Documentos de Académico
Documentos de Profesional
Documentos de Cultura
FINANCIAL PROJECT
DEPARTMENT
BUSINESS MANAGEMENT SCIENCES
UNIVERSITY OF EDUCATION
OKARA CAMPUS
SUPERVISOR
SADAF AMBREEN
BBA (HONS) FINANCE
SESSION 2006-2010
ROLL NO 607(E)
SEMESTER 8Th
Dedication
I dedicate this project to
Almighty Allah, The Creator of worlds
UNIVERSITY OF EDUCATION OKARA CAMPUS [SUMAD PURA ROAD OKARA]
Acknowledgment
First of all thanks to Almighty Allah, who have given me the strength and knowledge to
complete this project. I would like to specially thank for the help of my finance teacher
SADAF AMBREEN
BBA (Hons) Finance
Table of Contents
Sr. No
1.
2.
3.
4.
5.
6.
7.
8.
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10.
11.
12.
13.
14.
15.
16.
17.
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20.
Description
Executive Summary
Vision Statement
Mission Statement
Company Achievement
Production process
Exports
Purchases
Personnel Management
Organization Culture
SWOT Analysis
PEST Analysis
BCG Matrix Analysis
Summarized Balance Sheet
Trend Analysis of Balance Sheet
Vertical analysis of balance sheet
Summarized Income Statement
Trend Analysis of Income Statement
Ratio Analysis
Recommendations
Conclusion
EXECUTIVE SUMMARY
Mahmood Textiles Mills Limited is a fully integrated organization. The company's shares
are quoted on Stock Exchange. The company's registered Head Office is located at Mehr
Manzil Lohari Gate Multan.
The company's mills are situated at Mahmoodabad, Multan Road, Muzaffargarh, and
Masoodabad, D.G. Khan Road, Muzaffargarh. The management body of the company
consists of persons, who are highly qualified and have vast experience in the field of
Textile.Members of the board are:
COMPANY PROFILE
Chairman
Chief Executive
Directors
Muhammad
Ilyas
Maher
fatima
Bankers
The Bankers of the company are;
1. Muslim Commercial Bank Limited
2.
3.
Competitors
In whole country, the company has many competitors who produce and sell Yarn and
Fabric but the company considers the following as main competitors;
Fazal Cloth Mills.
Khokhar Mills.
Yahya Mills.
Target Markets
The company does the activities of both. Export and Local Sale. In both the areas
company doesn't considers any market as its specific, permanent market. Demand from
any city from the country and any country from the world is welcomed. However in
Export following countries are major customers of Mahmood Textile Mills;
Japan
Hong Kong and
Korea.
The company has four Spinning units and one Weaving unit. For the process of Spinning,
MAHMOOD TEXTILE MILLS fulfills its lint requirements from its own eight Ginning
factories located in different cities. In addition to that the company also purchases lint
from various outside, parties. In addition to producing the yarn, the company also
purchases the | yam from its various suppliers including competitors to make sure that
enough yarn is available for export. For the process of Weaving, the | company fulfills its
Yarn requirement from its own Spinning units. In addition to that company also
purchases the yam. The company produces both, 100% cotton and blended yarn and
fabric.
The company has a total of 103 looms in its weaving unit. Out of them 5 are big looms
with a width of 165" and remaining are of 153" width. All are SULZER PROJECTILE
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VISION STATEMENT
11
VISION STATEMENT
12
MISSION STATEMENT
13
MISSION STATEMENT
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COMPANY ACHIEVEMENT
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ISO 9002
In this era of rapid technological changes and new innovations, every customer has
become quality conscious. Customers now days want the assurance of quality either
through product design or through image or the personality of the product. In response to
this trend, marketers all over the world are either offering to the customers, products with
high quality design specifications or they are concentrating on the image marketing.The
ISO 9000 is the answer of every customer demand through which the organizations can
assure customers of their products' high quality. Coping with this Mahmood Textile Mills
has also achieved "ISO 9002" Quality Award. It gives Mahmood Textile Mills the
international recognition as the producer of High Quality Yam and Grey Cloth. In the
whole world; it is now a general rule that without ISO Certificate, an organization cannot
export. Hence for Mahmood Textile Mills, ISO has become a basic requirement. At
MTM, management has a formal procedure to comply with the ISO 9002 requirements.
The organization keeps formal record of establishing and maintaining procedures for
every kind of activity starting from purchase of raw materials till the dispatch of finished
products. All the procedures documented in the ISO 9002 requirements are thoroughly
followed at each and every activity. Moreover MTM carries out periodic
Quality Control Audits to confirm its compliance with the ISO 9002 requirements The
Internal Audits are carried out almost once in a month, but the External Audits are carried
out after six months (Each External Audit costs almost Rs.90, 000). In each External
Audit, the auditors see the compliance of the organization with the ISO standards. They
see the various clauses of ISO that whether the organization is implementing them.
Moreover they see various ISO documents. They see people working, their awareness
about ISO and their training levels. The company is implementing following clauses of
ISO;
1. Management Responsibility.
2. Quality System.
3. Contract Review.
4. Document and Data Control.
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COMPANY ACHIEVEMENT
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WEAVING
MAHMOOD TEXTILE MILLS is producing Grey Cloth. The process of Weaving starts
from the Placement of Order by the buyer (The buyer places the order at the Head
Office). When the buyer places the order he/she makes specifications in the order as;
Count specification for Warp and Weft.
Number of Ends and Picks per inch.
The Pattern of Warp and Weft
The ratio of chemicals used for Sizing.
Kind of packing required.
Net Weight and Gross Weight of the Packing.
After the buyer places the order, the Director decides whether the yam should be
purchased or it should just be transferred from MTM's one of spinning unit to the
Weaving unit. Yarn Store When the yarn reaches the mills, it is sent to the Yarn Store. A
Yarn Store Assistant is there who is responsible for receiving the yam and shifting it in
the Yarn Store. He also maintains proper record for Yarn. The documentation of the Yarn
Store is done in the following manner.
Documentation for the Yarn Store
(1). Yarn Store Ledger
When the yarn reaches the mill, all the information is entered in the Yarn Store Ledger
Such as;
Quality, Supplier, Count and Brand of Yarn.
Date of Receipt and Issuance.
Closing Balance and Opening Balance.
(2). Yarn Received and Issuance Report
In this report following type of information is inked.
Count and Brand of Yarn.
Date & Amount of Opening Balance, Receipt, Issued, Transfer, Closing Balance.
Remarks (If any).
(3). Yarn Requisition
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To start any process, a requisition for yarn is sent to the Main Office of the Mill
specifying the Quantity, Count and Brand of Yarn. Based on this requisition the Yarn is
issued from the Yam Store and the production process starts which is as under.
PRODUCTION PROCESS
Warping
The production process starts from Warping. From here the Preparatory section starts.
Yarn is transferred from the store to the Warping Department. In warping department,
there are two machines;
1. Machine on which cones are attached i-e Creel.
2. Other one is warping machine.
It takes the yarn from the cones and then according to the specification it
wraps the yarn on the beams. Here only warping is done (lengthwise yarn is enrolled). On
the machine every kind of detail about the requirement is fed. Also the workers do
continuous reporting during the process of Warping. After Warping is performed for a
certain quality, a detailed report is prepared about the whole process that explains;
1. For what Quality, Warping is done.
2. What was the Duration of the Process?
3. No. of Break Downs.
4. Workers' names.
5. Length of Yarn Enrolled.
6. No. Of Beams Produced.
7. Weight of Beams.
8. Date in which the Process was carried out.
If in any case like when cotton sticks in the yarn or when yarns breaks, the
machine automatically stops working so that the workers can correct the problem. During
the process a Floor Cleaner cleans any cotton, which flies of from the machines and falls
on the floor (Fluff).
It causes disruption. After the process the cones left over, which are partially used, also
called Short Cones are discarded off. The company also keeps control of Non
UNIVERSITY OF EDUCATION OKARA CAMPUS [SUMAD PURA ROAD OKARA]
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Sizing
Sizing department is the second department in Preparatory Section
Process
Basically here two large types of activities are performed in the process.
First, the ends of the Warped Beams are dipped into the Chemicals so that the yarn could
become tense strong and it could bear any jerk in the next department. There are various
chemicals used in this process. These are Maize Starch, PVA, Size CB, Wax, T.Wax, and
Arkofil.
