1. Sales and Marketing Conference
Pearl Continental Hotel, Muzaffarabad, AJK
January 22-23, 2013
Finance – Saeed Ahmad
Total Oil Pakistan (Private) Limited

2. Understanding Corporate Profitability

3. Purpose of business
Maximise shareholders’ wealth /
Earn maximum profits

4. How to earn maximum profits
Increase revenues
Optimize the costs

5. Increase revenues
Sell at optimum price
Fetch more volume (no compromise on min. set margins)
Sell right product mix (focus on high margin products)
Favourable credit terms
Effective marketing helps sales to sell at their terms and not at the
customers’ terms

6. Optimize the costs
Product cost
Other costs (i.e. operating expenses)
Finance (borrowing) cost

7. Who will achieve this purpose
Management’s responsibility -
is to set the guidelines for you, to provide
you with the required resources and to
give you continuous guidance and
feedback to keep you on the track
throughout the year
Your responsibility -
is to execute the job and to convert the dreams
into reality

8. Components of
product cost
Base oil
65%
Additives
20%
Packing
12%
Plant
overheads
3%

9. Particulars Rs/Ltr
Sales 232
Less: Sales tax at 16% 32
Net sales 200
Less: Product cost 156
Variable (supply chain) cost 7
GMVC (gross margins over/after variable cost) 37
Less: Operating (selling, marketing and admin.) expenses 24
Borrowing (markup) cost 4
Operating profit before tax 9
Less: Income tax at 35% 3
Net (actual) profit after tax available to the company 6
Corporate profitability

10. Q&A

11. Thank you