries office work.

This section maintains all the information and keep the record salary of each employee separately in Pakistan National Shipping Corporation. This section also deals extra benefits that are offered to the employees and maintain the record of extra benefits also. Extra benefits include medical allowances, residential allowances, workers fund,

transportation allowances, and Mess allowances etc. There are three kinds of workers in the Pakistan National Shipping Corporation. Permanent On contract

On daily wages Above benefits that are described are only for permanent employees. Little bit benefits are also offered to on contract employees. But no allowances or benefits are offered to the daily wages employee but only their basic daily wages are given.

The payroll section is responsible to maintain all payrolls of each employee either that is permanent, either it is contractual or it is on daily wages. The section is responsible to send all the information regarding to the payrolls of the employees of the Pakistan National Shipping Corporation to book keeping section where the payrolls will be charged into the head of expenses in different

books of accounts.

The employees that are on daily wages and they are off from the office for one day then the wage of that day will not be payable to that employee. So the work of payroll section in Pakistan National Shipping Corporation is very complicated and demands much attention of the person that is responsible and working on the payroll section.


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Fixed Assets Section:

Assets are the property of the Pakistan National Shipping Corporation. Assets section also called fixed assets section in PNSC. This department is responsible for the accounting of assets. Assets of PNSC include:

Land

Buildings

Vessels

Vehicles

Office equipment

Furniture and fittings

Motor launch and jetty

Equipment on board

Container fitting

Beach huts

Workshop machinery and equipment

Computer equipment In accounting of fixed assets their Net book value is calculated by using different methods. The main asset of the Pakistan National Shipping Corporation is the Vessels.

Vessel is depreciated according to its cost and life off the vessel. For the Pakistan National Shipping Corporation it is necessary to Dry Dock the vessel right after every 2.5 years and Class Renewal survey after 5 years. Dry Docking means color paint of the vessel and its repair and maintenance. I mean that vessel is brought at dry place and color and other work is made. It is

necessary for all the shipping companies to dry dock their vessels after 2.5 years of last dry docking. When 2.5 years are passed they are asked to dry dock their vessel as soon as possible. The expenses of dry docking will be depreciated or charged or adjusted in 2.5 years. The reason is that if we charge it in only 1 year then our profit will be decrease at a very low level even it can go to the negative side because the dry

docking is very much expensive even in million dollars.


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Class Renewal is another necessary work in ship. It means that after every 5 years a survey will be conducted to the ship and it will be checked that either the ship is in condition to carry the voyages for upcoming 5 years or not. Normally survey is conducted before the repair work that is done to that ship that is going

to be surveyed. Class renewal is the requirement of IMO International Maritime Organization which held the right to survey the vessels of every ship in the world. It is necessary to every shipping Corporation in the world to survey its vessels under IMO after every 5 years. The basic purpose of the survey is to safe the voyage and

lives of human. International Maritime Organization conduct surveys of the vessels by following three organizations who work under the International Maritime Organization. These are:

Loyed Registered Shipping

American Bureau Ship

Bureau Barry Task If the ship is declared fit for the sail to sea for upcoming 5 years or more then 5 years then a letter will be issued that this ship is fit for sail for 5 years and after 5 years again a survey will be conducted to see the performance of the ship. As it is fit for more voyages then now you can do repair and maintenance on the ship.

But if the survey is conducted and the condition of ship didnt allow that the ship will continue for next 5 years at that time the ship will not be allowed to continue the voyage and there will be no need for repair and maintenance to the ship and the ship will be scrapped. Class renewal survey is also very expensive and it is adjusted or depreciated in 5

years. Reason is the same that if we charge it in only 1 year then our profit will be decrease at a very low level even it can go to the negative side because the class renewal and survey is very much expensive even in million dollars. The depreciation of other asset depends upon the nature of the asset and its life. Followings are the depreciation rates that were applied on different assets at June 30, 2009 to calculate their book value.


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Annual rate of Depreciation on Assets

Assets Rate Buildings 3% to 20%

Vessels 04%

Vehicles 20%

Office equipment 15%

Furniture and fittings 10% to 15%

Motor launch and jetty 10% to 15%

Equipment on board 10% to 15%

Container fitting 15%

Beach huts 15%

Workshop machinery and equipment 5% to 10%

Computer equipment 25%


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Summary of Functions Finance Department:

There are various important functions that are performed by the Finance department of Pakistan National Shipping Corporation. But broad functions of department comprising finance division are as under.

Responsible to manage and allocate the funds.