After the ends are dipped into chemicals, they are separated from one another with the
help of needle like pins. Second, the Warped Beams are converted into a Sized Beam.
That is, the ends of all the warped beams are combined together and they are sized on a
single beam. For example, if there are eight warped beams each of 625 ends; then the
Sized Beam will be having 8*625=5000 ends.
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Boiler
Boiler plays very important role in the Sizing department. The job of Boiler is to boil the
water with the help of certain fuel to convert it in Steam. This steam is then sent to the
Sizing department for the purpose of heating the Chemicals. Boiler is run by different
things such as. Furnace Oil, Coal and Sui Gas but at MTM it is run by the Sui Gas. The
Boiling Point is maintained at 100 degree centigrade. The pressure with which the steam
is sent to the Sizing dept. is kept at 150 Pounds/Square Inch. An FD (Force Drive) fan is
there to push the fuel into the Boiler. During the working of the Boiler, the level of water
is kept at a certain level. The water of the steam comes back from the sizing department
to the Boiling Room and is then reused.
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Note
On each beam a sticker is attached that conveys information about the beam.
Drawing
In "Drawing" the activities are performed manually. In this department, the Drawers
work on the Sized Beams. Basically in this department, the Weave is given. The yarn is
passed in the reed frame according to the requirement of the design of the fabric. It is
actually the drawing section which has to take care of the construction of the cloth. In the
drawing section specific reeds are used for specific order. For an average order the reed
requires six to eight hours to be prepared. The supervisors produce different beams of
different specifications, under their supervision, for the Weaving Department actually,
here the drawers work on the part of a loom that is temporarily separated from the loom
for drawing purpose. This part contains following basic things;
Reed
Droppers
Heild 1The yam (single) passes through, first, droppers and then Heild I (single yam).
After that according to the requirement of the quality, yarn is weaved i-e in Reed, the
weave is given. If weave is 3/1, then from reed single yam passes through dent of reed
and from next dent, 3 yarns pass. All this is done manually. After this whole work is
done, the whole pattern is carried to the Weaving Department and fixed on the loom.
Weaving
Introduction
Weaving department is the most important department for any textile mill. The basic and
huge investment of installation I-e LOOMS is done in this department. Scale of operation
is dependent on the working of this department. Efficiency of the whole unit depends
upon the efficiency of the looms in this department.
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Process
A loom prepares the Fabric". On every loom, maximum two beams can be attached.
The loom draws the yam from the beams and then weaves it and the finished Grey Cloth
is then, wrapped on a rod called "Cloth Roll".
Droppers along with manually adjusted yam in them is brought from the drawing dept. by
a machine and is fixed over the looms. The loom weaves the cloth in the same manner as
it is designed by the drawers. So the design and construction of cloth made on looms
depends upon the design and construction that the workers of drawing department give to
it. Here basically the activity of "Wafting" is performed i-e "PICKS" are made here. The
weave (3/1 or 4/1 etc) depends upon the order. As described earlier the drawers make
weave by passing yarn through "Dents".
When the loom starts working the weaving is done by the "Projectile", which takes the
yam and passes it through ends according to the weave. "CAM" which is on the upper
side of the loom facilitates this process. During the process, there is a machine called
AIR JET OVERHEAD CLEANER", which moves in paths between the looms and
sucks any wasted cotton or yam. This is to ensure that nothing sticks in the looms. Under
each shed there are usually 3 or 4 Air Jet Cleaners.
Loom Stoppage
The loom stops due to following reasons;
When a yarn breaks, the loom stops.
When a cone ends, the loom stops. The workers put on new cone.
When a beam ends, the loom stops and the
"Knotting" or Article is done.
The loom can stop in case of malfunctioning. Every loom has got its own meter where
Different information is available as;
1. No. of rounds' completed. (In shift A, B, C)
2. RPM of the loom.
3. No. of rounds completed during the year i-e T counts. In this department special
attention is paid on each and every loom to avoid down time and supervisors and foremen
play main role here.
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Knotting
One beam usually takes ten days to become empty. After that a new beam is attached to
it. This process is called "Knotting". In Knotting, the beam replaced is of same quality.
Article
When a beam becomes empty, then when the new beam of another quality is attached to
it, this process is called "Article".
* 100
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Folding
Next to the weaving department, is the Folding Department? After the cloth is prepared
on the looms, it is thoroughly inspected to ensure quality. Inspection, Cutting and
Packing is done in the same shed i-e "Folding Department".
Inspection
Unrolling the Cloth
First of all, in Inspection, the cloth is unrolled on the Unrolling Machine. Then this
unrolled cloth is taken to the machines where "Inspection Supervisors" check, correct and
mark the faults in the cloth. If the fault can be corrected at the spot, it is fine otherwise it
is marked and passed on to the cutting area. The workers on the unrolling machine list
various details about the process. Whenever a Cloth Roll enters the Folding department,
all the information related to it is listed in a report. A Daily Roll Cutting Card is also
made. This card gives details about the length of certain quality cloth cut in a day and
other related information. After the cloth is unrolled, it is sent for inspection. There, the
Inspection Supervisors inspect the cloth on machines and give points to the faults in the
cloth. On a chart called Cloth Inspection Chart", they write different information as
Inspector name
Shift
Loom no
Quality
Width
Total yards/meters
Type of faults and their points
Grade of cloth.
Also the amount of cloth inspected by each inspector is written there. There is a formal
procedure for "Fabric Inspection. The procedure follows one of two choices of
standards. One is "Ten Point Standard (J.I.S. Standard)". It is followed by Japanese. The
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Hence when the cloth is inspected, it is graded by counting the number of points in a
specific count of yards. More are the Points, lower is the Grade. Note that the fault
which is corrected at the inspection spot is not given any point. Only the fault that cannot
be corrected is given point. There are 17 kinds of faults that can be in a cloth if the fault
is serious and repetitive, and then an "Action Slip" is made. This is to take strict notice of
the fault so that B and C quality cloth must be avoided.
Folding
After the inspection activity is performed. Folding, Cutting and Packing is done. But first
the Folding activity is performed. Folding is done on the Folding Machine. A Folder is
there to do that activity on the machine. Every fold of cloth is of one meter.
Cutting
After folding, Cutting is performed. The Inspection Supervisors give the Cloth Inspection
Chart to the personnel of the cutting area that specifies the fault i-e place from which the
cloth is to be cut. Hence at the time of cutting, in order to ensure quality, the faulted
fabric (that is of either B or C quality) is separated from A Grade fabric. At a place of
fault, the Inspection Supervisors attach a Strip that gives the detail about the fault.
Moreover, whenever the buyer places an order, he specifies the cutting of the cloth. For
example he can say that he wants his fabric in ten cuttings each of 110 meters, or he can
say that the cloth should be in ten cuttings each one greater than 100 meters. Hence
according to this specification the cloth is cut. When the cutting activity is performed, all
its detail is entered in a register. For example; Quality of Cloth, Cutting Length (specified
by the buyer). Loom number.
Length of A Grade Cloth.
Length of B Grade Cloth.
Length of C Grade Cloth.
Length of Fents and
Total Length.
Folding is done on the Folding Machine. A Folder is there to do that activity on the
machine. Every fold of cloth is of one meter.
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Packing
When the cutting is done, then "Packing" starts but before packing, the cloth is weighted
to calculate its "Net Weight". After that according to the buyer's requirement the cloth is
packed either in the form of a Roll or Bail. After the packing the cloth is again weighted
to calculate its "Gross Weight". Before packing, cloth is first pressed to bring it in proper
shape. This activity is carried out by the "Hydraulic Pressing Machine".
After the packing is performed, a list is made that is called the "Packing List". It is given
to the buyer when the cloth is dispatched. Moreover on the bale or roll a Sticker is
attached that gives information about the packing.
For the organization's proper record, a "Daily Summary of Packing" is made to know the
amount of cloth made with reference to the Quality. A "Damage Report is prepared
daily. It explains the cloth damaged in daily production (in every shift). Based on this
report the performance and efficiency of employees in every shift is calculated and
Rewards are given. Dispatch After the packing, the cloth is shifted to the Fabric
Godown". There, proper record is kept about the amount of cloth and its quality and
weight. At the day of dispatch, the cloth is dispatched from the mill.
Spinning
The procedure for making "Yarn" is called Spinning. Spinning is a delicate process
because the yarn produced in this process should be exactly of the same quality and count
as specified by the buyer. There are many technical aspects involved in this process. At
each and every stage of yarn production, one has to take care of all the instructions and
technical things to produce a good quality yam.
