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University of Wah
Department of Management Sciences
Submitted by
Sobia Nawaz Maha Hassan Amna Rashid Muhammad Zain
June 15th 2011
Organizational Analysis of Dawood Lawrencepur Textile Mills
Submitted to
Ms Afshan Sultana
Semester Project of BBA-VI
Topic
"Organization Analysis"
Organization
Dawood Lawrencepur Textile ltd.
BY
Sobia Nawaz
Maha Hassan
Amna Rashid
Muhammad Zain
Approved: __________________
Ms. Afshan Sultana
(Course Instructor)
Marks Obtained: ________
Comments: ____________________
____________________
Acknowledgement
All our praises for ALLAH
THE ALMIGHTY, who
bestowed potentially upon us to
accomplish this present report
successfully. With all our
sincerity, we express. Our
gratitude to the HOLY
PROPHET (P.B.U.H) and his
fellows, who are the source of enlighten guidance and wisdom for the
humanity. We have deep sense of gratitude to our honorable teacher
Ms. Afshan Sultana for her generous guidance for this report. We
would also like to appreciate the praise-worthy efforts and the
assistance of some people who have kindly helped us out in the
completion of this report. They definitely include our parents,
teachers and friends. We want to thank Mr. Asif Comboh- (Manger
IR & Admin), Ms. Sobia-(HR Executive) and Mr. Tahir for their
support and guidance so that we are able to complete such project.
Abstract
Students of BBA 6th
semester ─UW carried out a visit to Dawood Lawrencepur
Texile Mills, Lawrencepur, to learn its business strategies, functions, local and
international operations etc. This visit was being done as a part of the project of BBA
course. The Project covered all steps from planning to final operations of
Management and Marketing.
The introduction covers the key features, company profile mission &
vision. In Pakistan all smart organizations are trying to understand and
implement the concept of modern business practices. The practices and
strategies should implement in their true sense in the organization in order to
achieve overall effectiveness and efficiency. This final report includes an
introduction, the finding, Analysis, learning and conclusions. In this report we
discuss the core functions performed at Dawood Lawrencepur, strategies,
marketing mix and SWOT analysis etc.
The success of Dawood Lawrencepur has been based on replicable and
state of the art technologies. The key Strength of Dawood Lawrencepur is their
well-recognized Brand, innovation and luxurious services, along with a highly
motivated management and loyal team, and excellent course material hold and
control and implementing the rules and regulations. It has clear and predefined
policies that fulfill the legal requirements.
About the Theme
We are streamlining our textile business to meet growing customer
needs while maintaining a profitable profile. We are focused on a single
agenda, to build our Lawrencepur brand driven by strong sales and
wide scale presence in the market.
Table of Contents
Company History
Mission and Vision Statements
Globalization
Products
Technology
SWOT Analysis
PEST Analysis
Demand and Supply
Future Prospects
Statement of Ethics and Business Practices
Investments
Trade
Conclusion
COMPANY HISTORY:
Business Description
Dawood Lawrencepur Limited is a Pakistan-based
company. The Company is engaged in the business of
manufacture and sale of yarns and fabrics made from
natural and man-made fibers and blends thereof. The
wholly owned subsidiary of the Company is Tenaga
Generasi Limited (TGL).
The name Dawood is known to everyone today and the generation owes it to
elders whose dedicated efforts, sheer hard work and commitment to the cause, the
cause of betterment to the country and self, placed them where they are today.
Dawoods, the people of vision and integrity are in business since decades.
The elders started business even before the momentous changes that swept the sub-
continent and culminated in the emergence of Pakistan.
Vision
To pursue sustained growth through a diversified
business portfolio for enhancing stakeholder value.
Mission
To be a responsible corporate citizen with respect
for the society.
To achieve a safe & healthy business environment.
To provide an excellent working environment and growth potential for the
employees.
To strive for excellence through commitment,
integrity, honesty and teamwork.
To make honest and ethical behavior a way of life.
To improve quality of life for our employees.
The Icon of Integrity
The Dawood Group, a distinguished and trusted name in Pakistan, traces its
origins back to almost a century ago. The Group owns companies ranging from
fertilizer, textiles, business and finance. Through its diverse businesses, the
Dawood Group of Companies delivers some of the top brands and the highest
quality services.
