The sales of Khyber Pakhtunkhwa Printing and Stationery Department registered 27 percent increase while cost of sales went up by eight percent in financial year 2009-10, which was Rs 37.564 million in 2008-09 reached to Rs 47.867 million over previous year, said audit report on the Accounts of Public Sector Entities (PSEs) for audit year 2011-12.
The increase in sales resulted in decrease of gross loss by 60 percent from Rs 11.002 million in 2008-09 to Rs 4.737 million in 2009-10. The department is continuously running into losses since long. The net loss stood at Rs 14.378 million and Rs 7.815 million during the year 2008-09 to 2009-10. The audit has stressed strenuous efforts to increase sales and control over expenditure.
The analysis of cost of sales revealed that only cost of stores consumed is available which has been 48.74 percent and 50.36 percent, 62.73 percent and 50.03 percent of sales during the loss four years 2006-07 to 2009-10 respectively. It means that contribution margin of the department ranged from 37 percent to 51 percent in these years. However, the department still suffered net loss as mentioned above. This clearly indicates that the fixed costs of the department are much higher and are not covered by the current sales level.
The audit urged the management to work out break even sales and if the volume (demand, quantity) is not in the control of management, then the sales price should be increased to at least earn the contribution margin sufficient to cover the fixed costs. The department did not execute jobs amounting to Rs 6.435 million during the year, 2009-10 on the plea that the old vintage/obsolete printing machinery is hampering its productivity and efficiency. As such 49 NOCs were issued to other government departments to carry out their printing works from open market. The government press is a commercial organisation; therefore all possible efforts should have been made to improve its production/sales.
The sundry debtors of the Printing and Stationery Department stood at Rs 18.600 million as on June 30, 2010 included therein an amount of Rs 10.818 million outstanding since 1996-97 to 2008-09. Moreover, the organisation collection period in days was 142 days (2008-09 = 225 days). The management is required to shorten this period to maximum of 45-60 days so as to increase its liquidity position. Moreover, the system for at least 50 percent advance may also be introduced.
Closing stock of raw material (papers) was Rs 13.164 million (2008-09: Rs 14.254 million) which indicates that the stock turnover ratio with purchase was only 1.70 times (2008-09=1.41 times). This is too low. Management needs, to increase its turnover ratio to decrease the average stock holding period which is currently 215 days (2008-09=259 days).
Finished goods stood at Rs 17.128 million as on June 30, 2010. This included finished stocks worth Rs 4.104 million for which bills were not prepared / sent to concerned departments. Reasons for maintain such a huge inventory of finished goods may be investigated and efforts for its sale are made now to minimise the inventory.
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