Issuance of Bales
The production process starts from the issuance of cotton bales. Based on the order
(Contract) of yam, an estimate is made for the amount of cotton required for the process.
The cotton is then transferred from one of the Ginning factories to the Spinning unit or it
is purchased from the outside parties. When the cotton reaches the unit, the bales are
weighted and their moisture is checked. After that they are shifted to the Cotton Godown.
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The moisture of cotton bales is again checked when they are issued for the production
process. At this time the laboratory personnel came to know that exactly how much
cotton would be needed for the production process with a particular amount of moisture.
Relating to this a Daily Moisture Report is also prepared
Blow Room
Blow Room is the first stage in the making of Yarn. Here there are different machines on
which different activities are performed in order to clean the cotton. So, the basic
objective of this room is to clean the cotton to assure quality in the product. First of all in
the blow room, there is a machine called Plucker". In this, 20 bales of 20 different lots
are placed. It means that from every one lot one bale is taken. The role of this machine is
to separate the cotton layers because the cotton is in form of layers when the ginning
factory packs it. The machine does this role by sucking the cotton into it, sending it in a
"Condenser" which forwards the cotton to other place. The dust in the cotton is sent
outside the blow room through a pipe. After the Plucker has done its job then the job of
women start who clean the cotton by removing different impurities from it. Impurities
may include jute, leaves, plastic bags and other impurities. The cotton cleaned by ladies
is gathered on one side. Near this gathering of cotton there is a machine that is called
"Breaker". In this, cotton is loaded which is cleaned and its wastage called
"Dropping" is removed. It is first wastage that is removed with the help of machines.
After that the cotton moves along a path and reaches another machine called "Exi Flow".
This machine also cleans the cotton. After this the cotton reaches another machine called
"Multi Mixer". In this machine cotton is mixed. As explained before that cotton taken is
from 20 different bales. So the cotton is mixed together so that the mixed variety
produced should be good enough to produce a high quality yarn. After that the cotton
reaches a machine called RM" which further purifies the cotton. After this machine has
done its job there are two workers who remove any impurity like jute left over by the
machine. After this, there is another machine, which is called TX".
This machine exerts a very strong pressure on the cotton in order to remove any impurity
and then sends it to the Filter Room". In the Filter room there are different machines that
clean the cotton very thoroughly to make sure that the cotton passed to the
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Lacreen- Dropping
Lacreen is the cotton containing different things such as leaves. Dropping is same as
Lacreen but it is worse than Lacreen. Other wastages are Card Fly and Filter Fan. So the
job of blow room is to clean the cotton to make sure that fine quality lint is there for the
production of Yam.
Carding Department
After the blow room, the job of carding department starts. Basically in this department
three different major activities are performed. They are "Carding, Drawing and
Simpering".
Carding
In Carding "Slivers" are made. These are long, soft and thick ropes of cotton. These
Slivers are placed in drums called "Cans".
The cotton passed to the "Carding Section" is clean to produce a high quality yam. Here
cleaning the cotton gets different kinds of wastage. These are
DRAWING
In the drawing section, a process is there where the lengths of the slivers is increased.
This process is called "Drafting".
Twelve (12) canes of slivers are placed in a sequence and after that slivers from these
canes are combined to form a single sliver of larger length. Here, thus, the slivers are
combined to form a single sliver of a larger length.
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removing the waste, again the slivers are made to prepare them for the "Simplexing
process. Another waste (Short Fiber) goes outside the process with the help of pipes.
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SIMPLEXING
In the Simplexing section the Frames of carded yarn and comber are separately run. Here,
from slivers, Roving is made. This is basically thick yarn from which later the yam
with specified counts is made. These roving are wrapped on specially made thing called
"Bobbins". These roving are then carried over to the Ring department.
Ring Department
Here at the ring department, the yam with specified count is made. The Bobbins made in
the previous department are carried to this department where these are run on "Spindles".
At spindles the yarn is made which is of the count specified by the buyer. These Spindles
are run in frames. Each frame is of 480 spindles.
Yarn Godown
After packing, the yarn is transferred to the Yam Godown. In this Godown, all the record
is kept about the amount of yarn, its quality and the count.
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Laboratory
The laboratory plays very important role in Spinning. Its role starts from the issuance of
the bales. When the bales are issued, the laboratory checks their moisture and a Moisture
Report are prepared for that. In each department the raw material is checked by the
laboratory for its moisture. More over the laboratory also prepares report of various
wastage for different departments. It keeps record of daily production, monthly
production and wastage etc.
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EXPORTS
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EXPORT
Introduction
Export is the most distinctive recognition of Mahmood Textile Mills. It is the most
powerful weapon that MTM has got in the field of Textile. It is due to the export that
today MTM has got a distinction in the production of textile products. MTM exports
both, the Yarn and the Grey Cloth but major export is in the field of yarn. Hence yarn is
the major contributor to the earnings from the export. Currently Mahmood Textile Mills
has four brands of yarn. They are;
1. Cotton King
2. Palm
3. Zaitoon
4. Engine
In Fabric MTM have 214 qualities of grey cloth.
2) Letter of Credit:
After the contract is developed, the buyer opens Letter of Credit in his bank (foreign
bank) and that LC is sent to MTM's bank by that foreign bank. Then MTM's bank
forwards the LC to it. It is a document that is cashed when exporter hands over the
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3) Bill Of Lading:
When the goods are cleared from the custom and reach shipment, then the ipping
company issues Bill of Lading to the exporter. Bill of Lading intains following important
information;
Shipper and Consignee's particulars.
Place of Receipt, Loading and place of Delivery.
Forwarding Agent.
Country of Origin of Goods.
Port of Discharge.
Description of Goods and Packages.
Container Numbers.
Weight of Goods and
Total Freight (in US $ and local currency).
4) Checking of bill of lading and Buyer Information
against the Letter of Credit to make sure that there is no discrepancy between them. If
there is some, then it is the job of the agent to get it removed from the Shipping
Company.
An Export Register is maintained where all the information is entered about When the
agent sends the Bill of Lading to export department, it is checked the documents.
After checking the Bill of Lading, the buyer is also informed about the shipment by Fax
or by Phone. Now, before explaining the next step, it is necessary to tell you about the
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Non-Negotiable Documents
These are the non-original documents (either photocopies or faxes) of negotiable
documents that are given to the buyer just for providing him information about different
steps. With the help of these documents, exporter cannot take the payment from the bank
and the buyer cannot receive the goods. These documents are sent directly to the buyer
while the Negotiable documents are always sent via banks.
Negotiation of Documents
After receipt/correction of Bill of Lading, export department prepares the documents for
negotiation/collection of the payment and sends them to the audit department for
checking.
If the documents are passed by the audit dept., the director and the export manager sign
the bill of exchange. After their approval, the documents are sent to the bank for the
negotiation. Two copies of the Invoice and Bill of Lading are sent to the account section
for Freight and Sale Booking.
After this, a person appointed by the export department follows up the documents in the
bank, removes any discrepancy, if pointed out by the bank and receives the payment from
the bank on the same day.
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Bill of exchange
Bill of exchange is a document that is used to draw money from the foreign bank.
Exporter sends this bill to its bank which forwards it to the foreign bank that opens LC.
Invoice
In MTM the invoices prepared are of two types;
(1). First, the invoice that is prepared is for the purpose of "Custom Clearance". Its only
objective is to clear the goods from custom checks. From the two types of Invoices, this
one is prepared first. The basic difference between the two is that, in first one, the
information about; Description of Goods, Unit Price and Amount of goods (in any
currency) is given to small extent for secrecy purposes. Only that much of information is
given that can serve the purpose of Custom Officers.
(2). the second type of Invoice is prepared for the purpose of "Negotiation of
Documents". This Invoice is submitted to the bank. Each and every information about the
transaction is given in full detail here.
Settlement/Payment of Expenses
With each shipping company, the Director or the Export Manager settles the rate of Sea
Freight in American dollars for each destination.
After or before receipt of Bill of Lading, Sea Freight Payment Performa(explained
below) is filled by the export department which is then sent to the account section for
necessary action. The Performa is checked by the account and audit department and is
sent to the Director for approval of Demand Draft Issuance. After approval account
section arrange Demand Draft.
After that the Demand Draft is sent to the shipping company along with the Performa
and its two copies are kept at the export department for recording purposes.
