Civil Aviation Authority Multan

International

Internship Report Submitted To: Mr. Tariq Mehmood Gill (Airport Manager)

15

INSTITUTE OF SOUTHERN PUNJAB, MULTAN Department of Business Administration

Supervisor : Sir Farhan Gillani

Submitted by : Marium Zahid Student of BBA (Hon’s) Reg. No : BBA-013R11-25

Session : Oct Fall-2011

Specialization : Finance

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Abstract

By definition “Internship is a working program arranged for gaining experience.” After completion of the 8th semester the students of the Department of Business administration of ISP are required to undertake training in an organization selected by them, for a period of 8 weeks. The benefits of internship are:

1. Internships will provide students the opportunity to test their interest in a particular career before permanent commitments are made. 2. Internship students will develop skills in the application of theory to practical work situations. 3. Internships will provide students the opportunity to test their aptitude for a particular career before permanent commitments are made.

4. Internship students will develop skills and techniques directly applicable to their careers.

5. Internships will aid students in adjusting from college to full-time employment.

6. Internships will provide students the opportunity to develop attitudes conducive to effective interpersonal relationships.

7. Internships will increase a student's sense of responsibility.

8. Internship students will be prepared to enter into full-time employment in their area of specialization upon graduation.

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ACKNOWLEDGEMENT

In the Name of Allah, the Most Beneficent, the Most Merciful!

I would like to thank other officials ,Superintendent and all the concerned staff who were so cooperative in completing my internship and also provide all necessary information about polices and procedure of finance Management of Pakistan Civil Aviation Authority.

I would like to special thanks to Mr. Tariq Mehmood Gill (Airport Manager, Multan International Airport) who give me opportunity and work in this esteemed organization.

Finance Section is a part of Pakistan Civil Aviation Authority. I have worked in Pakistan Civil Aviation Authority at Multan Airport in Finance Branch as internee. I am thankful to office executives that gave me permission to work in their department.

Thank You

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DEDICATION

We dedicate this Report Book to our beloved Parents, Teachers, Staff of CAA and friends For their guidance, moral Support And perseverance.

First of all we are thankful to Allah for giving us the valor to remain dedicated to make this progress report. Thisunderlying report is based on theanalysis of different finance functions of CAA Pakistan.

We present our gratitude to all the staff of Budgeting, Revenue, Accounts and last but not least Disbursement department. We hope the present efforts will live up through the Expectations of all who have Invested time, efforts and prayers in making it possible.

Thank You.

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DECLARATION

I hereby declare that the work contained in the report written by “Marium Zahid” Roll No. 25 student of Bachelor of Business Administration has been carried out under the supervision of “Sir Farhan Gillani”. I also hereby declare that this report has not been submitted for any degree elsewhere.

------Marium Zahid Roll No. 25 BBA (Hons) Session: 2011-2015

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Internship letter

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APPROVAL CERTIFICATE

The Board of Examiner approved internship report and recommends award of the degree of BBA (Hons) as the student has successfully defended viva voce.

External Examiner:

Internal Examiner:

Dean / Chairman:

Viva Date:

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TABLE OF CONTENTS

Chapters Title Page No.

1 Introduction of Pakistan Civil Aviation 1

2 Organization Structure of Pakistan Civil Aviation Authority 3

3 and other units of Pakistan 6

4 History of Multan International Airport 8

5 Organizational Structure of Multan International Airport 9

6 Organizational Structure of Finance Department At Multan Airport 13

7 Financial Statements and Analysis 17

8 PEST Analysis 30

9 SWOT Analysis 33

10 Competitor Analysis 36

11 Conclusion & Recommendations 37

References 38

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Chapter # 1: Introduction of Pakistan Civil Aviation:

Pakistan Civil Aviation Authority (CAA) is a public sector autonomous body working under the Federal through Aviation Division Cabinet Secretariat. CAA was established on 7th December, 1982 through Pakistan Civil Aviation Authority ordinance 1982. Prior to creation of CAA, a Civil Aviation Department (CAD) in the Ministry of Defence (MOD) used to manage the Civil Aviation related activities. Ministry of Defence (MOD) continued to be the controlling Ministry even after creation of CAA on 7th December, 1982. However, in June, 2013, Government of Pakistan assigned this responsibility to Cabinet Secretariat (Aviation Division).

Brief history: Pakistan Civil Aviation Authority is a Public sector autonomous bodyworking under the Federal Government of Pakistan through theMinistry of Defense. It was established on 7th December, 1982 as an autonomous body. Prior to its creation, a Civil Aviation Department in the Ministry of Defense used to manage the civil aviation related activities. The day of 7th December has significance, as it coincides with the date of creation of International Civil Aviation Organization (ICAO)in 1944 as a result of the famous Chicago Convention. Incidentally, the United Nations have declared 7th December as the International Civil Aviation day and celebrated as such every year all over the World.

