Siemens Pakistan Engineering Co Ltd.

Internship Report
Submitted to: Mr. Hussain Ismail
Internship Report-Hudaibia Tariq Siemens Pakistan
Engineering Co Ltd.

Acknowledgements:

To begin with, I would like to thank to Allah s.w.t for giving me an

opportunity to work in this prestigious organization. I would also like to acknowledge
Mr. Hussain Ismail for his cooperation and consideration in accommodating this
valuable internship. I would also like to particularly recognize my supervisors: Mr.
Ammad Saleem and Ms. Rabia Anis, for their constant support, time, and unrelenting
guidance throughout my 6 weeks here.
This internship has been the most fulfilling work experience I’ve undertaken.
It has given me a deeper knowledge of the business world and office culture, has
sharpened my IT skills and significantly improved my multi-tasking and decision-
making capabilities. What I felt was a greatest asset was the knowledge I gained here
on how to operate corporate accounting software, the Spiridon System. I found the
work environment to be very friendly, and the people I worked under always
encouraged me to ask as many questions as possible while at the same time I was
expected to learn on my own. Through this experience I acquired the unique
opportunity to look deeper into my chosen career field, by interacting with employees
and clients, working on real assignments and shadowing commercial officers.

Hudaibia Tariq
Commercial Internee, OLM
August 10th-September 18th 2009

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Internship Report-Hudaibia Tariq Siemens Pakistan
Engineering Co Ltd.

Table of Contents

Table of Contents...........................................................................................................3
Building Management Solutions................................................................................7

Company Profile Overview:

Siemens (Berlin and Munich) is a global powerhouse in electrical engineering

and electronics. Siemens provides innovative technologies and comprehensive know-
how to benefit customers in over 190 countries.

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The company was established in 1847. Initially it began its operations as a
small precision-engineering workshop, and overtime grew into what is now one of the
world's largest companies in electrical engineering and electronics. Landmark
inventions, an immense readiness to innovate, and a strong international commitment
have driven the company's success since its very beginnings. Siemens’ operations are
divided into three main sectors:

• Industry

• Energy

• Healthcare

Siemens in Pakistan
Siemens Pakistan is currently in the leading position in the country in the areas
of Power, Automation and Control, Medical, Transportation, Information Technology
and Industrial solutions. Siemens is the country’s prime supplier of high-voltage grid
stations, switchgear products and systems, power distribution and power transformers,
and network consultancy. The Power Generation Group is a major player in the
country. To date, the Group has added over 2,500 MW to Pakistan's power generation
capacity, which represents 15% of the country's installed output. The Automation and
Drives Group is the only major local supplier with 35 years of experience in the local
manufacture of diesel generating sets to meet customer specific demands from clients
on both the domestic and international front. The company further flourishes with its
Medical Solutions Group, which at the moment is the chief supplier of state-of-the-art
equipment to major hospitals.
Siemens is one of the most important employers in the country; it has a
monumental workforce of 1550 employees. Siemens is also the single largest
employer of engineering graduates in the country. It also boasts a significant number
of women in important positions in every department and thoroughly follows a gender
equality policy.
Siemens Engineering Pakistan was established in 1953 as a private limited
company. The company then evolved to become a public limited company in 1963.
Company shares have since then been quoted on the Karachi, Lahore and Islamabad
Stock Exchanges. The head office is located in Karachi and the regional offices are

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Engineering Co Ltd.
based in Lahore and Islamabad. The company is an essential subsidiary of Siemens
AG and consists of three main divisions:

1) Energy Solutions
2) Industry Solutions
3) Healthcare Solutions
The products manufactured locally are done so under license from Siemens
AG, in Germany and thus the quality of the products are in line with the products
being produced at Siemens AG factories that provide specialised technical support
and back up when needed.
The firm is predominantly engaged in providing solutions that address all
three sectors; Industry, Energy and Healthcare. The Industry sector aims to provide
avant garde solutions to customers in the fields of production, transportation and
building systems. Similarly, the Energy sector offers products and solutions for the
generation, transmission and distribution of electrical energy. Meanwhile, the
Healthcare Sector strives to come up with innovative products and complete solutions
as well as service and consulting in the healthcare industry. In a nut shell the company
deals with manufacturing electrical and mechanical equipment, installation and sale of
telecommunication, household and medical equipment and mobile devices and
executing projects under contract. The firm has been contributing to the Pakistani
economy by channelling their tech savvy knowledge into producing contemporary
solutions and products as well as services.
The firm is centrally located in the heart of the industrial vicinity of Karachi at
S.I.T.E. and is one of the oldest and largest industrial estates. Furthermore, the firm
also boasts an ISO 9001 certification proving its high standards in manufacturing
second to none in the region. The firm was given such recognition by Siemens AG
that it is now the competence centre for the entire region and has been permitted to
export its high tech products and services to countries in the Middle East and Central
Asia.
Siemens Engineering Pakistan is one of the few firms in the country that uses
the SAP/ERP Technology. This corporate accounting software, the Spiridon System
(formerly known as SAP) is heavily used in the day to day business function of each
business unit within the firm. Siemens Engineering Pakistan uses this software
globally and many other successful MNC use it in order to ease the flow of
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information in their worldwide divisions. At Siemens the Spiridon System is used to
produce Financial Statements and record important data related to clients and vendors.
The fiscal year at Siemens Engineering Pakistan runs from October through till
September and annual closings take place on the 31st of September.
The Spiridon System is generally used to compile transactions with related
parties separately for each related party with complete analysis product-wise, order-
wise, period-wise, nature of transaction wise etc. Furthermore, separate reports may
be generated for transactions carried out at arms length (those transactions whose
terms are similar to that of the knowledgeable and willing unrelated parties in the
ordinary course of business) or otherwise. The system is used to generate quarterly
returns, default budgets and forecasts which are then submitted to business units.
There are three main types of businesses that get reported by Siemens world-
wide and they are:
• Direct Business- The business from external clients.
• Intra Company Business- This is the business generated from within
the company; business units may require each other’s services and thus are treated as
clients hence charged the same. However if a business unit requires services form
another division the reporting is done under Direct Business.
• Commission Based Business- Refers to commission based income
where the business units act like a third party. Thus Siemens Pakistan receives
commission as the ‘middle-man’ in the case where a business unit may not be able to
provide a particular product or service, they outsource and receive commission.
Although Siemens Pakistan doesn’t receive hefty amounts of commission based
business. It does deal with it especially concerning Lahore offices and regional deals.

Principal Business Functions at Siemens Engineering Pakistan:

1. Sales & Marketing

2. Engineering & Design
3. Manufacturing

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4. Installation & Commissioning
5. Services

Products & Services

Energy and Power Solutions

• Energy Automation
• Generating sets
• High Voltage Sub-stations
• Power Generations
• Power Transmission & distribution services
• Solar power
• Switch boards
• Transformers

Industrial Solutions

• Engineering & Construction

• Motors & Alternators
• On call Logistic, Repair service & Maintenance
• Process Industries Automation
• Standard Products
• UGS PLM Software

Transportation Solutions

• Automotive
• Telemetric Solutions
• Transport Systems

Building Management Solutions

• Building management solutions

Communication Solutions

• Communication Networks

Information Technology Solutions

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• SAP Academy
• SAP Solutions

Health Care Solutions

• Medical Solutions

Home Appliances

• Siemens Home Appliances

Corporate Structure:

The corporate structure at Siemens Engineering Pakistan is such that each

division has several separate business units. Each business unit has two heads, one
being a commercial head and the other a technical head. Both subsequently work
together towards achieving operational efficiency. The Commercial heads are

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Engineering Co Ltd.
commerce related persons holding an MBA and Technical heads are the Executive
Engineers. Mr. Hussein Ismail is the General Manager of the OnCall-, Logistics-
Repair Services & Maintenance (OLM) Business Unit where I was placed for my
Internship. Mr. Mohammed Mehdi is the DGM of OLM. The hierarchy is such that
each commercial head of a business unit reports to the commercial sector head who
then reports directly to the CFO of Siemens Pakistan, Mr. Gerhard Wilcke.
Overall, the business unit heads report to the divisional heads who then in turn
report to CFO, Mr. Gerhard Wilcke and CEO, Mr. Sohail Wajahat Siddiqui of
Siemens Pakistan. A flow chart has been given below:

Siemens AG Siemens Engineering

Germany Pakistan

Divisions

Business Units

The organisational chart of Siemens Engineering Pakistan is on the following

page. The chart shows how each division is divided into separate business units and
will help explain the hierchachical flow of the firm.