Most of the Group Companies consistently ranks among the top 25
companies of KSE. The Dawood Group's exemplary success for more than five
decades has transpired into collective benefit of its customers, shareholders and
employees of all Companies.
In 1947 Mr Ahmed Dawood migrated to Pakistan. Understanding the need
for industrial development as the only means for the prosperity of this newly born
state, he initiated a number of industrial projects in East and West Pakistan.
In 1949 Lawrencepur woollen & Textile Mills was founded, and acquired its name
after the Military Commander of the area before Independence, Sir John Lawrence
Pakistan's industrial sector was lacking in textile processing units due to the
non-availability of quality yarn. Realising this need, Dawood Cotton Mills Limited
was set up in Karachi, which commenced production in January 1952.
In 1954 Burewala Textile Mills Limited was established at
Burewala, District Vehari, Punjab. It was one of the largest
spinning and weaving mills of Pakistan at that time producing
100% cotton yarn and Grey Fabrics.
In 1954 Lawrencepur Woollen & Textile Mills became
operational and produced yarn for hand knotted carpets, blanket
for Armed Forces, tweed and worsted fabrics.
In 1960 Lawrencepur Woollen & Textile Mills, saw a revolutionary change
as Dawood Group took over the mills. The new management took radical steps to
expand and modernize the production facilities.
In 1967 Dilon Limited, Pakistan’s first Nylon Yarn
Producer, was established in Karachi.
In 1968 Dawood Hercules Chemicals Limited was
established as a joint venture between the Dawood Group of
Industries and Hercules Chemicals Inc. of the USA. It was the
first private sector venture in Pakistan to receive a loan by the
World Bank.
In 1971 East Pakistan, Mr Ahmed Dawood
established Karnaphuli Paper Mills. He also founded,
Karnaphuli Rayon & Chemicals Limited, Dawood Jute
Mills and Dawood Shipping Company. All his
investment in East Pakistan were lost with the creation
of Bangladesh in 1971.The East Pakistan industrial
undertakings constituted almost 60% of the Group’s activities.
In 1974 Mr Ahmed Dawood's business enterprise
suffered further setbacks as the Government of Pakistan
nationalised a number of large Pakistani industrial
undertakings and the Group lost its flagshipj company,
Dawood Petroleum Limited
In 1984 Keeping in view the industrial development of the country, a new
polyester plant was installed at Dilon unit with the daily capacity 4.5 ton of flat and
textured filament yarn.
In 1996 Burewala Textile Mills became Pakistan’s first spinning and
weaving mill to receive prestigious ISO 9001 certification.
In April 1998, Lawrencepur Woollen & Textile Mills obtained ISO 9001
certification.
In 2004 Amalgamation of all textile companies
of the Dawood group into a single entity named
Dawood Lawrencepur Limited.
In 2004 Dawood group acquired a majority stake in Inbox Business
Technologies Pvt Ltd - Pakistan's leading computer brand.
People
At Dawood Group, we do not consider
ourselves as a group of companies but rather a
group of people because our people are
fundamental to the way we do business; they
are at the centre of every thing we do. We grow
as a group by the growth of each one of us.This
insight is behind all our efforts to keep our
people fulfilled and committed. It’s also why
we stay connected within a company and with
the other companies of the group with shared
values and business goals.
The Dawood Group Companies
• Dawood Hercules Chemicals Limited
• Dawood Lawrencepur Limtied
• Central Insurance Company Limited
• Inbox Business Technologies
• Elixir Securities
• Pebbles Private Limited
Associate Companies of Dawood group
• Avanceon Limited
• Engro Fertilizers Limited
• Engro Polymer & Chemical Ltd.
• Engro Foods Limited
• Engro Powergen Limited
• Engro Vopak Terminal Limited
• Engro Eximp Private Limtied
Investor Information
The Dawood Group employees Over 1,200 people in more than seven
manufacturing units and 10 offices all across Pakistan. Our diverse management
team at the group level with global exposure is setting the standards for the
business practices in the region.
Group’s strong capital base, financial stability and diversified earnings
stream are strong indicators that we’re strategically well positioned for future
growth and development.
Globlization of Market
Lawrencepur first started their business locally. when they had achieved
their objectives to produce high quality woolen and fabrics they targeted the
international market they exported their products to European countries where their
products were highly appreciated by the royal family because of its high quality
they established their brand international even prime minister of USA know their
brand by name.
