Ahmad Fine Textile Mills

Ahmad Fine Textile Mills Ltd.

AHMAD FINE TEXTILE MILLS LIMITED

STATUS

The Company is limited by shares incorporated in Pakistan on December 13,

1989 under the Companies Ordinance, 1984 with an Authorized Capital of

10000000 Ordinary Shares of Rs. 10/- each i.e., Rs. 100000000/-. The

Issued, Subscribed and Paid up Capital of the Company is 3800000 Ordinary

Shares of Rs. 10/- each full paid in cash i.e., Rs. 38000000/-

NATURE OF BUSINESS

The Principal Business of the Company is Manufacture and Sale of Yarn

and Cloth.

MANUFACTURING UNITS

The Company has two manufacturing units, one is spinning unit and the

other is Weaving unit.

The Spinning Unit is located at District Rahim Yar Khan and the Weaving

Unit is located at District Multan in the Province of Punjab.

OFFICES

Head Office of the Company is located at Ist Floor, International Plaza,

Bohra Street, Multan Cantt. Sub Office is located at 35-KM, Multan-

Bahawalpur Road, Near Adda Basira, Multan. Another sub office is located

in the Spinning Unit at Rahim Yar Khan.

INTERNSHIP REPORT 1


AUDITORS

M/S M. Yousuf Adil Saleem & Company, Chartered Accountants, a

member of HLB International, a world wide organization of accounting

firms and business advisers.

2nd Floor, 6-Commercial Plaza Opposite Civil Hospital Abdali Road,

Multan.

FINANCIAL YEAR

Financial Year of Company starts on Ist October and lasts till 30 th

September.

BANKERS

Muslim Commercial Bank Limited.

Habib Bank Limited.

Askari Commercial Bank Limited.

PRODUCTS

Major Products of the company are

Blended Yarn

Grey Fabric

RAW MATERIALS

Raw materials of productions are Ginned Cotton, Polyester and Yarn.

WORK FORCE

The Company has a total work force of 743 including skilled and unskilled.

INTERNSHIP REPORT 2


CAPACITY

Number of Spindles installed 17280

Number of Spindles worked 17280

Number of Shifts per day 03

Number of working days 365

Installed Capacity after conversion

Into 20/s count kgs 5632450

Actual production of yarn after

conversion into 20/s count kgs 7626423

PORTION OF EXPORTS

The Company exports more than 90% of the produce.

INTERNSHIP REPORT 3


MISSION STATEMENT

To produce superior quality of Yarn by focusing on customer demand in

order to face the competition in international market and at the same time

taking care of its employees, suppliers, shareholders and society.

INTERNSHIP REPORT 4


PURCHASE DEPARTMENT

The purchase department is divided into to two sections, cotton purchase

department and store purchase department.

COTTON PURCHASE DEPARTMENT

Cotton purchase department is most important department in textile industry.

Quality of yarn depends upon cotton that has been purchased. It becomes

most important when there is business of export. There is no question of

compromise on quality. Because your minor mistake may result in huge

losses. Moreover you will loss your credibility. From director to cotton

selectors all are involved in cotton purchase process.

INTERNSHIP REPORT 5

PURCHASE DEPARTMENT

COTTON PURCHASE

STORE PURCHASE


PURCHASE PROCESS

The following steps are involved in the purchase of raw material i.e. cotton.

INTERNSHIP REPORT 6

Demand of purchase from mill

Purchase Requisition

Sample from different suppliers and

quotations

Sample TestingDecision-making

Agreement with the Party

Receiving

Writing delivery order for factory

InGate pass + D.O + Purchase Invoice +

Purchase Requisitions are supplied to accounts

department


VISIT OF COTTON SELECTORS

The cotton selectors of AFT visit the cotton ginning factories. Cotton

selectors may visit the factories on their own behalf and some times the

cotton factories call them. Their visits are very important because purchase

process starts from here.

SELECTION OF SAMPLE

Samples are selected from huge amounts of cotton. Samples are taken from

different suppliers. These samples are then tested. The most suitable sample

at lowest price is selected for Purchase of cotton.

As there is centralized management system so the Director himself takes the

decision of selection and purchase of cotton. In other words Director is final

authority in making decision.

STORE PURCHASE DEPARTMENT

The store purchase department is headed by Stores Incharge. The setup of

purchase department is as under:

Director

Purchase Officer

Assistant Purchase Officer

Purchase Clerk

The store purchase department is responsible for the purchase of items like

Spare parts of machinery, store and Packing material spares, electric items,

oil and lubricants, Stationery items, Building Material, and General Store,

DOCUMENTS Demand Requisition.

INTERNSHIP REPORT 7


Invoice of Purchase

Delivery Order

In Gate Pass

PROCEDURE

The following is the procedure for local purchase department.

The purchase department receives the demand requisition from store

in charge at store at mills this is in fact an intention or requirement of

commodities at mill

The purchase demand requisition contains a full detail of quality and

quantity of commodities required. It also contains price detail of

goods purchased previously

The purchase department on the basis of indent does an inquiry for

rate from at least two suppliers from approved suppliers list.

After inquiry Purchase Manager discusses with Director for approval

of rate and other necessary requirement.

After the approval the Purchase Department purchases the items from

suppliers and sent them to the mill with three copies of delivery orders

In case of no rejection of items store in charge send one copy of

delivery order back to the purchase department along with one copy

of In Gate Pass. Store in charge also keeps a copy of delivery order

and in Gate Pass for his own record.