All kinds of Civil Aviation related activities are performed by CAAincluding the regulatory, air traffic services, airport management, infrastructure and commercial development at the airports, etc.Recently, Civil Aviation Authority underwent Restructuring andChange Management pro cess to meet the present and futurechallenges. This organizational transformation process ide ntifiedStructure, Culture, Skills, and Rewards as four tracks on whichsimultaneous emphasis is being laid. The Vision, Mission, and CoreValues have been identified. Wide-angle buy- in process by CAAsenior management with staff and lower levels for bridgingcommunication gaps between different hierarchical levels of the

Overview:

Schedule Operations (Airlines)

Pakistan Civil Aviation Authority grants approval of schedules to domestic as well as foreign airlines operating to / from Pakistani airports and overflying Pakistan airspace as per agreed bilateral entitlement. Two schedules “Summer and Winter” are approved by Air Transport Directorate, HQ CAA. Representative(s) from Air Transport Directorate CAA Pakistan also attend bi-annual IATA scheduling conferences where provisional approvals of the schedules are granted subject to availability of the slots at the relevant airports. For obtaining approvals, operators shall apply to Director Air Transport via On-line

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Air Transport Flight Management System (ATFMS) with proposed schedules at least 90 days prior to commencing date.

For change in schedule or for extra section flights, operators are to apply to Director Air Transport, HQ CAA which will be granted subject to availability of slots, which may be varied from the requested timings.

Vision:

"Be a world-class service provider in the aviation industry”

Mission:

“Provide safe, secure and efficient best-in-class aviation services to the stakeholders”.

Core Values:

 Commitment  Professional Excellence  Customer Focus  Safety and Security  Integrity

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Chapter # 2 Organizational Structure of Pakistan Civil Aviation Authority

Personnel Management

Personnel Management is responsible to manage record of all major official events, which occur during the tenure of an employee in CAA, from hiring to leaving the organization. Besides management of record, it also performs the activities of posting / transfer, sanctioning of leaves, disciplinary actions, authorization of current / additional charge, extension of contract and deputation cases, and verification of degrees in respect of an employee. Apart from it, it also deals with the majority of litigations related to service matters. Emphasis is being given towards robust record management by digitalizing all manual records of employees.

Organizational structure:

Director General (DG)

Dy. DG / Principal Director

Director

Addiotional Director

Joint Director

Deputy Director

Assistant Director

Superintendent

Supervisor Grade II

Assistant Grade II

Head Helper / Jr. Operator

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Hierarchy

Following is the hierarchy structure of Pakistan Civil Aviation Authority:

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CAA Audit Committee

Mr. M. Bashir Janmohammed

Mr. Hassan Nawaz Tarar

Mr. Nisar Muhammad

Mr. Zahid Aqeel

CAA Executive Committee Mr. Amjad Ali Toor

Air Vice Marshal Khawar Hussain

Mr. Amer Habib Sikander

Danish Qaseem

Mr. Sumair Saeed

Mr. Javaid Iqbal

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Chapter # 3: Airports and Other Units of Pakistan

Pakistan Civil Aviation Authority owns and runs about 42 Airports in Pakistan.

S. # Name of Airport City Category Status 01 Intl. Airport International Operational 02 Airport Gilgit Domestic Operational 03 Airport Skardu Domestic Operational 04 Muzaffarabad Domestic Operational 05 Rawlakot Airport Rawlakot Domestic Closed 06 Peshawar Airport Peshawar International Operational 07 Swat Valley Domestic Closed 08 Chitral Domestic Operational 09 Kohat Airport Kohat Domestic Closed 10 Parachinar Airport Parachinar Domestic Closed 11 Bannu Airport Bannu Domestic Closed 12 Dera Ismail Khan Airport D I Khan Domestic Operational 13 Allama Iqbal Intl. Airport International Operational 14 Walton Airport Lahore Domestic Operational 15 Mangla Airport Mangla Domestic Closed 16 Mianwali Airport Mianwali Domestic Closed 17 Bhagtanwala Airport Sargodha Domestic Closed 18 Faisalabad Airport Faisalabad International Operational 19 Multan Airport Multan International Operational 20 Dera Ghazi Khan Airport D G Khan International Operational 21 Airport Bahawalpur International Operational 22 Sheikh Zayed Airport R Y Kahn International Operational

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S. # Name of Airport City Category Status 23 Jinnah International Airport International Operational 24 Airport Jacobabad Domestic Closed 25 Airport Sukkur Domestic Operational 26 Moenjodaro Airport Larkana Domestic Operational 27 Airport Nawabshah Domestic Operational 28 Mirpur Khas Airport Mirpur Khas Domestic Closed 29 Talhar Airport Badin Domestic Closed 30 Sehwan Sharif Airport Sehwan Sharif Domestic Closed 31 Hyderabad Airport Hyderabad Domestic Closed 32 Quetta Airport Quetta International Operational 33 Zhob Airport Zhob Domestic Operational 34 Sibi Airport Sibi Domestic Closed 35 Khuzdar Airport Khuzdar Domestic Closed 36 Dalbandin Airport Dalbandin Domestic Closed 37 Panjgur Airport Panjgur Domestic Operational 38 Turbat Airport Turbat International Operational 39 Ormara Airport Ormara Domestic Operational 40 Gawadar Airport Gawadar International Operational 41 Pasni International Operational 42 Jiwani Airport Jiwani Domestic Closed

