76384832 Nishat Mills Limited

Nishat Mills Limited

DedicationWe would like to dedicate this report to our beloved parents for their kind support and help on our way to gain knowledge and skills. Their presence means a lot to us and a major source of

motivation on the way to our goals.

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Acknowledgement

Without the help of certain people, our thesis would have never been completed. Thus, we want to take this opportunity to thank them.

We thank, respected Mr. Mahboob Sanghi our examiner. His lessons gave us insights about the way of writing a report, and his constructive criticisms were a great help and

provided the opportunity to learn from our mistakes.

We thank as well our tutor, Mr. Mujeeb for the help he provided, the advices he gave, and for the time he took.

We also want to thank the other students for their helpful advises during the completion of report and for the time they took to read our paper.

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Mission Statement

To provide quality products to customers and explore newmarkets to promote/expand sales of the Company through good

governance and foster a sound and dynamic team, so as to achieve

optimum prices of products of the Company for sustainable andequitable growth and prosperity of the Company.

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Vision Statement

To transform the Company into a modern and dynamic yarn,

cloth and processed cloth and finished product manufacturing

Company with highly professionals and fully equipped toplay a meaningful role on sustainable basis in the economy

ofPakistan.

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INTRODUCTION

When Pakistan came into being there was only 16 textile mills out of which only 12 were in operation. It grew to 70 in 1957 as industrial development takes place. Now a day there are 596-textile mills out of which 442 are in operation. The export revenue of textile industry contributes a large share to the GDP of Pakistan.

Textiles Exports from Pakistan

Textiles constitute a major exporting sector for Pakistan, which accounts for about 60%of the country’s total foreign exchange earnings. The major export items are yarn; gray Cloth, finished cloth, towels and bed sheets and their major customers are the USA, EU, Japan and Hong Kong. Many textile exports take place under quota arrangements With the EU and the United States. Gray cloth constitutes roughly 16-18% of total cloth.

Exports from Pakistan.

Nishat gray cloth exports account for roughly 20 % of Pakistani gray cloth exports. The firm has been exporting to the USA for many years, and has only recently started to export to EU countries. In Pakistan, the cotton crop season runs approximately from August to March. Prices are generally high at the start of the season in August/September, and fall later on as supply increases. Following income tax law, the fiscal year runs from October to September for textiles sector.

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NISHAT MILLS LIMITED NISHAT MILLS LIMITED (NML) commenced business in 1951 as a partnership concern, which was converted into private limited company in 1959. In 1961, the company went public and was listed on the Karachi stock exchange, the only stock exchange in the country at that time. NML started out as a weaving unit with 500 semi-automatic looms; later 10000 spindles were added, laying the foundation on nation’s biggest textiles composite project. Composite project at Nishat mills limited Faisalabad covering 98 acre of land is providing all production process under one roof i.e. spinning, weaving, processing, stitching and power generation. The FounderA man of vision, courage and integrity, Mian Mohammad Yahya was born in 1918 in Chiniot. In 1947 when he was running a leather business in Calcutta, he witnessed the momentous that swept the indo-pak sub-continent and resulted in the emergence of Pakistan. Like many of his contemporaries, he also migrated to the new country to help establish its industrial base. His is a story of success through sheer hard work and an undaunted spirit of enterprise. Beginning with a cotton export house, he soon branched out into ginning, cotton and jute textiles, chemicals and insurance. He was elected Chairman of All Pakistan textile Mills Association (APTMA), the prime textile body in the country. He died in 1969, at the age of 51 having achieved so much success in so short period.

The Chairman

Today Mian Mohammad Mansha, the chairman of Nishat Group, like his father, continues the spirit of entrepreneurship and has led the group to become a multi dimensional corporation, with wide ranging interests. Nishat has grown from a cotton export house into the premier business group of the country with 5 listed companies, concentrating on 4 core business, Textiles, Cement, Banking, and Power Generation. Today, Nishat is considered to be at par with multinationals operating locally in terms of its quality products and management skills. Firmly believing in ‘Growth through Professional Management’ our corporate culture is based on decentralization, delegation of authority, encouraging the acceptance of responsibility and inculcating quality consciousness. It is our conviction that every successful organization is a reflection on the commitment, dedication, and team spirit of its employees, and Nishat is no exception. Our people are all imbued with the spirit, a fact manifested in our rapid growth and low turnover

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Nishat continue to strive to be a better group today than what they were yesterday, for their customers, for their shareholders, for their investors, for the environment, for the community and for their employees, for it is with them that Nishat has achieved so much success in last fifty years.

COMPANY INFORMATION

BOARD OF DIRECTORS: Mian Hassan ManshaMr. Fayaz Ahmad Longi (NIT)Mr. Muhammad Bilal Sheikh (PICIC)Mr. Aftab Ahmed KhanMr. Khalid Qadeer Qureshi Mr. Muhammad AzamRana Muhammad MushtaqMr. Muhammad Ali Zeb

CHIEF EXECUTIVE: Mrs. Naz Mansha

CORPORATE DEPARTMENT: Mr. Muhammad Azam Company Secretary

Mr. Khalid Mahmood Chohan Senior Manager corporate

AUDITORS: Riaz Ahmad and CompanyChartered Accountants

LEGAL ADVISOR: Mr. M. Aurangzeb Khan, Advocate,Chamber No. 6, District Court, Faisalabad.