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OnCall-, Logistics-Repair Services & Maintenance (OLM) Business Unit

The OLM department is under the Industry Division. The Industry division
consists of two segments and OLM is in the first segment.
The OLM department is generally involved in:
• Providing Operation & Maintenance Service for Industrial and Power Plants.
• Repairing, Overhauling & Maintenance of Motors & Alternators
• Condition Monitoring (Thermography, Vibration Analysis, NDI & Oil
Analysis)
• Spare Parts Management
• Call Centre for customer support and after sales services.

Furthermore, the department is also involved in providing business based

maintenance and technical support. The OLM department consists of three main
executionary sub-departments.
They are:
• Sales & Marketing
• Services
• Commercial
OLM consist of three main branches Karachi, Lahore and Islamabad. Although there
is a branch in Multan it is reported in Lahore.
Sales & Marketing
The sales and marketing department handles the marketing related activities
and is heavily involved in the Bid Offer Preparation process. The initial stages of
marketing activities begin with the gathering of information through the internet,
newspaper, industrial associations and market intelligence data. The department then
carried out extensive market research in order to calculate market potential.
After the research results have been analysed, a thorough marketing strategy is
defined and the clients are contacted via telephone, email, letter or where appropriate
conduct site visits.

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Commercial
The general business flow at the OLM Commercial Department is given
below:
1. Initially a prospective client sends and inquiry to Siemens Pakistan, in the
relative department dealing with the services needed. The inquiry is basically
sent to find out whether the company can provide the manufacturing and or
servicing of a particular product or service. Based on this, the commercial
department is responsible for sending back quotations; these are the prices
Siemens Pakistan will charge.
2. The inquiry is then received by the client and an offer is generated. The offers
are received by the Commercial officers, who then open the orders.
3. The renewed quoted prices are then sent back to the client who then either
accept or reject the quoted prices. Clients often ask for discounts and the
department reviews the request and tries to accommodate in order to receive
further business.
4. The client then sends a revised offer with the revised amount and prices. At
this stage the terms and conditions usually remain the same.
5. The client, after accepting the revised offer from Siemens Pakistan then sends
a purchase order.
6. Once the order is received, the job is executed. As soon as the job has been
fully completed a job completion note and dispatch note is sent with the
client’s authorised approval.
7. It is at this stage where the orders are booked onto the Spiridon System using a
system generated number.
8. After the order is booked onto the system, the turnover is then booked and an
invoice is generated for the customer signifying the completion if the job.
Through this process I learnt how and when each new order is placed onto the
system and once it is executed it is recorded as sales turnover and communicated to
the entire industry sector.
The commercial department gives it inputs at various stages. During the Offer
Processing stage, the commercial department is responsible for checking the
proposals, cost calculation sheet and calculating the Return on Capital Employed
(ROCE).

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During the order processing stage, the OLM commercial staff remains in touch
with the clients’ right through to the execution process. Through the execution phase,
various costs are incurred; the OLM Commercial staff strives to ensure that the actual
cost remains lower than the planned cost, or within the parameters of the planned
costs. A loss order occurs when the actual cost exceeds the order value.
The Industry sector has a centralized purchase department and a separate
payables and stores department. Once a Purchase Order has been initiated and booked
onto the system, purchasing starts.
There are two main types of purchases:
• Local Purchases
And
• Imports
Local Purchases:
The local purchases follow a particular procedure which is listed below:
• Material Requisition-A material requisition form is received from the
Industry Store. All the materials that are needed and not in inventory are put on the
Material Requisition form. This form is signed and checked for commercial and
technical workings and is then forwarded to the purchase department, who in turn
arrange for the best quotations for the business unit in question with different vendors.
• Quotation- A quotation is received either internally from another
Business Unit or externally from a vendor.
• Comparative Statement- The comparative statement is made by the
purchase department. The different quotations are then reviewed on a comparative
statement. The quotation that is most viable to the business unit is then selected. The
commercial staff is responsible for making sure that the planned cost remains greater
than the committed cost. The cost of the items to be procured is also checked with the
planned cost of those items.
• Purchase Order-The Purchase Department then issues a purchase
order. A Spiridon generated purchase order number is then raised and sent to the
selected vendor (internal or external).
• Once procurement is made from the vendor a Materials Received
Report is generated by the Industry Store.