Find the resources of obtaining funds.

Make the best strategy to invest those funds

Responsible for overall direction and policy implementation

Responsible for budgeting, accounting, purchasing, and treasury functions .

Maintain the accounting system, the payroll system, the fixed assets system, reconcile book accounts, and prepare financial reports.

Prepare annual budget

Maintain Books of accounts, supporting vouchers, and other accounting record of the corporation and subsidiaries in all with legal and regulatory

requirements.

Preparation of quarterly, semi annually, and annual accounts of the corporation as well as of the subsidiary company and consolidated accounts of PNSC group in accounting with legal and regulatory requirements.

Ensure complete compliance with the policies and procedures set out in internal control system.

Arrange audit of accounts.

Maintain effective control over all local and foreign bank accounts and regularly reconcile those accounts.


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Exercise effective control over cash flow and ensure that surplus funds are invested in accordance with governing rules so as to maximize income.

Accounting of receivables, payables, deposits, receipts, payments, and advances.

Ensuring that all returns required under the income tax ordinance are filed promptly.

Accounting for PNSC workshop, stores, departments, and regional office accounts.

Maintain financial control over regional officers.

Obtain approval from State bank of Pakistan for all foreign currency transactions.

Processing and accounting of payments of salaries, allowances, advances etc, to Ashore & Afloat personnel & controlling recovery, adjustment and reconciliation thereof.

Accounting of all revenues earned by the corporation & expenses incurred locally as well as abroad.

Checking and arranging payments of all bills including cargo expenses, bills, medical bills, legal expenses bills, purchases of capital assets, stores, spares etc.

It also Sanction expenditure then control and review of expenditures.

Review of contracts, agreements, schedule of rates and charges, documents and files from financial angles.

Preparations, implementation and monitoring of revenues & capital budgets, & revised budget estimated.

Short and long term financing arrangements- tapping of sources of funds, evolution of loans offers, negotiation with leader.


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Accounting and Maintenance of loans profile & subsidiary loan ledger, register of mortgage & charge register of debentures, filing of returns as also processing of debt services payments with government & state Bank of Pakistan, preparation of schedules & medical incidental to or connected

therewith.

Accounting and maintenance of fixed assets.

Custody of assets and reconciliation of record with annual physical verification.

Investment appraisal, completions of formalities relating to acquisition of ships & other assets, import license, custom duty, sales tax and other levies, letter of credit etc and disposal of ships of scrapping locally.

Preparation of provisional voyage results and review of performance of each ship in relation to the budget, preparation of periodical voyage summaries, port statistic etc.

Interpretation of financial and services rules & regulations and amendments thereto, developing adequate record, safety and custody.

Collection, tabulation, summarization of information figures, data etc & supplying the same to management, government and other agents.

Representation on various committees e.g. Tender Committee, personnel

Committee, Negotiation Committee, Welfare fund, Purchase, Economy Committee.


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MIS Department: MIS department of PNSC is very important department because it is the hub that connects all departments and make link between different departments. This department constantly provides the services in data processing and it also plans

the future data processing strategies. To achieve the desired goals it establishes strategies. It also maintains coordination between different departments. In MIS department the computer systems are used for the different kinds of tasks like financial accounting, payrolls, billing, purchase etc. MIS department is the

provider to all the departments and staff the equipment like electronic tools and computer system. The programs like, the development of the new programs, accessing the softwares requirements and planning for different actions, the need of training to its employees are also come under the MIS departments. Whenever the user department require any reports then MIS department also

provide the required reports to the department who need reports like cash book, bank book, general ledger, trial balance, financial statements, voyage and cargo ledger, bills receivables, realized statements, outstanding statements, category wise and aging statements. The MIS department basically performs 2 functions:

Support function

Software function Support function that is performed by the MIS department is that takes care of Networking in the PNSC; also take care of the different system matters like take care of Hardware, Operating system, firewall, Server and Antivirus Maintenance,

procurement of I.T equipments and other services. The Software function is the second function that is performed by the MIS department that involved implementation of new software and training to its employees that how to use that software, website management, database management, up gradation of previous system.


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Function of MIS department:

The functions that are performed by the MIS department in Pakistan National Shipping Corporation are the following:

The MIS department is responsible to plan and formulate strategies while keeping the desired goals in front of them so that goals that are defined

can be achieved.

MIS department also establish strategies regarding the data processing that will be processed in the future.

This department also makes changes, modifications, alterations and up gradation of the operational system that now exists in the MIS

department of PNSC.