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Chapter # 4: History of Multan International Airport

The Airport caters both International & Domestic flights. It is situated 4 km West of the city. Multan is also known as Madinat-ul-Auliya because of the large number of shrines and Sufi saints from the city. Naturally, the prime attractions are the mausoleums of Sufi saints. It is blanketed with bazaars, mosques, shrines, and ornate tombs. The city is famous for its handicrafts (carpets & ceramics) and cottage industries. Multan is also an important agricultural centre. Multan features an arid climate with very hot summers and mild winters. Local rickshaws and taxi cabs connect the airport to the city. A few moderate to cheap hotels are available. The Airport operates nonstop round the clock, 7 days a week.

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Chapter # 5 Organizational Structure Of Multan International Airport

Airport Manager

O-1/C O-1/C Supply Chain O-1/C O-1/C O-1/C Comunication O-1/C Accounts Management Cargo facilities Air Traffic Control Electro Mechanical Human Resource Navigation Services

Airport Manager:

Plans, organizes and directs City activities and functions of the airport; develops and implements goals, objectives, policies and priorities. Promotes, negotiates and administers leases, fuel flows and other revenue sources for the airport, including billing and compliance with lease terms. Implements, develops and enforces applicable Federal, State and local regulations pertaining to airport functions and safety. Develops, implements and manages annual budget to include revenues, expenditures and grant management. Actively pursues economic development opportunities for airport via active marketing efforts. Meets with developers to discuss new construction and markets the Airport’s ability to meet client needs. Work with City staff and others to evaluate Airport’s ability to serve new development based on existing infrastructure and capacities. Follow up, measure and monitor the effectiveness of programs, services and marketing efforts and make recommendations for improvements and enhancements. Prepares and maintains a variety of required reports and records for submittal to Federal, State and Local agencies. Serves as staff liaison to Airport Commission and coordinates and facilitates activities at the airport.

Air Traffic Control

Air traffic controllers are well known for working in control towers at airports, but the majority actually works in area control centers. They are responsible for the en-route stage of the aircraft, using radar to track its exact position, keeping it safe in the airspace and providing the most efficient route.

Air traffic controllers manage aircraft through all aspects of their flight with the priority of safety, followed by other aspects such as ensuring arrivals and departures are on time. They use highly sophisticated radar and radio communication equipment to communicate advice, information and instructions to pilots

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Electro Mechanical

Electro Mechanical section is the main supporting section at any Airport. It provides facilities to all departments working at any Airport resulting safe and smooth operation of the airport. Functions performed are as follow:

 Operation And Maintenance Of Power Supply And Its Distribution Network

 Communication / Navigation Services Section

 Rescue And Fire Fighting Section

 Airport Services Section

 Civil Works Section

Human Resource

Training & Education

In collaboration with ICAO, CATI (Civil Aviation Training Institute) was established in 1982 at Hyderabad as a regional training institute to meet the training needs of PCAA as well as other countries in the region. Since then, the institute conducted various courses pertaining ATC, Airport Management and other technical courses like E&M, Fire Fighting, Communication, Navigation and Surveillance, etc. Trainees from African countries, Sri Lanka, Iran, Afghanistan, Bangladesh, etc. were also trained.

PCAA shall offer their employees an opportunity to attend short courses abroad.

Train-the-trainer programs shall be initiated in all departments of civil aviation and the same may be offered to aviation operators. Foreign qualified and competent trainers shall train other employees. It would help to spread dissemination of knowledge and learning. Accounts

Accounts section is responsible to manage all the financial issues at the Airport. Accounts / Finance section plays a vital role in smooth running of an Airport within allocated resources. It facilitates all sections, other departments and employees of PCAA. Functions performed are as follows:

 Preparation of Budget estimates and submission to concerned quarters.  Recording of Budget concurrences and produce statements  Management of payments and liabilities within the allocated budgets  Preparation and submission of bills to all other departments / Agencies and Airline(s)  Management of TA/DA and Transfer grants on transfers and tours.  Collection of revenue from commercial concessionaries at the Airport.  Resolution of Audit paths and submission reports to HQs.

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 Maintenance of documents and records according to Intl. Accounting standards as admissible in Pakistan Civil Aviation Authority.