In case of rejection of items store in charge sends all copies of

Delivery Orders with items back to the purchase department at Multan

Office of AFT.

INTERNSHIP REPORT 8


IMPORT DEPARTMENT

AFT has also an import department. The import department is responsible to

import those items, which are not available in Pakistan. The structure of this

department is as under:

PROCEDURE

Senior Manager is responsible for import of machinery, equipment, spare

parts, raw material, etc.

An indent for import of item after the approval of Chief Executive is sent

to import department.

The Senior Manager Import selects a subcontractor from approved

suppliers list.

In reply, a quotation from the subcontractor is received .A copy of

quotation is sent to concerned department for evaluation and checking of

specification.

The received items are sending to the mills where these are opened. The

items are checked against quotations. In case of any damage, the import

department is informed immediately. Import department do the necessary

arrangements for survey of goods from insurance agencies

INTERNSHIP REPORT 9

Chief Executive

Director

Senior Manager Import

Assistant


ACCOUNTS DEPARTMENT

Accounting is the art or science of interpreting, measuring, and

communicating the results of economic activities whether you are paying

your phone bill, balancing your checkbook, preparing your income tax

return or managing an international corporation, you are working with

accounting. Accounts Manager makes the important financial decisions with

consultation of Director and Chief executive of company.

Record of all departments like import department, Export department,

Purchase and sale department, are maintained here. So this department feels

a burden of work. Accountant is very much busy person who gives

instructions to six members of finance department and checks their work

time-to-time .His ten-year experience has made the work easier for him. All

types of tax rates, recent changes in tax policies, different codes, companies’

names are on his fingertips.

The accounts department is responsible for the entire accounting process of

the organization regarding the recording of transactions, designing the

accounting policies and accounting system, preparing financial statements

and computer application. If we consider a company a cell then we can say

that accounts department has role of nucleus.

Without accounts department there is no possibility of doing business even

sight weakness’ on the part of accounts department can badly effect the

performance of whole organization.

INTERNSHIP REPORT 10


FUNCTIONS OF THE DEPARTMENT

Very first and an important function of accounting department is recording

the business transactions on vouchers. This is also called process of

vouching. This is made for internal record keeping. Auditors specifically

audit vouchers. Wrong vouching will lead to error in the system and

ultimately create problems.

From vouchers information is recorded in daybook and cashbook. As each

voucher along with its invoice, DO and other necessary documents are kept

in the record room so daybook is one that can give information about parties

DR and name of account CR along with amount.

In order to see accounts in condense form ledger is used. From daybook all

the entries are posted in ledger. Ledger represents DR or CR balance of each

party. So from ledger we can see amount that is to be paid to a party or the

amount that is to be received and the balance at the end of the month.

After this all the DR balances and CR balances of all the parties are posted

in trial balance. The trial balance must be equal at both sides. Otherwise

there is any error in recording the transactions.

Now trial balance becomes the source of profit and loss and balance sheet.

This department also designs the accounting policies. All the work in this

department is being take place on accrual basis.

The department prepares trial balance at the end of every three months and

Profit and loss accounts and balance sheet are prepared at the end of year.

The financial year ends on september30 of each year. The financial

statements are presented to shareholders



THE SETUP OF DEPARTMENT

The accounting department is mainly divided in to following three sections:

1. Stores section

2. Salaries and Wages Section

3. General Accounting

STORE SECTION

Store section is mainly concerned with store accounting. This section deals

with many accounts heads that are concerned with stores. Such as stores

&spare A/C, oil and Lubricant, Packing material A/C, General Store A/C,

Building Material A/C and many others. The major responsibilities of this

department are


Chief AccountantChief Accountant

AccountantAccountant

Asst AccountantAsst Accountant

CashierCashier

Computer Operator

Computer Operator

Record KeeperRecord Keeper


To record the store purchases

To record all store issues

To prepare various reports relating to store i.e. material consumption

report, party wise purchase report

To keep a check on all stores by surprisingly checking their record and

physical existence of items stored. Because of the above mentioned duties.

This section has a key position in the company. No payment is made to any

body unless it is checked and verified by this section.

SALARIES AND WAGES SECTION

This section is responsible of making payments to the employees. This

section plays an important role in safeguarding the interest of the company

as well as employees. This section also insures all the labor laws; certain

laws relating to company are as under:

Leave Procedure

There are three types of leaves.

Sick Leaves

Sick Leaves are eight in year

Casual Leaves

Casual Leaves are ten in each year

Annual or Earned Leaves

There are twelve earned leaves. Company’s rule doesn’t allow any employee

to do four-day leave without application. In case any employee does so then

he can’t avail annual leaves



Attendance Allowance

Leave encashment is given to those employees who save their holidays and

don’t avail them. This is given according to their per day salary multiply

with number of days of holidays not availed.

