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Internship Report on Nishat Textile Mills Ltd 2009
The tradition of quality, in products and business practice, runs unbroken through the history of Nishat group since its inception in 1950.
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.
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 Founder
A 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
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 Mansha
Mr. Fayaz Ahmad Longi (NIT)
Mr. Muhammad Bilal Sheikh (PICIC)
Mr. Aftab Ahmed Khan
Mr. Khalid Qadeer Qureshi
Mr. Muhammad Azam
Rana Muhammad Mushtaq
Mr. 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 Company
Chartered 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 Limited
American Express Bank
Askari Commercial Bank Limited
Credit Agricole Indosuez
Citibank N.A.
Deutsche Bank
Emirates Bank International P.J.S.C
Faysal Bank Limited
Habib Bank Limited
Habib Bank A.G. Zurich
Mashreq Bank P.S.C.
National Bank of Pakistan
Standard Chartered Grind lays
Societe General – The French
And International Bank
The Hong Kong & Shangai
Banking Corporation Limited
Union Bank Limited
United 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 &
SHARES DEPARTMENT Nishat House,
53, A, Lawrence Road, Lahore.
Tel: 042-6367812-16
Fax: 042-6367414
LIAISON OFFICE: 1st Floor, Karachi Chamber
Hasrat Monani Road, Karachi.
Tel: 021-6367812-16
Fax: 021-2412936
HEAD OFFICE: 3rd and 4th Floor E.F.U. House,
6-D, Main Gulberg, Jail Road, Lahore.
Tel: 042-5715646-52
Fax: 042-5715644-5
NUMBER OF EMPLOYEES
|
Year |
1998 |
1999 |
2000 |
2001 |
|
No. Of employees |
9445 |
10331 |
10090 |
13146 |
NISHAT GROUP OF COMPANIES
·
NISHAT MILLS LTD, FAISALABAD·
NISHAT DYEING AND FINISHING, LAHORE·
NISHAT FABRICS, BHIKHI·
NISHAT SPINNING, FEROZE WATTOAN·
NISHAT SEWING, LAHOREPRODUCT LINE
Products line of Nishat mills limited consists of following items,
BEDDING
·
Sheet sets·
Quilt cover sets·
Bed spreads·
Comforters·
Bed skirts·
Oxford pillow cases·
Blanket covers·
Sleeping bags
CURTAINS & ACCESSORIES
·
Embroidered curtains·
Pencil pleat tape curtains·
Pinch pleat lined & unlined curtains·
Tab top & rod pocket curtains·
Assorted pelmets and window dressings·
Oxford cushion covers·
Frilled and piped cushion covers·
Frilled, piped and pleated tie backsTABLE, FURNITURE & KITCHEN ACCESSORIES
·
Tea cozy·
Table mats·
Table cloth and napkins·
Aprons·
Kitchen gloves·
Pot holders·
Chair pads with circle tacks·
Couch cove
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
1. Textiles
2. Power generation
3. Banking
4. Cement
The textile business is further subdivided into 2 textile divisions;
Ø
Nishat FaisalabadØ
Nishat ChunianI did my internship in the head office of Nishat 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 is 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.
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 RESPONSIBILITIES
Management 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.
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 cheques.
(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.
(6) Product Identification and Tracebility
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.
(7) Inspection
There should be proper inspection of stores so that every thing functions according to manners prescribed by certificates.
(8) 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.
(9) 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.
(10) Training Programs
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.
(11) 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.
MEMORANDUM OF ASSOCIATION
NISHAT MILLS LIMITED
I. The name of the company is NISHAT MILLS LIMITED.
II. The Registered office of the company shall be situated in the Province of Punjab, Pakistan.
III. The objectives for which the company is established are as follows:
“OBJECTS”
. To acquire and take over as a going concern the business rights, liabilities and undertaking of the NISHAT MILLS, LYALLPUR a firm belonging to:
o
Mohammad Yakubo
Mohammad Shafio
Abdul Hamido
Mohammad Fafiqo
Mohammad Yahao
Mohammad Ayoobo
Mohammad Farooqo
Haji Maula Baksh1. And to carry on the same business in whole or in part, or in extended form and pay for the same in cash, shares or otherwise and with a view thereto, to enter into the agreement referred to Clause 3 of the Company’s Articles of Association and to carry the same into effect with or without modification.
2. To carry on the business of textile manufacturers and of dyeing, bleaching printing, combing, preparing, spinning, weaving, manufacturing, selling, buying and otherwise dealing in yarn. Linen, cloth and other goods and fabrics made from raw cotton, silk, flax, jute and materials.
3. To purchase or take on lease or otherwise acquire and work and spinning mills, weaving mills, ginning factories or presses for pressing merchandise into bales or any other similar concern an the property, business and goodwill appertaining thereto.
4. To purchase, sell, exchange and deal in cloth, yarn, cotton in process, raw cotton, jute, wool, silk, hemp, and other fibrous. Also drugs chemicals, dyes, metal, stores and other articles and things.
5. To carry on the business of spinners, weavers manufacturers balers and pressers ofall jute, cutting, jute rejections, hemp, cotton, wool, hair and other fibrous material, and to transact all manufacturing, curing, preparing, dying, coloring or bleaching processed and mercantile business that may be necessary or expedient, and to vend the raw material, and manufactured articles.
6. To purchase, import, export, sell, comb, prepare, spin, weave, dye and otherwise deal in cotton, flax, jute hemp, wool, silk, and all or any fibrous and other allied products.
7. To import, export, buy, sell or otherwise deal in all kinds of textile machinery and equipment, their spare parts and accessories and to manufacture and deal in articles of all kinds required for the manufacturers of yarn, silk, wool, linen and cloth and other allied products.
8. To weave and otherwise manufacture, buy, sell, import, export and otherwise deal in all kinds of cloth and other goods and fabrics including textile, filted, netted and looped goods.
9. To carry on the business of manufacturers, importers, exporter, buyers, sellers and dealers in waterproof material and fabrics, Pauline, American clothe, floor cloth and imitation leather, rubbers and allied goods.
10. To carry on all or any of the business of silk mercers, silk weavers furriers, haberdashers, hosiers, manufacturers, importers, and wholesale and retail dealers of and in textiles and gold and silver thread fabrics of all kinds, milliners, dressmakers, tailors, hatters, clothiers, outfitters, glovers, lace manufacturers and feather dressers and allied products of every description.
11. To make arrangements for the supply of cotton, wool, flax,, hemp, silk, jute and other fibrous and similar products for use in the mills run by the company or otherwise, either directly or in cooperation with any other person and for this purpose to set up farms, estates and other establishments.
12. To purchase, or take on lease for any term of year or otherwise acquire land with or without buildings thereon at such price or rent and under and subject to such terms and conditions as to title or otherwise as may be thought fit and to erect, build and construct thereon such factories (ginning or otherwise), mills warehouses, tanks, chawls, and other buildings, and to purchase take on lease or otherwise acquire such machinery, engines and apparatus and other property and erect them and such other therein as may be necessary for the purposed of the company.
13. To manufacture, refine, improve, purchase, sell, export, import, stock, store or otherwise deal in woolen, cotton, silk, or mercerized articles, goods, yarn or raw material or nay other quality of the same and to dye it or to manufacture there from articles of hosiery such as socks, stocking, underwear, outwear, banyans, jersey, mufflers, bands or any other articles of knitting line or embroidery of every description, beads, tapes, laces or any other goods of similar nature.
14. To erect, manufacture, contract, install, purchase or hire machinery, mills and factories for the manufacture of starch and other allied products.
15. To promote and establish working of woolen, cotton or spinning and weaving mills, khaddies or otherwise, carding, raising, machining and finishing of all cotton, silken and woolen goods, articles and yarns.
16. To carry on all or any of the business of oil from cotton seeds, rape seeds and all other varieties of seeds and other sorts of oil and any products thereof and the manufacturers and dealers of vegetable ghee.
17. To carry on the business of dealing and importing rubber in its raw or manufactured state and to treat, prepare, render marketable and manufacture all articles or rubber including Motor and Cycle tyres.
18. To carry on business of dealers and importers of chemicals of all sorts.
19. To carry on business as general merchants, contractors, agents, importers, exporters, factors and warehousemen except managing agents.
20. To transact or carry on all kinds of agency commissio0n and contract business in Pakistan or abroad and in particular in relation to industrial, manufacturing and financial transactions and to act as agents of any person, firm, company, Government or local authorities except managing agents.
21. To carry on all kinds of contracts of Government, locals bodies and other authorities.
22. To adopt such means of making known the products and business of the company as may seem expedient and in particular by advertisement and publicity in the press or otherwise, exhibitions, publication of books and periodicals and by granting prizes, rewards and donations.
23. To purchase or by any other means acquire and protect, prolong and renew, whether in Pakistan or elsewhere any patent rights, brevent, invention, licenses, protection, concessions, and the like, which may appear likely to be advantageous or useful to the company, and use and turn to account and to manufacture under or grant licenses or privileged, in respect of the same and to spend money in experimenting upon and testing or in improving or seeding to improve any patents, inventions or rights which the company may acquire or propose to acquire.
24. To employ experts to investigate and examine the condition, prospects, value, character, and circumstances of any business, concerns and undertakings and generally of any assets, property or rights.
25. To carry on the business of electrical engineers, electricians, engineers, contractors, manufacturers, constructors, suppliers, of and dealers in electrical and other appliances, cables, wire-lines, dry cells, accumulate, lamps and works and to generate, accumulate, distribute and supply electricity for the purpose of light, heat, motive power and for all other purposes for which electrical energy can be employed and to manufacture and deal in all apparatus and things required for or capable of being used in connection with the generation, distribution, supply, accumulation and employment of electricity, including in the term electricity all powers that may be directly or indirectly derived there from or may be incidentally hereafter discovered in dealing with electricity.
26. To underwrite, subscribe, acquire, invest, hold, sell, exchange or transfer shares, debentures stocks, bonds, modaraba certificates, participation term certificates, term finance certificate or other securities issued or guaranteed by any company, constituted in Pakistan or abroad or issued or guaranteed by any Government, State, sovereign, rulers, commissioners, public body or authority, supreme, local or others and to exercise and enforce all rights and power conferred by or incidental to the ownership thereof.
27. To borrow raise or secure the payment of money by the issue of debentures, debentures-stock, bonds, obligations and securities of all kinds, or on personal security or without security, and to frame, constitute, and secure same as may seem expedient, with full power to make the transferable by delivery, or by instruments of transfer or otherwise and either perpetual or terminable, and either redeemable or otherwise on the undertaking of the company or upon and specific property and rights, present and future of the company.
28. To receive fixed and other deposits, accepts the business of a banking company.
29. To pay for any property or rights acquired by the company, either in cash fully paid shares or by the issue of securities, or partly in one mode and partly in another and generally on such terms as may be determined.
30. To draw, make, accept, endorse, discount, execute and issue promissory notes, bills of exchanges, bills of lading, warrants, debentures, and other negotiable or transferable instruments.
31. To establish and support, or aid in the establishment and support of association, institutions, funds, trusts and conveniences calculated to benefit employees and ex-employees of the company, or its predecessors in business or the dependents or connections of such persons and to grant pensions and allowances, and to make payments towards insurance, and to subscribe or guarantee money for charitable or benevolent objects, or for any exhibition or for any public, general or useful object.
32. To invest and deal with any money of the company in such form as may be though expedient.
33. To acquire and carry on all or any part of the business or property and to undertake any liabilities of any person, firm. Association or company carrying on any business which the company is authorized to carry on or possessed of property or rights suitable for any of the purposes of this company and as the consideration for the same to pay cash or to issue any shares stocks or obligation of this company.
34. To promote and form and to be interested in and to take, hold and dispose of shares and securities in any other company having objects altogether or in part similar tot those of this company, or carrying on any business capable of being conducted so as directly or indirectly to benefit this company and to transfer to any such company all or any of the property, rights and liabilities of this company and to subsidies or otherwise assist any such company.
35. To appoint such person and/ or firm as may be deemed expedient to be secretaries, managers, branch managers, or district representatives of the company upon such terms as the company may determine.
36. To undertake and execute any trust the undertaking whereof may seem desirable and either gratuitously or otherwise.
37. To procure the company to be registered or recognized in any foreign country or any place.
38. To enter into partnership or arrangement in the nature of a partnership, cooperation or union of interests, with any person or persons company or cooperation engaged or interested or about to become engaged or interested in the carrying on or conduct any business or enterprise which the company is authorized to carry on or conduct or from which the company would or might derive any benefit whether direct or indirect.
39. To sell or dispose of the undertaking of the company or any part thereof in such manner and for such considerations as the company may think fit and in particular for shares, debentures stock or securities or any other company whether promoted by this company for the purpose or not, and to improve, manage, develop, exchange, lease, dispose off turn to account, or otherwise deal with all or any part of the property and rights of the company.
40. To pay all the preliminary expenses of any kind and incidental to the formation and incorporation of the company out of the funds of the company.
41. To distribute any of the company’s property among the members in specie or in any manner thereof.
42. To take part in the formation, management, subsidizing, supervision or control of the business or operations, of any company or undertaking and for the purpose to act as directors, trustees, administrators, managers, secretaries or in any other capacity and to appoint and remunerate any directors, administrators, managers or accountants or other experts.
43. To advance and lend money on the security of assets of all kinds or without security upon such terms as may be arranged.
44. To give any guarantee in relation to the payment of any loan, debentures-stock, bonds, obligation, securities and to guarantee the payment of interest thereon or of dividends on any stock or shares of the company.
45. To constitute any trust with a view to the issue of stocks or securities based on or representing any shares, stocks, or other assets specially appropriated for the purpose of any such trust and to settle and regulate, and if thought fir, to undertake and execute any such trusts and to issue, dispose or hold any preferred, deferred or other special stocks or securities.
46. To cause the company to be registered or recognized in Pakistan or any other country.
47. To issue any shares of the company at par or at a premium or debentures at premium or at a discount.
48. To remunerate any person or company for services rendered or to be rendered, in placing or assisting to place or guaranteeing, the placing of or under-writing of any of the shares in the company’s capital or any debentures, debentures-stock to other securities of the company, or in or about the formation and promotion of the company or the conduct of its business.
49. To enter into any arrangement with any Government or authority, supreme, municipal, local or otherwise that may seem conductive to the company’s objects or any of them, and to obtain any such Government or authority, all right, concessions and privileges which the company may think it desirable to obtain, and to carryout, exercise and comply with any such arrangements, rights, privileges and concessions.
50. To carry on various other businesses which in the opinion of the company it is desirable or convenient to carry on in conjunction with or in lieu of any other business which the company is authorized to carry on.
51. To do all or any of the above things in any part of the world, and either at principals, agents, trustees, or otherwise and either alone or in conjunction with others and, by through agents, subcontractors, trustees or otherwise.
52. To do all such other things as are incidental or the company may think conducive to the attainment of the above objects or any of them. It is hereby declared that in the interpretation of this clause the power conferred upon the company by any paragraph, shall not be restricted by reference to any other paragraph, or by the juxtaposition of two or more objects and that in the event of the any ambiguity in this clause every paragraph thereof shall be constructed in such a way as to widen not to restrict the power of the company.
53. To carry on all or any kind of the cement business of manufacturers, sellers, dealers, and conveniences of all kinds.
o
The liability of members is limited.o
The authorized share capital of the company shall be RS. 1500000000 (one billion five hundred million) divided into 150000000 (one hundred fifty million) ordinary shares of Rupees of 10 each. The company shall have the power to increase, reduce or reorganize the said capital and divide shares in the capital for the time being in several classes in accordance with provisions of Companies ordinance, 1984.