Glabalization of Product
In start Lawrencepur collected sheep all part of country and made wool and
cotton tops they first had their own weaving plant and produce 100 % threads for
their fabrics then they started achieve the factor of production to reduce the cost of
production they started importing threads from Australia still some their weaving
plant run in factory but instead of collecting sheep’s wool and cotton to make top
they importing the ready-made tops from Australia which not only reducing the
cost of production but also maintaining highest quality of product . They also
import wool from china and further processing such as dying and spinning and
weaving done inside the factory through same procedure polyester is prepared and
then different proportion of threads and polyester are made according to each
product line.
Globalization
Globalization negatively affects Lawrencepur. It is affected so badly that
Lawrencepur is now out of international market and other reason is power and
energy crisis in Pakistan 3 days of the week gas supply is being stopped electricity
prices are going high and ultimately cost of production as well as per unit cost has
increased. On other hand other competitors of Lawrencepur such as china turkey
and Japan are offering low prices for same quality in same international market
lawurncpur cannot offer such prices because of their increased cost of production
that’s why its share has dropped in international market and finally they with draw
from international business and the export business. The reason of their failure that
they had not any contingency plan to cope with such crisis situation.
Technology
During our visit in factory we noticed that Lawrencepur had not adopted
new or modified technology the plants installed in 1957 are still being used.
Most of the office work is done manually. No invention or innovations are
adapted. This all leading to high cost of product. Only labor efficiency is used. Due
to high cost most of the units are closed. Old machinery is maintained at high cost.
SWOT ANALYSIS
The availability on economical, reliable and sustainable energy is the key
Issue that companies face globally today. Countries all over the world are
grappling ways in which millions of households, industries and other Businesses
can be provided with energy that is dependable and does not tax our future
generations.
Stregnths
Experienced and competent management following a carefully strategies
Diversified customer base and geographical distribution e business plan
Substantial goodwill in the market
State of the art production facilities
Superior Customer services
Dawood Lawrencepur have decided that with technical and financial
capabilities within the company and the group, they can play an instrumental role
in an effort to the national objective of reliable, economical, sustainable energy for
sustainable economic development, creating an environment where everyone can
turn reach grow.
Weakness
Centralized decision making.
High overhead expenses
Slow Growth rate
High cost of production
Lack of contingency planning
Low focus on marketing
Threats
Energy crises
Economic and Political instability
Lack of quality raw material availability and high cost of procurement
New Entry of competitors
Increased marketing costs
Strong labor union
In Pakistan we face a slightly different challenge. While the world Figures
out a way to power the economic growth of the future, we at home while we are
concerned with the issue of inadequate energy today. Demand has Outgrown
supply massively in the past, the resulting in prolonged power Breakdowns and gas
load shedding.
Pakistan's energy scarcity is indeed disconcerting. It is seen as the single
biggest impediment to the growth for our industrial sector. Frequent power outages
render our exports uncompetitive, as idle factories cannot deliver goods so
desperately needed to be produce on time. This is the issue of reliable energy.
Opportunities
Install own power plants
Target middle class
Decentralized decision may lead to fastest growth
To offer online selling facility
Open its own retail network
The company currently generates over 6500 MW from renewable hydro
energy, but have the capacity to generate 32000 MW more. According to latest
figures Dawood has the potential to generate up to 43,000 MW through wind
energy alone, a source already producing electricity at commercially viable levels.
The location in the tropics gives Dawood Lawrencepur an added advantage to use
the sun to power our homes, with technologies becoming increasingly competitive
with conventional methods of power generation.
Pakistan possesses over 180 billion tons of coal. We also have the lowest
drilling densities and highest success ratios suggesting tremendous potential in
hydrocarbon exploration. On top of that we are located in the region that has
provided much of the world with cheap energy and is forecasted to do so for next
few decades. All of these factors have coupled together for us to look back and
turn.
PEST ANALYSIS
Political
The factors negatively affect all businesses; including the political wars
among the parties etc. The monthly wages were increased. These steps did prove to
be a successful in motivating an already depressed and low paid labor force but at
the same time increased the threats from labor unions for meeting their demands
and cost of production for already suffering textile industry.
Economic
The inflationary pressures as noted in the year 2006 influences the company
sales. However the inflation rate is stabilizing and is at 10.26% and the SBP has
decreased interest and is expected to further cut the interest rates. The rupee
depreciation during the year has been beneficial for the exporters, as unit prices in
PKR have increased for the textile segment.