Salaries and Wages

Minimum salary is not less than Rs1950. The breakup of salary is as under

Basic Salary ________

Badli allowance 50

Cost of living Allowance 18% of basic salary

House Rent Allowance 10%of basic salary

Utility Allowance 10% of basic salary

Special Allowance 300

Income Tax

Income tax is deducted from salary of all those employees whose annual

salary is greater than Rs.40000.An entry is passed on voucher while

deducting income tax and this is paid to tax department

Advances and Loans

Advances and loans are given to the Employees on their application and are

adjusted against their salaries every month. It is the sole discretion of the

management whether they approve advances and loans are not

Gratuity

Amount of gratuity is deducted from salary of employee with passage of

time and he gets a lump sum amount at retiring time



ACCOUNTING SYSTEM

Accounting System at here is centralized and on accrual basis. All accounts

are maintained in Multan head office. The process of accounting system

starts from the preparation of voucher. The following are different types of

vouchers prepared at AFT Mills:

Journal Voucher

Bank Voucher

Payment Voucher

Credit Voucher

JOURNAL VOUCHER (JV)

As accounting system is on accrual basis, so accounting entries are passed

on journal voucher at first step. This is also known adjustment voucher. This

is prepared for adjusting entry. Vouchers are prepared after every

transaction. Accounts Manager and Director verify the voucher respectively.

If they have any question they can ask relevant person if there is no enquiry

then they will put their signatures on voucher. Now it is time to record these

vouchers in books of accounts.

BANK VOUCHER (BV)

Bank voucher is used when any transaction is made with bank . Amount

may be drawn from bank and can be deposited in bank. You can receive DR

advice or CR advice from bank



DR ADVICE

When issued by bank, it means bank has deducted some amount from your

account or when has been made through your account

CR ADVICE

When issued by bank to you, it means some amount has been added in your

account .It normally takes place when some foreign remittances has been

received by bank in your account. This is usually sent by your customer in

foreign country to which exports has been made.

PAYMENT VOUCHER

This voucher is prepared at the time of making payments to any party. Party

name is debited with the amount to which payment has been made. Payment

vouchers are used for the payment up to Rs.5000. Payments more than this

are made through bank

CREDIT VOUCHER

As name of voucher represents, this voucher is prepared when some amount

is received from any party. In this case party name is credited by the amount

that has been received

IMPORTANT BOOKS

Cash Book

Bank Book

Bought Day Book

Sale Day Book



CASH BOOK

In this book cash payment and cash receipt vouchers are recorded on daily

basis. The vouchers are numbered serial wise and cash-closing balance is

calculated on daily basis.

BANK BOOK

This book is maintained for all the bank accounts of the company. When any

amount is withdrawn or deposited in the bank that amount is also recorded

in the bankbook. At the end of month bank account is reconciled with the

statements of the banks

BOUGHT DAY BOOK

The bought daybook is maintained for recording the purchases made by the

company. The balances from the bought daybook are entered in the relevant

supplier ledgers. At the end of the month the balances from the bought day

book is posted in the main ledger for control purposes

SALE DAY BOOK

In this book sale bills are entered and then posted in the customer ledger. At

the end of month balances are posted in the main ledger for control

purposes.

When the transaction is properly recorded in the books of accounts then

these balances are posted in the ledgers.

The following are the types of ledgers maintained in this organization.

Main ledger

Profit &Loss Ledger

Customer Ledger



Supplier Ledger

Staff Ledger

MAIN LEDGER

It is a control ledger, which maintain all heads of accounts from which

balance sheet is prepared. All assets and liabilities accounted, profit&loss,

customer, supplier and personal Ledger are maintained in it. Posting of sub

ledger is made in main ledger on closing of month. From basic books like

cashbook, bank book, bought daybook and sale daybook. At the end of

month trial balance is prepared to check the accuracy of accounts maintained

during the month by observing the debit and credit balance as they are equal

or not.

PROFIT AND LOSS LEDGER

In profit and loss ledger all accounts of income and expenses are

maintained .The following are the heads of accounts maintained in the profit

and loss ledger:

Sales Account

Local Sales

Export Sales

Commission on sales

Excise duty on yarn

Export development Charges

Manufacturing Expenses

Administration Expenses

Selling Expenses

Financial Charges



Miscellaneous Charges

MANUFACTURING EXPENSES

They are like purchase of cotton, wages and salaries, fuel and power,

insurance, repair and maintenance of plant, packing material and

depreciation.

ADMINISTRATION EXPENSES

These are traveling expenses, salaries, communication expenses like fax,

phone and telex, rent, electricity, entertainment, advertising, vehicleup

charges, depreciation, printing and stationary expenses

SELLING EXPENSES

These include export expenses, corporate freight, ocean freight, trailer

freight and local selling expenses

FINANCIAL CHARGES

They are like interest on long term loan, markup on short term finances,

exchange risk coverage fee, commission on bank guarantees, letter of credit

commission, excise duty on long term and short term finances.

MISCELLANEOUS CHARGES

Miscellaneous charges include auditors fee, legal and professional charges,

donations, fines and penalties.

CUSTOMER LEDGER



It is maintained by company in which all accounts are opened to whom the

company sells yarn. Posting in customer ledger is made from cashbook,

bankbook and daybook. The balances of customers are worked out daily and

the report of receivables is prepared daily and submitted to the management.

SUPPLIER LEDGER

In supplier ledger the goods supplied by the parties is recorded. Party’s

account is credited and goods purchased are debited.

PERSONAL LEDGER

To record all transactions relating to the personal accounts of employees of

the company, this ledger is used. Advances and loans made to the

employees, and the monthly deductions from their accounts of loans are

recorded.



INTERNAL AUDIT DEPARTMENT

Audit means checking the accounts prepared by others with a view to

express an opinion. An auditor is appointed to go through the accounting

and other records.