ARTICLES OF ASSOCIATION
OF
NISHAT MILLS LIMITED
Actually the main purpose of including memorandum and articles of association is to get knowledge about company internal management and affairs, various matter like appointment of directors, their remunerations, disqualifications, company seal, winding up of company, accounts of company are frequently discussed. It also sets the boundary wall for the company.
1. PRELIMINARY
1. The regulations in Table “A” in the first schedule of the company’s ordinance, 1984 shall not apply to the company except as reproduced herein.
2. In these articles, unless the context or the subject matter otherwise requires:
a) Articles mean these articles as originally framed or as from time to time altered in accordance with law.
b) Board means a meeting of directors duly called and constituted or as the case may be the directors assembled at a board.
c) Company means NISHAT MILLS LIMITED.
d) Director’s means the directors for the time being of the company or as the case may be, the directors assembled at a board.
e) Month means calendar month according to the English calendar.
f) Office means the registered office for the time being of the company. Ordinance means the company’s ordinance, 1984 or any modification or re-enactment thereof for the time being enforce.
g) Register means, unless the context otherwise requires, the register of members to be kept pursuant to Section 147 of the ordinance.
h) Seal means the common seal of the company.
i) Section means section of the ordinance.
j) Special resolution means the special resolution of the companies defined in section 2(1) (36) of the ordinance.
k) Words importing masculine gender include the feminine gender.
l) Words importing singular number include the plural number and vice versa.
m) Expression referring to writing shall, unless the contrary intention appears, be construed as including references to printing, lithography, photography and other method of representing or reproducing words in a visible form.
n) Words importing person shall include bodies corporate.
o) The head notes are inserted for convenience and shall not affect the construction of these articles.
p) Unless the context otherwise requires words or expressions contained in these articles shall bear the same meaning as in the ordinance.
I1. BUSINESS
3. The directors shall have regard to the restriction on the commencement of business imposed by section 146, if and so far as, those restrictions are binding upon the company.
111. SHARES
4. No shares shall be offered to the public for subscription except upon the term that the amount payable on application shall be the full amount of the nominal amount of the shares.
5. The directors shall, as regards any allotment of shares, duly comply with such of the provision of section 68 to 73 as may be applicable to the company.
6. Every person whose name is entered, as a member in the register shall, without payment, be entitled to receive within three months after allotment or within forty-five days of the applications for registration of transfer, a certificate under the seal specifying the share of shares held by him and the amount paid upon thereon. Provided that, in respect of a share or share held jointly by several persons, the company shall not be bound to issue more than one certificate, and delivery of a certificate for a share to one of several jointly holders shall be sufficient delivery.
7. If a share certificate is defaced, lost or destroyed, it may be renewed on payment of such fee, if any, not exceeding one rupee, and on such terms if any, ads to evidence and indemnity and payment of expenses incurred by the company in investigating titles as the directors think it.
8. Except to the extent and in the manner allowed by section95, no part of the funds of the company shall be employed in the purchase of, or in loans upon the security, the company’s shares.
iv. TRANSFER OF SHARES
9. The instrument of transfer of any share in the company shall be executed both by the transferor and transferee, and the transferor shall be deemed to remain holder of the share until the name of the transferee is entered in the register in respect thereof. No transfer shall be made to an infant or person of unsound mind.
10. The directors shall not refuse the transfer any time unless the transfer is defective or invalid. The directors may also suspend the registration of transfers prior to the determination of entitlement or rights of the shareholders by giving seven days previous notice in the manner provided in the ordinance. The directors may decline to recognize any instrument unless the certificate of the shares to which it relates, and such other evidence as the directors may reasonably require showing the right of the transferor to make the transfer accompanies the duly stamped instrument of transfer.
If the directors refuse to register a transfer of shares, they shall within thirty days after the date on which the transfer was made lodged with the company send to the transferee and the transferee notice of the refusal indicating the defect or invalidity to the transferee, who shall, after removal of such defect or invalidity be entitled to re-lodge the transfer deed with the company.
v. TRANSMISSION OF SHARES
11. The executors, administrators, heirs of nominees, as the case may be, of a deceased sole holder of a share shall be he only persons recognized by the company as having any title to the share. In the case of share registered in the name of two or more holders, the survivor or survivors shall be the only person recognized by the company as having any title to the share.
12. Any person becoming entitled to a share in consequence of the death or insolvency of a member shall, upon such evidence being produced as may from time to time be required by directors, have the right, either to be registered as a member in respect of the share or, instead of being registered himself, to make such transfer of the share as the deceased or insolvent person could have made. But the directors shall, in either case have the same right to decline or suspend registration as they, would have had in the case of a transfer of the share by the deceased or insolvent person before the death or insolvency.
13. A person becoming entitled to a share by reason of the death or insolvency of the holder shall be entitled to same dividends and other advantages to which he would be entitled if he were registered holder of the share, except that he shall not, before being registered as a member in respect of the share, be entitled in respect of it to exercise any right conferred by membership in relation to meetings of the company.
VI. ALTERNATION OF SHARE CAPITAL
14. The company may, from time to time, by ordinary resolution increase the share capital by such sum, to be divided into shares of such amount, as the resolution shall prescribe.
15. Subject to the provisions of the ordinance, all new shares shall, before issue, be offered to such persons as at the date of the offer or entitled to receive notices from the company of general meetings in proportion, as nearly as the circumstances admit, to the amount of the existing shares to which they are entitled. The offer shall be made by notice specifying the number of shares offered, and limiting a time within which the offer, if not accepted, will be deemed to be declined, and after the expiration of that time, or on the receipt of an intimation from the person to whom the offer is made that he declines to accept the shares offered, the directors may dispose off the same in such manner as they think most beneficial to the company. The directors may likewise so dispose off any new shares which (by reason of the ratio which the new shares bear to shares held by person entitled to an offer of new shares) cannot, in the opinion of the directors, conveniently offered under this regulations.
16. The new shares shall be subject to the same provisions with reference to transfer, transmission and otherwise as the shares in the original share capital.
17. The company may by ordinary resolution:
a) Consolidate and divide its share capital into shares of larger amount than its existing shares.
b) Sub-divide its existing shares or any of them into shares of smaller amount than is fixed by the company’s memorandum of association, subject, nevertheless, to the provisos, to clause (d) of sub –section of (1) of section 92.
18. The company may, by special resolution, reduce its share capital in any manner and with, and subject to, any incident authorized and consent required by law.
19. Subject to the provisions of the ordinance, the directors may accept from any member the surrender of all or any of his shares on such terms as shall be agreed.
VII. GENERAL MEETING
20. The statutory general meeting of the company shall be held within the period required by section 157.
21. A general meeting to be called annual general meeting shall be held in accordance with the provisions of section158, within eighteen months from the date of incorporation of the company and thereafter once at least in every year within in a period of six month following the close of its financial year and not more than fifteen months after the holding of its last preceding annual general meeting as may be determined by the directors.
22. All general meetings of the company other than the statutory meeting or an annual general meeting shall be called extraordinary general meetings.
23. The directors may whenever they think fit, call an extraordinary general meeting, and extraordinary general meetings shall also be called on such requisition or in default, may be called by such requisition, as is provided by section 159. If at any time there are not within Pakistan sufficient directors capable of action to form a quorum, any director of the company may call an extraordinary general meeting in the same manner as nearly as possible as that in which meetings may be called by the directors.
VIII. NOTES AND PROCEEDING OF GENERAL MEETING
24. Twenty one days at the least (exclusive of the day on which the notice is served or deemed to be served but inclusive of the day for which notice is given) specifying the place, the day and the hour of meeting and, in case of special business, the general nature of that business, shall be given in the manner provided by the ordinance for the general meeting, to such persons as are, under the ordinance or the regulations of the company, entitled of receive such notices from the company, but the accidentally omission to give notice to or the non- receipt of notice by , any member shall not invalidate the proceedings at any general meetings.
25. All business shall be deemed special that is transacted at an extraordinary general meeting, and also all that it is transacted at an annual general meeting with the exception of declaring a dividend, the consideration of accounts, balance sheet and the reports of the directors and auditors, the election of directors, the appointment of, and the fixing of the remuneration of, the auditors.
26. No business shall be transacted at any general meeting unless a quorum of members is present at that time when the meeting proceeds to business. Three members present personally who represent not less than twenty-five percent of the total voting power either on their own account or a proxies shall be a quorum
27. If within half an hour from the time appointed for the meeting a quorum is not present the meeting, if called upon the requisition of members, shall be dissolved, in any other case, it shall stand adjourned to the same day in the next week at the same time and place, and, if at the adjourned meetings a quorum is not present within half an hour from the time appointed for the meeting, the members present, being not less than two, shall be a quorum.
28. The chairman of the board of directors, if any, shall preside as chairman of every general meeting of the company, but if there is no such chairman, or if at any meeting he is not present within fifteen minutes after the time appointed for the meeting, or he is unwilling to act as chairman, any one of the directors present may be elected to be chairman, and if none of the directors is present, or willing to act as chairman, the members present shall choose on of the their member to be chairman.
29. The chairman may, with the consent of any meeting at which a quorum is present (and shall if so directed by the meeting) adjourn the meeting from time to time but no business shall be transacted at any adjourned meeting other than in the business left unfinished at the meeting.
30. At any general meeting a resolution put to the vote of the meeting shall be decided on a show of hands unless a poll is (before or on the declara5ion of the result of the show of the hands) demanded. Unless a poll is so demanded, a declaration by the chairman that a resolution has, on a show of hands, been carried or carried unanimously, or by a particular majority or last, and an entry to that effect in the book of the proceedings so the company shall be conclusive evidence of the face without proof of the number or proportion of the votes recorded in favor of or agent that resolution.
31. A poll may be demanded only in accordance with the provisions of section 167.
32. If a poll is fully demanded, it shall be taken in accordance with the manner lay down in section 168 and result of the pool shall be deemed to be the resolution of the meeting at which the pool was demanded.
33. A poll demanded on the election of chairman or on a question of adjournment shall be taken at once.
34. In the case of an equality of votes, whether on a show of hands or on a poll, the chairman of the meeting at which the show of hands takes place, or at which the poll is demanded, shall have an exercise a second or casting of vote.
IX. VOTES OF MEMBERS
Subject to any rights or restriction n for the time being attached to any class or classes of shares, on a show of hands every member present in person shall have one vote except for election of directors in which case the provisions of section 178 shall apply. On a poll every member shall have voting rights as laid down in section 160.
35. In case of joint holders, the vote of the senior who tenders as a vote, whether in person or by proxy, shall be accepted to the exclusion of the votes of the other joint holders, and for this purpose seniority shall be determined by the order in which the names stand in the register.
36. A member of unsound mind, or in respect of whom an order has been made by any court having jurisdiction, in lunacy, may vote, whether on show of hands or on a pool, by his committee or other legal guardian, and any such committee or guardian may, on the pool, vote by proxy.
37. On a poll votes may be given either personally or by proxy. Provided that nobody corporate shall vote by proxy as long as a resolution of its directors in accordance with the provision of section 162 is enforce.
38. The instrument appointing a proxy shall be in writing under the hand of the appointer of his attorney duly authorized in writing. A proxy must be member of the company.
39. The instrument appointing a proxy and the power of attorney or other authority (if any) under which it is signed, or a materially certified copy of that power or authority, shall be deposited at the office not less than forty-eight hours before the time for holding the meeting at which the person named in the instrument proposes to vote and in default the instrument of proxy shall not be treated as valid.
40. An instrument appointing a proxy may be in form.
41. A note given in accordance with the terms of any instrument of proxy shall be valid notwithstanding the previous death or insanity of the principal or revocation of the proxy or of the authority under which the proxy was executive, or the transfer of the share in respect of which this proxy is given. Provided that no intimation in writing of such death, insanity revocation or transfer as aforesaid shall have been received by the adjourned meeting at which the proxy is used.
X. DIRECTORS
42. The numbers of the directors and the names of the first directors shall be determined in writing by a majority of the subscribers of the memorandum of association, so, however, that such number shall not in any case be less than seven.
43. Save as provided in section 187, no person shall be appointed as a director unless he is a member of the company and holds shares of the minimum value of Rs.25000 in his own name, relax able in the case of directors representing interest of other concerns. A director who is required to hold qualification shares may act as a director before acquiring his qualification shares but shall, in any case, acquire the same within in two month of appointment.
44. The remuneration of a director for performing extra services, including holding of the office of chairman and the remuneration to be paid to any director for attending the meetings of the directors or a committee of directors shall from time to time be determined by the board of the directors in accordance with law.
XI. POWERS AND DUTIES OF DIRECTORS
45. The business of the company shall be managed by the directors, who may pay all expenses incurred in promoting and registering the company, and may exercise all such powers of the company, and may exercise all such powers of the company as are not by the ordinance or by there regulations, required to be exercised by the company in general meeting, subject nevertheless to the provisions of the ordinance or to any of these regulations, and such regulation being no inconsistent with the aforesaid provisions as may be prescribed by the company in general meeting but no regulation made by the company in general meeting shall invalidate any prior act of the directors which would have been valid if that regulation had not been made.
46. The directors may from time to time, by power of attorney under the company’s seal appoint any person or person to be the attorneys of the company for such purposes and with such powers, authorities, and discretion (not exceeding those vested in or exercisable by the directors under these presents) and for such period and subject to such conditions as the directors may from time to time think fit. Any such attorney (s) may, if authorized by the directors delegate all or nay of the powers vested in him/ them.
47. The directors shall duly comply with the provisions of the ordinance and in particular with the provisions in regard to the registration of the particulars of mortgages and charges affecting the property of the company or created by it, to the keeping of a register of the directors and to the sending to the registrar of an annual list of members and summary of particulars relating thereto and notice of nay consolidation or increase of share capital, or sub-division of shares, copies of special resolution and copy of the register of directors and notifications of any changes therein.
48. The directors shall cause minutes to be made in books provided for the purpose of,
a) All appointments of officers made by the directors.
b) The name of the directors present at each meeting of the directors and of nay committee of the directors.
c) All resolution and proceedings at all meeting of the company and of the directors and of committee of directs.
And every director present at any meeting of directors or committee of directors shall sign his name in a book to be kept for that purpose.
49. The directors shall appoint a chief executive in accordance with the provisions of section 198 and 199. The board shall determine the terms and conditions of appointments of the chief executive.
XII. DISQUALIFICATION OF DIRECTORS
50. No person shall become a director of the company if he suffers from any of the disabilities or disqualification mentioned in section 187 and, if already a director, shall cease to hold such offers from the date he so becomes disqualified or disabled. Provided however that no director shall vacate his office by reason only of his being a member of any company which has entered into contracts with, or done, any work for, the company but such director shall not vote in respect of any such contract or work, and if he does so vote, his vote shall not be counted.
XIII. PROCEEDING OF DIRECTORS
51. The company may meet together for the dispatch of the business, adjourned and otherwise regulate their meetings, and they think fit. The quorum for a meeting of directors shall not be less than one-third of their number of four, whichever is greater, questions arising at any meeting shall be decided by a majority of vote. In case of an equality of vote, the chairman shall have and exercise a second or casting vote. A director may, and the secretary on the requisition of a director shall, at any time, summon a meeting of directors to, it shall not be necessary to give notice of a meeting of directors to any director for the time being absent from Pakistan.