BANKERS TO THE COMPANY : ABN AMRO Bank

Allied Bank of Pakistan LimitedAmerican Express BankAskari Commercial Bank LimitedCredit Agricole IndosuezCitibank N.A.Deutsche BankEmirates Bank International P.J.S.CFaysal Bank LimitedHabib Bank LimitedHabib Bank A.G. ZurichMashreq Bank P.S.C.National Bank of PakistanStandard Chartered Grind laysSociete General – The FrenchAnd International BankThe Hong Kong & ShangaiBanking Corporation Limited

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Union Bank LimitedUnited Bank Limited

MILLS: Niashatabad, Faisalabad(Spinning, Weaving, Processing,Stitching units & Power Plant)

12 K.M. Faisalabad Road, Shiekhupura(Weaving units & Power Plant)21 K.M Ferozepur Road, Lahore.(Stitching unit)

5 K.M. Nishat Avenue off 22 K.M Ferozepur Road, Lahore (Dyeing & Finishing Unit and Power Plant)

20 K.M. Shiekhupura Faisalabad Road, Froze Watwan(Spinning Unit)

REGISTERED OFFICE Nishat House,

53, A, Lawrence Road, Lahore.Tel: 042-6367812-16Fax: 042-6367414

LIAISON OFFICE: 1st Floor, Karachi ChamberHasrat Monani Road, Karachi.Tel: 021-6367812-16Fax: 021-2412936

HEAD OFFICE: 3rd and 4th Floor E.F.U. House,6-D, Main Gulberg, Jail Road, Lahore.Tel: 042-5715646-52Fax: 042-5715644-5

NISHAT GROUP OF COMPANIES

NISHAT MILLS LTD, FAISALABAD NISHAT DYEING AND FINISHING, LAHORE NISHAT FABRICS, BHIKHI NISHAT SPINNING, FEROZE WATTOAN NISHAT SEWING, LAHORE

HISTORY AND PRESENT STATUS OF NISHAT The history of Nishat dates back to 1951, when Mian Mohammad Yahya founded Nishat Mills. After almost half a century of undaunted success, Nishat Group is among the leading business houses of the country and ranks among the top 5 groups in terms of assets and sales revenue. The group has its roots firmly planted into four-core business namely.

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1. Textiles2. Power generation3. Banking4. Cement

The textile business is further subdivided into 2 textile divisions; Nishat Faisalabad Nishat Chunian

I did my internship in the head office of Nishatabad Faisalabad.

TEXTILE CAPACITY Production process consists of spinning, weaving, processing, and finishing. The processing includes dyeing, engraving. The textile capacity of the group is the largest in the country. An addition of 20000 new spindles, 100 new air jets looms and new dyeing plant has increased the existing capacity of 24000 spindles, 740 looms and dyeing and finishing capacity of 5 million meters. The group is the largest exporter of textile products from Pakistan for more than a decade.

Export Oriented Organization Nishat mills limited are an export-oriented organization. Nishat mills limited exports more than 90% of its products mainly to the Far East, Europe and United States.

D.G khan Cement Company limited In 1992, Nishat group acquired D.G Khan Cement Company LIMITED from the government of Pakistan. DGKCC is the second largest project of the group and is ideally located in the heart of the Pakistan. DGKCC Unit No I has a capacity of 2,200 tons per day, a new unit having the capacity of 3,300 ton was established in 1997, international Finance Corporation and Common Wealth Development Corporation have finance this unit. With addition of unit NO 2, DGKCC has become the largest manufacture cement of Pakistan.

Muslim commercial bank In 1991, Nishat Group ventured into the financial sector through the acquisition of Muslim Commercial Bank. MCB has the grown ever since and is now the largest in the private sector. MCB has a network of over 1500 branches employing over 12,000 people.Management of Nishat Mills Limited Nishat Mills Limited employees are highly qualified professionals and have a young, energetic and dedicated team of professionals who have a lot of knowledge to their credit.

Managers are responsible for the task assigned to them in their departments and also have to match whether their respective department is achieving the desired efficiency level or not.

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There are at least three basic requirements for a successful company and the managers of Nishat Mill Limited are made to think on these lines:

1. It must provide a product (good or service) that suits best to the company’s capabilities and for which there is a sufficient market.

2. It must provide the product with consistent quality at a level that appeals to intended customers and satisfy their needs.

3. It must provide a product at a cost that always an adequate profit and a reasonable sale price.

INTERNATIONAL STANDARD OF ORGANIZATION (ISO) Nishat mills limited have achieved ISO 9001 and ISO 9002 certificate in 1997. In order to achieve this certificate following requirements should be fulfilled,

(1) MANAGEMENT RESPONSIBILITIESManagement responsibilities includes the following,

i. Quality policy According to the ISO 9001 and ISO 9002, it is utmost responsibility of management to devise policies that provide quality products to customers. Nishat is working hard to ensure that they produce quality products.

ii. Customer expectation It is essential that customer expectation should be fulfilled. It is the responsibility of management to do so. Since Nishat is an export-oriented organization so utmost attention is paid to meet customers’ need and requirements.

iii. Resource management Utilization of resources play crucial role in the success or failure of organization. If resources are effectively utilized, they become cause of success for organization. Nishat is effectively using its resources and thus has achieved ISO 9001 and ISO 9002. In the financial year of 1999-00, it declared dividend of 26%, which is highest so far. This performance shows that Nishat mills limited have sky-high goals. Human resource management also exists. They have ensured that, right man is placed at right job and also at the right time. Various training programs are offered for upgrading the skills of staff.

iv. Responsibility and authority Nishat is fairly decentralized organization. Middle level management makes most of decisions and matters are decided in a friendly environment. Nishat cares a lot for its staff. Orders are not dictated but they are made with effective participation from staff.

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v. Management representatives Nishat governing body is highly talented. Board of directors include professional of great repute. They are committed toward achieving a good name for Nishat mills limited.

(2) QUALITY SYSTEM

I. System Procedure ISO 9001 requires that there should be proper system for each work. Standardization of work is necessary for achieving effective certification.

II. Standard Operations Nishat mills limited have established a quality control lab, which ensures quality products to their customers. Objective at Nishat is to provide only quality products to their customers. That’s why they achieved quality certification like ISO 9001.

III. Quality Planning Effective planning is required for the success of organization. If plans are well planned, they bring success to firms. For this production and planning department has been established.

IV. Work Instructions Instruction should be provided for better handling of job, and it is exactly in its true spirit followed at Nishat mills limited.