Internal audit is essential for large-scale companies. It is a review of

operations and records under taken within a business by specially assigned

staff. The management can appoint staff to go through the business

activities. The suggestions given by auditors can be applied for the business

benefit.

This organization has also a separate department for performing the internal

audit. The internal auditor heads this department. The audit department

develops audit program before conducting an audit. this department works

on continual basis. The internal auditor of the company visits the mill on

weekly basis and conducts the audit according to the checklist framed by the

internal audit department. The department is responsible to keeps its eyes on

the implementation of management policies. This department is also

responsible to inform the top management regarding the accuracy of all

accounting information and their analysis

MAIN FUNCTIONS OF THE INTERNAL AUDIT DEPARTMENTFollowing are the main functions of internal audit department:

REVISION OF THE SYSTEM

The internal audit department revises the system if there arises any

discrepancy.



CHECK ON THE SYSTEM

The internal audit department checks whether the revised system is being

followed or not, if there arises any deviation that is reported to the

management.

CHECK ON THE MANAGEMENT POLICIES

This department also examines whether management policies are being

followed or not

PROPER MAINTENANCE OF BOOKS OF ACCOUNTS

The internal audit department also examines that whether books are being

properly maintained as required by the Companies Ordinance 1984.

Assets Safeguarding

This department also safeguards the company’s assets.

MAIN FUNCTIONS OF INTERNAL AUDIT DEPARTMENT AT THE HEAD OFFICE MULTAN.

Checking of posting from clock cards to wages sheets Price Checking Recovery of advances Checking of rebates and discounts Continuous checking of assets of the company Checking of Bank vouchers, Journal vouchers, Payment vouchers,

Credit vouchers Checking of trial balance statement after every three months. Checking of bank reconciliation statements every month. An internal auditor can check any document at any time or can ask the

accountant to provide the necessary documents.



PRODUCTION DEPARTMENT

Ahmed Fine Textile Limited Company has a Spinning Unit which is

situated at District Rahim Yar Khan. This unit is equipped with highly

modern and automated machinery. Following sections are there in their

Production Department or Spinning Unit.

PLUCKER ROOM

Now a days most of the Spinning Mills are using the Auto Plucker Plants.

The function of this plant is the breaking and opening of the bales of

cotton. The cotton in these bales is in the pressed form. It cannot be used

for further processing until and unless it is opened and made in the loose

form. Firstly the cotton bales were opened manually but in that way, so

much cotton was wasted and instead of remaining clean it became dirtier.

Further more it took a lot of time. Along with opening, the blending of

different lots is done in this plant, a lot is consisted of 100 bales of cotton.

For blending the bales contain the specifications as given below:

Lot Number

Station

Kind of Cotton/Quality of Cotton

Weight

CONDITIONING

Conditioning is a term, which is directed towards a task in which the opened

cotton from plucker room is placed in open form before feeding in the Blow

Room. In this way the cotton absorbs the air and automatically comes into



loose form, which is helpful in the smooth functioning of Blow Rom

machines. For the purpose of conditioning the cotton poles are allowed to

lie for 12 to 16 hours.

BLOW ROOM

The main function of the Blow Room is cleaning and purifying the cotton.

In Blow Room, the raw cotton is first time processed. Input of this room is

the raw cotton while the output is the lap. In Blow Room, the Bale Breaker

machines are installed. These perform the function of breaking cotton into

the loose form then cotton is passed artificially the lighted path so that any

impurity such as stones, clots can be removed. The Bale Breaker machine

contains the beaters in them these beaters move the cotton into different

ways and open it the spikes installed on the edges help in splitting the

cotton.

DISTRIBUTORS

These are the pipes through which the cotton is sent to Scutchers where the

raw cotton takes the shape of final product of Blow Room. Firstly, the

cotton was put into scutchers manually therefore lot of cotton was wasted

but now the help of distributors the cotton is not wasted.

SCUTCHERS

These are the machines where output of Blow Room Lap is shaped.



HOPPER FEEDERS

Hopper Feeders are used to regulate the flow of cotton to Scutchers. These

ensure the uniform supply of cotton to scutchers.

KRISCHNER BEATER

These are the beaters installed in scutchers. They perform the function of

opening and cleaning. They contain wooden laps and spikes which are

installed on the edge of these .

CARDING SECTION

The completed lap, which is the output of the Blow Room, is the input of the

Carding section. So, the out product is the Card Sliver. Here the laps are

opened, cleaned, drafted and short fiber is extracted from the Card Sliver.

Sliver is fiber of cotton in the shape of thick rope. Drafting in the process in

which the length of the cotton fiber is increased through automatic machine

process. The lap, which is raped on the lap rod, is placed and feeded to these

machines, these machines perform different functions to covert this lap into

Sliver. The production speed of the carding machines is 122m/m. The

rollers and cylinders in these machines, which perform these functions,

include the followings:

Feed Roller Taker in

Cylinder Doffer

Stripping Roller



DRAWING SECTION

Here the functions including doubling, drafting, and parallelization and

straightening are done. Doubling refers to the doubling the length of cotton

fiber. This section is divided into the two sections including the Passage 1

and Passage 2.

DRAFTING

In drafting the length of the fiber is increased 50% that it can be converted

into yarn/

PARALLELIZATION

In parallelization process the fibers of the sliver rope are make in the parallel

form to each other this is done along with drafting the sort fiber is extracted.