Sea Freight Payment Performa
It is a Performa made by the export department specifying the terms of transactions with
the shipping company. It is sent with the Demand Draft and contains following important
information;
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CIF
Means "Cost, Insurance and Freight". It means that along with paying freight till
destination, the exporter will also get the goods insured on his/her own expense.
FOB
UNIVERSITY OF EDUCATION OKARA CAMPUS [SUMAD PURA ROAD OKARA]
45
Means "Freight on Board". In this the exporter will pay the freight till boarding only.
Remaining freight is paid by the buyer.
Getting Rebate from the Government
When the above steps are over, the job of Rebate Assistant starts.
With the help of some documents such as Shipping Bill, he prepares the rebate case and
sends it to the custom for payment after the checking of audit department and export
manager.
He then follows the case till receipt of payment.
After the receipt of payment, he maintains its record and hands over the check to the
accounts department. Shipping Bill It is given to the exporter by the shipping company
when the ds are shipped on board. Its important contents are;
Export Registration Number
FOB in foreign currency
Freight
Rate of Exchange
Exporter's and Consignee's particulars.
Name of Vessel or Aircraft
Port of Discharge.
Country of Final Destination.
Packages (description, marks and numbers)Quantity (units and amount)Description of
Goods.
Export Value and
Other information (Form E No., Unit Price, Vessels name etc.)
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exchange going. On this Form, exporter's specified bank also gives its statement about
the exporter that it knows the exporter and will collect the proceeds within 120 days. In
case of no realization, it will inform the State Bank about the circumstances. On Form E,
other information is made available as;
Description of Goods in detail.
Quantity (In bales, bundles, pieces, tons, Ibs, etc.)Invoice Value (In $) and Terms.
Destination, Port, Station.
Name and Address of Consignee
Name of Steamer or Air Company.
Reference of Bill of Lading or Airway Bill.
Port of Shipment/Post Office of Dispatch.
Land Custom Post.
47
Packing List
For the purpose of Custom Clearance and later on providing it to the buyer, a Packing
List is prepared. It contains information as;
Description of Goods.
Bales numbers.
Measurement.
Total number of Packages.
Total Gross Weight
Total Net Weight.
It is a negotiable document and is sent via bank.
Shipment Detail to the Buyer
When the goods are shipped, a detail of dispatch is sent to the buyer that contains all the
information about the Goods and their Packing. It is a non-negotiable document and is
only for buyer information.
Certificate of Origin
Certificate of Origin, as it is clear from the name is to certify that the goods being
exported to the importing country are of Pakistan origin. There are some countries in
which goods of certain other countries are banned. Hence this is to make sure that the
imported goods are not banned in the importing country, by the government. This is also
a negotiable document and is sent via bank.
Bill of Export
When the exporter submits different documents to the custom office for the purpose of
Custom Clearance, the Custom Office, issues a Bill of Export. Based on this bill, goods
are cleared from the custom. It contains each and very information about all the
transactions. Buy-Back-Cum-Indemnity for Export/Inland Bills After the exporter has
negotiated the documents it signs a "Buy-Back-Cum-Indemnity for Export/Inland Bills".
In this it accepts that it will buy the negotiated documents back from its bank. at the
amount of bill of exchange plus all the bank charges and mark up at the rate specified by
48
the bank within settled number of days, in the event of the said documents being refused
to the bank by the bank opening/confirming the credit or
dishonored by the drawee after acceptance, insolvency of the drawee or the bank that has
opened the LC or any other reason whatsoever.
49
PURCHASES
50
PURCHASE
Every organization has the need to purchase the raw material, heavy machinery, daily
used products etc., so has Mahmood Textile Mills. At MTM there is a separate
department for purchase known as "Purchase Department"
At MTM the purchase falls in four categories.
1. Import
2. General Purchase
3. Cotton Purchase and
4. Yarn Purchase
Let's first have a look on MTM's Import.
Import
Mahmood Textile Mills imports the goods that are not produced locally. So far Import a
proper procedure is followed at MTM. or every organization to import, it has to, first,
register itself in the list of importers. After that, the Importer can import. MTM is also
registered in importer's list.
51
Performa Invoice
The Performa Invoice is made by the Indenture to confirm the goods and r particulars, the
organization is demanding. Moreover it tells the importer about the Price, Payment, and
other Terms and Conditions. Forma Invoice has following contents;
Exporter's Name and Address.
Importer's Name and Address.
Description of items.
Quantity.
Terms and Conditions.
Country of Origin.
Delivery Date.
Mode of Payment.
52
Form I
Form I is an application for permission under the Foreign Exchange Regulation Act,
1947 to purchase Foreign Exchange for payment of Imports. In this Form, the
Importer declares;
That the mentioned payment is due and that he has not already obtained exchange
for payment for Imports nor he has made any other application for this purpose.
That the amount of Foreign Exchange mentioned represents the correct prevailing
marker price for the goods on the date of contract in the exporting country.
That he is neither connected with the exporter abroad directly nor indirectly nor do
he has any financial or other interest in the exporters. The Importer certifies that;
The imports are covered by a valid Import License/Import Permit/Sub
unauthorization/Authorization duly registered with the State Bank of Pakistan.
Importer undertakes that the remittances being made shall be utilized for e Import
mentioned and he shall clear the goods for consumption in Pakistan with in four
months from the date of application. A part of this Form I is completed by the
Authorized Dealer who certifies that the statements made by the applicant in the form
are to the best of its knowledge correct and it has seen documentary evidence in
support there of. The dealer also certifies that the remittance has been made in
accordance with method of payment as per existing Exchange Control Regulations.
Bill Of Entry
The Bill of Entry is just like Shipping Bill. With the help of this document, import
department clears the goods from the custom. It carries all the information about;
The Importer.
Letter Of Credit.
Freight.
Goods (Their price, units, weight, packages).
Shipment detail.
Sales Tax, Income Tax, Custom and Excise Duty.
53
Invoice
When the exporter negotiates the documents, he sends Invoice to Import department
that specifies;
Goods imported by MTM
Air Freight and Forwarding Charges.
Port of destination.
Payment (in importing country's currency).
Type of Packing
Airway Bill
When the goods are sent by ship. Bill of Lading is made. When the goods are sent by
Air, Airway Bill is made. Airway Bill possesses following information;
Airport of destination.
Flight/Date.
Amount of Insurance.
Handling Information
Number of pieces of goods
Gross Weight and Net Weight.
Rate/Charge.
Nature and Quantity of Goods. It is a negotiable document. The exporter also sends
Certificate of Origin and Letter of Credit to the Import department which are both
negotiable documents.
General Purchase
The Purchase department of Mahmood Textile Mills purchases different parts and
daily used products from the local market too. But Installations and other heavy
machinery are imported, because they offer high-class quality and prolong warranty
periods. The goods purchased locally, fall in the category of General Purchase.
General Purchase at Mahmood Textile Mills
54
Yarn Purchase
As mentioned earlier, Mahmood Textile Mills also purchase the yarn from outside
parties inspite of its own Spinning units. The yarn is only purchased from the
approved suppliers and it is made sure that the yarn purchased is of high quality to
produce a good high quality fabric.
55
56
Local Market.
The Local Sale Director makes the contract and he is responsible for sale of cloth in
the local market. He takes help of the Local Sale Assistant. Usually, A Grade
products are exported and B and C Grade products are sold in the local market.
Obviously the rate for B and C Grade products is less than the A Grade products but
these are also easily sold in the local market as compared to the foreign market
because foreign market is more quality conscious than the local market.
57
which then
58
59
PERSONAL
MANAGEMENT
PERSONNEL MANAGEMENT
60
Orientation
Orientation is necessary for any kind of worker and the manager. The concerned
Officer or the Director is made responsible for conducting Orientation.
61
Placement
The placement of the worker is temporary when he is selected and placed in a trial
session. The placement becomes permanent when the worker passes the trial. The
selection of the middle or the top managers is in the Head Office and at the time the
managers are selected, they are placement as permanent. For them there is no trial.
The job description is given to the worker or the manager after the selection and in
this respect the documented procedures of ISO 9002 for job description are followed.
Salaries
The salary of a single worker is Rs. 2100/- per month which is called Gross Salary.
Overtime is paid according to the hours worked over and above one shift of eight
hours. The salary of the middle and top managers is determined by the concerned
Director. There is lot of variation in it.