Data processing should be constant and MIS give services to the corporation.

MIS department also maintain a good and strong relation with the other departments for the coordination among all the departments so that MIS department can assess their needs and fulfill their needs with the

suggestion for the future.

Also develop new software, systems and program and also implement them in the department.

MIS also asses the software needs and plan various actions to fulfill the requirements of software.

Also get information about the employee training needs and if training is necessary then plan & monitor the training no matter that either its is in the house or outside agencies.

Responsibility of MIS department also include Design some standards and reporting performance to measure and monitor the activities and

performance of different sections that are working under the MIS department.


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Enhance the knowledge of the employees or users who are engaged in the work of data processing. MIS department responsibility is also to educate the users in the field of data processing.

Provide all the account reports that are required by the any user department, whenever the user department need more particularly the following:

Local Cash book (daily, monthly and annually)

Bank book (foreign) monthly

General Ledger (quarterly)

Trial balance (quarterly)

Profit and loss group statement (quarterly semi annually and

annually)

Financial statements

Hull and cargo claims subsidiary ledger & voyage ledger (current, previous, and advance quarterly and annually)

Bill receivable, realize and outstanding statements

Voyage statistic account

Operating expenditures, vessel voyage-wise Earning and expenditures (semi annually)

Port expenses, Port disbursement, agent disbursement account

Foreign income & expenditure account, exchange rate

Head office register of payrolls, pay slip, overtime estimates

Welfare fund statements (monthly and annually)

Consolidated salary statements (semi annually)


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Online enquiry system

Vessel position and status

Voyage accounts , port, Vessel, route & voyage-wise

Bill receivable, party-wise, age-wise, sequence-wise

Position of on board inventories.

Purchasing Section in MIS: In the purchasing process there are three modules -- Requirement

-- Procurement -- Inventory

Purchasing Process: The purchasing process starts from the Requisition of the ship mean there is the requirement of an inventory.

After that the sign of the supplier are required who will supply the inventory at the ship. Then we will make analysis the quotation that is sent by the ship to ensure that the inventory required is necessary to purchase.

After the analysis we will order that allow purchasing inventory. Then there will be outstanding order means further order to the seller. Then the seller will send the required inventory and we will make payment.

At the last stage the physical inventory will reach on the ship.


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Financial Statements


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PNSC and its Subsidiary Companies CONSOLIDATED BALANCE SHEET

AS AT JUNE 30, 2009

2009 2008

(Rupees in '000) NON-CURRENT ASSETS

Property, plant and equipment 8,264,524 13,624,883

Intangible asset - 1,649 Investment properties 969,296 969,987 Long-term investments in: - - Related party (associate) - - Listed companies and another entity 22,715 40,229 Long-term loans 1,012 1,434

Long-term deposits 90 90 Deferred tax - net 20,655 15,316

9,278,292 14,653,588 ---------------------------------------------

CURRENT ASSETS

Stores and spares 444,682 475,663 Trade debts 798,023 563,000 Agents' and owners' balances 20,420 32,145 Loans and advances 76,852 39,495 Deposits and short term prepayments 21,260 9,535 Interest / mark-up accrued 147,214 65,143 other receivables 136,052 137,148

Incomplete voyages 83,587 -Insurance claims 33,063 13847 Short-term investments 5,108,614 3,113,147 Cash and bank balances 2,223,490 3, 39 ------------------------------------------ 9,093,257 7,848,228

NET CURRENT ASSETS 18,371,549 22,501,816 ===============================

Continued


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LESS: CURRENT LIABILITIES AND PROVISIONS Trade and other payables 1,366,078 1,201,541

Provision against damage claims 99,810 130,579 Incomplete voyages - 3,931 Current portion of long-term financing - 245,607 Taxation net 252,268 212,372

1,718,156 1,794,030 SHARE CAPITAL AND RESERVES

Issued, subscribed and paid-up share capital 1,320,634 1,320,634 Reserves 14,512,150 11,572,647

15,832,784 12,893,281 MINORITY INTEREST 1,895 1,694

--------------------------------------------- EQUITY ATTRIBUTABLE TO EQUITY HOLDERS 15,834,679 12,894,975 SURPLUS ON REVALUATION OF FIXED ASSETS-NET OF TAX

-Group 596,672 7,601,880

- Minority 2,148 2,148 ------------------------------------------- 598,820 7,604,028

NON-CURRENT LIABILITIES Long-term financing - -

Deferred liabilities 219,894 208,783 --------------------------------------------- 18,371,549 22,501,816 ===========================