STRAIGHTENING

Here the fibers are made the straight, the hooks of the fibers are removed,

and all the zigzagging is eliminated to reduce the waste.

FINISHER DRAWING

Here the input is breaker drawing sliver, the cross canning is done also in

this section as was in previous section so as to bet evenness sliver.

PRE COMBER

Here the pre combing machines are used the main objectives of which are

the followings:

Parallelization

Removed of short fiber



Doubling

Straightening

Drafting

LAP FORMER

Lap former is the machine, which are reserved for the formation of lap of

drawn, breaker sliver. Its main purpose is lap formation by doubling. 452

cones are used for making one lap. In product here is breaker sliver while

the out product is the comber yarn. The lap is rapped on the plastic bobbins.

Yellow bobbins are used for the combed yarn while the Pink and green are

used for the carded yarn.

COMBER

Comber machines perform two basic functions:

Parallelization

Extraction of short fiber

SIMPLEX SECTION

Here roving machines are installed, the functions involved are twisting, and

drafting in twisting the machine twists the thread so as to make it cohesive.

In this way the string gets the strength and cannot break easily so ensuring

the smooth functioning of the machines. Here the in product is finisher-

combed sliver and out product is the Roving. The relative humidity needed

is 55% to 60%. Weight of roving package is 1.52 kg.



RING SECTION

The main function of this section is drafting and twisting, 32 ring frame has

been installed in this unit. The machinery in this section is the most

expensive of all. Main functions of the spindles are to wrap the thread

bobbins and the speed difference between speed of the spindles and of the

rings is the cause of the winding but both travels in the same direction.

There are overhead cleaners in this section they are moving overhead cleaner

and ensure the cleaning in this section they by providing the air pressure, for

two machines there are one overhead cleaner. The waste material is

extracted from the sucking pump in the plant these plants are installed on the

floor.

Here the input is roving package and the output is the Yarn.

AUTO CONE SECTION

Here the yarn formed by the ring section is wrapped on cones. An important

aspect about the cone formation is that different types of thread are wrapped

on cones of different colors. Following features of Yarn are adjusted.

Thinness of Yarn

Thick places adjustment

Short thick places

Here if the thread breaks it is automatically rejoined and the waste is

removed ultimately, overhead cleaners are also installed there.



CHEESE WINDING SECTION

Some companies demand doubling Yarn production so for that purpose

thread from two cones are twisted combines into one and wrapped into one

cone this is the fine output.

PACKING ROOM

It is also yarn condition room the relative humidity is 90% and is provided to

the combed yarn in this way the cotton regains the 8.5% moisture and it is

the natural. The cones are then packed and different types of packaging is

used for example for export purpose first it is packed into the polythene and

then into the cartons and the cartons contain all details about the yarn

including

Count

Brand

Gross Weight

Net Weight

The final mark that is “Made in Pakistan” is placed.

TYPES OF PRODUCTION REPORTS

Different types of reports are prepared when yarn is received from the

spinning section an all records are maintained completely. These are as

under:

Yarn Report

Waste Report

Daily Cotton Consumption Report



Efficiency Report (Spindles Worked)

Daily Production Report



QUALITY CONTROL MANAGEMENT

Quality Control refers to setting certain standards for production and

matching production with those standards. Management of every company

is specially committed to the good quality both in production and end

results. The Management of AFT has been successful in creating and

maintaining the quality culture in the organization. Daily quality report is

sent to headquarter and it is checked here. Sine 90 to 95 percent of

production is exported; therefore, it is highly intensified. Following are the

characteristics of the Yarn that are checked for the equality assurance:

Weight of Fiber

Length and Strength

Dia

Weight and Final Yarn

Evenness of Yarn

Relative Humidity

Temperature



MARKETING MIX Marketing mix is the set of marketing tool that the firm uses to get its marketing objective

in the target market.

PRODUCT

AFT is dealing in the textile area, the products which the AFT is

manufacturing is the yarn and the grey fabric. AFT is producing the best

quality yarn there and the different types. The construction of the grey fabric

differ due to the differ in the quality of the yarn. There are counts.

AFT produces the yarn of different counts. From 1 count to 20 count yarn&

above, according to the specification of the customers.

AFT exports about 95% of its produce to the foreign markets. It exports to

the Europe, Asia& the other neighboring countries. Due to the spinning unit.

AFT has an advantage in the weaving, that they use their own yarn in the

manufacturing of the grey fabric also has the different quality constructions.

The combed & the carded yarn. The combed is the yarn which is more

refined on compared to the carded.

The products are produced according to the specification of the customers.

AFT also sells & purchase the products from the local market to fulfill

its orders.

These products are building the image the progress and developments

of the organization.



PRICE

PRICING OBJECTIVES

The obvious pricing objectives, of AFT.

Maximization of profit

To achieve the target return and targeted sales.

Maintain the market share.

PRICING METHOD

The pricing method AFT is adopting is profit based. The AFT policy about pricing is that

the profit should be reasonable. And also they keep in mind the competitors because they

are also providing the products at the competitive rates.

Fixed cost

Variable cost

The total cost is calculated. while all the expenditure related to the products production

are added. The total expenditure are divided by the production. There the per unit is

obtained, also a margin is added.