Supply chain

All bills are verified by supply branch before payment then issued to the finance department. Inventory received from HQCAA also maintain record. Moreover, it supplies to all other departments. Purchasing of goods provided by supply chain from local market office use local items. Communication navigation Services

Pakistan will develop its air navigation infrastructure in the light of ICAO Global Air Navigation Plan (GANP). As we attract global aviation to fly to and/or through Pakistan, the requirement to upgrade our current navigation systems’ infrastructure is an essential consideration. To ensure continuous safety improvements as well as air navigation modernization, ICAO has also developed a strategic approach to the up-gradation process. This concept of Aviation System Block Upgrades (ASBU) allows realization of global interoperability, greater safety, sustained growth and increased efficiency. The Block Upgrades describe a way to apply the concepts defined in the ICAO Global Air Navigation Plan with the goal of implementing regional performance improvements. They will include the development of technology roadmaps to ensure that standards are mature and to facilitate synchronized implementation between air and ground systems and between regions. The ultimate goal is to achieve global interoperability. Safety demands this level of interoperability and harmonization. Cargo Facilities

For an efficient and quick transit, a single window clearing mechanism and facilities for warehousing, weighing scales, airline offices, freight forwarders, customs house agents, Government and regulatory agencies, airline ground handling agents, insurance and banks’ facilities, etc. shall be made available undergone-roof. Infrastructure of a cargo village shall include multi-modal transport, cargo terminals, cold storage centers, automatic storage and retrieval systems, mechanized transport of cargo, dedicated express cargo terminals with airside and city side openings, computerization and automation.

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Sections Working at Multan 1. Air Space Services 13. Information Technology 2. Embarkation 14. Electronics (Radar) 3. Complaints 15. Electronics (Navigation airside) 4. Commercial 16. Electronics Terminal Facilitation 5. Estate 17. Communication Operation 6. Cargo 18. E & M 7. Supply 19. Electrical 8. Human Resource 20. Mechanical 9. Revenue 21. Motor Transport 10. Cash Disbursement 22. Facility Training 11. Medical 23. Air Traffic Management 12. Legal 24. Fire Control

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Chapter # 6 Organizational Structure of Finance Department At Multan Airport

Sr. Joint Director Finance

Deputy Director

Assistant Director

Senior Superintendent

Supervisor Grade II

Assistant Grade II

Head Helper / Jr. Operator

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Cash Disbursement Section (Account Branch)

After introductory meeting I was briefed about office working. I learned that Cash disbursement section at Headquarter allocates budget to pay expenses as salaries expense, supplies expenses, medical expenses, TA/DA expenses and repair and Maintenance expenses for all locations of CAA and check every month disbursed amounts against bills and surplus or deficit with respect to budgets. Accounts and finance department at location is responsible for maintaining record of funds received from headq uarters and funds disbursement and reporting automatically as data is recorded with the help of Oracle. In cash disbursement section there are three main disbursement parts.

 Bills expenses payments  TA/DA expenses payments  Salaries and wages expenses payments This day I prepared structure of cash disbursement section, this structure consists of 14 people working in this section as given below:

Bills Expenses Payments

Types of Bills

There are three kinds of expense bills handled in this section.

1. Medical Bills 2. Supplies 3. Working (repair and Maintenance) bills Basic procedure for creating bills payment voucher for all three kinds is same as first of all an advance for cash is created for respective departments like HR department, Medical department, account department IMS(Integrated management system) etc

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Payment of Medical Bill

To make payments to trading partners against their services four copies of a document is prepared called PAYMENT OF (status) BILL dispatched with one copy that is sent to trading party, one copy is kept for personal record, one copy is sent to HR department and one copy is sent to Medical Officer for record.

2. Supplies

For supplies and working(Repair and Maintenance) a tender is issued by CAA for work in respective department, according to standards set by CAA the lowest three bidders are selected and then final decision is made about selection of party. Estimated cost is sent by respective department to account branch, where after checking allocated budget permission is made for starting work.

Payment procedure on procurement

The approved bills, sales tax invoices, delivery challan and other required documents are sent to cash disbursement section after completion portion or whole work for payment to the suppliers. All relevant documents are checked by account supervisor. After dispatching check a stamp is marked “PAID” by cashier and cheque is handed over to concerned party.

3.Working (Repair and Maintenance)

All Locations make annual contracts with different vendors for various types of Repair and Maintenance. Annual contracts are made due to immediate and timely need of repair as repairing is a continuous procedure. Tender process is used to made contracts and rates for the year are mentioned in bids. Financial concurrence is obtained from account officer before signing any contract. The account officer in cash disbursement section check original bills as:

 Disbursement authority approval.  Copy of contract.  Satisfactory work confirmation by concerned department.  All other relevant record i.e. demand requisition

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Adjustment in account department

Employee submits expenses form with evidences as tickets, hotel bills and km if travel in taxi or bus etc. enclosed with form. Personal details are important because these are base for allocation of TA/DA allowance. In particulars of journey employee mention departure, arrival, mode of conveyance and total km information

1. Daily allowance claim

Daily allowance standards or normal, when CAA provide residence during tour then standard daily allowance are given to employees on the basis of their PG scale PG 1 to PG 11

2. Travel Allowance There are three accounts of traveling allowance air travel (in case of purchased by employee), rail travel cost, and taxi or bus cost. For air travel, air tickets are attached with claim form and PG 8 and above are allowed for air travel. In case of train travel no need to attach tickets because from one station to another fair charges list is kept by account officer.