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PNSC and its Subsidiary companies CONSOLIDATED PROFIT AND LOSS ACCOUNT

FOR THE YEAR ENDED JUNE 30, 2009

2009 2008 (Rupees in '000)

REVENUES Chartering revenues 5,390,341 4,761,142

Freight 6,005,781 5,915,303

Rental income 78,227 77,083 -------------------------------------------

11,474,349 10,753,528 EXPENDITURE

Fleet expenses-direct 31 8,394,921 7,258,730 - Indirect 16,860 18,331

------------------------------------------- 8,411,781 7,277,061

------------------------------------------- GROSS PROFIT 3,062,568 3,476,467 Administrative and general expenses 519,807 445,027 Other operating expenses 319,113 184,265 Finance costs 54,154 174,987

-------------------------------------------

893,074 804,279 + Other operating income 825,417 814,973

------------------------------------------- PROFIT BEFORE TAXATION 2,994,911 3,487,161

Taxation 682,069 1,038,281 ------------------------------------------- PROFIT AFTER TAXATION 2,312,842 2,448,880

============================ Attributable to: Equity holders of the Group 2,312,641 2,448,540 Minority interest 201 340 ------------------------------------------------

2,312,842 2,448,880 ==============================

EARNINGS PER SHARE FOR PROFIT ATTRIBUTABLE

TO EQUITY HOLDERS OF THE CORPORATION 17.51 18.54


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PNSC AND ITS SUBSIDIARY COMPANIES CONSOLIDATED CASH FLOW STATEMENT

FOR THE YEAR ENDED JUNE 30, 2009

2009 2008 (Rupees in '000)

Cash flows from operating activities Cash generated from operations 2,216,760 6,193,569 Employees' gratuity paid (1,108) (31,945) Employees' compensated absences paid (41,859) (36,833) Post retirement medical benefits paid (19,632) (8,445) Contribution to plan assets of employees gratuity fund -00 (235,159)

Long-term loans and advances net 422 593 Finance costs paid (8,789) (30,229)

Taxes paid (642,066) (787,258) --------------------------------------------

Net cash generated from operating activities 1,503,728 5,064,293 Cash flows from investing activities Fixed capital expenditure (3,465,790) (3,347,801) Investment in investment properties (2,138) (3,350) Proceeds from disposal of property, plant and equip. 886,846 6 2,712 Interest / mark-up received 544,706 684,374

Dividends received 1,898 1,716

Net cash used in investing activities (2,034,478) (2,662,349) Cash flows from financing activities Repayment of long-term financing (282,642) (264,857)

Dividends paid (403,609) (195,888) --------------------------------------------

Net cash used in financing activities (686,251) (460,745) ---------------------------------------------

Net (decrease) / increase in cash and cash equivalents (1,217,001) 1,941,199 Cash and cash equivalents at the beginning of the year 4,649,105 2,707,906

---------------------------------------------

Cash and cash equivalents at the end of the year 3,432,104 4,649,105


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Pattern of Shareholders as at June 30 2009: No. of

Shareholders

Shareholding

Total share held

From

To

11002 1

100 372182 3227 101

500 747982

878 504

1000 638118 721 1001

5000 1538384

81 5001

10000 586254 24 10001

15000 296674

19 15001

20000 347854

12 20001

25000 280285 6 25001

30000 170104

2 30001

35000 69500 8 35001

40000 301312

6 40001

45000 257815 5 45001

50000 250000

4 50001

55000 215600

3 55001

60000 179865 4 70001

75000 292200

2 75001

80000 155300 1 80001

85000 83000

1 90001

95000 95000 2 100001

105000 205595

1 125001

130000 128200

1 150001

155000 150900 2 155001

160000 317642

1 190001

195000 192241 1 195001

200000 200000

1 225001

230000 227500 1 235001

240000 235916

1 240001

245000 242800

1 245001

250000 246500 1 260001

265000 262344

1 385001

390000 386236 1 435001

440000 436564

1 445001

450000 449697 1 495001

500000 500000

1 745001

750000 746603

1 765001

770000 769700 1 1440001

1445000 1443762

_____1_____ 117705001

117710000 117706724 16,030

132,063,379


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COMPARATIVE STATEMENT OF YAER WISE REVENUE & EXPENSES 1979 TO 2009

Year Revenue Expenses Gross Profit/(Loss)

1979 455,814 423,526 32,288 1980 1,084,177 1,073,573 10,604 1981 1,444,582 1,437,877 6,705