(3) CONTRACT REVIEW

i. Reviews Sometimes contracts are reviewed, that reviewing must be in proper manner. Contract should be given keeping in view of interest of the company.

ii. Amendments If the amendments are made in the contract, they should be made with authorized person. And management should be fully informed with that.

iii. Quality record For the storage of record, there should be proper arrangements. Each item in accounts should be properly coded and placed. Cash should be paid by cheque.

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(4) DESIGN CONTROL

1. Design and Development Planning For designing of products, there should be specific arrangements. Department of design planning should be established, if the enterprise want to achieve quality certificate like ISO 9001 and ISO 9002.

2. Design review Design should be reviewed once made by the firms. This design should have some characteristics that should be in accordance with the business practices.

3. Verify Validity Of Design Once design is complete, the competent authority should verify it.

(5) Customer Data Control It is the perquisite for ISO 9001 that proper customer data should be there. This is to provide customers list if required by the top management.

(6) Control of Customer Supply Product There should be proper control over customer’s products.

(7) Product Identification and Traceability Product should be clearly identified and traceable. It should have some characteristics that distinguish it from others. It should not be similar with other products in terms of its name, logo etc.

(8) Inspection There should be proper inspection of stores so that every thing functions according to manners prescribed by certificates.

(9) Corrective and Preventing Measures There should be check and balances. If the mistakes are made, there should be proper systems so that they are identified and corrected. Preventing methods should be there.

(10) Internal Audit There should be strong internal audit. So all discrepancies should be disclosed. In order to get ISO 9001 there should be separate internal audit department.

(11) Training Programs

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Training programs should be there to upgrade the skills of employees. On the job training programs should be provided so that workers get knowledge about work.

( 12) Statistical Techniques Various statistical tools are required to better controls the affairs of organization. They should be available to achieve quality awards. Uses of information technology, automation of factory, Internet and computer technology are prominent features in achieving ISO 9001 and ISO 9002.

ORGANIZATIONAL STRUCTURENISHAT MILLS LIMITED

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Director processing

Manager processing Manager folding

Dy. Manager foldingDy. Manager processing printing Dy. Manager processing dying




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G.M LOCAL MARKETING

In charge fair price Dy. Manager Quality Sr. assistant manager waste Assistant manager

Assistant manager

fair price

Assistant manager waste

Assistant manager waist

Assistant manager sales


Different Management Styles at Nishat Mills Limited

1. Personal Development And Training Junior-level courses are frequently held in-house for personal training. Various courses organized in the past include the following,

2. Japanese-style Production Management This course was formulated for supervisors and officers to enhance their management capabilities in interaction with the lower staff and associates and also to improve the production efficiencies.

3. Executive Development Course This course was specially designed for middle management to enhance their principle-centered leadership qualities so that they could meet the emerging challenges of the global world. Neuro-linguistic programming was part of the course to help the employee in day-to-day activities to improve proficiency and effectiveness in their attitude and work style.

4. Basic English Language Course This course was for those staff that is not proficient in written and verbal English language. An external instructor whose services were especially hired for this purpose conducted the course.

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G.M SALES

Sr. Assistant manager Asst. manager sales Asst. Manager Sales

Sales officer Sales officer Sales officer

Asst. sales officer Asst. sales officer Computer programmer

Computer programmer


5. Basic Labor laws of Pakistan Professionals from Labor Department organized this course. The main purpose was to give acquaintances to the staff of their rights. Wage rates, vacations, working hours, child & bonded labor etc, were the main topics covered.

6. In-Housing Training School Nishat mills limited has also established an in-house Training School for unskilled labor so that they may be trained on stitching machines, and qualify for work in the stitching floors. Unskilled manpower is hired from the market for training. And during this period they are paid as per the prevailing wage rules.

The Working Environment and Accountability

With the world fast becoming a Global Village and the Internet Information Technology Revolution, the issues of HUMAN RIGHTS and Working Condition are becoming significant important with each passing day. Nishat can pride itself in having one of the most congenial and professional working environments of any company operating in Pakistan. Nishat is an equal opportunity employer and there is no discrimination on the basis of sex, caste or creed. All hiring and promotion decisions are taken on merit. All local laws are adhered to regarding different matters. Extreme emphasis is placed on worker safety and health. All stitching machines are being equipped with belt and needle guards. Employees using cloth cutters are required to wear steel mesh safety gloves.

Selection & Career ladder First of all, human resource department selects appropriate people to do the job. These people are expected to work with full devotion, loyalty etc. management of Nishat believes in healthy competition among the employees so that workers are promoted on the basis of performance. Management cares a lot of their employees. Normally young people with great enthusiasm are preferred. Mostly clerical and middle level management are young people. Average age would be 25 to 30 years.

Promotion of Persons at Nishat On the basis of experience and performance, they are promoted to higher managerial level; at higher level I have seen various MBA, CA, ICMA and also people who have spend years at Nishat mills limited. In order to provide incentives to employees at Nishat mills limited, cash rewards are also granted. The head of the department, on job basis gives bonuses. Normally 10% of salary is bonus in each year.

Job Assessment At Nishat mills limited Performance Appraisal is prepared to check the performance of workers. It is like ACR (annual confidential report) in the government sector.The basic Objectives of job assessment are

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Check the overall performance of employees Whether the job assigned is fully done or not Integrity, honesty Loyalty Devotion and commitment of the part of employee to achieve organizational

objectives

Measures To Check Overall Performance Higher manager to check the performance of employees adopts following measures,

Standards are established first Measure the individual as well as collectively performance Compare actual performance with planned Taking corrective action Reviews of job are made. Superior management assesses accuracy of work.

On the basis of performance appraisal awards and rewards or punishments are given.

Accountability Employees have to face inquiries or suspensions, if they are involved in activities which are not according to the goal of Nishat mills limited. They are often terminated from their jobs, if they are not performing well. They can be demoted from their ranks. In Nishat mills limited, promotion is granted on performance basis so they are also accountable if they are performing poorly.