Rewards
The rewards given to the lower level are of two types
1. Rewards which are given to weavers.
2 .Rewards which are given to workers.
(1). the amount of reward which is given to the weavers is based on their work done.
When a certain weaver weaves the cloth, then the Time Keeper places a sticker
(Tape) on the Cloth Roll which describes,
1
Name of weaver.
3 Loom number.
4
Quality.
62
Bonus
Bonus is given annually with respect to percentage of profit. (Percentage is
determined by the concerned Director).
Facilities
The facilities are provided to all the levels.
The GM of the unit as been given a good reasonable home and a car. Middle
managers have been allotted homes.
Lower Managers are also been provided homes but for four lower managers there is
one home.
Moreover the personnel are provided free Electricity and Gas into their home
Workers Union concept is different here. Union in at the mills (production units).
Unit #1, 2 and 3 has one union. Unit no. 4 and 5 has another union. Union's President
and Secretary are elected by the workers. But usually they are the persons whom the
owners want to be president or secretary. They take 1% share from the workers'
bonus but according to the workers they are of no use to them.
63
Attendance
For attendance every worker is given an "Attendance Card" and he brings it in the
unit in the morning when he comes to work. From that card the attendance is shifted
to a register for the purpose of making "Daily Attendance Report for a Shift". This
report contains information as;
No. of workers that should be on work.
No. of workers actually on work.
No. of workers in trial.
No. of workers present.
No. of workers absent. No. of workers that have come on time. No. Of workers that
have come late.
Leaves
The company has a leave system for the benefit of the workers and the managers. In
this system there are three kinds of leaves. They are;
1. Sick Leave (SL). They are 8 per year.
2. Casual Leave (CL). They are 10 per year.
3. Annual Leave or Earned Leave. They are 14 per year. If a person is on leave, then
his salary is not deducted, but if a person has taken his all leaves and is now absent
then his salary would be deducted for that day. According to the government's law;
If a person has taken all the 18 (SL & CL) leaves in a year and is now absent, then he
cannot take 14 Annual leaves the next year, even he was absent only once apart from
his 18 leaves. But the company has extended this benefit to 4 absentees apart from 18
leaves. By working more than 8 hours a worker can take either;
1. Overtime or
2. CPL (Compensation Pay Leave).
When ever a worker works more than 8 hours and does not takes overtime, then his
CPL is noted and against this he can take one leave without marking himself absent.
When a worker is newly selected, he cannot take leave for the first three months, but
his leaves are deferred in the proceeding months
64
Gratuity
Gratuity is another benefit which is given to the employees. It is the one month's
basic pay which is added to employees' Gratuity Account after completing his one
year in service. For example if the basic pay of an employee is Rs. 1000 per month,
then after one year Rs.1000 will be added to employees' Gratuity account but it will
not be given to him. When the employee will get resignation or he will get retirement
then the whole gratuity will be given to him. If the above employee has retired after
25 years then his gratuity after retirement will be 25,000 rupees. There is no contract
with the workers or managers for their job. However one has to inform one month
before his resignation so that the mills can arrange another worker or the manager.
Otherwise in case of no reporting, one month salary of that person is deducted. The
Personnel Management of the company is good but it is not like a Multinational
company. Especially the salaries of the middle managers are very low and the
rewards and fringe benefits are limited
65
ORGANIZATION CULTURE
ORGANIZATION CULTURE
66
67
SWOT ANALYSIS
68
SWOT ANALYSIS
STRENGTHS:
The company has a vertical integration system
Adopting Farm-to-fabric strategy
Mahmood group consists of seven companies located in different cities of country
Company has many distinction certificates over the entire textile industry of
Pakistan by ISO, Supima, Lycra and Oko-tex.
Its annual turnover ratio is US $ 215 million.
Company is playing a significant role in textile exports with 90% export ratio.
MTM has a strong dealer ship network and large sales force to cater to its needs.
69
WEAKNESSES:
Lack of long term planning, decisions are made keeping in view the short term
benefits.
Monetary sensitiveness to foreign exchange exposure.
Too much centralization beurucratic control effects timely decision making.
Less mobilization of resources.
There is a lack of joint research and development activities.
Company has dearth of trained manpower.
Some little exposure of high-tech technology.
Improper methods of inventory management.
70
OPPORTUNITIES:
Great opportunities for joint ventures.
More ease for internationally integration because of the lower tariff barriers and
Removal of quantitative trade restrictions.
Proper placement of warehouses, automated in future.
With the help of government subsidiaries, purchase of raw material in bulk form
will cut companys cost.
Company can hire specialized people with innovative approach will help to
Differentiate its products and maintain an edge over competitors.
Opportunity to appear as a multifunctional textile mill because of globalization
factor.
Expansion of plants to meet the demand more efficiently.
THREATS:
Crises of gas and water can effect its production.
High production cost can create problems for company.
Threat of entry of new competitors in market.
Low price of market share as compared to competitors will effect investments.
No strong brand name can decrease companys sales level.
Companys registered office located away from main business cities so it creates
hurdles for company to carry its operations efficiently.
71
72
PEST ANALYSIS
73
Govt. should apply sustainable policies for the beneficial of the exporters as
well as the investors.
Economic situation
The economic condition of Pakistan affect the textile industry directly and
due to week economic condition textile industry is also not performing well.
Increasing inflation rate make the cost of production high and thus reduce
the profit margin of the investor.
Social situation
The change in the lifestyle of the people affects the demand of MTM
product and especially the demand for exports is affected by the changing
fashions and style in the importing countries so the company is needed to be
contemporary to meet the changing demand of customers.
Technological factor
Technological advancement in all the sectors of the country has changed the
entire socio-economic environment. Especially in the textile sector there is a
lot of technological development, but we still need more development to
meet the demand of outside world.
74
75
BCG MATRIX
76
The
basic
idea
behind
it is:
if
product's
Stars are using large amounts of cash. Stars are leaders in the business.
Therefore they should also generate large amounts of cash.
77
Profits and cash generation should be high. Because of the low growth,
investments which are needed should be low.
Cash Cows are often the stars of yesterday and they are the foundation of a
company.
Dogs (low growth, low market share)
Cash Cows Business Units will reach their profit target easily. Their management
have an easy job. The executives are often praised anyhow. Even worse, they are
often allowed to reinvest substantial cash amounts in their mature businesses.
Dogs Business Units are fighting an impossible battle and, even worse, now and
then investments are made. These are hopeless attempts to "turn the business
around".
78
As a result all Question Marks and Stars receive only mediocre investment funds.
In this way they can never become Cash Cows. These inadequate invested sums
of money are a waste of money. Either these SBUs should receive enough
investment funds to enable them to achieve a real market dominance and become
Cash Cows (or Stars), or otherwise companies are advised to disinvest. They can
then try to get any possible cash from the Question Marks that were not selected.
If a company is able to use the experience curve to its advantage, it should be able
to manufacture and sell new products at a price that is low enough to get early
market share leadership. Once it becomes a star, it is destined to be profitable.
BCG model is helpful for managers to evaluate balance in the firms current
portfolio of Stars, Cash Cows, Question Marks and Dogs.
BCG method is applicable to large companies that seek volume and experience
effects.
It provides a base for management to decide and prepare for future actions.
The problems of getting data on the market share and market growth.
A high market share does not necessarily lead to profitability all the time.
The model uses only two dimensions market share and growth rate. This may
tempt management to emphasize a particular product, or to divest prematurely.
79
The model neglects small competitors that have fast growing market shares
BALANCE SHEET
80
81
Assets
Current Assets
Cash and bank
balances
MAHMOOD
Advances,
deposits and
other receivables
Trade debtors
(net)
Stock-in-trade
Raw material
Work in process
Finished goods
Stock-intrade(net)
Sales tax
refundable
Short term
investments
Stores, spares
and loose tools
Total current
Assets
Fixed Assets
Operating Fixed
Assets
Investment
Property
capital work-inprogress
Long term
Investment
Long term
Deposits
Total fixed
Assets
Total Assets
2005
Rs.
2006
Rs.
2007
Rs.
2008
Rs.