Social
In rural areas of Pakistan there are fewer opportunities to earn a living, so
many bread earners move out to find a better earning opportunities. They mostly
find jobs in different sectors including textiles and also prove to be low cost labor.
This benefits the companies in competing in terms of cost.
Technology
Pakistan is facing serious power crises in terms of electricity shortage and
gas shortage as well. Due to this many textile units have completely shut down and
many units have to cut down production. Since decades many incentives were
given to the local industry such as tax rebates, R&D support in 2007.The domestic
companies took advantage of such policies but were not able to add value to the
textile exports due to which Pakistan exports are falling sharply.
Demand & supply
The demand and supply of a Dawood textile industry depends upon few
main factors. Some of them are mentioned below;
1. Internal Conditions of the home country
2. Condition of the country where the end product is to be exported.
3 Global financial conditions.
If we take an example of current situation of textile sector we’ll come to
know that the demands are much more then supply. Reason for less supply from
industry is;
1. Shortage of Cotton
2. Unavailability of Skilled Labor
3. Problems of Electricity Shortage
4. Problems of Gas shortage
5. Improper law and order situations
6. Unrealistic hike in fuel prices
The textile industry can supply more than it is already supplying if the
abovementioned problems get solved.
Regarding past if we compare then the demands were high but the supply
was low because of hike in freight charges and also the raw material which
depends upon oil or we can say due to hike in the prices of all petrochemical
products which are necessary for a textile industry. For example:
1. Plastic Resin: Which is used for making plastic bags
2. Dyes: Used as colorants
3. Chemicals of all types used in dyeing and finishing process
4. Lubricants.
5. Fuel (which is somewhat stable now than before)
6. Transportation charges.
In future if our government can provide the better fuel including power and
natural gas then much of the problems of a textile industry will get solved in this
way.
Future Prospects
The company is in the process of improving its woolen textile operations
with investments in technology, processes and human resources and this is likely to
result in improved results. Substantial progress has been made in our negotiations
with Wind Turbine Suppliers and EPC Contractors for setting up a 50MW Wind
Energy Farm. We expect to achieve financial close by the end of this year. Your
company will also be looking at the possibility of other projects in the Alternative
energy field.
Staff Relations
The company continues to benefit from the efforts and dedication of all its
employees. The Directors are pleased to record their appreciation.
Karachi: Inam Ur Rehman
March 25, 2010 Chief Executive
Statement of Ethics and Business Practices
Dawood Lawrencepur Limited exists on sound principles of development
and growth. It makes no compromises in any aspect of good business practices.
The Company takes pride in adherence to its principles and continues to serve its
customers, stakeholders and society on the following guidelines.
Guidelines
The Company strongly believes in free and fair business practices and open
competitive markets. Developing any association within the segment,
industry or with competitors to distort the pricing and availability is
contradictory to our business code of conduct.
The Company's financial policies for conducting business are transparency,
integrity and following the principles of accounting and finance as approved
by regulations and contemporary accounting codes.
The Company believes in uprightness of performance and expects it to be a
fundamental responsibility of our employees to act in Company's best
interest while holding confidential information. We expect our employees
neither to solicit internal information from others nor to disclose Company's
figures, data or any material information to any unauthorized person/body.
The Company believes in encouraging the individuals’ respect and growth.
Our employment and HR policies develop individuals without any
discrimination on the basis of race, religion, gender or any other factor.
The Company as a responsible corporate citizen strongly adheres to the
principles of corporate governance and complies with regulatory obligations
enforced by regulatory bodies for improving corporate performance.
The Company anticipates integrity and honesty of employees in doing
business for the Company. Any unfair or corrupt practices either to solicit
business for the Company or for personal gains of the employee is
fundamentally inconsistent with business codes of the Company.
The Company believes in community development without political
affiliations with any person or group of persons working for gains. We
contribute our resources for a better environment with an unprejudiced
approach.