If the employees are not obedient to their superior or involved in unethical activities, they have to face the circumstances. Severe punishment like demotion, firing and suspensions are given to non-performing or low-performing employees.

Satisfaction Of Employee Employees have a high morale. Top management is maintaining very cordial relationships with union leaders. Actually employees feel a part in the organization and its achievements.

Plant location Plant location is one of the main long-term strategic decisions normally taken by top management. Nishat mills limited is ideally located in,Nishatabad Faisalabad.12- K.M Faisalabad road Shiekhupura.21- K.M Ferozepur road Lahore.5 K.M Nishat Avenue Lahore.Off 22.K.M ferozepur road Lahore.

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20-K.M Shiekhupura Faisalabad (ferozewatan)Main factory is located at Niashatabad. It is a composite unit.Composite unit means all the process i.e. from spinning to stitching takes place under one roof. Product process includes spinning, weaving, processing, finishing and stitching units.

General market scenario & future prospects The fiscal year ended June 2008 observed some major changes in

world economics in general and for textile sector in particular. This year witnessed

crude oil touching the record high of $140 per barrel, substitution of food crops to

biofuel crops, rising capital and commodity price indexes and galloping inflation in all

major economies of the world. Overall there was a major shift in fuel, labor and

operating costs of all business activities. For textile sector, matters were further

complicated by an unprecedented rise in cotton prices in September and October 2007,

with no signs of stability by the year end. Additional factors were energy crises at

domestic level, low yield of cotton in Pakistan and a very weak demand from US and

European and credit crunch for general consumers. Although softening of Pak Rupee

against US dollar helped to cover a small factor of this accumulated cost pressure, the

overall picture for domestic textiles industry was that of inflating costs and a deflating

product demand. Forecasting future is intricate in the present scenario of the country

and capricious market.

It mainly depends upon cotton market for the coming season, which seems

bullish. As per estimate of experts, Pakistani cotton production is short by

approximately 30 to 35 % as compared to the demand. We need our government to

chalk out a proper and long term textile policy for the survival of industry. On our part,

we need to increase customers profile and explore new markets to increase business

volumes. Our strategy to drive our marketing activities would be the timely adoption of

innovative products, finishes and production techniques.

Spinning Section The year 2008 mainly started with difficulties in the shape of the bullish and

uncertain cotton market. Ever highest cotton prices were seen this year in Pakistan.

Cotton prices started with Rs. 2,900/maund and went up to Rs. 4,000/ maund during

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this year. Most of the Spinning mills remained in a serious cotton crisis through out the

year. We have, however, by passed these crises by following our one time cotton

buying policy and same has also helped us to maintain steady quality results. Demand

of 100% grey cotton yarn remained steady and we tried to uphold the prices along with

market and to keep over all spinning in profits. By the end of the year, Far East market

showed good response in terms of demand and prices of carded & combed yarn. Far

East remained our main selling market of cotton yarn. USA had some steady demand

during this year, where as in Europe demand of cotton yarn was reduced more.

Development in terms of machinery is in progress for better quality of yarn. Installation

of state of art ring frames is under way at one of our spinning units.

Weaving Section During the year under review, we have observed highest ever yarn prices

which made the job more difficult. The increase in the yarn prices was not absorbed by

the fabric prices. We faced a lot of difficulties to win business in the international

market because of high raw material prices. Moreover, political instability, law and

order situation and energy crisis (Oil, Gas and Power shortage), increased our cost of

production and held our product uncompetitive in international market. It is becoming

difficult to maintain our performance in the present scenario. Fareast market showed

difficulties on ground of price. Business in South America reduced by 80% in

comparison with previous period because of the bullish yarn market and cheaper prices

from competitors. Our wider width looms home textiles greige capacity continued

facing decline in prices. Our strategy in this competition was to diversify ourselves

customer wise, market wise and product wise. This was the only way to survive in such

uncertain market. Another strategy was to cut costs by bringing innovative

technologies. We continued to replace our old looms with the new state of the art looms

and got new looms in different widths to meet the varying requirements of all of our

customers. This is the first time that Nishat has looms with 90” width. By having these

looms, we will be more competitive and can supply all types of greige fabric in varying

widths. We hope that after getting these new looms, we would not lose any business

because of the width problem, especially stretch articles. Moreover, we are planning for

PFD plant in our weaving to give PFD fabrics to our customers, as many customers in

Europe are asking for PFD fabrics instead of weaved fabric. In this way, we will be

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much competitive product wise and quality wise. It would increase our customer profile

in Europe. We are also trying to reduce our production lead times by bringing state of

the art looms. Customer services, keeping stocks of special filaments, yarns and fibers,

are our major tools for a better lead time. We have added new European customers and

started to increase business in France, Denmark, Turkey and Poland markets to fulfill

the gap of the Fareast and South American markets. Our business in the special and

technical fabric (Antistatic, Fire retardant, and military fabrics) has also increased with

continuation of orders. We have increased the sales volumes to Nishat Dyeing and

Finishing with a better product mix. We have launched several new products like

Viscose Lycra, Cotton/Kapok/Lycra, Bamboo Lycra and Linen based items etc. in the

Fairs/ Exhibitions and developed the same in different markets.

Processing and Stitching Section Year 2008 was a difficult year for fabric processing mills as in addition to

the domestic challenging scenario, recession of American market further slowed down

the entire business cycle. Retailers were stuck up with high inventory levels, which

hindered new ventures. Unanticipated bankruptcy of some major textile businesses

including, Dan River, Linen & Things, Goody’s Family Inc also gave unprecedented

setback to an already fading market. This situation did not allow suppliers to increase

any prices to overcome excessive overhead costs and ease out the worsening condition.