FIXED COST

Fixed cost in value, the cost related to the machinery.

Building cost.

Electricity change.

Salaries & wages

Insurance expenses

Plant cost.

VARIABLE COST

Part time workers.

Transportation charges

Miscellaneous.



Fixed Cost + Variable Cost +Desired Profit

The profit margin depends upon the quality of the yarn and the grey fabric. As the high

quality yarn is used in the construction of the grey cloth, then the price would be high.

The price will be different to attract the customer and in local market.

PRICE METHOD FOR THE EXPORT

Pricing method for the export products is differ from the local pricing method. In the

export, all the expenditure related to the export such as the custom clearance charges, port

clearance charges, shipping line freight and other foreign agent commission is added.

Also the charges related to the transportation and bank handling expenditure are

considered while calculating the price of the export items.

PRICE METHOD FOR LOCAL

Pricing method for the local sale is different because all the cost involved in the export

procedures is not included. So the price would be lower in this.



PLACE/DISTRIBUTION

AFT exports about 95% of its produce.

Therefore the distribution channel of the AFT is as follows.

AFT TO CUSTOMER

AFT is also dealing directly with the customers. As in the local market and the foreign,

the buyers direct contact with the AFT. So the export department fulfill their orders by

the transformers. The transporter help in delivering the products. The transporter are

helping a lot in progressing the textile industry. The comely delivery to the buyer is the

greatest service to the customer, timely delivery is important for the success and

development of the organization.

AFT has a direct contact with the shopping his and the port and customer clearance

agents. They clear the containers from the port.

INDIRECT CHANNEL

AFT to agent & to customer. In the export of textile products, the agents are

the back bone of textile industry. They receive the order on behalf of the

buyer, give to the seller. They receive their commission form the buyer and

the seller.

The agents also purchase the products, sell them directly to other buyers.

So in this trading they earn enough profit.

In Lahore & Karachi, there has been a large number of agents which are

working for their organizations, in foreign countries as well as in this

country.

Mostly the export business is through these agents. The agents have been

successful due to the credibility and honesty of their work.

AFT mostly receive orders through agents, located in the Lahore and

Karachi.



AFT pays commission to them.

Mainly the responsibilities lies on the agents in case of delayed

shipments, payment problems and the quality problems.

Mainly the products are exported through the different shopping lines.

PROMOTION

AFT promotes its products, but to a limited extent.

AFT provides the company brouchers to the buyers.

AFT provides the samples of the grey fabric. The yarn to the customers.

AFT has a direct contact with the local and the foreign agents, so they

also promote the company products.

Visits to the customers.

AFT marketing manager also visits its customers.

Their high quality of the products on the fine count the Grey cloth is also

promoting the company and establishing image and goodwill.

AFT provides the timely information to customers which helps in

promoting.



EXPORT DEPARTMENT

Export department plays a vital role in any organization. AFT export

department is headed by the export manager. The export manager supervises

all the marketing & export activities. Export manager is also responsible for

the exploration of local and foreign markets. He is also making efforts for

the development and the progress of the company.

OBJECTIVES

1) To increase the Export of the Grey Fabric and yarn.

2) To maximize the company profit by increasing exports.

3) Exploration of the new markets.

4) Market research making the better information system

5) Adopting the new technological a developmental changes in the field of

textile.

6) To build the image a credibility of the organization.

7) To earn foreign exchange for the progress of the economy of the country.

FUNCTIONS

Following are the main functions of the export department.

Export department is responsible for the production planning and the

production follow up with the mill.

Customer correspondence as well

Export department also follow-up the local sale and purchase of the yarn

and the Grey fabric.

The important function of the export department is to make shipment

schedule and the planning.



Visiting to the existing and new customer.

Providing timely information about the production of the products to the

customers which is also providing a service to its customers and

promoting the company image.

Improving the quality of the products with a collaboration with the buyer

and the production department.

Bank documents preparation and the follow-up.

Preparing the custom documents

Dealing with the agents and providing timely information to the parties.

B/L follow-up with the shipping lines.

Export system updation is also the responsibility of department.

Preparing the quality analysis report and sending them to higher

authorities.

Maintaining the complete sale and purchase records

Export department is helping in improving the quality and betterment of

the products and the company.

Providing timely information to the clients is the main service provided

by the AFT export department.



EXPORT DOCUMENTATION

Export procedure is a very lengthy process. It involves a number of

documents required by the importer from the exporter. AFT export

department carefully handle all the steps involve in it. Because a little bit of

mistake can cause a great loss to the exporter and the importer.

i. Indent

ii. Sales contract

iii. Letter of Credit

iv. Custom documents

v. Packing list

vi. Bill of lading

vii. Bill of exchange

viii. Certificate of origin

ix. Inspection certificate

x. Form E

xi. Form M

xii. Shipping bill

INDENT

Indent is the first export document which is send by the agents to export

department. After the careful analysis of all the terms and conditions such as

the quality description the selvedge, shipment date, piece length, price per

unit, the packing and payments terms. It also contains the buyer name and

the reference number of buyer or agent.



SALES CONTRACT

The export department after the careful analysis of indent issues the sales

contract. As they have the products and in the sales contract they confirm the

terms and conditions of the indent, such as the quality, packing, payment

terms, commission, shipment date and the price of the product. Issuing sales

contract is the confirming the sale of the products to the buyer on the

specified price. If there is changing made by the buyer or agent, so the later

revised sales contract is issued by the export department. In which they can

revised any thing, the shipment schedule, the price & the product

specification. Export department handle carefully the steps of that procedure.