172,814,896
16,049,950
9,686,177
7,584,259
2009
Rs
1,486,068,648
169,580,242
117,185,853
88,430,076
2,310,941
48,589,001
67,760,129
44,812,703
69,394,339
187,557,975
69,433,646
24,855,609
126,440,912
220,730,167
239,587,504
31,738,172
117,640,324
388,966,000
678,544,478
29,227,518
146,632,574
854,404,570
813,116,252
30,807,354
95,951,990
939,875,596
1,085,638,458
21,007,454
92,354,018
1,198,999,930
45,952,942
9,680,642
55,484,417
169,036,865
138,494,733
53,646,568
65,443,171
97,176,451
696,002,889
1,260,569,339
1,386,908,396
594,686,601
708,267,837
57,739,692
2,942,357,828
701,075,042
738,093,535
1,665,827,350
14,058
14,058
19,626,598
11,370,049
444,708,159
146,806,000
146,806,000
146,806,000
134,804,956
207,547,729
1,644,030
1,833,030
1,180,685
3,771,143
4,347,499
876,344,465
861,098,179
1,330,802,437
1,804,403,449
1,775,523,737
1,471,031,066
1,557,101,06
8
2,591,371,77
6
3,191,311,84
5
6,493,405,302
1,563,628,509
Liabilities
Short term
liabilities
1,908,804
1,411,284
15,995,363
13,793,090
interest/markup
on loans
75,310,394
26,536,600
53,108,029
74,679,405
current portion of
long term
liabilities
297,885
134,520,221
584,313,022
768,552,579
Short term
finances
42,281,203
47,569,156
53,767,978
66,037,846
Creditors
86,325,079
94,848,370
177,473,542
131,461,316
accruals and
other payables
1,745,999
2,291,263
3,266,410
1,300,650
Provision for
taxation
40,326,746
Dividends
248,196,110
307,176,894
887,924,344
1,055,824,886
Total Current
Liabilities
Long Term
Liabilities
66,341,447
39,804,847
366,446,223
550,618,900
Long term loans
and finances
20,164,685
17,741,861
18,638,048
33,043,700
Long term
Payables
86,506,132
57,546,708
385,084,271
583,662,600
Total Long term
Liabilities
Capital and
UNIVERSITY OF EDUCATION OKARA CAMPUS [SUMAD PURA ROAD OKARA]
82
Reserves
99,739,890
99,739,890
99,739,890
99,849,890
Issued
subscribed and
paid-up capital
4 9,005,607
136,689,609
1,394,354,879
40,664,725
27,062,791
6,900,809
1,605,672,813
304,349,426
12,879,015
317,228,441
715,520,000
TREND ANALYSIS
Assets
Current Assets
Cash and bank balances
Advances, deposits and
other receivables
Trade debtors (net)
Stock-in-trade
Raw material
Work in process
Finished goods
Stock-in-trade(net)
Stores, spares and loose
tools
Total current Assets
Fixed Assets
Operating Fixed Assets
Investment Property
capital work-in-progress
Long term Investment
Long term Deposits
Total fixed Assets
Total Assets
Liabilities
Short term liabilities
interest/markup on loans
current portion pf long term
liabilities
Short term finances
Creditors
2005
Rs.
100
2006
Rs.
9.287364904
2007
Rs.
5.604943338
2008
Rs.
4.388660454
2009
Rs
859.92
100
100
174.7023039
139.4556949
120.7253762
92.22808059
91.10104945
142.8190281
2.38
386.01
100
100
100
100
345.0596617
127.6901805
93.03976232
176.2178706
977.2560093
117.589225
115.9692474
387.0810146
1171.069501
123.9452793
75.88682214
425.8029651
1,563.56
84.52
73.04
543.20
100
100
96.68763033
117.0369213
117.9487405
211.9720432
175.1418799
233.2166882
104.06
494.77
100
98.98445269
104.2110762
235.1973735
100
100
100
100
100
57.93183821
100
111.4961406
98.26024051
105.8509983
2265.844335
100
71.81651186
151.8583719
176.1602345
0
91.82523603
229.3840745
205.9011634
216.9438783
141.38
264.44
202.61
441.42
100
73.93551145
837.9782838
722.6037875
100
100
100
35.23630483
45158.44067
112.5066285
70.51885693
196153.8923
127.167569
99.16214885
258003.115
156.1872447
181.50
468,084.96
96.18
100
100
100
100
109.8734818
131.2293421
0
123.7637826
205.5874655
187.0797177
0
357.7511122
152.2863547
74.49316981
0
425.3994497
31.35
395.24
646.94
100
100
59.99996804
87.98481603
552.3639287
92.42915523
829.9772237
163.8691604
458.76
63.87
100
66.52327028
445.1525714
674.7066208
366.71
100
100
100
100.1102869
717.39
100
105.4070269
117.5608991
139.3854229
25.46
86
100
104.9324316
116.0195124
136.5647272
.20
100
105.8509983
176.1602345
216.9438783
.30
197
83
84
2005
2006
2007
2008
2009
11.74787535
6.598645144
1.030758396
10.89076653
0.373785695
4.52215518
0.237653334
2.770963174
22.88581382
0.035589046
3.303057435
4.351684704
1.729304279
2.174476904
4.720066599
1.68967261
8.595393729
15.00513294
0
0
3.771804572
15.3867664
2.038285931
7.555085949
24.98013828
0
0
3.445284902
26.18475991
1.127878225
5.658492361
32.9711305
0
6.523064987
2.525425784
25.47905976
0.965350787
3.006662923
29.45107347
1.439938941
4.339743019
3.045031502
16.72
1.42
1.422274041
18.46488667
0.14908421
0
0.889205114
40.42651544
0
48.14771444
0
1.334206901
9.979802833
0.111760386
3129801661
100
0
0
0.129759598
5.119565164
44.69863282
0
45.02437616
0.000902832
0.73020623
9.428161281
0.117720682
3075350639
100
0
0
0.09063535
1.704231058
48.64486642
0
28.4827342
0.000542493
17.16110992
5.665184801
0.045562162
4752865846
100
0
0
0.617254658
2.04941759
43.45888034
0
52.19882703
0
0
4.224123575
0.118169053
6444298032
100
0
0
0.432207527
2.34008485
45.31301669
0
0
24.08025429
0
3.196284836
0.066952528
6341156204
100
0
0
0
2.105052783
0.020250082
2.874256294
8.639145125
3.054981913
6.091343199
22.54840573
2.074884758
6.848632977
24.08265366
2.06930094
4.119350361
21.47339977
0.626246524
5.868338269
0.118692191
2.741393226
16.87225482
0.147149279
0
19.72748592
0.126049455
0
34.26464517
0.040755967
0
33.08435331
0.106274115
0
24.72774666
4.509860365
2.556343183
14.14101313
17.25368522
4.687054201
1.370785802
5.880646167
1.139416147
3.69575933
0.719234815
14.86024794
1.035426859
18.28911208
0.198339922
4.885394123
6.780270812
6.405485941
3.848922448
3.128803917
11.01917972
0
70.4668282
77.24709901
0
70.17126881
76.57675475
0
47.02618444
0.223124544
45.27460615
48.62653462
0
4.064814203
15.08399392
Total Liabilities
and owner's
100 OKARA CAMPUS
100 [SUMAD PURA ROAD
100 OKARA]
UNIVERSITY
OF EDUCATION
equity
100
85
100
86
INCOME STATEMENT
87
2005
Rs.
3,172,585,332
2006
Rs.
3,909,712,718
2007
Rs.
2,878,130,066
2008
Rs.