Even though all major concerns were facing a perpendicular decline in the revenues,

our company was able to sustain its sales in step with the plant efficiency. A particular

focus was conferred upon enhancing production efficiency by drawing more production

in less number of hours and with optimum workforce. With reference to this cost

cutting strategy, ban important step was taken by shifting the Faisalabad stitching unit

to Lahore, adjacent to the processing plant. This adaptation is expected to play an extra

ordinary role in improving the supply, operations’ management and reduction in

transportation costs. It will overcome unnecessary operational delays and costs.

Moreover, this stitching unit is being upgraded with the latest machinery and a state of

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the art switch-track system that will enhance the working efficiency enormously along

with the product quality. We are installing caustic soda recovery plant to have further

value addition, cost reduction and diversification in production resources. We have

installed new gerbur cutting equipment in our sewing operation. For exports, European

market remained our main bread & butter earner during the period due to its economic

and currency strength. Devaluation of rupee provided an auxiliary edge to European

customers to shop more on our existing prices, which consequently increased our

production & sales. We are exploring more opportunities to enhance our strong

presence in European market. Furthermore, a lot of developmental works are underway

for American market for regular and branded items. With escalating value of Chinese

currency, Pakistani market is once again expected to attract US importers. Coupled

with Nishat’s capabilities and competencies, our vertically integrated production

facilities that can turn raw cotton to a final finished consumer product, always attract

attention of US clients. We are very positive to materialize current developments into

tangible sales in near future.

Nishat Dyeing & Finishing – (NDF) Given the circumstances of textile industry and all challenges, NDF managed

to perform quite well. NDF not only managed to retain all its major customers despite

the cut throat price competition, but also increased its customer base both in US as well

as in Europe. Thereby the low demand by existing customers due to poor retail was

covered well by addition of this new business. This increase in customer base was both

due to the complete verticality offered to customers from fabric till finished garments

as well as to the increased marketing activities on tapping new customers. The overall

picture is not expected to improve much in the next fiscal year, as the market still

remains highly unstable. All the factors contributing to the current inflationary

pressures and weak demand are still present and far from being settled. As much as it is

hard to establish a firm marketing strategy in such a volatile market, NDF has

formulated the key principles to follow in the next fiscal year. These revolve around a

further expansion in its customer base, retaining the current major customers,

increasing marketing efforts in the still profitable European market and concentrated

efforts towards specialized finishes over regular run-of-the-mill products to fetch better

margins.

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Power Generation Nishat has 80 MW of self power generation facilities at different sites. We

have always concentrated on installation of most modern and efficient power

generation machines to get more with less fuel consumption. s

Faisalabad 2 7 1 - Bhikki 3 4 – 1 Lahore 6 4 – 4 Ferozewatwan 3 4 - - Out of the total

generation capacity, 46 MW generation is done through most modern and highly

efficient gas fired generators and their design is based on “tri-generation” concept i.e.

besides generating power these plants are producing steam for use in processing, for

further power generation and hot water for process use or air conditioning. This

concept makes it possible to use the precious energy to the maximize profitability of

the company and help reduce environmental pollution. Keeping in view the current

power shortage in the country, Nishat has responded to beckon of the Government and

sold its excessive power from different locations to the local distribution companies.

Earning Per Share The earning per share of the company stood at Rs 38.42 (2007: Rs 7.58) Annual Report 2008 15NisInformation Technology

Following series of adaptation efforts, our information system has got to a

stage where activity based data are collected, classified, processed and interpretation of

results is done there at in order to provide an integrated series of information to users

for decision making, for further communication or analyses. In a progressively spirited

atmosphere, our system plays the role as ‘enabler and facilitator’, which endows

tactical values to the officialdom and considerably step up the excellence of

administration. Starting with co-ordination and control, our systems help managers to

investigate problems, envisage complex subjects and to take up new orders for

production or services calculatedly. The concern is being taken by us in line with global

conception and our team is taking part in every activity of our company to get better

and instant outcomes. Keeping in view its significance, we have confirmed allocations

in our budgets for investment in IT structure and activities.

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PROCEDURE OF EXPORT

DEPARTMENT

As most of the NML production is exported to different countries, export

department has the key importance in the organization.

The management has hired the competent employees who are working effectively and

efficiently and the percentage of the export in the total production is regularly

increasing. The highly educated and experienced team of professional is headed by the

GM Export having an experience of 20 years. These peoples know the importance of

good customer relationship this team of professionals is so dedicated to their work that

they often work after office hours even without overtime payment. These people use

this most modern technology available to remain in close contact with the customers

(e.g. telephone, fax, e-mail etc.)

They don’t rely only on the previous stated promotional activity but they also try to

find out new prospect with whom they can promote business.

They use the following sources to identify new customers:

Internet

Infotex (organized by the software houses at port)

By using personal contacts

EBP (export promotion bureau)

Trade Association’s reports and publications.

After they have gathered the information, they start the conversation with the

prospects. They send them e-mail in which they introduce their organization and

different production facilities available. They give them the different incentives to

work with NML. These incentives may include competitive prices, better quality,

increased satisfaction etc.

Inquiry from the customers:

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First of all the buyer who is interested to work with Nishat inquire the NML

that he wants to purchase these specific the products from their organization. This

interested party may be the existing customers, may come in response to the e-mail sent

by the export department or through some other source (textile exhibition). In this

inquiry he also describes the different qualities and their amounts he want to purchase.

Reply to inquiry: When the inquiry has been received by the Deputy Export Manager (DEM),

he carefully analyzes the specified products. He evaluated that whether the

organization has the required production facilities or not to produce those products. He

also tries to estimate the time required to produce those products before replying to the

other party, DEM also analyzes the interested organization because Nishat prefer to

work with chain store and organization which have some worthiness. If he feels that

this party can become valuable and loyal customer for the organization in the long run,

he then after consultation with the export manger replies to interested party. At this

stage the DEM also analyzes the amount of each product inquired and determine

whether it will be feasible for NML to produce that quantity of required products.