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Chapter # 7

Financial Analysis Financial analysis of the firm provides the performance scope to the investor of funds whether in the form of credit investor (short term or long term credit investors) or Equity investors as owner of the firm. What kind of investor the basic object is behind is to get the positive return from that investment which has in form of surplus amount and to avoid from the inflationary risk? On the other hand the investor is also looking for the risk associated with his investment.

To analyze all these he used certain tools, which provide the investor to access the liquidity, creditability, operational efficiencies and growth opportunity in the organization. The most common tools are Balance Sheet

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Income and other expenditure

Horizontal Analysis

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Comprehensive Income

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Statement of movement

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Cash flow statement

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Cash flow 2012

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Ratio Analysis:

The figures in financial statements, do not tell the whole truth. To obtain meaningful information relationship between relevant figures must be examined. For instance:

 Relationships which help find the liquidity of the business.

 Relationship which reflect the effectiveness of the financial policies adopted and the potential fund raising ability.

 Relationships which help evaluate the effectiveness of operational policies.

. To achieve the aim, we undertake Ratio Analysis. Ratios provide the means of showing the relationship which exists between figures on the Balance Sheets and Income Statements. The analysis is undertaken to assess important characteristics of business like liquidity, solvency and profitability. A study on these aspects enables drawing conclusions as to financial requirements and capabilities of business units.

Ratios may be classified in a number of ways to suit any particular purpose. Different kinds of ratios are selected fro different types of situations.

Current Ratio: A widely used measure of short term debt paying ability is the current ratio. This ratio is computed by dividing total current assets by total current liabilities.

Current Ratio = current assets/current liabilities

2012

Current Ratio = 17,275,086 / 5,456,512

= 3.16%

2011

Current Ratio = 16,312,595 / 4,309,368

= 3.78%

Current Ratio a measure of short term debt paying ability.

Quick Ratio:

Inventory and prepaid expenses are the least liquid of the current assets. The quick ratio compares only the most liquid current assets called

Page | 23 quick assets with current liabilities. Quick assets include cash, marketable securities and receivables the current assets that can be converted most quickly into cash.

Quick Ratio = Quick Assets/Current Liabilities

2012

Quick Ratio = prepayments + other receivable + cash and bank balance/current liabilities

Quick Ratio = 56,606 + 684,692 + 1,475,624 / 5,456,512

= 2,216,922 / 5,456,512

= 40%

2011

Quick Ratio = prepayments + other receivables + cash and bank balance / current liabilities

= 41,462 + 677,652 + 819,928 /4,309,368

= 1,539,042 / 4,309,368

= 35%

Quick Ratio a measure of short term debt paying ability.

Debt Ratio:

If a business fails and must be liquidated, the claims of creditors take priority over those of the owners. But if the business has a great deal of debt, there may not be enough assets even to make full payment to all creditors.

A basic measure of the safety of creditor’s claims in the debt ratio, which states total liabilities as a percentage of total assets. Debt ratio is computed by dividing total liabilities by total assets. Use to measures long term credit risk.

Debt Ratio = Total Liabilities / Total Assets

2012

Debt Ratio = 17,391,557 / 245,795,748

= 7%

2011

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Debt Ratio = 15,654,716 / 237,293,639

= 6.59%

Debt Ratio percentage of assets financed by creditors; indicates relative size of the equity position.

Working Capital:

Working capital is a measurement sometimes used to express the relationship between current assets and current liabilities.

Working Capital is the excess of current assets over current liabilities.

Working Capital = Current Assets – Current Liabilities

2012

Working capital = 17,275,086 – 5,456,512

= Rs 11,818,574

2011

Working capital = 16,312,595 – 4,309,368

= Rs 12,003,227

Working capital a measure of short term debt paying ability.

Return On Assets: This ratio is used in evaluating whether management has earned a reasonable return with the assets under its control.

Return on assets shows relation between the earning after tax and total assets through which the profit has been generated, in last few years ROA has been decreasing trend.

ROA = Net Income / Total Assets

2012

ROA = 27,177,704 / 245,795,748

= 11%

2011

ROA = 18,896,709 / 237,293,639

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= 7.9%

Return on assets a measure of the productivity of assets, regardless of how the assets are financed.

Return On Equity: The return on equity ratio, in contrast, looks only the return earned by management on the stockholder’s investment that is on owner equity.

The return to stockholder is net income, which represents the return from all sources both operating and non operating.