52. The director may elect a chairman of their meetings and determine the period for which he is to hold office, but, if no such chairman is elected or if at any meeting the chairman is not present within ten minutes after the time appointed for holding the same or is unwilling to act as chairman, the directors present may choose one of their number to be chairman of the meeting.
53. The directors may delegate any of their powers not required to be exercised in their meeting to committees consisting of such member or members of their body as they think fit. Any committee so formed shall, in the exercise of the powers so delegated, confirm to any restrictions that may be imposed on it by the directors.
54. A committee may elect a chairman of its meetings, but, if no such chairman is elected, or if at any meeting the chairman is not present within ten minutes after the time appointed for holding the same or is unwilling toast as chairman, the members present may choose one of their members to be chairman of the meeting.
55. A committee may meet and adjourn as it thinks proper, question arising at any meeting shall be determined by a majority of votes of the members present. In case of any equality of votes, the chairman shall have and exercise a second or casting vote.
56. All acts by any meeting of the directors or of a committee of directors, or by any person acting as a director, shall not withstanding that it be after wards discovered that there was some defect in the appointment of such directors or persons acting as aforesaid, or that they or any of them were disqualified, be as valid as if every such person had been duly appointed and was qualified to be a director.
57. A resolution in writing signed by the directors (not being less than one-third of their number or four whichever is greater) or affirmed by them through telex or telegram shall be as valid and effectual as if it had been passed at the meeting of the directors duly convened and held.]
XIV. ELECTION AND REMOVAL OF DIRECTORS
58. At the first annual general meeting of the company all the directors shall stand retired from office, and directors shall be elected in their place in accordance with section 178 for a term of three years.
59. A retiring director shall be eligible for re-election.
60. The number of directors determined by the board shall be elected to office by the members in general meting in the following manner;
a) A number shall have such number of votes as it equal to the product of the number of voting shares held by him and the number of directors to be elected.
b) A member may give all his votes to a single candidate or divide them between more than one of the candidates in such manner as he may choose.
c) The candidate who gets the highest number of votes shall be declared elected as directors and then the candidate who gets the next highest number of votes shall be so declared and so on until the total number of directors to be elected has been so elected.
61. Subject to the provision of the ordinance, the company may from time to time in annual general meeting increase or decrease the number of directors.
62. Any casual vacancy occurring on the board of directors may be filled up by the directors, but the persons so chosen shall be subject to retirement at the same time as if he had become a director on the day on which the director in whose place he is chosen was last elected as director.
63. The company may remove a director but only in accordance with the provisions of the ordinance.
XV. THE SEAL
64. The directors shall provide a common seal of the company which shall not be affixed to any instrument except by the authority of a resolution of the board or by a committee of directors authorized in that behalf by the directors, and two directors or one director and the secretary of the company shall sigh every instrument to which the common seal is affixed.
65. The directors may provide for the use in any territory, district or place not situated in Pakistan, of an official seal which shall be a facsimile of the common seal of the company, which the addition on its face of the name of every territory, district or place where it is to be used. The provisions of section 213 shall apply to the use of the official seal.
XVI. DIVIDENDS AND RESERVE
66. The company in general meeting may declare dividends but no dividend shall exceed the amount recommended by the directors.
67. The directors may from time to time pay to the members such interim dividends as appear to the directors to be justified by the profits of the company.
68. No dividends shall be paid otherwise than out of profits of the year or any other undistributed profits.
69. Subject to the rights of the persons entitled to shares with special rights as to dividends, all dividends, shall be declared and paid according to the amounts paid on the shares, but if and so long as nothing is paid upon any of the share in the company, dividends may be declared and paid according to the amounts of the shares. No amount paid on a share in advance of calls shall be treated for the purposed of this regulation as paid on the share.
70. Any general meeting declaring a dividend may resolve that such divided be paid wholly or in part by the distribution of the specific assets and in particular, of paid up shares, debentures, or debentures in stock of the company or other company or in one or more of such ways.
71. The directors may, before recommending any dividend, set aside out of the profits of the company such sums as they think proper as a reserve or reserves which shall, at the discretion of the directors, be applicable for meeting contingencies, or for equalizing dividends or for any other purpose to which the profits of the company may be properly applied, and pending such application may, at the like discretion either be employed in the business of the company or be invested in such investments (other than shares of the company) as the directors may, subject to the provisions of the ordinance, from time to time think fit.
72. The directors may carry forward any profits, which they may think prudent not to distribute, without setting them aside as a reserve.
73. Any general meeting may resolve that any money investments, or other assets forming part of the undivided profits of the company standing to the credit of any reserve or other fund or in the hands of the company and available for divided
74. (or representing premiums received on the issue of the shares and standing to the credit of the share premium account) be capitalized and distributed amongst such of the share holders as would be entitled to receive the same if distributed by way of dividend and in the same proportions on the footing that they become entitled thereto as capital and that all or any part of such capitalized fund be applied on behalf of such share holders in paying up in full any unmissed shares, debentures or debenture-stock of the company which shall be distributed accordingly and that such distribution or payment shall be accepted by such share holders in full satisfaction of their interest in the said capitalized sum.
75. A transfer of shares shall not pass the right to any dividend declared thereon before the registration of the transfer.
76. If several persons are registered as joint-holders of any share, any one of them may give effectual receipt for any dividend payable on the share.
77. Notice of any dividend that may have been declared shall be given in the manner hereinafter mentioned to the persons entitled to share therein.
78. The dividend shall be paid within the period laid down in section 251.
79. All dividends unclaimed for six year after having been declared shall be kept in trust by the company but may invested or otherwise made use of by the directors for the benefit of the company until claimed.
XVII. ACCOUNTS
80. The directors shall cause to be kept proper books of account as required under section 230.
81. The directors shall keep the books of account at the office on at such other place as the directors shall think fit and shall be open to inspection during business hours.
82. The directors shall from time to time determine whether and to what extent and at what time and places and under what conditions or regulations the accounts and books or papers of the company or any of them shall be open to the inspection of members not being directors and no member (not being a director) shall have any right of inspecting any account and book or papers of the company except as conferred by law or authorized by the directors or by the company in general meeting.
83. The directors shall as required by section 233 and 236 cause to be prepared and to be laid before the company in general meeting such profit and loss account and balance sheets duly audited and reports as are referred to in those sections.
84. A balance sheet, profit and loss account, and other reports referred to in the preceding articles shall be made out in every year and laid before the company in the annual general meeting made up to the date not more than six month before such meeting. The balance sheet and profit and loss account shall be accompanied by a report of the auditors of the company and the report of directors.
85. A copy of the balance sheet and profit and loss account and reports of directors and auditors shall, at least twenty-one days preceding the meeting be sent to the persons entitled to receive notices of general meeting in the manner in which notices are to be given as hereinafter provided.
86. Every account of the directors when audited and approved by a general meeting shall be conclusive except as regards any errors discovered therein within three months next after the approval thereof. Whenever any such error is discovered within that period the account shall forthwith be corrected and thenceforth shall be conclusive.
87. The directors shall in all respect comply with the provisions of section 230 to 236.
88. Auditors shall be appointed and their duties regulated in accordance with section 252 to 255.
XVIII. NOTICES
89. The company shall give notice to members and auditors of the company and other persons entitled to receive notice in accordance with section 50.
XIX. SECRECY
90. Every directors, manager, advisor, auditors, trustee, member of a committee, officer, servant, agent, accountant, or other person employed in the business of the company shall, if so, required by the directors before entering upon his duties sign a declaration pledging himself to observe a strict secrecy respecting all transactions of the company with its customers and the state of accounts with individuals and in matters relating thereto, and shall be such declaration pledge himself not to reveal any of the matters which may come to his knowledge in the discharge of his duties except when required to do so by the directors or by any general meeting or by any a court of law and except so far as may be necessary in order top comply with any of the provisions in these presents.
91. No member or other person (not being a director) shall be entitled to enter upon the property of the company or examine the company’s premises or properties without the permission of a director subject to articles 82, to require discovery of or any information respecting any detail of the company’s trading or any matter which is or may be in the nature of a trade secret, mystery of trade, or secret process or of any matter whatsoever which may relate to the conduct of the business of the company and which in the opinion of the directors will be in expedient, in the interest of the members of the company, to communicate.
XX. RECONSTRUCTION
92. On any sale of the undertakings of the company the directors or the liquidators on a winding up may, if authorized by a special resolution, accept fully paid shares, debentures or securities or any other company, either then existing or to be formed for the purchase in whole or in part of the property of the company, and the directors (if the profits of the company permit) or the liquidation (in a winding up) may distribute such shares or securities, or any other properties of the company amongst the members without realization, or vest the same in trustees for them, and any special resolution may pro-vide for the distribution or appropriation of the cash, shares or other securities, benefits or property, otherwise than in accordance with the strict legal rights of the members or valuation of any such securities or property at such price and in such manner as the meeting may approve, and all holders of shares shall be bound to accept and shall be bound by any valuation or distribution so authorized, and wave all rights in relation thereto save only such statutory rights (if any) as are, in case the company is proposed to be or is in the course of being wound up, incapable of being varied or excluded by these presents.
XXI. WINDING UP
93. If the company is wound up, the liquidator may, with the sanction of a special resolution of the company and any other sanction required by law, divide amongst the members in specie or kind the whole or any part of the assets of the company (whether they shall consist of property of same kind or not) and may, for such purpose, set such value as he deems fair upon any property to be divided as aforesaid and may determine how such divisions shall be carried out as between the members or different clauses of members. The liquidator may, with the like sanctions, vest the whole or any part of such assets in trustees upon such trust for the benefit or the contributories, as the liquidator with the like sanction, shall think fit but so that no member shall be compelled to accept any shares or other securities whereon there is any liability.
XXII. INDEMNITY
94. Every officer or agent for the time being of the company may be indemnified out of the assets of the company against any liability incurred by him in defending any proceedings, whether civil or criminal, arising out of his dealings in relation to the affairs of the company, accept those brought by the company against him in which judgment is given in his favor or in which he is acquitted, or in connection with any application under section 488 in which relief is granted to him by the court.
XXIII. ARBITRATION
95. Whenever any difference arises between the company on the one hand and any of the members, their executors administrators or assigns on the other hand, touching the true intent or construction or the incident or consequences of these articles or of the statutes, or touching anything there or thereafter done, executed, omitted or suffered in pursuance of these articles or of the statutes or touching any breach or alleged breach of these articles, or to these articles or to any statue affecting the company or to any of the affairs of the company, every such difference shall, as a condition precedent to any other action at law be referred in conformity with the arbitration act, 1940, or any statutory modification thereof and any rules made there under, to the decisions of an arbitrator to be appointed by the parties in difference or if they cannot agree upon a single arbitrator to the decision of two arbitrators of whom one shall be appointed by each of the parties in difference, or in the event of the two arbitrators not agreeing, then of an umpire to be appointed by the two arbitrators, in writing, before proceeding on the reference and such decision shall be final and binding on the parties.
Director Finance
Company Secretary
Chief Executive
Board of Directors
ORGANIZATIONAL STRUCTURE
NISHAT MILLS LIMITED
Director Purchase
Director Processing
Director Marketing
ORGANIZATIONAL STRUCTURE
NISHAT MILLS LIMITED
G.M. Weave
G.M. Finance
G.M. Export
Legal Advisor
G.M. HRM
G.M. Stitching
Chief Engineer
Director spinning
G.M. Purchase
Director processing
Chief Executive
ORGANIZATIONAL STRUCTURE
NISHAT MILLS LIMITED
Assistant manager waste
Assistant manager sales
AM quality control
Deputy Manager Waste
Assistant Manager
Deputy Manager Quality
Incharge fair price shop
GM MARKETING
Assistant manager
ORGANIZATIONAL STRUCTURE
NISHAT MILLS LIMITED
Director processing
Manager processing
Manager folding
Dy. Manager folding
Dy. Manager processing printing
Dy. Manager processing dying
ORGANIZATIONAL STRUCTURE
NISHAT MILLS LIMITED
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
ORGANIZATIONAL STRUCTURE
NISHAT MILLS LIMITED
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
Part 2
GROUP PERFORMANCE
Playing a crucial role in the private sector, Nishat Group rank among the top five business houses in Pakistan, in terms of sales and assets. There open and decentralized management structure helps us in making decision, vital to remain competitive in their businesses. Their team is proud of their achievement and work together to maintain high standard of quality and service. As a responsible corporate citizen, they continually strive for the beneficial partnerships with the communities in which the CARING FOR THE ENVIRONMENT is undertaken.
Nishat Group is playing a leadership role in setting the pace for environmental protection in the country. To control pollution and provide safe working and living conditions in and around Nishat Mills Limited, a sophisticated Water Treatment and Disposal System has been installed which removes hazardous materials from effluents. This system was the first of its kind in the Pakistan.
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.
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.
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Selection & Career ladderFirst 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.
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Promotion of Persons at NishatOn 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 AssessmentAt 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
·
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 PerformanceHigher 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.
§
AccountabilityEmployees 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 EmployeeEmployees 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,
Niashatabad 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.
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.
While at Shiekhupura, weaving process is being carried out. At 21. K.M ferozepur road, Lahore a stitching unit has been established to meet the customer’s requirements. Finally
20.K.M Shiekhupura Faisalabad road is a spinning unit is working. This unit involves converting cotton into yarn.
Plant location is critical success factor. It involve huge investment and irreversible. It is either a life long asset or life long liability because building and other structure once made cannot be moved.
Now we see the appropriateness of Nishat plant location,
NISHATABAD FAISALABAD
The history of Nishat mills limited date back to 1951. When Mian Muhammad Yahya founded Nishat mills limited at NISHATABAD FAISALABAD. This plant is ideally located in the heart of industrial area. Plant was established keeping in view of following considerations,
Ø
Availability of cottonØ
Technical peopleØ
Housing and other facilitiesØ
InfrastructureØ
Cost of transportation of laborØ
LandØ
Proximity to marketØ
Stitching and its worker
Ø
Availability Of CottonSince Faisalabad and its surroundings are known for fines kind of cotton so it is easy to acquire to raw material. Cotton is procured at the start of season to avoid any variation, which may occur in the crop from time to time, enabling the mills to produce consistent quality all the year. For this purpose a fully equipped cotton laboratory is established and it is working day and night during cotton seasons to select the best quality crop to be purchased.
Ø
Technical PeopleFaisalabad is an industry-boosting city. People have technical skills. In order to promote their skills, government has established various training schools, like TEXTILE COLLEGE FAISALABAD. This college is providing skilled persons to NISHAT MILLS LIMITED.
Ø
Housing And Other FacilitiesSatisfaction of employees both manager and worker is necessary and inevitable to achieve organization goals. To fully exploit the skills of worker Nishat is providing them various facilities. A housing scheme was introduced. It was named at NISHATABAD COLONY. This colony provides residential facilities to workers.
Other facilities include in-house training school to upgrade the skills. Seminars/lectures are arranged to acquire satisfactory results. Its plant location enables it to invite celebrities from Faisalabad chamber of commerce to share their personal experiences.
Ø
InfrastructureIt includes availability of water, gas, electricity, roads (roads from factory to market), disposal of wastage etc. all the facilities are available there. Road conditions are absolutely perfect for the transportation of products. Goods can be transported either by road or by railway. There is also a dry port at Faisalabad, so delivery of finished products becomes very easy. There are certain objective factors, which include
Ø
Cost Of Transportation Of LaborPlant is not far enough from city, infact with increase in population; it has become heart of industrial area. Cost of transportation of labor/material is low as compared to its competitors.