Also the contract copies are sent to the agent, the buyer, the accounts and the

audit department of the AFT for their record purpose.

LETTER OF CREDIT

Letter of credit is very important documents in the whole export procedure.

Because without this the process could not be complete.

L/C is a written instruction issued by buyer’s bank, authorizing the exports

to draw in accordance with the terms and stimulate legal forms that bill will

be honored.

In the L/C all the term and the conditions are given by the buyer. What

documents he needs. In the L/c there are important things mentioned there.

1. The Buyer name is there in the L/C

2. The bank of the importer is also mentioned.

3. The importer name and address is also given.

4. L/C number is mentioned on the top or the L/C



5. Issuing date of the L/c, the expiry date of the L/C, the amount of L/C, the

quantity of the products.

6. The complete description of the products and the rate.

7. The terms, either CNF or CFR,

8. The shipment date is also mentioned.

9. The port is given there in L/C.

10.The shipping line is given, so the exporter only sent the goods on that

specific shipping line.

11.L/C terms are given, either it is 120 days, 90 days or sight from B/L date

12.On the L/C the rate per unit and the shipment schedule is give on what

date the products would be shipped in what quantity.

13.Trans shipment or the partial shipment allowed or not is also there in the

L/C

14. All the documents such as the invoices, the packing list, the certificate of origin and

other inspection certificate are also mentioned as required by the importer.

TYPES OF L/C

Irrevocable or revocable

Documentary or clean

Un-confirmed or confirmed

Sight

The exporter has to fulfill the terms mentioned in the L/C. Both the

importer the exporter are bound to fulfill their obligation mentioned his

L/C



TRANSPORT DOCUMENTS

The transport documents are very important because it provide the evidence

that goods have been transported and it enables the importer to receive the

goods from the custom authorities. As the order placed by the importer is

ready on the due date, the export department issues the dispatch order to the

mill. That the following quality should be dispatched on the containers

specified on this L/C. The goods are loaded on the specified containers and

they are sent to the Karachi port on the specified shipping line.

AFT mostly does its shipment through the shipping companies. The

shipping lines charge their freight and other charges are paid the agents as

well as for clearance of the goods from the port. The agents handover the

documents which involve packing list and invoices to the shipping lines.

As the trailer number, the container number E form number, quality and the quantity is

completely mentioned on this invoices.

Mode Document Carrier

By sea Bill of lading Shipping lines

By Rail Receipt Railway service

By Road Road way bill Transporters

By Air Air way bill Air lines

NEGOTIABLE DOCUMENTS

In the negotiable documents the title of the good is transferred form one

person to another when the existing holder produces the documents.



NON NEGOTIABLE

In the non-negotiable the title of the goods is non-transferable. In the

exporting of good the number of the parties one involved.

1) The firm or the company engaged in business of transporting products,

such as the track company, shipping company a airline.

2) The exporter, who is exporting the goods to the buyer.

3) The importer who is importing the goods from the seller.

BILL OF LADING

Bill of lading is one of the most important documents in the whole export

documents. Because without this the importer cannot receive their goods

from the destination port.

AFT first of all draft the bill of lading and that is sent to the shipping line.

Bill of lading also contains the specifications related to the importer and the

exporter. The name of the exporter, place, the importer, the bank, the

quantity is mentioned, the quality with all the specifications required by that,

the total value of the goods which are exported. The date of the bill of

lading is mentioned. The shipping line and vessel name is given on B/L.

B/L is a comprehensive documents that is issued by the shipping line. The

date of shipment is also mentioned on that. Without this the importer can’t

clear the goods from the destination.

AFT export department also very quick in follow up of the B/L because they

have to transfer the information to the parties.



CERTIFICATE OF ORIGIN

Certificate of origin shows that the good which are being exported are

originate from a country form which importer is allowed. These are required

by the authorities in the importing countries. In order to satisfy and support a

claim for the import duty.

This certificate of origin may also be made by the consultants of the

importing country in the form of consoler invoice or legalize the exporter’s

commercial invoice. When explorer called for L/C, of is with the other

documents by reference to the invoice number, L/C number and by quoting

shipping marks and numbers in order to identify the goods.

PACKING LIST

Packing list is a document which involves all the complete list of the goods

packed in the particular shipment. It is very important. Documents. It

provides a convenience to the shipping and the clearance authorities.

FEATURES OF PACKING LIST

1) It usually shows the marks a number mentioned on the packages.

2) It shows the weight also.

3) Each package is marked by a number.

4) It shows the contents of each package, what is nature, quality and

quantity of the package.

5) It provides a linkage with the other documents to reference to the invoice

number, date, letter of credit number, date and vessel name.



FORM-E

Form E is a document issued by the exporter bank. Through Form-E the

SBP controls the overall exports of the country. The form-E declares that the

export information given on the form-E are correct and will submit the

duplicate and triplicate copy of this form to authorized bank.

Form-E contains the following important information’s.

1) Description of the goods, the quality of the goods exported.

2) The quantity of the goods.

3) The Terms of the L/C.

4) Destination of the goods.

5) The consignee bank. The importer bank name through countries the

payment would be released.

6) The Invoice value of the goods in the exported.