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• Material Inspection Report- A material inspection report is generated
once all the materials have been checked.
• Goods Received- After MRR & MIR, a goods receipt is entered in the
system by the Industry Store.
• Invoice-Following the goods receipt note, an Invoice is received from
the vendor (internal & external) by the Industry Payables section.
• Verify-This vendor invoice is then verified by the responsible engineer
& forwarded to Industry payables for the preparation of bill sticker.
• Bill Sticker-Duely signed Bill sticker is then forwarded to Financial
Control Department for posting by the payables division & release of payments.

Imports
The process of imports is very much similar to that of the processes of
Material requisition, Quotation, Comparative statement and Purchase order.
• Material Requisition- A material requisition form is received from the
services department. All the materials that are needed and not in inventory are put on
the Material Requisition form. This form is signed and checked for commercial and
technical workings and is then forwarded to the purchase department, who in turn
arrange for the best quotations for the business unit in question with different vendors.
• Quotation- - A quotation is received either internally from another
Business Unit or externally from a vendor.
• Comparative Statement- The different quotations offered are reviewed
on a comparative statement. The quotation that is most viable to the business unit is
then selected. The commercial staff is responsible for making sure that the planned
cost remains greater than the committed cost. In the case where a committed cost (the
actual cost of procuring all the raw materials needed to perform or execute a particular
job/order) is greater, divisional management is involved for approval and settling the
misbalance. The cost of the items to be procured is also checked with the planned cost
of those items.
• Purchase Order- A Spiridon generated purchase order is then raised
and sent to the selected vendor or internally to the business unit (in this case the OLM
business unit).

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• Order Acknowledgement- The supplier then dispatches an order
acknowledgement or Performance Invoice which serves as the part of the Agreement
for the establishment of a Letter of Credit or a bank contract.
• Central Imports- During this phase the Letter of Credit or Bank
Requisition is forwarded to the Central Imports department. At Siemens the Imports
department is centralised. They are responsible for handling all the Letters of Credit
and dealing with banks. The Centralised Imports Department receives the respective
business unit’s request for the establishment of an LC or Bank Contract, through an
LC or Bank Contract establishment form. The central imports department then deals
with banks directly who create the LC or Bank Contract. An internal system generated
number is then arranged by the Central Imports Department which is eventually
communicated to the respective business unit.
• Letter of Credit/ Bank Contract- Clients dealing with Siemens or vice
versa may often require an LC or Bank Contract. This binding document allows the
buyer (through his/her respective bank) a guarantee that the payment for goods will be
transferred in fact be transferred to the seller and the goods will arrive on the date
agreed. In short, A Letter of Credit is a written undertaking by the Importer’s bank,
known as the Issuing Bank, on behalf of its customer, the Importer (Applicant),
promising to effect payment in favour of the Exporter (Beneficiary) up to a stated sum
of money, within a prescribed time limit and against stipulated documents. It also
further gives the beneficiary the basis for clearance. In order for the payment to occur,
the seller has to present the bank with the necessary shipping documents confirming
the delivery of goods within a given time frame. It is often used in international trade
to eliminate risks such as unfamiliarity with the foreign country, customs or political
uncertainty.
• Clearance- Consignment is sent by the seller after which the necessary
shipping documents are delivered to the Centralised Imports department through an
agent for the clearance of the consignment. The Centralised Imports department
organises for a respective clearing agent who is responsible for the customs clearance
and dispatching the shipment to the respective business unit’s ware house/store.
• Material Receiving Report- A material receiving report is generated
once the goods have been received.

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• Material Inspection Report- A material inspection report is generated
once all the materials have been inspected thoroughly.
• Goods Received- After MRR & MIR, a goods receipt number is
entered in the system leading to a goods receipt note.
• Invoice-After the goods receipt had been established an invoice is
received from the supplier or business unit.
• Verify- The vendor invoice is then verified by an engineer.
• Payables- Once the invoice has been properly verified, it is forwarded
to the payables department. This is then forwarded to Financial Control Department
for posting by the payables division.