Ø
Land At Reasonable PriceNishat mills limited started out as a weaving unit with 500 semi-automatic looms. Later on 10000 spindles were added, laying the foundation of nation’s biggest textile composite project. Nishat mills Faisalabad covers 98 acre. It has quality with adequate provisions for future expansion.
Ø
Proximity To MarketNishat mills limited are export-oriented organizations. The major products are exported to Japan, Far East, South America, Europe and use. Logistics are available to carry goods. Dry Port., railway and roads all are in perfect conditions.
Ø
Stitching Unit And Its WorkerStitching unit is not far from city so female workers are not reluctant to work in stitching department. This is another advantage of plant location.
There are certain subjective factors like emotional sentiment of people. I want to serve my people and I want to serve my homeland. Frankly speaking capitalist do not believe. They invest money to get return. Nishat mills limited do not have any subjective factors, which are considered, before location of plant.
PRODUCT LINE
Products line of Nishat mills limited consists of following items,
Bedding
·
Sheet sets·
Quilt cover sets·
Bed spreads·
Comforters·
Bed skirts·
Oxford pillow cases·
Blanket covers·
Sleeping bagsCurtains & Accessories
·
Embroidered curtains·
Pencil pleat tape curtains·
Pinch pleat lined & unlined curtains·
Tab top & rod pocket curtains·
Assorted pelmets and window dressings·
Oxford cushion covers·
Frilled and piped cushion covers·
Frilled, piped and pleated tie backsTable, Furniture & Kitchen Accessories
·
Tea cozy·
Table mats·
Table cloth and napkins·
Aprons·
Kitchen gloves·
Pot holders·
Chair pads with circle tacks·
Couch covePRODUCTION UNITS OF NISHAT MILLS LIMITED
The Company’s production facilities comprises of:
v
Spinningv
Weavingv
Processingv
Design studiov
Engravingv
Rotary screen printing sectionv
Finishing sectionv
Dyeing sectionv
Inspection and rolling sectionv
Quality control sectionv
Production planning sectionv
Stitching unitsv
Power generationPlant Capacity
|
UNITS |
Scale |
1998 |
1999 |
2000 |
2001 |
|
SPINNING |
Kgs |
54969 |
51989 |
48362 |
52467 |
|
WEAVING |
Sq. Mt. |
118008 |
140229 |
142304 |
152619 |
|
POWER PLANT |
KWH |
264902 |
264902 |
264902 |
315418 |
Actual Production
|
UNITS |
Scale |
1998 |
1999 |
2000 |
2001 |
|
SPINNING |
Kgs |
53968 |
50529 |
46729 |
50907 |
|
WEAVING |
Sq. Mt. |
107661 |
128130 |
130444 |
140046 |
|
POWER PLANT |
KWH |
182090 |
189273 |
174829 |
179882 |
Reason for Low Production
Under utilization of available capacity is due to normal maintenance. The generation capacity of power plant was increased due to installation of gas turbines in last quarter during the year under reference.
Production Machines
|
No. Of Spindles |
176452 |
178324 |
166792 |
153192 |
172992 |
|
No. Of sulzer looms |
338 |
338 |
388 |
284 |
284 |
|
No. Of Air jet looms |
120 |
120 |
180 |
244 |
244 |
|
No. Of Thermo sole dyeing |
1 |
1 |
2 |
1 |
3 |
|
No of Rotary printing machine |
2 |
2 |
3 |
3 |
3 |
SPINNING
Nishat Mills Limited initially started business with 10,000 spindles, which later on with the gradual increase reached 165,800. The entire machinery is from world-renowned manufacturers from Japan. A China and Europe. For reaching high quality standards, research and development is imperative for which Nishat Mills has state of the art yarn and cotton laboratories with world class scaling standards. Cotton is procured at the start of the season to avoid any variation, which, can occur in the crop from time to time enabling the mills to produce a consistent quality all the year round. For this purpose a fully equipped cotton laboratory with HVI-900/I and ASIF-N is working day and night during the cotton season to select the best quality crop to be purchased.
NML spinning is operationally organized into seven spinning units, each with a distinctive product range and capacity to keep a check on the quality standards, every cone undergoes inspection before packing to ensure that the buyer gets only the best out of the lot.
NML spinning is thus renowned for being one of the most trusted brand names in the market enjoying the trust and confidence of the consumer’s world over.
The major production from the spinning is exported to Japan, Far East, South America, Europe and the USA. In addition the spinning also provides the same high quality yarn to their own weaving mills going into fabric production.
A Brief Range of Machinery and Production Range is Given Below
A) Machinery Details
Nishat Mills Limited (Faisalabad only) has seven spinning units with a total of 165,880 spindles. Spinning production capacity for both cotton and Blended yarn is 120 Tons/Day.
Here under are summarized details of spinning machinery:
1) BLOW ROOM
Toyofa-Ohara-Heregeth (Japanese origin with German technology know how)
2) CARD
Trytzschler (German Origin)
Crosrol (U.Korigin)
Toyoda (Japanese Origin)
Howa (Japanese)
3) DRAWING
Toyoda& Howa (Japanese Origin)
Rieter (swiss Origin)
4) COMBER
Toyoda& Howa (Japanese Origin )
Rieter (Swiss Origin)
5) SIMPLEX
Toyda&Howa (Japanese Origine)
6) RINGFRAMES
Toyoda& Howa (Japanese Origine)
FA-507 (Chinese Origin with Germen Drafting)
7) AUTO CORNER
Murata (Japanese Origin)
8) DOUBLE INCH& TWISTING EQUIPMENT
Murata (Japanese Origin)
COUNT RANGE
100% Cotton Carded
From New 12 /1 to Ne32/1
From New 12/1 to New 32/1
All double Yarn in 100% Knotless/ auto-spliced
100%Cotton Combed
From New 12/1 to New 32/1
From New 12/1to New 32/1
All double Yarn in 100% Knotless/auto –spliced
We are also producing finer counts i.e., 42/1 combed and
Above with the bending of imported cotton of longer staple length.
BLENDED YARN
Poly cotton
Poly 52%: cotton 48% carded New 10/1 to Ne30/1
Poly 52%: cotton 48% carded New 10/1 to Ne40/1
Poly 65%: cotton 35% carded New 10/1 to Ne30/1
Poly 65%: cotton 35% carded New 10/1 to Ne45/1
Cotton Rich (CVC)
Poly 45%: cotton 48% carded New 10/1 to New 30/1
Poly 45%: cotton 48% combed New 10/1 to Ne 40/1
Poly 40%: cotton 48% carded Ne 10/1 to Ne 30/1
Poly 40%: cotton 48% cambed Ne 10/1 to Ne 40/1
All yarn made at Nishat Mills Limited is ring spun, for both knitting (waxed or UN waxed) and weaving.
Standard packing 24 cones per carton
Carton Wt. 100 lbs.
Quantity per FCL 39000 lbs. (40ft High cube container)
WEAVING
NML weaving enjoys the reputation for being the market leader in the loom state fabric business in Pakistan. Their fabrics are not only rated as the top quality but also enjoy a premium for their superior quality all over the world. Supported by their own in house spinning units, the weaving sector of Nishat mills limited produces fabric range form light to heavy percales to satin and traditional to twill dobby items.
Their fabric is well established all over the world with their exports going to the America the Far East, Africa, Australia Europe and Japan. Besides export they are also supplying grey fabric to their dyeing and printing units.
NML FAISALABAD:
Machinery: 188 sulzer- Ruti looms
Capacity: Approximately 2.1 million meters per month
Product range 100% cotton and poly cotton fabrics, in plain weaves. Twills, Drills,
Satins (regular /broken &stripped, Bedford cordsm herring bones pique and Rib cords.) This unit has been producing top qualities fabric for export as well as for consumption of their own processing unit. Recently awarded the ISO9002 certification, the facility is highly regarded for the production standard and quality control. This unit is comprised of 188 SULZER- RUTI P7100 Looms and state of the, back up process, with equally efficient quality control and packing department.
NML SHEIKHUPURA
MACHINERY 96 SULZER-ruti- looms (unit -1)
120 Tsudakoma air jets (unit-2)
60 Tsudakoma air jets (unit-3)
64 Tsudakoma air jets (unit-4)
CAPACITY: 4.5 Million meters per month
PRODUCT RANGE
The products in this unit range are not only the traditional 100% cotton polyester cotton fabrics, but also in Dobby items, customized to the buyer need.
Established initially by the name of Nishat fabric limited 1992. Subsequently merged into Nishat Mills Ltd, NML Shiekhupura is one of the most advance unit In the country equipped with the state of art machinery and back processes, the highly sophisticated labotary also insured total quality control in yarn purchase and fabric production, and other64 tsudakoma air yet looms have added (unit 4) recently along with the back process.
Future programs for the unit include the purchase of some new air yet looms, which will be give a boost to the production capacity and the product the range the unit will also expand subsequently.
PROCESSING
Nishat processing plant with monthly capacity of 3 million meters is one of the largest processing facilities of Pakistan. With and array of month modern machines, it is the geared to meet the ever increasing the demand of there client. The processing division has been divided in to different section to facilitate uninterrupted process flow and to insured quality control at all stages almost 75% chemical and dyestuff being used is of European origin and independent quality control department with a strong backing of fully equipped laboratory insured quality standard at all level. The processing plant has recently been awarded ISO –9001 Certification. Yet another achievement in this regard by Nishat mills limited.
Bleaching
Sometime cloth is bleached according to customer requirements. Bleaching helps to remove impurity from the cloth. For this purpose singeing machines are used where cloth is bleached in three steps.
1. Brushing
It helps to remove thread.
2. Singeing
It removes pills by temperature.
3. Chemicals tanks
It is used to remove oily and stain spots on cloth.
At the end cloth is raped on a batch. Polies then bags are used to prevent air penetration. At the end, batch number, quantity, meters of cloth are written on paper and stocked with batcher.
Desizing
Sometimes cloth is desized according to customers’ requirements. It is used to remove the grey fabric stiffness of the cloth that helps in bleaching for easy washing.
Scovring
It is done in bleaching machine, it helps to remove artificial spot like oil, grease etc.
PRE-TREATMENT SECTION
Fabric preparation is crucially important, as the successful out come of all subsequently operations is dependent on it.
At, Nishat, to reduce the natural impurity of cotton and to impart good hydrophilic properties, this section employees too singing machine and two modern open with width bleaching plants, to give more luster and strength one chain less mercerizing machine is also in operation. Besides preparing fabrics for dyeing printing, this section also bleach bacteria killer fabric for Japanese hospital linen and fire retardant low pill fabric for contract textiles.
MACHINERY
Singeing/Designing vollen weides 118”
Singeing/Designing Kyoto 108
Bleaching plant benninger 95
Bleaching plant Kyoto 95
Mercerising C. Less goller 95
DESIGN Studio
The state of the art design studio, known for producing transparencies of the highest quality, accommodates a STORK STK image 3000,a CST Ramste lll silicon graphic 02 and STORK Drum scanner plotter, along with these a team of convention manual color separation artist is also maintained.
Design studio is a sub department of processing. Here cloth design is made. Tracers are there to trace out different pattern and design of cloth. For each type of color different films are made. Different trace papers that are sued at Nishat are of Kodak and AGFA. For each color separation, there are positive and negative films. Positive film is sent for processing. Ink is used to fill scratches and unwanted graphics.
Tracing table is used to examine designs and it helping tracing of design. Germany waterproof ink is sued to avoid the ink expansion. Digital design studio is also complementary department of design studio. Where design are made on computer program and using information technology.
ENGRAVING
Technology advancement in the field of rotary printing necessitates upgrading the pre-print line-up. NML is reputed for the most efficient use of the STORK engraving systems for manual exposing. They are known for halftone work in single step designing.
Living up to this reputation, they have recently added to their line lf production the “ROTARY WAX JET’ With exposing resolution at 1019dpi and a screen circumference of 640,820 and 9144mm. Engraving at this high resolution with digital technology enhances the print quality to a great extent and reduces the existing human error margins to the minimum.
ROTAARY SCREEN PRINTING SECTION
In another step to upgrade the existing machine mix. Anew 3.2m (126”) Regina printing machine, with a facility to print 16 colors has been installed. This machine with UNICA system successfully combines production and quality performance at the highest possible level in rotary screen-printing.
NML has a well-trained work force to print extremely intricate and complex toe-on –tone designs. Monthly printing capacity of the section is about 203 million meters. Besides conventional printing in pigment and reactive dyes, printing in puff effects, resist and discharge dyestuff is also done.
MACHINERY:
Printing machine Reggiani 126” 16 colors
Printing machine john zimmer 110” 12colours
Printing machine stork 72” 16 colors
Following files are maintained in printing department of Nishat mills limited,
·
Process sheet·
Job description specification·
Audit report·
ISO 9001·
Assessment file·
Purchase order·
Work instruction·
Staff document·
Worker document·
Reactive color documentStandard operating procedure
·
Customer letters and fax·
Organizational chart·
Technical literature·
Daily production reportFINISHING SECTION
Offering optimal final fabric quality and handle very recently this section has been equipped with a new generation/ Babco-starter. This machine combines tried and tested drying technology with innovative electronic control system. Ensuring absolute reproducibility of fabric qualities and full documentation on the quality control checks.
Besides offering normal finished, this section also full fills the demands for scotch guard protection for soil release and resist finish, peach skin affect finish (emerizing), Fire Retardant finish, water proofing, anti crease and easy care finish,
MACHINARY:
Stenter Babcock 130”
Stenter Monforts 110”
Stenter Monforts 95”
Stenter Monforts 73”
Stenter Krantz 95”
Stenter Krantz 73”
Sanforizing M/c monforts 73”
Raising for Flannel sucker &muller118”
Emerizing M/c sucker &muller 71”
Calenders Ramish 110”
DYEING SECTION
Nishat provides quality piece died fabrics in heavy twills to some of the world leading brand names like Gap, Old Navy, Banana Republic, DKNY, Tommy Hilfiger, CHAPS, and sears, this has been made possible by using high quality grieve from the mills own weaving units and by using expensive dyestuffs, Highly trained Chinese technicians keep a close check on all stages of production. Depending upon specifications, dyeing in reactive, disperse, pigment. Vat and sulphur is possible.
To further enhance their existing dyeing capacity of 1,000,000 meters per month, a designated Apparel Fabric Dyeing Unit is being set up near Lahore. The machinery and land have been purchased for this project, which is planned to be operational by the end of year 2000. This unit, which will have a monthly capacity of 2.5 million mergers, has been designed to give the optimal results due to the custom built machinery purchased after careful and lengthy consideration of the technical and
Marketing teams
This would certainly give them an edge over their competitors and would be welcome addition in the ever-changing apparel fabric market. It will help Nishat mills limited to improve its market access and consequently profitability.
Following files are maintained in dyeing section,
·
Training files·
Dyeing files·
Washing file·
Lab to bulk·
Sample received file·
Singeing file·
OK for curing·
Sample status·
Sample letter·
Shortfall file·
Daily stock file·
After curing file·
Folding return file·
Daily attendance register·
Water fall cardMACHINERY
Pad steam Goller 95”
Pad thermosal monforts 95”
Washing range Goller 95”
INSPECTION AND ROLLING SECTION
To roll and pack 100,000 meters per day, this section has 8 rolling Machines; all equipped with photo censors and inspection frames. Apart from rolling and folding, the primary responsibility of rolling section is to prevent faulty fabric reaching the customer; the fabric undergoes a100%inspecion system. To assist in shade checking a data color computer system is also used.