3,839,168,820
2,213,630,692
133,297,738
436,781,177
2,783,709,607
(4,450,373)
(2,720,508)
2,776,538,726
3,173,235,325
132,789,205
351,691,836
3,657,716,366
(6,882,563)
1,735,461
3,652,569,264
2,111,626,689
121,751,406
270,811,260
2,504,189,355
4,936,003
(21,397,559)
2,487,727,799
2,730,669,961
193,020,389
466,581,883
3,390,272,233
(1,579,836)
46,424,394
3,435,116,791
1 ,036,163,837
131,332,709
396,046,606
257,143,454
390,402,267
404,052,029
257,905,297
Admin expenses
Selling expenses
other operating
expenses
29,651,107
89,978,928
32,247,865
95,151,804
5,879,609
28,621,516
88,692,539
36,433,230
46,198,337
73,696,732
22,201,896
20,909,963
63,697,327
497,111
total operating
expenses
119,630,035
133,279,278
153,747,285
142,096,965
135,072,569
Operating Profit
Add Other
incomes
Export rebate on
packing material
276,416,571
123,864,176
236,654,982
261,955,064
122,832,728
3,424,297
1,657,745
697,730
4,321
5,437
Exchange
fluctuation gainnet
Income on bank
deposits
1,324,990
59,957
153,432
20,419
135,759
1,255,303
438,693
75,546
123,921
321,834
3,407,400
9,411,990
6,169,977
8,326,372
7,078,700
280,967
8,286,375
4,121,025
38,699,414
42,969,100
4,704,749
Sales (Net)
Cost of goods
sold
Material
Labor
Foh
total factory cost
Work in process
Finished Goods
Cost of goods
sold
Gross profit
Less Operating
Expenses
dividend income
others
total other
incomes
Less Other
Expenses
Profit before
Interest and
taxes
Less Interest
Expense
14,079,92
8
271,748,63
3
Profit
available
for appropriation
116,065,43
50,075,47
229,479,65
42,349,30
6
97,769,63
4
28,683,08
192,990,07
36,209,67
5,167,779
17,623,607
110,376,90
19,349,547
67,553,74
150,920,67
91,027,35
3
21,007,454
92,354,018
1 ,450,247,795
177,681,66
6
5
56,048,64
106,915,86
187,130,34
41,720,99
2
432,691,811
564,024,520
1,708,153,092
284,597,53
4
18,295,80
221,673,15
20,326,63
0
15,461,70
6
profit before
taxation
Profit
after
taxation
Add inappropriate
profit
16,125,11
4
2009
15,549,420
110,127,92
2
75,477,93
3
883,494,82
0
1,076,484,89
0
Less Appropriation
39,895,95
6
Inappropriate
1,036,588,93 OKARA CAMPUS [SUMAD PURA ROAD OKARA]
UNIVERSITY OF EDUCATION
profit (carried to 4
B/S)
EPS
9.56
19.35
5.62
15.13
11.03
88
TREND ANALYSIS
INCOME STATEMENT
Sales (Net)
Cost of goods sold
Material
Labour
200
5
2006
2007
2008
2009
Rs.
100
Rs.
3909712718
Rs.
2878130066
Rs.
3839168820
Rs.
1,708,153,092
100
100
3173235325
132789205
2111626689
121751406
2730669961
193020389
1 ,036,163,837
131,332,709
89
100
100
100
100
100
351691836
3657716366
-6882563
1735461
3652569264
270811260
2504189355
4936003
-21397559
2487727799
466581883
3390272233
-1579836
46424394
3435116791
21,007,454
92,354,018
1 ,450,247,795
Gross profit
100
257143454
390402267
404052029
257,905,297
100
100
100
32247865
95151804
5879609
28621516
88692539
36433230
46198337
98500306
22201896
20,909,963
63,697,327
497,111
100
133279278
153747285
166900539
135,072,569
100
100
123864176
236654982
237151490
122832728
Export rebate on
packing material
Exchange fluctuation
gain-net
Income on bank
deposits
dividend income
others
total other incomes
100
1657745
697730
4321
5,437
100
59957
153432
20419
135,759
100
438693
75546
123921
321,834
100
100
100
6169977
8326372
7078700
280967
8286375
4121025
38699414
42969100
4,704,749
Less
Other
Expenses
Profit
before
Taxation
Less provision for
taxation
Profit after taxation
100
34420914
57811012
102438924
17,623,607
100
97769634
187130345
177681666
110376900
100
41720992
36209675
67553744
15,549,420
100
56048642
150920670
110127922
263,944,861
100
5.62
15.13
11.03
9.56
Less
Operating
Expenses
Admin expenses
Selling expenses
other
operating
expenses
total
operating
expenses
Operating Profit
Add Other incomes
432,691,811
564,024,520
5,167,779
Add unappropriated
profit
Profit available for
appropriation
Less Appropriation
Unappropriated
profit (carried to
B/S)
EPS
90
91
RATIO ANALYSIS
92
Liquidity Ratios:
2005
2006
2007
2008
2009
Ratio
346,490,491
388825995
372644995
331083510
1336685015
"Working Capital"
1,600,000,000
1336685015
1,400,000,000
1,200,000,000
1,000,000,000
800,000,000
600,000,000
400,000,000
200,000,000
0
2005
2006
2007
2008
2009
INTERPRETATION:
The working Capital is showing decreasing trend for the last two years because of rapid
increase in account payable and also due to short-term borrowings, hence decreasing its
profitability. In year 2009 there is high increase in liabilities as compare to the current
assets. Working capital is decreased in 2009 as compare to previous years
93
2. Current Ratio:
Formula: Current Assets / Current Liabilities
Years
2005
2006
2007
2008
2009
Ratio
2.39
2.26
1.42
1.31
1.83
Current Ratio
3
2.5
2.39
2.26
1.83
2
1.42
1.5
1.31
1
0.5
0
2005
2006
2007
2008
2009
Interpretation:
Current Ratio of the company has a decreasing trend. It was quite good in 2005 but then
current liabilities of the company increased in the proceeding years so it went down. Over
all although the current ratio is decreasing yet it is showing the good ability of firm to pay
its current liabilities from current assets.
94
2005
2006
2007
2008
2009
Ratio
0.89
0.27
0.06
0.07
0.05
0.89
0.7
0.6
0.5
0.4
0.3
0.27
0.2
0.1
0
2005
2006
0.06
0.07
0.05
2007
2008
2009
INTERPRETATION:
Quick ratio of the company has a decreasing trend. In 2006 there is a significant decrease
in the quick ratio which shows company has a very large portion of least liquid asset
(inventory) in its current assets. It shows that the most liquid assets of the company are
not in a position to payoff the current liabilities.
95
4. Cash Ratio:
Formula: Cash+ Cash equivalent+ marketable securities / Current Assets
Years
2005
2006
2007
2008
2009
Ratio
0.7
0.052
0.01
0.007
0.08
Cash Ratio
0.8
0.7
0.7
0.6
0.5
0.4
0.3
0.2
0.052
0.1
0.08
0.01
0.007
2007
2008
0
2005
2006
2009
INTERPRETATION:
Cash ratio is showing a decreasing trend. A significant decrease can be seen in 2006.
After this there is a continuous decrease which shows firm is using cash up to its best and
maximum advantage.
96
Formula:
Years
2005
2006
2007
2008
2009
Ratio
62.59
64.86
49.29
64.83
64.98
62.59
64.86
60
64.83
64.98
2008
2009
49.29
50
40
30
20
10
0
2005
2006
2007
INTERPRETATION:
A consistent trend in account receivable ratio can be seen. As this ratio tells that hoe
many times the credit sales are being converted into cash. So, the company is showing a
very good trend which shows the good management of the company.
97
2005
2006
2007
2008
2009
Ratio
5.83
6.52
5.94
6.8
8.9
8.9
5.83
2005
6.52
2006
6.8
5.94
2007
2008
2009
INTERPRETATION:
A mix trend can be seen. It is 5.83 days in 2005. Then in 2006 it is increased and became
6.52 days. Then it is again decreased and it became 6.8 days in 2008. The companys
overall collection period is good as there is a slight difference in figures.
98
2005 2006
2007
2008
2009
Ratio
12.58
2.91
3.65
2.89
9.39
12.58
12
9.39
10
8
6
2.91
3.65
2.89
2
0
2005
2006
2007
2008
2009
INTERPRETATION:
Inventory turnover ratio is showing random trend. This ratio has decreased in 2006.
There is a significant decrease in 2007. Then in 2008 a slight increase can be seen. The
reason behind this low turnover is the high fluctuation in cost of sales. The cost of sales
showed a massive fluctuation because of intensive change in total factory cost.
99
Formula:
(Average Inventory / Cost of Goods Sold) x365
Years
2005 2006
2007
2008
2009
Ratio
29.01
125.36
99.86
89.67
38.86
125.36
120
99.86
100
89.67
80
60
40
29.01
38.86
20
0
2005
2006
2007
2008
2009
INTERPRETATION:
A continuous increase can be seen. It is 29.01days in 2005. Then it is increased to 38.86
days in 2006. A significant increase can be seen in 2007 i.e. 125.36 days. Then there is a
slight decrease in 2008 and it became 99.86 days. This shows the firms poor management
to convert its inventory into sales.
100
2005 2006
2007
2008
2009
Ratio
5.43
5.42
2.66
3.66
6.34
6.34
5.43
5.42
5
3.66
4
2.66
3
2
1
0
2005
2006
2007
2008
2009
INTERPRETATION:
The times interest earned ratio of the company was good in 2005 and in 2006. After 2006
a decreasing trend is shown in the ratio up to 2008. It is because of the increase in the
interest expenses of the company. But in 2006, instead of massive decrease, company is
still able to generate 2 times the expense of interest from its operations. In 2009 its again
increasing.