Within our mills our policies gear towards unbiased and impartial employees
betterment
Legal Status and Operations
Dawood Lawrencepur Limited, "the Company" is incorporated in Pakistan
as a public listed company formed as a result of Scheme of Arrangement for
Amalgamation in terms of the provisions of the Companies Ordinance, 1984
between Dawood Cotton Mills Limited, Dilon Limited, Burewala Textile Mills
Limited, Lawrencepur Woolen and Textile Mills Limited. The shares of the
Company are listed on the Karachi and Lahore Stock Exchanges. The Company is
principally engaged in the business of manufacture and sale of yarn and fabrics
made from natural and man-made fibers and blends thereof. The registered office
of the Company is situated at 35-A, Shahrah-e-Abdul Hameed Bin Badees
(Empress) Road, Lahore. The Company in the years 2007 and 2008 closed its
manufacturing units located at Landhi, Karachi and at Dawoodabad unit,
Burewala, District Vehari. The operations relating to the closed down units have
been classified as discontinued operations, and are accounted for as ‘non-current
assets held for sale and discontinued operations’ as per the requirement of IFRS-5.
During the period, the Company has adopted special tax year ending on
December 31 for which permission of Commissioner of Income Tax has been
obtained vide its letter dated August 18, 2009. Consequent upon the change in tax
year, the Company's financial year has been changed from June to December. The
change was made so that the Company's year-end coincides with the year-end of
group companies.
Taxation
Income tax expense comprises current and deferred tax. Income tax expense
is recognized in profit or loss except to the extent that it relates to items recognized
directly in equity, in which case it is also directly recognized in equity.
Current
Provision for current taxation is based on income streams chargeable at
current rate of taxation under the normal tax regime after taking into account tax
credits and tax rebates available, if any. The charge for current tax includes
adjustments to charge for prior years, if any.
Stock-in-trade
Stock-in-trade is valued at the lower of cost and net realizable value. Cost is
determined using weighted average method except for raw material in transit,
which is stated at cost. Cost includes applicable purchase cost and manufacturing
expenses. The cost of work in process includes material and proportionate
conversion costs. Net realizable value represents the estimated selling price for
inventories less all estimated costs of completion and costs necessary to make the
sale.
INVESTMENT
Investments in Subsidiaries and Associated Companies
Investments, in subsidiaries where control exist, and associates where
significant influence can be established are initially stated at cost. Subsequently,
the recoverable amount is estimated to determine the extent of impairment losses,
if any, and carrying amounts are adjusted accordingly. Impairment losses are
recognized as expense in the profit and loss account. Where impairment losses
subsequently reverse, the carrying amounts of the investments are increased to the
revised recoverable amounts but limited to the extent of initial cost of investments.
A reversal of impairment loss is recognized in the profit and loss account adjusted
for impairment, if any, in the recoverable amounts of such investments.
Profit or loss is measured at fair value, and changes therein are recognized in
the profit and loss account. Purchases and sales of investments are accounted for at
trade date, i.e., the date that the Company commits itself to purchase or sell the
investment.
Trade and Other Payables
31 DEC 09 30 JUNE 09
Rupees Rupees
Creditors 34,740,816 27,688,595
Accrued expenses 28,914,218 24,414,899
Gratuity payable to resigned staff 8, 306,973 9,687,512
Advance from customers and others 12,345,234 17,208,925
Unclaimed dividend 20,698,412 20,732,552
Due to Islamic Development Bank 25,960,000 25,960,000
Deposits 740,376 766,42
Withholding tax 156,684 175,803
Others 6,468,03 2 6,699,792
Total 138,330,745 133,334,505
This represents preference share capital of one of the merged entity issued to
Islamic Development Bank with right to redeem. The merged entity had served
notice to the Bank for redemption before the scheme of amalgamation was
approved and as such the same has been classified as liability and redemption
reserve has been created. All deposits are re-payable on demand and no interest is
payable thereon.
Conclusion
The Lawrencepur is
well-managed and well
competing and renowned
brand in textile industry.
The devoting and hardwo-
rking management and
their offering are their
strength. Since they have
no competitor locally but
for few segments some
competitor are in international market, but due to energy crises it is only offering
its products to local market. The Lawrencepur has very strong employment policy
to retain their employees but as of the global trend the industry is in downsizing
phase. Lawrencepur has to coupe many challenges internationally, locally as well
as internally. The strategic planning and policies are quiet good; soon the company
will come out of these challenges. The Lawrencepur is also having plan for
targeting more markets and make come back to international market. Hence it is a
progressing organization that has the potential of in such tough scenario. But the
margin of improvement is still there, by which it can boost it growth.