QUALITY CONTROL SECTION
And independent on line quality control section monitors all production operation to the required levels. The quality control lab is fully equipped to conduct all relevant tests. The staff not only keeps control of the bulk production, but also is also actively involved in standardization of process routes and operating procedure.
Quality control lab
Nishat mills limited has not only build an international standard quality control lab to meet customer’s satisfaction but also to improve their own product quality. Various type of test is conducted at this quality control lab to improve the quality of products and to meet customer requirements.
Two Types of Cloth Are Required By Customer
1. When Customer Needs Specific Cloth
When customers need specific type of cloth, he sends his own sample whose composition is tested is laboratory and production is made according to sample.
2. When Marketing Deppt Offers Design
When marketing department officers approaches customers, they show their product quality sample books to customer. Customers can select any leaf of them and can place order for this type of cloth. That cloth is already available with Nishat whose production is carried on according to the instruction of customers.
Quality Control Policy
Nishat mills limited are committed to move things in direction of TQM. Their prime
Objective is comically produce products for the satisfaction of buyers. For this they plan thing ahead, fresh ideas are developed, make more effective use of time, put the right man in the right place, and keep on updating the skills of the employee by training.
In the factory, in order to motivate employee and workers toward quality management, many billboards are they’re containing various statements like,
“Quality has no finish line”
“Quality is degree of excellence”
According to juran “Quality is fitness for use”
“Quality ensures our future”
Tests to Ensure Quality
Following test are conducted in quality control lab,
Counter tests
1) To count warp and weft
2) Count Glass
3) To count ends and picks
4) Weight
5) To measure weight of cloth
6) Cock meter test
It examines dry rub and wet rub
7) Pilling test
It is used to test pilling of cloth
8) Durra test
It is used to examine fastness of cloth
9) Auto wash
It is used to examine change in shade
10) Vasctor
It is used to examine shrinking of cloth
11) Tumble dryer
This test is used to examine dryness of cloth
12) Padder
It is used to examine matching and finishing of cloth.
13) Curring
It is used to examine shade of cloth
14) Light box test
It is used to examine fastness of light on cloth.
15) Presser
It is used to determine pressing of cloth.
16) Visco meter
It is used to measure viscoty of cloth.
17) Inspection table
Here warp and weft and other type of faulth are examined.
18) Chemical analysis
It is used to examine acidity.
19) Spectro photo meter
It is used to examine shading.
20) Perma meter test
It is used to measure passage of air from the cloth.
These types of tests are conducted keeping in view market requirements, weather requirements and customer demands.
Ø
Production Planning SectionTo control all production priorities and to load machine on day-to-day basis, a full fledge production planning cell is in operation. This production planning system is designed to be fine tuned with the clients needs and thereby ensures responsive handling of all accounts by fore-casting demands from each client in terms of greige quality and quantity, space on print/ dye machines and space on stitching machines. Coupled with forecast from their buyers, it makes their system work efficiently. Advantages of this system include shorter lead times, on time deliveries and less quality hassles.
It is an intermediate party between marketing department and processing department. It issues daily production program to each processing unit. Daily production reports are received in this department. New product development letter is also received in this department. Then work is planned accordingly. Nishat group is pioneer for making production and planning department. Instructions are first given to production and planning department and then distributed to other processing units. Here various type of analysis are conducted like,
1) Bleaching production analysis
2) Printing production analysis
3) Dyeing production analysis
4) Finishing
5) Folding
6) Damage trend analysis
7) Monthly maintenance breaks down analysis
Data flex program is used to save the date at production and planning department. First export manager creates orders from the customer and record specification of that order on a paper. This program is sent to the production and planning department.
The cloth required is issued against the grey demand letter. First copy is remained in production and planning department. And second goes to grey stock room. On this letter grey issued is returned. It is generally more than demanded cloth because some cloth expected to be damage. For this job number is issued to work. When grey material is issued, lot number is given than production and planning department issues program according to specification of each processing unit.
STITCHING UNITS
Apart of Nishat plan to have a totally integrated textile sector the stitching unit was set up in 1989.the unit has a string work force of 400 skilled and semi-skilled workers mainly in cutting, stitching, quality control, folding and packing department. With an array of 250 modern new generation machines, the stitching, department has an average capacity to process up to 10,000 bed sets and 2000 curtain pair per day, approximately 40000 meters of fabric, the assembly line consists of combination of manual and automated operation designed to provide the required flexibility in its system to allow processing of a wide product range and versions of its existing product line the units current product line includes bed sheet, quilt covers, fitted sheet ,cushion cover, valances, datable linen, baby sets, quilted throwovers and curtains in various specifications and model customized to the requirements of individual market . In addition, a range of embellished products with piping, bias binding, bulk over lock, decorative trimming and bourdon stitching is also being offered to customers, facility to handle small volumes of decorative embroidery is also on line.
Procedure of Conducting Quality Control
Quality control procedures are carried out at every stage during production. From purchasing of material to cutting and stitching right till folding and packing of the final product, each aspect is scrutinized and controlled to the international quality standards.
Power Generation
The power generation unit formerly known as Nishat Tek Limited, was the first ever power generation company in the private sector in Pakistan.
Commercial production sanded in 1992 with three KRUPP-Macungie’s with generating capacity of 5.5 Mw each, Capacity at Faisalabad has since eon increased to 27MW. Supplying power exclusively to NML.Nishata Tek also establishes a power-generating unit of 6Mw at Shiekhupura to supply power to sulzer unit lll and Tsudakoma unit ill. It started commercial operation in September 1995.
MARKETING STRATEGY & FUTURE PROSTECTS
Future prospectus of Nishat mills limited are given as under
The past year has been tough for the textile industry as competition is steadily and margin of profits is becoming smaller day-by-day. Our competitors from Asia have come up in a big way with lower prices resulting from lower overhead, cheaper and better raw materials and machinery. Countries like China, Indonesia, India and Bangladesh played an active role in the fabric market. Improvement in quality and production capability was the main area of concentration.
Market for Yarns and Grey fabrics was diversified to increase the customer base and reduce dependency on the Far East. In this effort business with Malaysia, Korea, Taiwan, UK and South America was initiated in case of Yarns. A new spinning unit of 21,672 spinning has also commenced, which caters to the weaving units in Shiekhupura.
Grey Fabric Market
In case of Grey Fabric market business was initiated in South Africa, North America, Japan, Italy, France, and Sri Lanka etc. Product range was also increased to cater to the differing needs of the buyers. Fancy and special items like Dobby Designs, Bedford Cords, and Cavairy Twills and stretch fabrics were developed which are being sold at premium prices. We have constantly updated our machinery, replacing old machines with new ones upgrading the existing set-up, leading to better efficiencies and quality products.
Quality control
Nishat has established its name in new markets be creating specialized fabrics, designs and also by providing our customers with efficient service and excellent quality. Leaving behind the traditional way of doing business and in our journey towards excellent it has consistently expanded its buyer base and explored the different markets around the world.
Value Addition Strategy
Keeping in view demand of the World market, Nishat Mills Ltd pursued its strategy of value addition that in command reducing the dependency on Grey Fabrics and Grey Yarn. Having the foresight to assessing year’s value addition will be the thing of the future, Nishat Mills Limited worked towards the achievement of its goal of future increasing its capability in value addition.
The export of processed fabric and made-Ups has shown market improvement as compared to last year. In Europe, Nishat has made the most growth in the year 1999. It has placed us successfully in the middle to upper end of the market. Our strength in Europe is the curtain division.
This included yarn dyed dobbies, engineered confections, different finishes and embellished products. The plan is to continue with this winning strategy and at the same time we are trying to find new clients in the high end. We are also exploring business opportunities in countries like Spain and France where Nishat has very little business at the moment.
North America Market
North America is the star market for Nishat. It’s a new market for it after breaking up the exclusive arrangement with our previous sale set-up. The quota is coming down in 2005 and we have started to prepare for it internally as well as for the external environment. Bedding is the bulk of the home textile business. Nishat is in the process of updating its machinery to cater the needs of the wider width fabric requirement for USA bedding business.
Social Responsibility
Nishat is also taking up the social accountability issues very seriously, which are so dear to the American consumers. Lot of big brand US companies have visited us and are discussing the possibilities of a joint venture.
Opportunities
The opportunities are limitless, we have to review and analyze them very thoroughly to associates with the right people in the long run. In the short term we are building a small amount of quota, which will give us recognition as a bedding supplier.
Future Prospectus in Non-Quota Countries
Nishat is very strong in non-quota categories like curtain and table linen. These categories are best served with new product development (NPD).Nishat will coordinate the effort for NPD by all markets to optimize results. Nishat has achieved the highest sales in 1999-2002 for North America market. On top Nishat has developed more direct and closer relationship with our end customers.
Oceanic has been our most lucrative and mature marker. In business terms it is our “cash cow” market.
Primarily due to being a non-quota market it had no real limitations in this market. Despite economic problems in that region, it has maintained our sales figures in the year under review. This market is a good design source for other markets, which is helping us to maintain our print volumes.
Middle East Countries
Middle East market is composed of South Africa and the new emerging markets like the UAE, Egypt, Saudi Arabia, Jordan etc. Nishat has dedicated new staff with fresh energy for the emerging market.
They have successfully broken the ground and we have very strong faith that these markets will give us good volumes in the near future. We are also targeting printed apparel business for the first time.
Position With Regard To Competitors
The latest addition is the most ambitious Apparel Dyeing plant setup near Lahore, which has started its production. The effectiveness and productivity of this plant will be further enhanced as Nishat Mills Ltd moves towards becoming a more vertically integrated organization.
Our dyed fabric has already established its name in the market. It is being exported to some of the leading brands of the world.
Market leader in textile sector why?
Nishat has increasing its profitability by working efficiently, procuring better raw material and most importantly kept a very close association with its customers. It visits its business partners frequently and provides them with the best service possible. All of the above mentioned points led to strengthened relationship with its business partners making it very difficult for its competition to penetrate into its market share.
§
Best Working EnvironmentNishat has provided its staff with better working environment and facilities, which enhanced efficiency and out put.
§
Professional CommitmentAt Nishat, it is prospering due to our professional commitment toward excellence and giving the best results at all times and against all odds. Its marketing and production team’s co-ordinance at all times and it focus remains on maintaining its position as the market leader in the textile sector of Pakistan.
During my internship I also worked in Sales & Marketing department.
Ø
MARKETING & SALES DEPARTMENTIn marketing department I learned how the orders are executed from the old buyers and how the new markets and buyers are discovered than orders are executed. Normally what happen is that the buyers contacts the marketing department and ask for the sample, if buyer accepts he gives order, Marketing department than issue a sales contract to the buyer.
Marketing strategies
Marketing strategies includes,
i. Meeting with buyers
ii. Company profile
iii. Buyer visits
iv. Free sample
v. Contact with agents
vi. R& D for marketing
a. Through Internet
b. Yellow pages
c. APTMA buyer dictionary
d. Intranet
1. Meeting with buyers
Marketing manager meets with buyer, introducing Nishat products to prospective buyer. This strategy helps manager to understand the needs and requirements of buyers as well as marketing people are aware of current trends of market. Through negotiation you win the sympathy of buyers and business for the company.
2. Company Profile
Nishat mills limited has also published it profile introducing its key products to customer. This booklet is send to various agencies dealing in purchase of cotton, fabrics and made-ups. This strategy helps to introduce the company in out side world. Various broachers are also published.
3. Buyers Visit
Sometimes buyer’s visits are arranged to familiarize them with products, Nishat is offering for their valuable customers. Theses visits are crucial for the growth of the company because they help in introducing products to others and also win a lot of business for the company. Nishat marketing department frequently invites buyer to show them excellent production process and quality productions.
4. Free Samples
This strategy is widely used to boost up exports. Free samples are delivered to customers to show how best our products are? Free sample is useful techniques in winning the loyalty of customers. When new product is made, free samples are sent to loyal customer to show firms concern for them. Customer’s satisfaction is a important aspect because customer is a person who gives meaning to company.
5. Contacts with Agents
Nishat mill limited is an export-oriented organization. More that 85% of its sales constitutes exports. So to capitalize foreign market, Nishat has long list of its agents working in foreign market. This strategy is useful when company is not able to communicate with buyers; it can hire services of agents who for commission introduce their products in market. Relationships with distributors or agents are recognized as critical success factors so lot of importance is paid to agents who are valuable asset of firm.
6. R & D for Marketing
Research and development is key to success. Some organizations feel that they cannot survive without R & D. Nishat is one of these organizations. Organizations finances research and development projects using either % age of sales of method or financing as many projects as possible.
Following are some research and development techniques
a. Through Internet
Nishat has recognized the importance of information technology in business field and very quick to capitalize this opportunity. It has launched its website which tells buyers about Nishat products.
b. APTAMA buyer’s dictionary
All Pakistan textile mills association publishes a directory, which includes prospective buyers. This dictionary is published regularly. Marketing department carefully analyses it and find buyers for its quality products.
c. Intranet
Through computers, products are introduced and customers are accessed.
4 Ps of Nishat Mills Limited
1. Product
2. Promotion
3. Price
4. Place
1. Product
Product includes product line,
Product Line
BEDDING
·
Sheet sets·
Quilt cover sets·
Bed spreads·
Comforters·
Bed skirts·
Oxford pillow cases·
Blanket covers·
Sleeping bagsCurtains & Accessories
·
Embroidered curtains·
Pencil pleat tape curtains·
Pinch pleat lined & unlined curtains·
Tab top & rod pocket curtains·
Assorted pelmets and window dressings·
Oxford cushion covers·
Frilled and piped cushion covers·
Frilled, piped and pleated tie backsTable, Furniture & Kitchen Accessories
·
Tea cozy·
Table mats·
Table cloth and napkins·
Aprons·
Kitchen gloves·
Pot holders·
Chair pads with circle tacks·
Couch cove2. Promotion
Nishat mills limited run advertising and promotion campaign on large scale. The promotion of products can be classified into two ways,
Ø
Direct MarketingØ
Indirect MarketingDirect Marketing
Promotional activities include presentations, free samples.
(a) Presentations
These are given to customer in a hotel at Karachi.
(b) Free Samples
Free samples are also provided so that customer may get an idea about the quality and excellence of Nishat mills limited.
(c) Agents
Direct marketing is done through agents. In each country a display center has been established names as CMD Company (concept marketing design). In Germany, products of Nishat mills limited are displayed in an exhibition (Frankfurt).
(d) Territorial Manager Tours
Territorial manager tours are also arranged. These tours are arranged to find new buyers in foreign market.
Ø
Indirect marketing(a) Chain stores
Companies in foreign countries make product from Nishat mills limited but sell them on their own name. This is another way to increase fir sales by increasing the number of chain stores.
Territorial managers are required to submit their reports at the end of their tours.
3. Pricing
Before setting prices of products various elements are kept into mind.
Customer is of utmost important. If customer is old, his track record is good and enjoys a favorable repute so profit margin may be reduced. Prices area determined on cost basis by adding certain percentage of profit. This is highly sensitive area. In 2005 when all quota barriers would be lifted, so pricing would become a crucial factor.
4. Place
As mentioned earlier, Nishat mills limited has its agents in each exporting country. Place includes, channels from producers to final consumers.
Placement of Order
Sometime buyer asks for sample, when it is accepted the buyer places the order. Marketing department issues sales contract that contains the below mentioned details. After signing the contract the buyer opens L/C in the favor of the seller, after the opening of the L/C the marketing department plans for the production and arranges the shipment.