1982 1,660,459 1,653,866 6,593 1983 1,599,148 1,805,733 (206,585) 1984 1,534,116 1,738,179 (204,063) 1985 2,289,554 2,243,245 46,309 1986 2,657,624 2,553,188 104,436 1987 2,209,737 2,404,063 (194,326) 1988 2,643,383 2,775,940 (132,557)

1989 3,787,923 3,618,384 1,695,390 1990 3,164,931 3,193,129 (28,198) 1991 3,860,369 3,751,710 108,659 1992 4,062,877 4,023,743 39,134 1993 3,134,077 3,272,481 (138,404) 1994 3,302,474 3,638,029 (335,555)

1995 5,159,560 5,687,483 (527,923) 1996 6,962,004 6,902,996 59,008 1997 7,761,518 7,479,472 282,046 1998 4,597,215 4,393,437 203,778 1999 3,710,787 3,552,518 158,269 2000 3,540,170 3,839,190 (299,020)

2001 5,458,665 5,013,725 44,940 2002 4,899,201 4,326,001 573,200 2003 5,404,864 4,605,487 799,377 2004 6,963,102 4,864,589 2,098,531 2005 7,950,981 5,416,485 2,534,496 2006 7,924,614 6,255,047 1,669,567 2007 9,089,124 6,495,702 2,593,422

2008 10,753,528 7,277,061 3,476,467 2009 11,747,349 8,411,781 3,062,568 2010 - - -


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Summarized Performance


83

Summarized Performance:

The financial performance of PNSC regarding different aspects is summarized below.

Revenue:

The consolidated revenue for PNSC group for 2009 was 6.7% higher than FY08. It

increased from Rs 10.753bn to Rs 11.474bn in 2009. This increase is credited to the increased voyages in the current year as well as the enlarge freight tons for the current year. Total freight however decreased for 2009. It decreased by approximately 8.1% from 9451 million to 8684 million tons. Except the liquid sector, the other entire

shipping sector showed some signs of decrease in freight tons. Total expenditure too, showed a considerable increase in 2009. It showed an increase of approximately 15.5%. This was attributed to a substantial increase of direct fleet expenses that inflated from Rs 7.25bn to Rs 8.39bn in 2009. Sub-category of expenses includes general and other expenses, operating

expenses, which too showed an increasing trend for the current year, which affected the profitability of the company. The current year showed an increase in the liquidity position of the company. The current ratio increased by 21% in 2009. This has resulted because of a greater proportion increase of current assets with respect to current liabilities.

Operating and Net Profits: Considering the profitability of PNSC in 2009, there has been a mixed trend in certain ratios calculated. First the Gross Profit Margin, there has been a decrease from 32.33% in 2008 to 26.69% in 2009. This is basically attributed to an increase

in direct fleet expenses incurred by the company. This considerable increase has resulted in lower gross profit margin in 2009. Coming to the net profit margin, we can see the same trend as it is for gross profit margin. It decreased from 22.7% to 20.16% in FY09. This again can be seen as the general and other expenses increased in a great proportion to the


84

revenues earned. Though the financial costs were reduced, it couldnt t play a considerable role in increasing the net profit as huge expenses were incurred. The major sub-category that showed an increase in the direct expenses was the fuel expenses which showed a 4.3% and claims which showed a 33% increase in

2009.

Market Share and Marketability: Marketability of PNSC showed a huge decline over the past year. The market price has nearly halved in 2009. This is because the company has been facing constrains in their profitability for past 2-3 years. Considering the earning per share, there has been an increase in this ratio from Rs 18.54 to Rs 19.54 in 2009, basically due to an increase in the net-profit seen in the current year. Moreover, dividend per share also saw a rise as the company was announced a 30% cash dividend this year; this increased the total cash dividend paid out this year.

However, the biggest slum could be seen in price-earnings ratio, the traders are not ready to higher prices for the shares of PNSC in the market, because of severe effects in profitability and their expenses which constraints their growth in income. Therefore there was a decline of Rs 5 to Rs 2.4 in 2009.

This is one major concern for the company as it has reduced its market worth for 2 consecutive years, which has dented upon the reputation of the company. Moreover, investors are not ready to invest because of the reasons mentioned above; hence the company needs to revive the trust of the investors by effectively managing its resources and assets.

Share Prices in Rupees

Year 2009 2008 2007 2006 2005

High 52.31 112.20 97.20 139.70 150.00

Low 44.14 65.00 4

PNSC- Internship Report

Documents

Transcript of PNSC- Internship Report