ROE = Net Income / Stock Holder’s Equity

2012

ROE = 27,177,704 / 54,115,143

= 50%

2011

ROE = 18,896,709 / 54,115,143

= 34%

Return on equity the rate of return earned on the stockholder’s equity in the business.

Horizontal Analysis:

Trend analysis is the practice of collecting information and attempting of spot a pattern, or trend, in the information. In some fields of study, the term “trend analysis” has more formally defined meanings.

Horizontal Analysis of the Income Statement

2012 2011 Income Aeronautical revenue 37.3192% 27.616% Non-aeronautical revenue 7.0784% 9.890% Inspection and services 42.0982% 12.624% Return on bank deposits and investments -33.1474% 15.867% Other income 10.1324% 5.171%

Expenditure General and administrative expenses 12.8688% 17.481% Finance costs 16.1728% 24.435%

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Surplus before taxation 53.5816% 7.915%

Taxation Current and prior years 63.6914% 18.809%

Deferred -105.3478% 13.349%

Horizontal Analysis of the Balance Sheet:

Horizontal analysis of the balance sheet is also usually in two-year format, such as the one shown below, with a variance showing the difference between the two years for each line item.`

Horizontal Analysis of the Balance Sheet

2012 2011 Non -Current Assets 3.254983 % 9.96754433 % Property, plant and equipment 86.19708% 9.669309611% Intangible Assets 40.08211% 10.16595929% Long term Assets 0 12.98701299% Long term deposits and other receivables Current Assets 30.92267% 6.145620477% Stores and Spares 46.03125% 19.83143282% Trade debts 33.16631% 9.266809993% Loans and advances 26.75335% 2.471454698% Prepayments 1.0282% 11.51975144% Other receivables 29.10538% 13.31766288% Interest accrued 78.43598% 17.55957084% Taxation-net -9.36432% 11.22535133% Investments -23.3328% 28.17044244% Cash and bank balance 13.3943% 14.6815344% Civil Aviation Authority Fund (0.27725)% 40.07333099% Surplus on revaluation

Non -Current Liabilities

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89.59678% 6.442385744% Deferred tax liability 40.48033% 38.75908901% Deferred liabilities-others

Current Liabilities 14.85864% 40.69189238% Security deposits and retention money 24.6769% 24.03127526% Trade and other payables

21.02339% 13.12553683%

Contingencies and commitments

Vertical Analysis:

Vertical Analysis of the Income Statement

2012 2011 Income Aeronautical revenue 81.38097% 73.36419% Non-aeronautical revenue 13.19928% 17.6398% Inspection and services 1.133856% 0.944228% Return on bank deposits and investments 4.036055% 7.728875% Other income 0.249841% 0.322919% Expenditure

General and administrative expenses 99.98425% 99.98485% Finance costs 0.01575% 0.015153% Surplus before taxation 176.5679% 143.0104% Taxation Current and prior years 102.4347% 115.5302% Deferred -2.43472% -15.5302%

Vertical Analysis of the Balance Sheet:

The central issue when creating a vertical analysis of a balance sheet is what to use the denominator in the percentage calculation. The usual denominator is the asset total, but one can also use the total of all liabilities when calculating all liability line item percentages, and the total of all equity accounts when calculating all equity line item percentages.

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Vertical Analysis of the Balance Sheet

2012 2011 Non -Current Assets 92.79047048 % 89.77016 % Property, plant and equipment 0.033430603% 0.004614% Intangible Assets 0.147162839% 0.088177% Long term Assets 0.000707905% 0.000708%

Current Assets 0.040689882% 0.028107% Stores and Spares 2.733072502% 1.475005% Trade debts 0.071777482% 0.047972% Loans and advances 0.02302969% 0.016868% Prepayments 0.278561369% 0.275697% Other receivables 0.195317862% 0.13847% Interest accrued 0.50524267% 0.108951% Taxation-net 2.580191094% 2.821808% Investments 0.600345617% 0.740423% Cash and bank balance 22.01671243% 19.06773% Civil Aviation Authority Fund 70.90767412% 71.10426% Surplus on revaluation Non-Current Liabilities 3.876833134% 0.403315% Deferred tax liability 0.978842807% 0.582604% Deferred liabilities-others Current Liabilities 0.826068806% 0.703326% Security deposits and retention money 1.393868701% 1.049905% Trade and other payables

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CHAPTER 8

PEST ANALYSIS

The macro-environment includes all factors influencing a company that are not within its control. These include political social, economic and technological factors. These are known as PEST factors. A technique of analysis of the macro environment is PEST analysis. Environmental analysis should be continuous and precede all aspects of planning. Since the airline industry is very much influenced by changes taking place in the environment and has undergone rapid and dramatic changes during the last decade, this analysis is especially important for CCA.