Now we shall discuss contents of sales contract in details,
§
Specification of goods§
Quantity§
Price§
Contract amount§
Shipment details§
Terms & conditions1) Specification of Goods
In the sales contract, what goods are intended is written. Nishat is an export-oriented organization and mainly exports yarn, gray cloths, fabrics and garments. In the sales contract goods are mentioned, if a number is allotted to them than that number is also written.
2) Quantity
In the sales contract, the quantity is written in yards. Different kinds of fabrics are produced so quantity is expressed sometimes in yards and sometime in meters.
3) Price
Now comes very important content of sales contract i.e. price. In case of foreign buyer price is normally written is US dollar. It depends on the negotiation between buyer and seller and if they agree that price will be shown on US dollar, it is US dollar.
Unit price is also written. It is very important to mention whether it is FOB value or C&F
4) Shipment Details
Shipment details address basic questions, whether partial shipment is allowed or not?
Transshipment is allowed or not? In how many days, ship will reach buyers country?
5) Terms & Conditions
The buyers and sellers decide terms of shipment mutually. Matters regarding insurance, freight, carriage, value of goods exported, packing charges, certificate of origin and any additional conditions are set by importers and exporter.
Coordination between production planning & marketing department
Coordination between production planning & marketing department is essential. Nishat was the pioneer in establishing production-planning department. The production staff carries out all the orders that are obtained by the marketing personnel. In fact there is very close relationship between production planning and marketing department.
In production planning following things are done;
·
Arrange production after contract·
Select the MILL for production in which the specified yarn of the required quantity can be produced·
Adjust frames according to no. of spindles·
Calculate daily production·
Give expected time of shipment to buyers·
Tell packing people what shipping marks should be on cartons·
Size of carton required by buyer·
No. of cones in one carton required by buyerIn arrangements regarding the shipment following things are done,
·
Arrange dispatch from mill after production·
Follow ship terms according to contract·
If any shipment line is nominates, check the freight of that line·
Arrange container of that shipping line·
Negotiation with transporter·
Giving shipment details to buyer·
Fax all documents to buyer before shipment reaches destination.·
Negotiation with shipping company·
Arrangement of container
·
Settlement of freightAll these arrangements are made regarding the shipment. When contract is received from the buyer, marketing department hand over task to production people who arrange all the products according to the terms of contract. After the production of goods arrangements are made to deliver goods to importer. Container is arranged.
Malaysia Market
Nishat mills limited also export goods to Malaysia and earn lot of foreign exchange.
During the last six month, shipment to MALAYSIA remains stable. In the month of December, sales decreases due to intense competition in the market. Overall performance remains satisfactorily.
United States of America
One of the largest markets of the world, this diagram depicts the export to USA.
In USA market there is ups and down because after nine September, scenario is totally different and policies of American government are not fully supporting Pakistan exporters.
Korea Market
Total sales/exports to Korea are depicted by this graph over the last six month ranging from July to December.
In the month of July shipment was made to Korea, in remaining month there was no turnover. This is because Nishat mills found no buyer in that period.
Singapore Market
Following chart depict the total export made to Singapore market.
Marketing department performance remains goods during last six month. Marketing department successfully cope with opportunities available in Singapore market.
Japan Market
Nishat mills are one of largest exporter in cloth to Japan.
The performance remained good and excellent.
Hong Kong
Hong Kong is another attractive market for Nishat mills limited.
Nishat has very stable customers who believe that they are getting only quality products and they are assured of quality goods.
SHIPMENT IN SEPTEMBER 2002
SHIPMENT IN NOVEMBER 2002
SHIPMENT IN DECEMBER 2002
SHIPMENT IN SEPTEMBER 2002
SHIPMENT IN NOVENBER 2002
Following graph depict quantity shipped to various markets like Japan, Hong Kong, Malaysia, USA, Korea, and Middle East.
SHIPMENT IN DECEBER 2002
Marketing Strategies
Textiles industry faced many challenges during the year 1998-99 throughout the world. Inflation and decline in purchasing power resulted in decline in demand, which increased the competition to a greater extent. In spite of the above facts Nishat mills ltd, had been successful in maintaining its market position and growth.
Ø
Diversification StrategyMarket yarn is diversified to increase the customer base. Under this, diversification program, business with Malaysia, Korea, Taiwan and UK have been initiated. Product range is also increased to cater for the different needs of increased number of buyers production volume is also increased by concentrating on coarse counts with a result of increase in volume from 90-95 containers per month to around 115 containers month.
Ø
Market DevelopmentIn order to reduce their dependence on a few markets especially FAR EAST, new markets were developed for tray cloth. This diversification not only reduced their dependence on Hong Kong but also gave those better profit margins at times when Hong Kong market was very depressed. Under this market diversification, they started business with SOUTH AFRICA, AUSTRALAS, TAIWAN, and SRILANKA, ITALY etc.
Ø
Contacting Old CustomersThe business with some of the old buyers in Europe was also revived during this period after intensive efforts. This revival gave both good volumes and better profit margins.
Ø
New And Innovative Product DevelopmentThey have developed fancy and special items like Cavalry Twills, Bedford Cords and dobby items, which are being sold at premium prices. They keep on modernizing their equipment in order to maintain the high quality of their products.
Ø
More Quality ConsciousWith the increase of competition, they have become more quality conscious. In order to achieve their quality standards, they are maintaining better quality by getting yarn from pre-approved sources, tighter fabrics inspection in folding and providing service to their customers.
RATIO ANALYSIS
OF
NISHAT MILLS LIMITED
|
NISHAT MILLS LIMITED |
|||
|
BALANCE SHEET |
|||
|
AS ON SEPTEMBER 30, -------------
|
|||
|
1999 |
2000 |
2001 |
|
|
Equity and Liabilities |
RS IN (000) |
||
|
Share capital and reserves |
|||
|
Authorized Capital |
1500000 |
1500000 |
1500000 |
|
Issued and Subscribed and paid up share capital |
1113444 |
1113444 |
1113444 |
|
Capital reserves |
1027622 |
1027622 |
1027622 |
|
Revenue |
201518 |
2428503 |
2566448 |
|
Surplus on revaluation of operating fixed assets |
12118 |
12118 |
12118 |
|
Non Current Liabilities |
|||
|
Redeemable capital |
252120 |
919250 |
2205907 |
|
Long Term Loans |
325429 |
228499 |
155639 |
|
Liability against finance lease |
107806 |
103834 |
235220 |
|
Deferred liability for gratuity |
1608 |
1091 |
843 |
|
Current Liabilities |
|||
|
Current portion of long-term liabilities |
562747 |
242729 |
768264 |
|
Short term finance |
4479010 |
4397584 |
5001841 |
|
Creditors accrued and other liabilities |
478364 |
533645 |
781352 |
|
Worker' participation fund |
23247 |
41587 |
20959 |
|
Provision for Taxation |
186884 |
164068 |
146087 |
|
Proposed dividend |
194853 |
283928 |
167017 |
|
Unclaimed Dividend |
5480 |
6955 |
9683 |
|
Total Liabilities and Owner Equity |
10782776 |
11904857 |
14222444 |
|
Assets |
|||
|
NON-CURRENT ASSETS |
1999 |
2000 |
2001 |
|
Tangible fixed assets |
|||
|
Operating fixed assets |
3555922 |
3679482 |
6194523 |
|
Assets subject to finance lease |
371014 |
243102 |
467330 |
|
Capital work in process |
125014 |
1465706 |
154009 |
|
Long Term Investment |
1590552 |
1390552 |
1390552 |
|
Long Term loans, deposits, prepayments |
57151 |
76963 |
100136 |
|
Current Assets |
|||
|
Stores, spare parts and loose tools |
544536 |
5071128 |
541611 |
|
Stock in Trade |
1824542 |
1410306 |
1966667 |
|
Short term investment |
5938 |
5938 |
5938 |
|
Trade Debts |
1290253 |
1409926 |
2027613 |
|
Advances, deposits and prepayments |
660621 |
478999 |
377918 |
|
Other Receivables |
316832 |
482438 |
630440 |
|
Cash At Bank |
440401 |
754317 |
365707 |
|
5083123 |
5049052 |
5915894 |
|
|
TOTAL ASSETS |
10782776 |
11904857 |
14222444 |
|
NISHAT MILLS LIMITED |
||||
|
INCOME STATEMENT |
||||
|
AS ON SEPTEMBER 30, ----------- |
||||
|
1999 |
2000 |
2001 |
||
|
RS IN (000) |
||||
|
SALES |
9436104 |
10134014 |
11662457 |
|
|
COST OF GOODS SOLD |
7745353 |
7991952 |
9605013 |
|
|
GROSS PROFIT |
1690751 |
2142062 |
2057444 |
|
|
ADMINISTRATIVE SELLING AND GEN EXPESES |
497043 |
545717 |
710360 |
|
|
OPERATING PROFIT |
1193708 |
1996345 |
1357084 |
|
|
ADD; OTHER INCOME |
68480 |
102431 |
116363 |
|
|
EARNING BEFORE INTEREST AND TAX |
1262188 |
1698776 |
1463447 |
|
|
LESS: FINANCIAL CHARGES |
299208 |
669014 |
1049756 |
|
|
WORKERS PARTICIPATION FUND |
23247 |
41887 |
20960 |
|
|
PROFIT BEFORE TAXATION |
439733 |
788175 |
392731 |
|
|
LESS: PROVISION FOR TAXATION |
59719 |
87788 |
77769 |
|
|
PROFITAFTER TAX |
380014 |
700387 |
314962 |
|
PROFITABILITY RATIO
|
FINANCIAL HIGHLIGHTS |
||||||
|
1997 |
1198 |
1999 |
2000 |
2001 |
||
|
PROFIT AND LOSS |
(RUPEES IN THOUSAND) |
|||||
|
Net sales |
8557876 |
8919459 |
9436104 |
10134014 |
11662457 |
|
|
Gross profit |
1622745 |
1956420 |
1690751 |
2145062 |
2057444 |
|
|
Profit before tax |
379589 |
412273 |
439733 |
788175 |
392731 |
|
|
Profit after tax |
324739 |
344397 |
380014 |
700387 |
314962 |
|
|
CASH OUTFLOWS |
||||||
|
Taxes paid |
86522 |
111489 |
96326 |
47762 |
110060 |
|
|
Financial charges paid |
820524 |
789018 |
836912 |
652024 |
941253 |
|
|
Fixed capital expense |
342969 |
644944 |
386464 |
1895627 |
2416093 |
|
|
BALANCE SHEET |
||||||
|
Current assets |
3161495 |
4209470 |
5083122 |
5049052 |
5915894 |
|
|
Current liabilities |
3925000 |
4940337 |
5930586 |
6070496 |
6895203 |
|
|
Operating assets |
3295763 |
3265748 |
3555922 |
3679483 |
6194523 |
|
|
Long term loans |
8660045 |
9940818 |
10782777 |
11904857 |
14222444 |
|
|
Share holders equity |
3818405 |
3967949 |
4153110 |
4569569 |
4717514 |
|
|
RATIOS |
||||||
|
Current ratio |
0.88:1 |
0.97:1 |
0.95:1 |
0.93:1 |
0.97:1 |
|
|
Gearing ratio |
0.27:1 |
0.29:1 |
0.23:1 |
0.29:1 |
0.42:1 |
|
|
Gross profit ratio |
18.96 |
18.96 |
18.96 |
18.96 |
18.96 |
|
|
Net profit before tax |
4.44 |
4.44 |
4.44 |
4.44 |
4.44 |
|
|
Earning per share |
2.92 |
2.92 |
2.92 |
2.92 |
2.92 |
|
|
Proposed dividend |
15 |
15 |
15 |
15 |
15 |
|
PROFITABILITY RATIO
Gross profit ratio
Gross profit
------------- X 100
Net sales
1999
1690751
---------- X 100
9436104
=17.92%
2000
2142062
----------- X 100
10134014
=21.14%
2001
2057444
------------- X 100
11662457
=17.64%
INTERPRETATION
Gross profit ratio is the ratio of gross profit to net sales expressed as percentage .In 1999 the firm earned a gross profit of 17.92%, in 2000it increased to 21.41%and in 2001 it decreased to 17.64%. The reason why the gross profit increased in 2000is that sale volume increased by 1.6% as compared to 1999 but cost of goods sold decreased by 8.05%. It is due to management efficiency and effective policies .In 2001the gross profit decrease because sales volume does not increase in correspondence to increase in cost of goods sold because during this period the rate of inflation and dollar fluctuations was high. The gross profit is sufficient to recover all operating expenses and to build up reserves after paying all fixed interest charges and dividend
Net profit ratio
Net profit after tax
---------------------- X 100
Net sales
1999
380014
----------- X 100
9436104
=4.02%
2000
700387
--------- X 100
10134014
=6.91%
2001
314962
------------- X 100
11662457
=2.70%
GRAPH SHOWING GROSS PROFIT IN THE LAST FIVE YEARS
INTERPRETATION
This is used to show over all profitability and hence it is useful to the proprietors. Higher the ratio better for the organization it shows the firms ability to turn each rupee of sale into net profit. In 1999, N.P was 4.02%, in 2000 it increase to 6.19% and in 2001 it decrease by 4.21% to2.70%. The reason why net profit decreased in 2001 is that operating expenses has increase by20.38% as compare to 1999. Higher ratio shows firms capacity to withstand adverse economic conditions. It is also advantageous to survive even in the case of falling prices and sale volume.
Operating Ratio
Cost of good sold + operating expense
------------------------------------------------ X 100
Net sales
1999
7745353+497043
--------------------- X 100
9436104
=87.35%
2000
7991952+545717
---------------------- X 100
10134014
=84.25%
2001
9605013+710360 ---------------------- X 100
116622457
=88.45%
Interpretation
This ratio shows the operational efficiency of the business. It is consider to be yard stick of operating efficiency but it should be used cautiously because it may be effected by a number of uncontrollable factors like sale promotion expenditure, in efficiency of marketing department, general rise in selling expenses and introduction of better substitute by the competitor. In 1999, operating ratio was 87.35%; in 2000-it decrease to 84.25% and it again increase to 88.45%. 2001 shows that 87.45% of sales have been consumed by cost of good sold and operating expenses and 12.55% of sales left to cover interest, income tax, dividend and firm’s need to retain profit for expansion. This high percentage is due to above-mentioned factors. In 2000, decrease is due to effective management policies.
Expenses Ratio
Particular expense
------------------------ X 100
Net sales
What do theses ratios signify?
Expense ratio indicates the relationship of various expenses to the sale. The operating ratio reveals the average total variations in expense. But some of the expenses may be increasing while some may be falling. It is use to depict the causes of the variation of the operating ratio. Lower the ratio better for the organization.
Cost Of Goods Sold Ratio
Cost of goods sold ----------------------- X100
Net sales
1999
7745353
------------ X 100
9436104
=82.08%
2000
7991952 ----------- x 100
10134014
=78.6%
2001
9605013 ----------- x100
11662457
=82.36%
Interpretation
This ratio shows how much percentage of sales is the cost of goods sold. Lower the ratio, better for the organization. In1999, the cost of goods sold ratio was 82.08%, in 2000, it decrease by 3.22% to 78.86%, in 2001, it again rose to 82.36%. In 2000, the cost of goods sold decrease because of efficient and effective management policies to control the wastage and loss, overhead etc.