Price bargaining: When the DEM gives the positive reply to interested party that we can

provide you the desired product, quality and design, the other party asks for the price

quotation for the each and every product. At this point the DEM perform the difficult

task of costing. He calculates each and every cost which would be involved from the

purchase of the Grey fabrics to the delivery of the products. In the costing calculation

DE M also keeps in view the complexity of the design which would be printed. Hew

includes the cost of the grey fabric, bleaching, printing, dyeing, finishing, stitching,

packing etc. After the calculation of cost and consultation with the export manager the

demand send this price to the party. if the other party is agreed on this price then its ok

but is the party does not accept that particular prices then dem ask them to quote the

price they are willing to pay. Then export manager and dem discuss these prices with

the GM export that whether these prices are acceptable for the organization and we

should accept or not. In the cases these prices are unacceptable for NML, the GM,

Manager Exports and DEM offer new prices after reviewing the old ones to attract the

party. It these prices are workable the other party places the order.

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Gray Procurement sheet: When the order confirmation sheet has been received by these dem on

agreed term and prices, he analyzed tha5t sheet to see what type and quality of fabrics

is required to fulfill that particular order. He makes a det5ailed list of all fabrics

qualities and confirmed that whether these quality are currently present in the gray go

down. If some type of fabric is not available when he issues the gray procurement

sheet. The export manager, GM export and Chief Executive sign the sheet then this is

sent to the grey procurement department.

Sales contract: In the next step, the export manager prepares the sales contract according

the detailed terms & conditions mentioned in the order confirmations sheet to make the

deal formal & legal. The GM export signs the contract and then it is sent to the buyer

for counter sign. If the buyer feel any discrepancies or wants to make some changes in

the contract, the GM & manager export discuss the matter to examine that whether the

proposed changes are feasible for us. If it is so, the amended contract is sent to buyer

for signature.

Buyer’s Purchase Order: After the sales contract has been signed by the both par5ties, the buyer

issues the purchase order regarding the specified design, quality & quantity of the

product on their letter head and signed by the higher authority of the organization. The

purchase order includes date, purchase no., shipment date, and ref. no. , terms, name of

the vendor, description of the products required.

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Strike off program: In simple words you can say strike off programs is the samples made

according to the customer’s requirement in order to send him for approval. Sometime

the customers demand the strike off program especially when he send his requi4ed

designs are very complex and involved different color shades.

Then export manager prepares strike off program and issues it to the different

departments. Rotary sampling machine (Austrian made j-zimmer) which can provide

12 meters fresh strike offs according to the requirements is used. This strike off is

carefully examined before sending it the customer for approval.

Opening of L/C: If the customer approves the strike off, NML considers it a signal for

starting the production. But if the customer does not approve the strike off and demand

some kind of changes in design, color or shade then it is communicated to the

designing and engraving department for making the desired changed so that the

customer requirements could be met. Designing department make the necessary

changes in the design to take a new strike off.

On the other hand if the strike of is approved then before starting the bulk

production of the req2uired products the DEM Asks the customers to open letter of

credit according to the term or condition of the sales contact. Some Times NML also

ask buyer to open L/C in the specific bank with which Nishat prefers to work. The

DEM study all the clauses of the L/C and see what changes are required in the different

clauses.

Production Schedule: After the L/C has been opened by the bu6er, the DEM prepares the

production schedule so that the production could be started in order to deliver the

required products on time. Production schedule include the order no, date, quality of

the fabric, quantity and quality standard (e.g. pilling, rubbing, shrinkage). This

production schedule is signed by the GM export, manager export and sent it to the

entire concerned departments.

Quality control:

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As the productions starts, the duties of the merchandisers increase. They

not only have to visit the designing department to ensure that the work is being done on

the designs, the design are made according to the requirement of the customer, screens

are sent to the printing department on time etc. They also see that fabrics are being

bleached according to the requirement of the dying and printing. If the fabric goes for

dyeing they should be very careful about color matching in the printing department.

They have to mange the printing on time. They also have to give the guidelines to the

production department employees. They have to remain in close contact with the

quality control department in each and every stage. The merchandiser also ensures that

the fabric has been reached in the finishing department on the time and that the

finishing is done according to the customer specification (e.g. water repellent, oil

repellent, and fire retardant).

Stitching Schedule: If the end product is made ups, then the manager export prepares the

stitching schedule according to the requirement and sends it to the stitching department.

Stitching schedule includes all the details of Stitching (e.g. sales contract no, schedule

date. Stitching schedule no, item description, quantity cutting instruction etc.) And

packing.

Merchandiser makes it sure that stitching is being done according to the stitching

schedule, instructions are followed regarding cutting, time, quality of stitching, design

etc.

Dispatching: At last after the stitching has been completed, the products are packed according

to the customer’s requirement and sent to the port or as per requirement. The export

department makes it sure that the bar codes are present, cartons are same as per

requirement, the contents of the each carton and its weight has been written on it.

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Export documentation department This is another very important department of any export organization like NML.

The export manger banking supervises this department. This department prepares all

the documents related to export the documents are prepared on the basis of the

information received from the export department regarding a particular order. Then

these documents are sent to the bank for collection of payment

Following are the important documents, which are prepared in this department.

Certificate of origin

Billing of lading

Quota statement

Inspection certificate

Bill of exchange

Textile declaration

Commercial invoice

Wight note

Vise form

Beneficiary’s certificate

Foreign commission certificate.

Packing list.

Accounting Department In Accounting Department, under the supervision of concerned

officers, I came to know different types of vouchers being prepared and their process of

preparation vouchers are simply a written evidence of any business transaction. The

different type of vouchers prepared in different departments of Nishat Textile which are

as follows:

o CASH PAYMENT VOUCHERS

o CASH RECEIPTS VOUCHERS

o BANK PAYMENT VOUCHERS

o BANK RECEIPTS VOUCHERS

o JOURNAL VOUCHERS

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o PETTY CASH VOUCHERS

CASH PAYMENT VOUCHERS: This voucher is prepared when cash payments are made against expense.