101
2. Debt Ratio:
Formula: Total Debts / Total Assets
Years
2005
2006
2007
2008
2009
Ratio
22.75%
23.42%
49.12%
51.37%
52.37%
Debt Ratio
60.00%
49.12%
50.00%
51.37%
52.37%
2008
2009
40.00%
30.00%
22.75%
23.42%
2005
2006
20.00%
10.00%
0.00%
2007
INTERPRETATION:
Debt ratio of the company is increasing in all the years. It reached its highest of 52.37%
in 2009. In 2006 there is a slight increase but in 2007 a significant increase can be seen. It
is all because of a massive increase in the liabilities of the company.
102
2005 2006
2007
2008
2009
Ratio
335%
1276%
1642%
1376%
365%
1642%
1800%
1600%
1376%
1276%
1400%
1200%
1000%
800%
600%
400%
335%
365%
2005
2006
200%
0%
2007
2008
2009
INTERPRETATION:
The ratio indicates the proportionate claims of owners and the outsiders against the firms
assets. This ratio shows that company is continuously increasing the debt portion in the
business. This shows that the business is risky to make investments in such business.
103
Profitability Ratios:
1. Gross Profit Margin:
Formula :( Gross Profit / Net Sales) x100
Years
2005
2006
2007
2008
2009
Ratio
12.48%
6.58%
13.56%
10.52%
9.54%
13.56%
12.48%
10.52%
12.00%
10.00%
9.54%
6.58%
8.00%
6.00%
4.00%
2.00%
0.00%
2005
2006
2007
2008
2009
INTERPRETATION:
An Irregular trend of gross profit can be seen. In 2006 it is decreased to 6.50%. In 2007 it
is increased to 13.56%. This increase is due to decrease in sales and in cost of goods sold.
In 2008 it is again decreased. The reason behind this fluctuation is the change in cost of
goods sold and in sales.
104
2005
2006
2007
2008
2009
Ratio
8.71%
3.17%
8.22%
6.82%
5.17%
8.71%
8.22%
6.82%
5.17%
3.17%
2005
2006
2007
2008
2009
INTERPRETATION:
An irregular trend can be seen. In 2005 the operating profit is 8.71%. It is decreased
significantly in 2006 to 3.71%. The reason behind this decrease is the increase in
operating expenses of the company. In 2007 a great increase of 8.22% can be seen.
Although the operating expenses are increasing but low cost of goods sold supported this
increase. And in 2008 there is a slight decrease of 6.82%. and in 2009 its again
decreasing from previous year. The reason behind this decrease is the increased cost of
goods sold.
.
UNIVERSITY OF EDUCATION OKARA CAMPUS [SUMAD PURA ROAD OKARA]
105
2005
2006
2007
2008
2009
Ratio
32.67%
1.43%
5.43%
2.87%
3.98%
32.67%
30.00%
25.00%
20.00%
15.00%
10.00%
5.43%
5.00%
1.43%
2.87%
3.98%
2008
2009
0.00%
2005
2006
2007
INTERPRETATION:
A great Variation can be seen in net profit ratio. It is 32.67% in 2005. A significant
decrease can be seen in 2006. Then there is a slight increase of 5.43%. Then it is again
reduced to 2.87%. The reason is the great fluctuation in interest and tax expenses of the
company. Another reason of this fluctuation can be that after 2003 there is no
inappropriate profit.
106
2005
2006
2007
2008
2009
Ratio
2.16
2.51
1.11
1.2
1.3
2.51
2.16
2
1.5
1.11
1.2
1.3
2007
2008
2009
1
0.5
0
2005
2006
INTERPRETATION:
An irregular trend can be seen. A good increase in turnover can be seen in 2006 which
shows that the assets are being effectively used to generate sales. The reason of decrease
in turnover in 2007 is that the assets have been increased but company is unable to
increase its sales volume. In 2008 and 2009 there is a little bit improvement in turnover.
107
2005
2006
2007
2008
2009
Ratio
4.48
5.58
3.9
2.31
0.96
5.58
4.48
3.9
4
3
2.31
2
0.96
1
0
2005
2006
2007
2008
2009
INTERPRETATION:
The ratio has shown an increasing trend in 2006 but then it again started to decrease and
it reached to 3.9 in 2007 and then in 2008 and 2009 there is again decrease but its not
significant decrease. It is all because of the greater increase in fixed assets as compared to
the sales of the company. This all shows that company is making productive use of its
fixed assets by generating good volume of sales.
108
6. Return on Assets:
Formula: Net Income / Average Total Assets *100
Years
2005
2006
2007
2008
2009
Ratio
70.50%
3.60%
5.80%
3.40%
3.97%
"Return on Assets"
80.00%
70.50%
70.00%
60.00%
50.00%
40.00%
30.00%
20.00%
10.00%
3.60%
5.80%
3.40%
3.97%
2006
2007
2008
2009
0.00%
2005
Interpretation:
A random trend can be seen in this ratio. There is significant decrease in return in 2006 of
3.60%. In 2007 a slight increase can be seen. And in 2008 there is again decrease in
return and it is 3.40% and in 2009 it is slightly increased. This fluctuation is due to the
continuous increase in assets and an irregular change in income.
109
Investors Analysis:
1. Degree of Financial Leverage:
% change in net income / % change in EBIT
Years
2005 2006
2007
2008
2009
Ratio
3.81
0.658
0.387
0.376
0.483
3.81
3.5
3
2.5
2
1.5
1
0.483
0.5
0
2005
2006
0.658
2007
0.387
0.376
2008
2009
INTERPRETATION:
The degree of financial in the year 2005 is 3.81 which indicate that as EBIT changes Net
income will change y 3.81 times that amount. If EBIT increases the financial leverage ill
be favorable and if EBIT decreases the financial leverage will be unfavorable. But in
2006 financial leverage decreased to 0.483 which shows that company is earning less on
the borrowed funds than it pays to use them. A conservative investor would look for
favorable financial leverage. In next years the degree of financial leverage has slight
changes that are in 2007 it has slightly increased to 0.658 the in 2008 and 2009 again
decreased to 0.387 and 0.376.
110
2005 2006
Ratio
103.93
5.62
2007
2008
2009
15.13
11.03
9.56
103.93
100
80
60
40
15.13
20
5.62
11.03
9.56
2008
2009
0
2005
2006
2007
INTERPRETATION:
A mix trend is there. In 2006 the E.P.S. has decreased. The reason is a huge reduction in
net income. As the no. of shares is almost same over the years, the increase in E.P.S. is
due to increase in net income. The income in 2008 is slightly decreased and there is small
increase in number of shares thats why E.P.S. has decreased.
111
Years
2005 2006
2007
2008
2009
Ratio
96%
100%
100%
100%
100%
100%
100%
100%
100%
2006
2007
2008
2009
99%
98%
97%
96%
96%
95%
94%
2005
INTERPRETATION:
The percentage of retained earnings is almost same in all the years. It is 96% in 2005
because the company has declared the dividend to its share holders. No dividend has been
declared in rest of the years. Thats why a consistent trend can be seen.
112
Years
2005
2006
2007
2008
2009
Ratio
10
10
10
10
10
10
10
10
10
10
2005
2006
2007
2008
2009
8
6
4
2
0
INTERPRETATION:
There is no change in the companys book value per share.
113
2005 2006
2007
2008
2009
Ratio
3.1
6.48
10.9
9.89
13.34
"Price/Earning Ratio"
16
13.34
14
12
10.9
10
8
9.89
6.48
6
4
3.1
2
0
2005
2006
2007
2008
2009
INTERPRETATION:
In the year 2005 the price earning ratio is 3.1. In 2006it has jumped up to 13.4. This
increasing trend is favorable for these investors who are interested in capital gain. But in
2007 there is again decrease of 6.48 which is favorable for those investors who are
interested in dividends. In the year 2008 it has again increased to 10.9 and in 2009 it
decreased to 9.89.
114
RECOMMENDATIONS
RECOMMENDATIONS
115
116
CONCLUSION
CONCLUSION
From this report I conclude that company is vertically based on integrated industries and
started business in 1935, by setting up a tanning unit. Since then, the group has grown
immensely in the fields of cotton ginning, spinning and weaving. Cotton is regarded as an
117
118