Summary of dividend analysis
Figures in Pakistan Rupees
Quarters are Fiscal Quarters (4th quarter ends in September)
|
Quarter |
EPS |
Divs |
TTM |
TTM |
Payout |
|
1Q1997 |
n/a |
0.000 |
n/a |
0.000 |
n/a |
|
2Q1997 |
n/a |
0.000 |
n/a |
0.000 |
n/a |
|
3Q1997 |
n/a |
0.000 |
n/a |
0.000 |
n/a |
|
4Q1997 |
n/a |
1.316 |
2.558 |
1.316 |
51.4% |
|
1Q1998 |
n/a |
0.000 |
n/a |
1.316 |
n/a |
|
2Q1998 |
n/a |
0.000 |
n/a |
1.316 |
n/a |
|
3Q1998 |
n/a |
0.000 |
n/a |
1.316 |
n/a |
|
4Q1998 |
n/a |
1.535 |
2.711 |
1.535 |
56.6% |
|
1Q1999 |
n/a |
0.000 |
n/a |
1.535 |
n/a |
|
2Q1999 |
1.340 |
0.000 |
n/a |
1.535 |
n/a |
|
3Q1999 |
n/a |
0.000 |
n/a |
1.535 |
n/a |
|
4Q1999 |
1.448 |
1.535 |
2.788 |
1.535 |
55.1% |
|
1Q2000 |
n/a |
0.000 |
n/a |
1.535 |
n/a |
|
2Q2000 |
2.628 |
0.000 |
n/a |
1.535 |
n/a |
|
3Q2000 |
n/a |
0.000 |
n/a |
1.535 |
n/a |
|
4Q2000 |
3.662 |
2.550 |
6.290 |
2.550 |
40.5% |
|
1Q2001 |
n/a |
0.000 |
n/a |
2.550 |
n/a |
|
2Q2001 |
1.960 |
0.000 |
n/a |
2.550 |
n/a |
|
3Q2001 |
n/a |
0.000 |
n/a |
2.550 |
n/a |
|
4Q2001 |
0.870 |
1.500 |
2.830 |
1.500 |
53.0% |
|
1Q2002 |
0.170 |
0.000 |
3.000 |
1.500 |
50.0% |
|
2Q2002 |
0.280 |
0.000 |
1.320 |
1.500 |
113.6% |
|
3Q2002 |
0.460 |
0.000 |
1.780 |
1.500 |
84.3% |
|
TTM: |
Trailing Twelve Months |
|
EPS: |
Earnings per share |
|
Divs: |
Dividends per share |
(
A): ALL ITEMS ADJUSTED FOR STOCK SPLITS OR DIVIDENDS - 120:100 RIGHTS ISSUE (14% DIV) IN 2000, 23:20 RIGHTS ISSUE (4.22% DIV) IN 95, 15% IN 94(
B): CALCULATION BASED ON YEAR END OUTSTANDING SHARES(
C): BASED ON AVERAGE SHARES OUTSTANDINGBottom of Form
Selling and administration expense ratio
Selling and administration expense
-------------------------------------------- X 100
Net sales
1999
497043 ---------- X 100
9436104
=5.27%
2000
545717
---------- X 100
10134014
=5.39%
2001
710360
---------- X 100
11662457
=6.09%
Interpretation
This ratio shows how much percentage of the sale is the selling and administration. Lower the ratio better for the organization. In1999, it was 5.27%, in 2000 it was 5.39 % and in 2001 it rose to 6.09%. This percentage shows the increasing trend. This trend is due to expensive advertisement and sales promotion technique and administration staff salaries. In 2001 the selling and administration expenses increases by 20.38% as compare to 1999.
OVER ALL PROFITABILITY RATIO
RETURN ON SHAREHOLDER INVESTMENT
Net profit after tax
------------------------ X 100
Shareholders fund
Shareholders fund paid up capital + capital reserves + revenue reserves + unappropriated profit + surplus on revaluation of investment
1999
380014
---------- X 100
4165228
=9.12%
2000
700387
---------- X 100
4582672
=15.28%
2001
314962
----------- X 100
4730562
=6.62%
Interpretation
This ratio is one of the most important ratios used for measuring the overall efficiency of the firm. As the primary objective of the firm is to maximize it’s earning, this ratio indicates the extent to which this primary objective of the company is being achieved. This ratio is of great importance to the present and perspective shareholder as well as management of the company. This ratio shows how well the resources of the company are being used. Higher the ratio better for the organization.
In 1999, the return on the shareholder fund is 9 paisa per rupee, in 2000 it increase to 15 paisa and in 2001 it reduced to 6 paisa that is in 2000, return on shareholder fund increased because shareholder fund increase by 10% in 2000 as compare to 1999 and net profit before interest and tax increased by 84% in 2000 as compare to 1999. In 2001 shareholder fund increased by only 3.22% but net profit after tax decrease by 55%, which is not in accordance with net profit before tax change. Decrease in profit resulted in 2001 due to increase in selling and administration expenses and financial charges in 2001 as compare to 2000.
Return on equity capital
Net profit after tax
------------------------ X 100
Equity share capital
1999
380014
---------- X 100
1113444
=3.13%
2000
700387
--------- X 100
1113444
=62.91%
2001
314962
---------- X 100
1113444
=28.28%
Interpretation
This ratio is meaningful to the equity shareholders who are interested to know the profit earned by the company and those profit which can be made available to pay dividend to them higher the ratio, better it is. In 1999 it was 34.13%, it increase to 62.90% in 2000 and then again decrease to 28.28% in 2001. The reason for increase in return on equity capital is the increase in sale and decrease in cost of goods sold that resulted in an increase in overall profitability and in 2001, the profit decrease because cost of goods sold and financial charges increased in 2001. In 2001, every 100 rupee of share capital is earning Rs. 28.28 of net profit that is still quite satisfactory.
Earning per share
Net profit after tax
------------------------ X 100
No of equity shares
1999
380014
--------- X 100
111344
=3.41 per share
2000
700387
---------- X 100
111344
=6.29 per share
2001
314962
---------- X 100
111344
=2.85 per share
PRE-TAX PROFIT
This graph depicts the pre-tax profit during last 5 years. In the 1999-2000, firm earned huge amount of profit. This is because of improvement in management decisions.
Interpretation
Earning per share calculated for a number of years indicate whether or not the earning power of the company has increased. The earning per share simply show the profitability of the firm on a per share basis .It does not reflect how much is paid as dividend and how much is retained in the business. But as a profitability index, it is a valuable and widely used ratio. In 1999 earning per share was Rs. 3.41, in 2000, it increases to 6.29 and in 2001,and it decreased to Rs.2.83 per share.
LIQUIDITY RATIO
(a) Current ratio
Current asset
----------------
Current liabilities
1999
5083123
----------
5930585
=0.86:1
2000
5049052
-----------
6070496
0.83:1
2001
5915894
-----------
6895203
0.86:1
Interpretation
Current ratio is general and quick measure of liquidity of a firm. It represents a margin of safety or cushion available to the creditors. It is an index of the firm’s financial stability. It is also an index of technical solvency and an index of the strength of working capital.
In 1999, the current ration is 0.86:1 that is Rs 0.86 is available to pay an obligation of Rs 1. It shows firm’s liquidity position is not strong enough. It cannot pay its short-term liabilities. The financial position of the firm is not strong. But it has improved its liquidity from 2000 to 2001.
ANALYSIS SUMMARY SEPTEMBER
Note: All figures are in Pakistan Rupees
|
|
Ratios |
Equity Capital |
|
Dividends |
||||||
|
Year |
Last |
P/E |
P/Bk |
Earned |
Profit |
Book |
Earnings |
% |
Divs |
Avg |
|
1994 |
65.65 |
n/c |
n/c |
n/c |
n/c |
n/a |
n/a |
n/c |
A 0.00 |
0.0 |
|
1995 |
25.66 |
n/c |
n/c |
n/c |
n/c |
n/a |
n/a |
n/c |
A 0.00 |
0.0 |
|
1996 |
9.21 |
n/c |
n/c |
n/c |
n/c |
n/a |
n/a |
n/c |
0.00 |
0.0 |
|
1997 |
14.91 |
5.8 |
n/c |
n/c |
n/c |
n/a |
2.558 |
n/c |
1.32 |
8.8 |
|
1998 |
9.30 |
3.4 |
0.3 |
3.9 |
9.0 |
30.18 |
2.711 |
6 |
1.54 |
16.5 |
|
1999 |
8.82 |
3.2 |
0.3 |
4.6 |
9.5 |
31.36 |
C 2.788 |
10 |
1.54 |
17.4 |
|
2000 |
28.10 |
4.5 |
0.9 |
11.4 |
19.2 |
32.81 |
B 6.290 |
110 |
A 2.55 |
9.1 |
|
2001 |
10.95 |
3.9 |
0.3 |
3.2 |
6.9 |
41.15 |
C 2.830 |
-55 |
1.50 |
13.7 |
|
2002 |
16.05 |
n/c |
0.4 |
n/c |
n/c |
42.37 |
n/a |
n/c |
0.00 |
0.0 |
|
11/15/02 |
19.00 |
13.6 |
0.4 |
n/a |
n/a |
42.37 |
1.350 |
n/c |
1.50 |
7.9 |
(
A): ALL ITEMS ADJUSTED FOR STOCK SPLITS OR DIVIDENDS - 120:100 RIGHTS ISSUE (14% DIV) IN 2000, 23:20 RIGHTS ISSUE (4.22% DIV) IN 95, 15% IN 94(
B): CALCULATION BASED ON YEAR END OUTSTANDING SHARES(
C): BASED ON AVERAGE SHARES OUTSTANDING
Current Ratio
This graph depicts current ratio of last 5 years. Although current ratio of Nishat mills limited is below the standard but since it enjoys an excellent credit rating in the eyes of lenders so it does not matter. Its track record is also excellent. Actually management of Nishat mills limited firmly believes in fair business practices. So while in obtaining loan not a greater importance is paid to current ratio.
(b) QUICK RATIO / ACID TEST RATIO
Liquid assets
----------------
Current ratio
Liquid assets = Current asset – (inventories + prepaid expenses)
1999
2706725
------------ X 100
5930585
0.46:1
2000
3122112
---------- X 100
6070496
=0.49:1
2001
3397960
----------- X 100
6895203
=0.49:1
Interpretation
Quick ratio is very useful in measuring the liquidity position of the firm. It measures the capacity of the firm to pay off current obligation immediately and is a more rigorous test of liquidity than current ratio.
In 1999, the liquid ratio was 0.46:1, it has shown more liquid and readily cash convertibles assets of 0.46 to pay off the obligation of Rs 1. It does not represent good financial position.
In 2000, it rose to 0.51:1 and in 2001 it was 0.49:1. A lower liquid ratio does not mean a bad liquidity position, as inventories are not absolutely non-liquid. The liquid ratio is better in 2000 as compared to 1999 and 2001.
CURRENT ASSET MOVEMENT AND ACTIVITY RATIO
(a) Stock turn over ratio
Cost of goods sold
------------------------
Average stock
1999
7745353
-----------
1931547
=4 times
2000
7991952
-----------
2143256
=3.73 times
2001
9605013
----------
2212850
=4.34 times
Average stock = (opening stock +closing stock)/2
Interpretation
Inventory turnover ratio measures the velocity of conversion of stock into sales. In other words, how rapidly inventory is turning into receivables through sales.
In 1999,the turnover was 4 times. In 2000, it decreased to 3.73 times and in 2001 it again increase to 4.34 times. In 2000 the ratio was low because of over investment in inventories, stock accumulation. This low ratio represents in efficient inventory management.
(b) Inventory turnover in days
365
-------------------------
Inventory turnover ratio
1999
365
------
4 times
=91.25 days
2000
365
-------------
3.73 times
=97.85 days
2001
365
-----------
4 times
=91.25 days
Interpretation
It shows in how many days an average, before any inventory is turned into account receivables through sales. In 1999 and 2000 it was 91 and 98 days respectively and in 2001 it was 84 days. The management should take prompt action to reduce these days
Debtor’s Turnover Ratio
Sales
-------------------
AV. trade debtors
1999
9436104
--------------------------------
1674052+1290253/2
=6.37 times
2000
10134014
---------------------------------
1290253+1409926/2
=7.51 times
2001
11662457
-----------------------------------
1409926+2027613/2
=6.78 times
Interpretation
It indicates no of times debtors are turned over during the year. The higher the value of debtors turnover, the more efficient is the management of debtors, or more liquid the debtors. There is no rule of thumb, which may be used, as normal to interpret the ration. In 1999 the debtor’s turnover ratio was 6.37 times. It increases to 7.1% in 2000 and decrease to 6.78%in 2001. It suggests that management is inefficient in management of debtors
Average Collection Period
NO. Of working days
-----------------------------
Debtor’s turnover
1999
365
-----
6.37
=57 days
2000
365
-----
7.51
= 49 days
2001
2001
365
------
6.78
=54 days
Interpretation
This ratio measures the quality of debtors. A short collection period implies prompt payment of debtors. It reduces the chances of bad debts.
In 1999 the collection period was 57 days; it reduces to 49 days in 2000 and then increase to 54 days in 2001. This period is high. Management should take prompt action to control it. It shows inefficient credit collection performance.
AVERAGE PAYMENT PERIOD
NO of working days
-------------------------
Creditors turnover ratio*
1999
365
-----
17
= 21 days
2000
365
-----
10.56
= 35 days
2001
365
-----
13.42
= 27 days
Creditors Turnover Ratio
Credit purchases
---------------------
Average trade
Interpretation
It represents the no of days taken by the firms to pay its creditors. High creditor’s turnover ratio and low average payment period represents creditors are being paid promptly. Thus enhancing the credit worthiness of them.
In 1999 it was 21 days; it rose to 35 days in 2000 and decrease to 27 days in 2001. It shows that firm is not taking full advantage of credit facilities allowed by the creditors. On other hand, it maintain the goodwill of the company by increasing credit worthiness on prompt pay back
Nishat Mills Limited
The Company manufactures, spins, combs, weaves, bleaches, dyes, prints, stitches, buys, sells textiles and otherwise deals in yarn, linen, cloth and other goods and fabrics made from raw cotton, synthetic fiber and cloth. The Company also generates, accumulates and distributes electricity.
|
Stock Chart Stock Price (11/15/02): 19.00 Recent stock performance 1 Week 3.5% 4 Weeks 15.9% 13 Weeks 22.2% 52 Weeks 14.5% |
Officers Chairman & Chief Executive Secretary |
|
Earnings / Dividends (as of 6/30/02) |
|
Earnings |
Dividends |
|
|
Most Recent Qtr |
0.46 |
1.50 |
|
Last 12 Months |
1.35 |
1.50 |
|
Ratio Analysis |
|
Price / Earnings Ratio |
14.07 |
|
Dividend Yield |
7.89% |
|
Price / Sales Ratio |
0.18 |
|
Payout Ratio |
111.11% |
|
Price / Book Ratio |
0.43 |
|
% Held by Insiders |
5.00% |
ANALYSIS OF LONG TERM FINANCIAL POSITION AND SOLVENCY TEST.
Debt-Equity Ratio
OUTSIDERS FUND
-------------------------
SHAREHOLDERS FUND
Outsiders’ fund
Redeemable capital + debentures + long term loans + current portion of long term liabilities + short term finances
1999
5727113
-----------
4165228
=1.37:1
2000
6291896
-----------
4582672
=1.37:1
2001
8366871
-----------
4730562
=1.7:1
Interpretation
The ratio indicates the proportionate claim of owners and outsiders against the firm asset. The purpose is to get an idea of the cushion available to outsider on the liquidation of the firm. The interpretation of the ratio depends upon the financial and business policies.