The entry is passed as the name of expense is debited and cash account is credited.

CASH RECEIPT VOUCHERS:

These types of vouchers are prepared when the cashier on behalf of

the company received cash. But these types of vouchers are small in numbers because

majority of transactions are done by banks. On receipt of cash, cashier prepared the

cash receipt slip. Accounts officer prepares vouchers on the basis of cash receipt

prepared by cashier. In books of accounts entry passed as cash account is debited and

income/receivables is credited.

BANK PAYMENT VOUCHERS:

Because Nishat Textile is public limited company the most of

transactions of the company are managed by banks. As the competent authority

approved the bills and invoices, those reaches to the table of account officer for

payment. Account officer checks the approval and mathematical accuracy of the bill

and prepares the bank payment voucher .but the account officer make sure the nature

of the expense i.e,capital or revenue and deduction of tax if applicable and passes

transaction as expense debited and bank account credited and also deduction of tax at

source credited.

BANK RECEIPT VOUCHERS:

Bank receipt vouchers are prepared when company received

cheque against accounts receivable or advance payment. On receipt on cheque account

officer send the cheque for clearing and passes entry as cheque clearing account debited

account receivable credited advance against sale also credited.

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Copy is attached with voucher. If cheque is returned by collecting bank these reverse of

both entry is made.

ADJUSTMENT VOUCHERS OR GENERAL VOUCHERS:

These vouchers are prepared in following circumstances:

o Purchase on credit

o Sale on credit

o Writing of asset i.e. depreciation

o Rectification of error or omissions

PURCHASE ON CREDIT:

Generally raw material, store & spares are purchased on credit. In

order to record them in the general voucher are prepared by the concerned person as

purchase account debited and account payable credited.

SALE ON CREDIT :

Like purchase sale local and export are made on credit and at the time

of delivery of goods general vouchers are prepared by account officer as account

officer debit and credit the sale account copy of invoices attached with vouchers.

FINANCE DEPARTMENT Finance department is like heart in every organization whether organization is

big or small. In every organization the department which firstly established is finance

department. Efficiency and effectiveness of every organization depends upon efficiency

and effectiveness of finance department. All the planning of an organization based on

finance department because every new project needs financing and it cannot be

acquired without better financial planning which is done by financial manager present

in fiancé department.

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At Nishat Textile finance department is situated at ground floor of the main

office building. Upper level hierarchy of finance department is as follows,

These are various types of activities performed in finance department.

Financial decisions under instructions of board of directors

Handling the accounting activities

Credit management

Handling the purchase

Negotiation with bank

In all the financial decisions there is G.M. Finance and financial manger

involved. They let the board of directors know the latest financial condition of the

industry. They assist the board how the can get finance and from where. Acquisition of

short term running finance is their responsibility under the instructions of CEO and

Director.

Finance department heads account and monitor the accounting activities and

give the proper instructions. There are various types of transactions, some are related

with export some are related with local sales and some are related with purchase. These

transactions are day to day or routine transaction. Treatment of extra ordinary or

sudden in done according to instructions of upper level management. All other

departments get assistance from finance department. All purchase of factory is taken

place through finance department. Commercial manager who is the head of purchase

department works under G.M. finance.

The staff of department is educated and efficient and provided with computer

facilities. On the whole department is very good and efficient that is why Nishat Textile

is doing a good business.

THE YEAR ENDED JUNE 30, 2008:-

The Share Transfer Books of the Company will remain closed for

entitlement of Final Cash Dividend @ Rs. 2.50 per share i.e. 25%, from 25-10-2008 to

31-10-2008 ( both days inclusive). Physical transfers / CDS transactions / IDs. received

in order at Nishat House, 53-A, Lawrence Road, Lahore upto 1:00 p.m. on 24-10-2008,

will be considered in time for the entitlement of said dividend and attending of meeting.

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2. A member eligible to attend and vote at this meeting may appoint another member as

his/ her proxy to attend and vote instead of him/her. Proxies in order to be effective

must reach the Company’s Registered Office not later than 48 hours before the time for

holding the meeting. Proxies of the Members through CDS shall be accompanied with

attested copies of their CNIC. The shareholders through CDC are requested to bring

original CNIC, Account Number and Participant Account Number to produce at the

time of attending the meeting.

3. Shareholders are requested to immediately notify the change of address, if any.

4. Members who have not yet submitted photocopies of their Computerized National

Identification

Cards to the Company are requested to send them at the earliest.

SWOT ANALYSISStrengths:

The major strength of Nishat is its location. The plant is situated in Faisalabad

which is renowned in the world for textile production.

Nishat is using the best machinery available in the market in its all the

department, which helps Nishat to produce the world class products to meet the needs

of the customers.

As Nishat is a part of large industrial group, so it has no need to search out the

raw materials from the market even during the peak season. For example, they can

produce high quality yarn.

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Nishat management provides an excellent working environment to its

employees, which motivate them to work more effectively and efficiently.

Nishat has strength to produce the quality products at the lowest possible prices

as compare to their competitors.

Nishat is an ISO certified company, which produce a sense of satisfaction to its

customers. Nishat also follow the ISO Standards.

Quality control department equipped with most modern machines is also a big

strength of Nishat, which ensures the quality at every stage of production. As a result

the wastage is very minimal as compare to competitors.

Adequate financial resources are also strength of Nishat. Nishat has the assets of

worth about us4.5$ Billion.

Nishat has highly educated and competent management and skilled labour

which contributed to the success of Nishat.

Nishat focuses on the chain stores and other big customers rather than focusing

on the small customers. Nishat also focus on the long lasting relations with the

customers. For these reasons its customers are very loyal.

Nishat has a good reputation and image in the local as well as in the

international market, which is also a major strength of Nishat.

Weaknesses NML is purely following the centralized management style, due to which

management has a burden of decisions, which ultimately takes too much time.