7) The port form where the good are shipped.

8) The place from where good are cleared.

9) Date of the form E is also on this form.

CERTIFICATE OF INSPECTION

Certificate of inspection is also a important document, it is in those

consignments where the importer wants to assure himself, about the

shipment of the correct goods, in terms of the quality, description quantity

and size. The documents should specifically identify to the goods by having

a reference to the marks and numbers of the package and linkage to the other

documents by reference to invoice number, the letter of credit number, the

vessel name and the shipping line.



BILL OF EXCHANGE

It is unconditional order in writing, addressed by a person to another,

signed by person giving it, requiring the person to when it is addressed to

pay on demand or at a fixed determinable future date. When the L/C is

opened the B/E must be strictly drawn according to the terms and conditions

of the creditor may be drown on the request of the applicant or on the bank

request through which the credit is opened. B/E is also a important

document of export.

SHIPPING BILL

The customer clearing agents issue the shipping bill. It contains the complete

information about the export bank the importer name, the exporter name, the

weight of the goods, (Net and gross weight), number of packages, amount in

US$, quality of the goods, the container number, the exchange rate and

rupee amount.

FORM-M

It is also an important. It is used to pay the commission to the agents. AFT

receive this from the agents. On this the amount of the commission is

mentioned against invoices.



PEST ANALYSIS

POLITICAL

The government taxes and the procedures about the taxes collection

also have impact on the textile sector.

Govt. rules & the regulation about the textile sectors they also

influence on the small and the large textile industries.

Duty drew back is also an other, which is important.

Export policies and the quota policies play a vital role in developing

the future of the textile Mill.

Custom rules regulation are major factors in importing the machinery

and exporting the products, such as the Grey Fabric the Yarn.

The export surcharges also have the impact on the competitiveness of

the organization.

The discontinuity in the policies have the negative impact on AFT.

ECONOMIC

Growth rate of the country is also important for the progressive

textile industry.

Inflation rate shows the level of prices. The high rate of inflation

level leading towards the lower profit margin.

Macro economy will also keep in improving the industry growth.

Foreign investment is also boosting the economy.

Govt. rules & regulations also have influence in the textile industry.

The fiscal balance also have impact. It is reducing so the interest rate

is also decreasing.



Balance of payment is also improving it is a positive indicator for the

development of textile sector.

Govt. incentives to the export of textile products also play vital role.

The rupee increasing so we are getting more foreign exchange.

SOCIAL

Social unrest and disorder is also influencing.

Work force attitude is positive which is improving the growth and

development of AFT.

The culture and the social norms.

TECHNOLOGICAL

Technological developments in the machinery and parts have a great

impact.

Internet access is other. It is improving the efficiency & the time is

reducing. It is a great facility to the exporters.

Computer aided designs are also improve the overall productivity and

the efficiency. It has reduced the time cost as well.

Customers quick access to the information due to the fast

communication channels.

The new technological developments such as e-commerce, e-banking

and information technology are improving the efficiency and

productivity.



SWOT ANALYSIS

STRENGTHS

Good know how about the textile business. Which is improving

the progress of the company.

Cheap labour is available to AFT which is reducing the per unit

cost.

The products are at compatible prices.

Cotton is also available at cheaper rates.

It has its own spinning unit and the weaving unit also. Which is

reducing the cost of production.

AFT has well qualified staff.

AFT has a good financial resources. So they can invest in other

textile related products.

AFT has its better market information system.

AFT has good relations with local and foreign buyers.

WEAKNESS

Delivery time is more due to this the shipment are delayed.

Lack of HR resources development.

Lack of promotional activities. AFT should do the more effort

in promotion.

There is more decentralization in AFT.

Less competitive in the fine count.

Our cotton fiber is Short .Which is decreasing our productivity

in fiber.

Non-professional attitude. Which is decreasing efficiency.



Per unit cost is not decreasing .So we are less competitive in

count Fiber.

AFT is not exporting value added products.

OPPORTUNITIES

AFT has opportunity to export to the U.S.A and the Europe

markets.

There is more scope of exporting to these markets.

Govt. is also providing lot of incentives to the exporters.

The AFT can move in horizontal and the forward integration.

The decreasing interest rates on the loans.

AFT has opportunity to explore new international and growth

oriented markets for the exports of Fabric.

AFT can play the role of agent. So they can save the

commission which is paid to the agents.

AFT can better the marketing techniques.

The company should import the latest technology to decrease

the per unit cost of the production.

The company should go in dying process also.

The company should make efforts to improve the technical

skills of the labour and employees which will improve the

overall efficiency and productivity of the organization.



THREATS

Quotas are lifting AFT will face the major threat.

AFT has a threat from the domestic and the international

competitors.

China, Thailand and Indonesia are the emerging giants in

textile.

WTO regime will be a great threat.

The AFT will face tough competition in domestic and

international markets.

Political instability is also a major threat.

Govt. strict policies about the textile sector.

The unreliable agriculture sector.



INTERNSHIP REPORT

ON

AHMAD FINE TEXTILE MILLS LIMITED

SUBMITTED TO:

MR. NAUMAN ABBASI

SUBMITTED BY:

MUHAMMAD NASIR RIAZ

MBA-I

MB-00-30

INSTITUTE OF MANAGEMENT SCIENCES, BAHAUDDIN ZAKARIYA UNIVERSITY,

MULTAN