POLITICAL FACTOR

Political factors always have a great influence, on the way businesses operate in the CAA industry and the spending power of customers. Governments intervene in the CAA industry for various reasons, including:

 It is a major employer and provider of livelihoods.  Transport systems are subject to legislation and regulation.  International tourism flows mean that governments benefit directly from incoming tourists.  Government still owns a significant stake in national carrier, Pakistan International Airlines (PIA) and gives it frequent subsidies in terms of financing and oil. However, in recent years it has been observed that government played an active role in increasing competition in the airline industry. A number of new airlines such as Air Blue and JS Air have been awarded licenses to enter the domestic market. Despite increasing competition, PIA has maintained a monopoly on international routes. Airline industry is significantly affected by political stability. Pakistan has achieved some political stability in recent years. If the management of CAA believes that the present government will perform well (consistently), then there will be more investment in the form of purchase of new airplanes and latest technology. The overall industry will grow resulting in more luxurious and comfortable flights. With the military takeover government policies have become more liberal. In the past, Pakistan’s Civil Aviation Authority (CAA) played a major role in discouraging new airlines to enter the industry. CAA had a restriction

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that companies could not operate as airlines unless they own their aircrafts. This means that new firms will need humongous investment even to enter the market ECONOMIC FACTORS

 Currently, Airlines industry has four major players: Pakistan International Airlines, Air Blue, Aero Asia and Shaheens Airlines. Their target market includes domestic travelers as well as Pakistanis living abroad particularly in the UK and USA.

 These countries have strong economies coupled with high purchasing power. Customers’purchase behavior depends very much on prices of thecompeting airlines as well as services offered . As inflation rate is stable in Pakistan, spending power of consumers is not effected in the long term. In fact growth in Pakistani economy has resulted in an increase in spending power and has positively impacted the airline industry. Economically, the new millennium has been highly volatile; the September 11attacks revolutionized the whole world. Consequently, there was a global depressio n in the North America, South America, Australia and Europe. However, in Asia especially Pakistan the effect in the short term was otherwise. The economy began to boom because of greater remittances from abroad and whole- sum immigration by expatriates. As a result, demand for air travel in South Asia rose.PIA because of its monopoly in the market had been dictating policies and prices. Economic conditions of Pakistan are however improving. The air travelers in Pakistan lie in four categories mentioned in the case study i.e. The Hustlers and Overloaded, The Frill Seekers, The Economizers The Habitual/Regular Fliers-The Frequented fliers, The Well-to-do and The Content-able. These customers use the services of airline companies according to their needs. An increase in interstates has negatively impacted the airline industry. Due to the devaluation of rupee, attractiveness of the Pakistani market has been reduced for foreigninvestors. PIA has cost advantage over its competitors because of its newly acquired, improved, long distance aircrafts from Boeing which give longer rangeand better fuel economy than any other jet currently produced. This costadvanta ge is a barrier to entry for new firms. However, this cost advantage will not be significant on domestic routes.

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SOCIALOCIAL FACTORSACTORS

 The social and cultural influences on business vary from country to country. The social structure of Pakistan is closely tied. The trend is now changing as the general public is educated and is pursuing professional goals. Customers are more aware of market conditions and available options and want to get best value for their money. They spend considerable time and money on entertainment hence increasing the need of in-flight entertainment systems. Also, word of mouth has a significant impact in the use of airline services and that is one the reasons of CAA’s ever increasing popularity. Hajj attracts a huge number of customers; however acquiring a license to provide services to pilgrims is a major hurdle. The social environment of Pakistan is turning liberal with the new regime. The initiative to automate check-in and ticket booking process might not be very popular with the general public (even educated population) is still technology averse. E ticketing might also face significant challenges as consumers are generally reluctant to provide their credit cards information over the phone and the internet. The consumers, however, have a warm reaction to the prospect of less costly but quality service flights. CAA, however, has untapped market potential as consumers are unaware of its services because of ineffective and meager marketing efforts. TECHNOLOGICAL FACTORS

 Technology is vital for competitive advantage and is a major driver of the airlines industry. Major technological changes are taking place in the airlines industry with innovations in the reservations and booking systems. In-flight entertainment systems and auto check in counters are two examples of such innovations. Internet plays a key role in e-ticketing as consumer can easily reserve tickets or check the status of the flight. A key issue will be the extent to which technological advancements (such as Internet) impact distribution and cost synergies from industry consolidation can offset upward pressures on costs. CAA has led the path of technological innovations by introducing new technologies ahead of its competitors such as its auto check-in counters which has helped it gain market share. It was the first airline in Pakistan to install Sabre system followed by the market leader, PIA. Pakistani Airlines have to be abreast of the technological developments in e-commerce and aircraft manufacturing technology in order to gain a competitive advantage

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Chapter # 9 SWOT Analysis

SWOT Analysis means strengths, weaknesses, opportunities and threats. Strengths & weaknesses are internal within the organization while opportunities and threats are inserted by the external environment. Now we will discuss strengths, weaknesses, opportunities and threats faced by Pakistan Civil Aviation Authority one by one.