As most of the machinery is imported from other countries therefore sometimes

few spare parts are not available in the market which creates problems.

Although NML pays very high salaries to the top management, it is not offering

attractive salaries to the other employees of the organization. Therefore the moral of the

employees is decreasing.

Due to low salaries the rate of turnout is very high which hinders the growth of

the organization.

The rate of overtime payment to the employees is not comparable with market.

NML is paying at the normal wage rate for overtime while the overtime rate is always

high in all the organizations.

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Due to centralized management there is n o delegation of authority in NML

which also hinder motivation of the employees.

Less chances of promotion are available for the employees in NML, which is

causing dissatisfaction.

OPPORTUNITIES: When the WTO will be implemented, there would be a great opportunity of

increase in exports if NMLl follow the international standards and provide high quality

products to the customers at competitive prices

NML should try to implement the latest ISO standards including ISO14000

series, which will improve their image and customer satisfaction in the local market as

well as in international market.

NML can explore the new markets for exports by giving the different incentives

to its employees in the export department, which will improve its profitability.

There is a lot of potential in the local market for NiCad’s products because

people believe that Nishat products are always of high quality. So NML should also

focus on local market.

Nishat can introduce its garments in the local market by using the same

stitching unit. This is also a great opportunity.

Threats: WTO implementation is a good opportunity but it is also a big threat at the same

time it STI fails to provide good quality and competitive prices to its customers.

There is no consistency in the government policies regarding textile sector.

Incidents like September 11, 2001 attacks would also be a major threat.

Political conditions of the country affect both NML and its customers as well.

On one hand it makes reluctant to the management to make new investments. On other

hand its customers also hesitate before signing new contacts.

Increasing rate of electricity and GST are also big threats.

Currency fluctuations and exchange rates can also create problems for NML.

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Government is focusing on the industrialization and is giving different

incentives to the investors. It is also a big threat because the number of competitors

will increase.

More and more competitors (National and International) are entering in the

same markets and offering attractive pric4es to the customers.

Conclusions Nishat Textile is considered to be the leading organization in the field of

textile. The name Nishat has become has become a symbol of quality and standard.

The quality of cloth is dependent of textile yarn to finished cloth. Which is totally

imported form various countries. Major machine are mercerizing machines, sober

machine and J-Zimmer that con print cloth with 12 colors.

All the sub department of processing like bleaching, dyeing, printing, and finishing

are working under laboratory instructions so laboratory is playing role of executive in

quality control. All the schedules of bleaching, dyeing printing and finishing are

prepared by the laboratory.

The customer satisfaction is a basic criterion of Nishat Textile. They are producing

good quality products and 80% products are exported. Great care is taken for export

products regarding. Marketers of Nishat Textile know the competition in the

international market. They put their level best efforts to satisfy the customer keeping in

view the costs of products and quality.

Nishat has also a big share in local market. Local market. Local marketers are

performing their jobs efficiently to enhance the sales and to satisfy the customers

however in local market quality is lower then export market.

So Nishat has greater capability to preclude what they claim for.

If we turn to human resource department we see that there are certain gaps in

human resources management of Nishat Textile. This department is not established

and not considered to be very much important. Low attention is paid to this department

by upper level management. There is lack of human resources planning, lack of

recruiting activities lack of job analysis, compensation and reward system is not very

much attractive and employees are not well motivated in Nishat textile. One good

thing of this department is that the department let the employees follow the rules and

regulations set by the organization strictly. Attendance is strictly checked 7 leaves as

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well. So there are good and bad both present in the human resources management of

Nishat Textile.

Nishat textile has the ability to produce what their customers want through excellent

machinery and skilled workers in processing department and qualified marketing staff.

But there are problems regarding human resource management and financial

management. Despite having problems Nishat has good and increasing sales figures

that will lead the organization to prosperity again.

RECOMMENDATIONS /SUGGESTIONS

Organizations big or small profit or unprofitable have problems and there are

always chances of improvements. This is also the condition for Nishat textile. As

problems and difficulties have been identified, now here are some suggestions that may

help the organization to improve.

In processing department there is a need of skilled workers. There are

certain departments of processing in which employees have been working since

long but there efficiency is not improved and unsatisfactory results come out

sometimes. The skilled labor will not only improve the efficiency but also will

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improve effectiveness. There should be chances given to skilled workers to

enter the organization.

There should be female artists and designers in design department as

females have naturally more esthetical qualities than males. They will really

improve the quality of designs and will introduce more innovative designs.

Expanding product lines that will give more variety to people of country

could extend local marketing and ultimately sales would be increased. There

should be more staff in local marketing department to enhance the sales figure

and to capture wide area of local market.

There is need to increases the staff in this department only three or four

persons are working with all the affairs regarding let the employees abide by the

rules 7 regulation, recruiting, selecting and other activities. This area should

carefully be handle to attract skilled employees and ultimately to enhance

efficiency and effectiveness.

Job analysis should be done to know what are the jobs needed in the

organization. I know some persons who are doing the job of two or three persons.

Compensation and reward system should be brought at higher level in order

to let the employees be motivated and happy. There should be more fringe

benefits for the employees taking into consideration there devotion skill and

experience. This higher level would make the employees more efficiency &

effective.

There should be little compensation for trainees as well, as they can fulfill

their day to day traveling and food expenses. By doing this trainees will show

more interest, more devotion, more potentials and will work with their full mental

and physical efforts.

The first aid and other medical facilities should be provided to the

employees with in the mill area. There is continuous working in the mill and

every time there are chances of any accident or unpleasant incident. So in order

to handle this type of situation the first aid dispensary should be there with in the

mill area.

Company should have proper planning to purchase raw material as it is

purchased sometimes without planning in every season that is the cause of high

level of inventory and blockage of funds and ultimately affects the liquidity.

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As company has problems with its financial condition and Human resources, so

there is need of better planning in order to solve the problems and to bring the company

n right track that might have been lost.

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Documents

76384832 Nishat Mills Limited