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The different types of Bank Guarantees’ used at Siemens Engineering Pakistan

There are three main types of bank guarantees:

• Bid Bond/Earnest Money-A surety bond filed by contractors,
guaranteeing that in the event where a bid is accepted, the successful contractor
will sign the contract and present a performance bond. This is basically given at
the time of submission of the tender and is often referred to as earnest money’.
• Advance Payment Guarantee- This is to secure any claims by the
buyer on the seller for reimbursements of the buyer’s advance payment on the
contract price before delivery of the goods (or advance payment of the full
contract price) - in the event that the seller has failed to meet his or her contractual
delivery obligations. This usually occurs once the job has been awarded, after
which a certain percentage or all is given as a guarantee to the client.
• Performance Bond-A performance bond is a surety bond issued by an
insurance company to guarantee satisfactory completion of a project by a
contractor. In short, a performance guarantee basically makes sure that the job has
been executed properly as per the client’s requirements. If not, then the guarantee
can be en cashed (taken back or withheld), it is a form of security for the client.

The process of billing and follow-up:

As soon as an invoice is booked on to the system, the recovery section is
involved in making sure that the payment is released by the customer through
consistent follow up.

Credit Analysis:

At Siemens Engineering Pakistan, certain credit limits are usually assigned to

new customers. These limits are often revised as business grows with a respective
client. The credit limits are assigned at the business unit level and an authority of Rs.
500, 000 is given as a general credit limit. A certain formula is applied in order to
obtain credit exposure. The formula is given below:

Credit Exposure = (Turnover + Receivables) - Advances

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One particular client had an extended credit limit amounting to Rs. 1 Million.
Therefore using the formula given above its credit exposure would be Rs. 2 Million.
In this case the credit exposure of that client was greater than its prescribed credit
limit. As a rule, credit limits need to be greater than or equal to credit exposures in
order for the system to operate. The Spiridon system restricts bookings on any such
orders where the credit exposure exceeds the credit limit.

Sales Document Index:

At the OLM department at Siemens Engineering Pakistan, a sales document
items list is prepared on a regular basis. It is obtained from the Spiridon system and
basically includes all the orders on hand. The OLM commercial department is
responsible for responsible for billing the orders. These bills are then transported to
the central Financial Control Department. Each division at Siemens (out of the three)
basically has several business units. Each unit prepares orders relating to varying
products and services. The accounting done here is at the business unit level. The
company reporting is then handled by the FC dept.
The sales document items list shows us which orders have been booked and
for what purpose. It also further acknowledges all the costs incurred from procuring
raw materials form vendors (known as committed costs) to planned costs. The
document list also allows us to see which orders have been booked as a loss order.
The aim of the business unit is to keep the various costs during the order execution
phase to a minimum, or to keep the actual cost lower or within the parameters of
planned costs. Each purchase order has a special system generated number once the
order is issued by the vendor.
Through this process a committed cost automatically appears on the document
list. The business units in turn work hand in hand with the purchase departments and
eventually submit their reports (usually on a monthly basis) to the FC Dept.

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Financial Reporting at Siemens Engineering Pakistan:

There are many types of Financial Control based reporting done at the
business unit level. The focal one’s being:

1. Budgeted Monitoring Reporting (BMR)

2. General Reporting

Budget Monitoring Reporting

A budget monitoring report its main sheet consists of two parts of an Income
Statement and Cash Flow. The income statement calculates the Earnings before
Interest & Taxes (EBIT) at the business unit level for the actual, seasonal &
forecasted figures for the month. Budgeted Monthly Reporting is compiled at sector
level and is then forwarded to Financial Controls Department. Various strategic
decisions are devised on the basis of BMR at divisional level.

At Siemens Engineering Pakistan, General Reports constitute of the following:

• Regional Reports-Siemens Pakistan is divided into three regions
Karachi, Lahore & Islamabad
• Budget Module-The budget module is prepared once a year.
• Segments Reporting (GG wise)
• Divisional Reporting
• Siemens AG Reporting
• Corporate Reporting

OLM BU has 5 segments defined to it which is Cross Industry, Pulp & Paper,
Cement, Industry Infrastructure and Logistic/ Repair Services & the Quarterly &
yearly forecasting & planning reporting is done in these segments.

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