STRENGTHS

 Having 13 International Airports certified by International Civil Aviation Organization.  Due to strategic importance of geographical location of Pakistan, International Air Routes use Pakistan’s Air space; hence PCAA role becomes vital in international flight movement.  General Engineering Depot (North) is ISO certified.  One of the very rare profitable and well-reputed semi Govt. organizations of Pakistan.  Plays a vital role during any calamity situation or war with any country.  The only organization in Aviation industry which regulates and implements aviation policies according to ICAO standards and handling Airports / navigational services in civilian sector of Pakistan. (Monopolistic organization with in the country).  State of the Art air navigation and Radar system are being used across the country.  Having 03 modern calibration aircrafts which provide calibration of RADAR, Navigational Equipment and other Airport Facilities at PCAA airports, Army and PAF airbases as well as outside the country.  Having the only aviation services training institute of International standard at Hyderabad (CATI).  MIS system has been implemented on almost all the airports.  Establishment of IT department at HQCAA level and provision of modern computer equipment at airports.  Handsome salary for the employees.  CAA is an organization having Assets of 184 Billion Rupees.

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WEAKNESSES

 Being the only organization of Aviation Industry in Pakistan there is no competition within the country.  Highly skilled persons are required in every field but deficiency still exists.  Lack of manpower as compared to approved establishment.  Long outstanding dues are to be recovered from PIAC and Shaheens Airlines.  Airports and other units are still not certified by ISO.  Unnecessary political interference in internal affairs of PCAA.  Slow career progression for employees of PCAA.  Retention of skilled employees is also a problem.  IT Sections are not still established at most of the airports due to shortage of infrastructure and relevant manpower.  Recruitment of employees through internal resources is still not implemented with true letter and spirit.

OPPORTUNITIES

 PCAA owns 43 airports, but there are only 03 domestic airlines working in Pakistan so there is a vast opportunity for growth in aviation sector.  A number of people want to get their occupation in aviation such as pilots but due to heavy expenditures this remains a dream, it can be overcome by decreasing in expenditure and establishment of more flying clubs / aviation training institutes.  Pakistan is a thickly populated country therefore a large no of people can be engaged in aviation industry and un-employment can be reduced by creating jobs in aviation industry.  Pakistan Civil Aviation Authority training institute (CATI) having state of the art and modern training facilities can be utilized to earn more revenue and highly qualified human resources.  CATI can also be utilized by developing more courses for private sector and by having affiliation with any reputed university of Pakistan.  CATI can attract more foreigners for training purpose by putting a little effort for advertising CATI as a world class aviation services training institute, this will bring more revenue to PCAA and foreign exchange to Pakistan.

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 PCAA calibration aircrafts can be used in more countries through advertisement to earn more revenue.

THREATS

 Uncertain political and economic environment of the region & globe.  Tension on international borders with India & Afghanistan.  Investment of PCAA in aviation sector only.  Huge cost of building new international airports.  Devaluation/depreciation of Pakistani currency results increment it debts.  Lack of collaboration with other developed countries in aviation field due to distrust in Govt. policies.  Skilled persons are getting higher salaries & better carrier progression abroad; so a large number of skilled employees are leaving organization because PCAAdoes not consider the above mentioned facts.  Due to war on terror going on in Pakistan and its neighboring countries, many of the foreign airlines have stopped their operation in Pakistan.

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Chapter # 10

Competitor Analysis

There is no direct competitor in Pakistan as such because CAA is governed by government and a regulatory body for airline services in Pakistan. Each country has its own Aviation Authority working separately. We could say that those aviation authorities are indirect competitors.

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Chapter # 11 Conclusion and Recommendation CONCLUSIONS:

By discussing following conclusion have been made:

 Being a monopolistic organization many advantages and disadvantages are there.  A thick culture is available in the Pakistan Civil Aviation.  Large and sound training institute as well as training infrastructure.  Reliable and competent navigation system/  Very weak career planning.  Job descriptions are much generalized in nature.  Responsibilities of employees are not clear.

RECOMMENDATIONS:

After studying CAA following conclusions are made:

 Pakistan civil aviation training institute must be focused because it can be utilized in a very better way. It should be focused because it can be utilized in a better way. It should be open for general public who are interested in getting quality technical education on state of the art training facilities. This will bring revenue to PCAA and qualified technical work force to the country.  HRM process should be implemented in true letter & spirit.  More private airlines should also be introduced for better and competitive services.  Further improvements of existing airports and construction of new airports on continuous basis living in available resources.

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References & Sources:

 www.caapakistan.com.pk  Annual report of CAA 2015  www.scribd.com  National Aviation Policy 2015  http://en.wikipedia.org/  www.google.com  Annual report of CAA PAKISTAN 2012.  An internship Report by MR Memon

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