In 1999, 2000 the ration was 1.37: 1and in 2001 it was 1.76:1, it shows that management want to do business with maximum outsider funds in order to take lesser of their investment.
It shows that for every 1.76 rupees worth creditors’ investment, the shareholders have invested RS 1.
Debt To Total Asset Ratio
TOTAL DEBTS
--------------------
TOTAL ASSTS
1999
5727112
-----------
10782776
=0.53:1
2000
6291896
-----------
11904857
=0.53:1
2001
8366871
------------
14222444
=0.59:1
Interpretation
It shows how much sufficient our assets are in retiring the total debts. We can observe in our analysis that for every RS 1 of assets we have 0.53, 0.53 and 0.59 debts respectively. We can also say that how much is that external financing is our total assets. Now, if the firm liquidates the creditors will owe 0.53, 0.53, and 0.59 in respective years and rest will go to the shareholders.
v
Interest Coverage RatioEBIT
----------------
Interest expense
1999
1262188
------------
799063
=1.58:1
2000
1698776
-----------
667188
=2.55:1
2001
1463447
----------
1048467
=1.40:1
Interpretation
The interest coverage ration is very important from the lender point of view. It indicates the no of time interest is covered by the profit available to pay interest charges. It is an index of the financial strength of an enterprise. A high ratio assures the lender a regular and periodic interest income. But the weakness of the ratio may create some problems to the financial managers in raising funds from debt sources.
In 1999 the ratio was 15 times and in 2000 it was 25 times. In 2001 it reduced to 14 times. The ratio is quite high and helps financial manager to raise funds from debts sources. In 2001 the company has RS 14 of profit to pay RS 1 of interest.
v
Inventory Turnover in Days365
---------------------------
Inventory turnover ratio
1999
365
------
4 times
=91.25 days
2000
365
-------
3.73 times
=97.85 day
2001
365
-----
4.34 times
=84.10 days
Interpretation
It shows in how many days an average, before any inventory is turned into account receivables through sales. In 1999 and 2000 it was 91 and 98 days respectively and in 2001 it was 84 days. The management should take prompt action to reduce these days
v
Total Asset Turnover / Capital Turnover RatioNet sales
------------
Total asset
1999
9436104
------------
10782776
=. 88 times
2000
10134014
-------------
11904857
=0.85 times
2001
11662457
-------------
14222444
=0.82 times
Interpretation
It shows that firms must manage its total assets efficiently and should generate maximum sales through their proper utilization. As the ratio, increases there are more revenue generated per rupee of total investment in asset. The firm ability to produce a large volume of sales on a small total asset based is an important part of the firms overall performance in terms of profits. In 1999, 2000 and 2001 the ratio was 0.88, 0.85, 0.82 times respectively. In 2001, the ratio indicates that it is producing RS 0.82 sales per rupees of investment in total assets.
v
Proprietary RatioSHAREHOLDERS FUNDS
------------------------------------
TOTAL ASSETS
1999
4165228
----------- X 100
10782776
=38.6%
2000
4582672
------------ X 100
11904857
=38.5%
2001
4730562
----------- X 100
14222444
=33%
Interpretation
This ratio puts light on the general financial strength of the company. It is also regarded as a test of the soundness of the capital structure. Higher the ratio, better the long term solvency of the company. Low proprietary ratio will include greater risk to the creditors.
In 1999 and 2000 this ratio was 38.6% and 38.5% respectively. In 2001 it is reduced to 33%. It shows that in 2001 the shareholders contribution was RS 33 for every RS 100 employed in business and creditor’s contribution would be the remaining RS 77.
v
OPERATING CYCLEOperating cycle measures the length of time from the commitment of cash for purchase until the collection of receivables resulting from the sale of goods or services. Operating period of an enterprise is the time period between acquisition of raw material till the realization into cash or any other instrument, which is readily converted into cash.
Operating cycle = Inventory turnover in days + Receivable turnover in days
1999 = 91+57 = 148 days
2000 = 98+49 = 147 days
2001 = 91+54 = 145 days
OPERATING CYCLE
Operating cycle shows how much days are required from the purchase of material to realization of cash. The length of time from the incurrence of cash for purchase of raw material until the collection of receivables resulting from the sale of goods or services.
Operating cycle for 1999 is 148 days, in year 2000 it was 147 days and in 2001 it is 145 days. Company trend is going in appositive ways. Nishat is maintaining its operating cycle. There is no fluctuation. It shows efficiency of the management that is why inventory is regulating efficiently. A firm with short operating cycle can operate efficiently with relatively small amount of current assets and relatively low current and acid test ratio. The firm is liquid in the dynamic sense that it can produce product, sell it and collect cash for it.
v
CASH CYCLECash cycle measures the length of time from the actual outlay of cash for purchase until the collection of receivables resulting from the sale of goods and services.
Cash Cycle = Operating cycle - Payable turnover in days
1999 = 148-21 = 127days
2000 = 147-35 = 112 days
2001 = 145-27 = 118 days
Cash cycle of Nishat Mills is in year 1999 is 127 days, in year 2000 it decreases to 112 days and in 2001 it is 118 days. The lesser the days of completing the cash cycle, higher be the business activity and company efficiency. It indicates the better circulation of cash. Long Cash cycle might be the warning of excessive receivables and inventory. It might lead to more chances of bad debts. Short cycle is sign of good management. Nishat is maintaining its cycle.
|
Stock Price Analysis |
Figures in Pakistan Rupees
|
Quarter |
High |
Low |
Close |
Qtrly |
12 mo. |
|
|
Apr - Jun |
1994 |
0.000 |
0.000 |
81.643 |
n/a |
n/a |
|
Jul - Sep |
1994 |
81.643 |
57.234 |
65.651 |
-19.6% |
n/a |
|
Oct - Dec |
1994 |
74.068 |
46.713 |
46.924 |
-28.5% |
n/a |
|
Jan - Mar |
1995 |
47.134 |
25.250 |
26.092 |
-44.4% |
n/a |
|
Apr - Jun |
1995 |
26.513 |
22.725 |
25.219 |
-3.3% |
-69.1% |
|
Jul - Sep |
1995 |
40.351 |
28.070 |
25.658 |
1.7% |
-60.9% |
|
Oct - Dec |
1995 |
30.482 |
22.368 |
25.658 |
0.0% |
-45.3% |
|
Jan - Mar |
1996 |
31.140 |
21.491 |
24.561 |
-4.3% |
-5.9% |
|
Apr - Jun |
1996 |
23.904 |
12.281 |
12.281 |
-50.0% |
-51.3% |
|
Jul - Sep |
1996 |
13.377 |
8.772 |
9.211 |
-25.0% |
-64.1% |
|
Oct - Dec |
1996 |
16.447 |
8.553 |
14.035 |
52.4% |
-45.3% |
|
Jan - Mar |
1997 |
25.219 |
14.167 |
22.368 |
59.4% |
-8.9% |
|
Apr - Jun |
1997 |
23.596 |
16.754 |
17.544 |
-21.6% |
42.9% |
|
Jul - Sep |
1997 |
21.930 |
13.596 |
13.596 |
-22.5% |
47.6% |
|
Oct - Dec |
1997 |
16.930 |
11.754 |
12.807 |
-5.8% |
-8.7% |
|
Jan - Mar |
1998 |
12.632 |
9.035 |
9.035 |
-29.5% |
-59.6% |
|
Apr - Jun |
1998 |
9.167 |
5.921 |
7.018 |
-22.3% |
-60.0% |
|
Jul - Sep |
1998 |
9.868 |
5.789 |
9.298 |
32.5% |
-31.6% |
|
Oct - Dec |
1998 |
9.254 |
6.184 |
8.509 |
-8.5% |
-33.6% |
|
Jan - Mar |
1999 |
11.404 |
8.114 |
9.167 |
7.7% |
1.5% |
|
Apr - Jun |
1999 |
9.912 |
7.763 |
8.333 |
-9.1% |
18.8% |
|
Jul - Sep |
1999 |
9.825 |
7.939 |
8.816 |
5.8% |
-5.2% |
|
Oct - Dec |
1999 |
23.509 |
8.333 |
23.509 |
166.7% |
176.3% |
|
Jan - Mar |
2000 |
35.800 |
22.544 |
35.800 |
52.3% |
290.5% |
|
Apr - Jun |
2000 |
44.250 |
23.150 |
23.150 |
-35.3% |
177.8% |
|
Jul - Sep |
2000 |
28.300 |
19.200 |
28.100 |
21.4% |
218.7% |
|
Oct - Dec |
2000 |
29.800 |
19.900 |
26.150 |
-6.9% |
11.2% |
|
Jan - Mar |
2001 |
27.300 |
15.750 |
16.300 |
-37.7% |
-54.5% |
|
Apr - Jun |
2001 |
19.000 |
16.550 |
17.300 |
6.1% |
-25.3% |
|
Jul - Sep |
2001 |
16.750 |
10.650 |
10.950 |
-36.7% |
-61.0% |
|
Oct - Dec |
2001 |
17.250 |
10.200 |
13.850 |
26.5% |
-47.0% |
|
Jan - Mar |
2002 |
20.700 |
14.600 |
16.450 |
18.8% |
0.9% |
|
Apr - Jun |
2002 |
17.750 |
11.550 |
15.600 |
-5.2% |
-9.8% |
|
Jul - Sep |
2002 |
17.100 |
15.150 |
16.050 |
2.9% |
46.6% |
|
11/15/02 |
19.000 |
22.2% |
14.5% |
|||
Top of Form
Bottom of Form
v
Return on InvestmentNet profit after tax
---------------------------------------- X 100
Total assets
1999
380014
------------------------ X 100
10782776
=3.52 %
2000
700387
-------------------- X 100
11904857
=5.88%
2001
314962
---------------------- X 100
14222444
= 2.21%
|
Sales & Profitability Summary |
Figures expressed in billions of Pakistan Rupees
|
Year |
Sales |
Sales |
EBITDA |
% of |
Inc. bef |
% of |
Emps |
Sales/ |
|
1992 |
3.688 |
n/c |
0.579 |
15.7% |
0.223 |
6.0% |
n/a |
n/a |
|
1997 |
8.572 |
n/c |
1.527 |
17.8% |
0.325 |
3.8% |
n/a |
n/a |
|
1998 |
8.919 |
4.0% |
1.874 |
21.0% |
0.344 |
3.9% |
n/a |
n/a |
|
1999 |
9.594 |
7.6% |
1.529 |
15.9% |
0.380 |
4.0% |
n/a |
n/a |
|
2000 |
10.297 |
7.3% |
1.909 |
18.5% |
0.700 |
6.8% |
n/a |
n/a |
|
2001 |
11.662 |
13.3% |
1.777 |
15.2% |
0.315 |
2.7% |
13,146 |
887,149 |
Top of Form
Bottom of Form
v
Return on InvestmentNet profit after tax sales
--------------------------------- X ------------------- X 100
Sales total assets
1999
380014 9436104
--------------------------- X -------------------
9436104 10782776
= 3.50
2000
700387 10134014
------------------- X ----------------- X 100
10134014 11904857
= 5.87
2001
314962 11662457
---------------- X -------------------- X 100
11662457 14222444
= 2.21
Interpretation
Return on investment is an important ratio in measuring the trend of the organization and thorough analysis of the company. Neither the net profit margin nor the total assets itself provide adequate measures for overall effectiveness. Net Profit margin ignores the utilization of assets and total assets turnover ratio ignores the profitability on sales. One variation in Du Pont analysis is to understand the firm’s return on investment. The return on investment ratio or earning power resolves this shortcoming. An improvement in the earning power of the firm will result if there is increase in total assets turnover ratio, an increase in net profit margin ratio or both.
In the year 2001, the return on investment remained low but in 1999 and 2000 there is positive trend and there is an increase in return on investment because of increase in both, net profit margin and total asset turnover ratio. This is showing the Total Quality Management (TQM) and efficiency of management.
|
NISHAT MILLS LIMITED |
||||
|
INCOME STATEMENT |
||||
|
VERTICAL ANALYSIS |
||||
|
1999 |
2000 |
2001 |
|
|
|
SALES |
100% |
100% |
100% |
|
|
COST OF GOODS SOLD |
82.08 |
78.86 |
82.36 |
|
|
GROSS PROFIT |
17.92 |
21.14 |
17.64 |
|
|
ADMINISTRATIVE SELLING AND GEN EXPESES |
5.27 |
5.39 |
6.09 |
|
|
OPERATING PROFIT |
12.65 |
15.75 |
11.55 |
|
|
ADD; OTHER INCOME |
0.73 |
1.01 |
1 |
|
|
EARNING BEFORE INTEREST AND TAX |
13.38 |
16.76 |
12.55 |
|
|
LESS: FINANCIAL CHARGES |
8.47 |
8.58 |
9 |
|
|
WORKERS PARTICIPATION FUND |
0.25 |
0.41 |
0.18 |
|
|
PROFIT BEFORE TAXATION |
4.66 |
7.78 |
3.37 |
|
|
LESS: PROVISION FOR TAXATION |
0.63 |
0.87 |
0.67 |
|
|
PROFITAFTER TAX |
4.03 |
6.91 |
2.7 |
|
Interpretation
Percentages of cost of goods sold to sales remain with in range of 78% to 80%. It means that cost of goods is being strictly controlled at Nishat mills limited. In the year of 2000 administrative expenses were 5.39% but in the year 2001 administrative expenses increased to 6.09% that depicts the inefficiency of management in curtailing its administrative costs.
Earning before interest and profit also reduced in the year of 2001 because of increase its selling and administrative costs. Financial charges also increase in the year of 2001 because firm financed its projects through borrowed financing.
In the year 2001 profit after tax reduced as compared to 2000 because of increase in cost of goods sold, increase in selling and administrative cost and increase in financial charges.
|
NISHAT MILLS LIMITED |
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|
BALANCE SHEET |
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|
VERTICAL ANALYSIS |
||||
|
|
||||
|
1999 |
2000 |
2001 |
|
|
|
Equity and Liabilities |
||||
|
Share Capital and Reserves |
||||
|
Authorized Capital |
||||
|
Issued and Subscribed and paid up share capital |
10.33 |
9.35 |
7.83 |
|
|
Capital reserves |
9.53 |
8.63 |
7.23 |
|
|
Revenue |
18.65 |
20.4 |
18.12 |
|
|
Surplus on revaluation of operating fixed assets |
0.0046 |
0.1 |
0.09 |
|
|
Non Current Liabilities |
||||
|
Redeemable capital |
0.11 |
7.72 |
15.51 |
|
|
Long Term Loans |
2.34 |
1.92 |
1.09 |
|
|
Liability against finance lease |
3.02 |
0.87 |
1.65 |
|
|
Deferred liability for gratuity |
1 |
0.01 |
0.1 |
|
|
Current Liabilities |
||||
|
Current portion of long-term liabilities |
5.22 |
5.4 |
5.4 |
|
|
Short term finance |
41.54 |
36.94 |
35.17 |
|
|
Creditors accrued and other liabilities |
4.44 |
4.48 |
5.49 |
|
|
Worker' participation fund |
0.22 |
0.35 |
0.15 |
|
|
Provision for Taxation |
1.73 |
1.38 |
1.03 |
|
|
Proposed dividend |
1.81 |
2.38 |
1.17 |
|
|
Unclaimed Dividend |
0.05 |
0.06 |
0.07 |
|
|
Total Liabilities and Owner Equity |
100 |
100 |
100 |
|
|
ASSETS |
||||
|
Non-Current Assets |
||||
|
Tangible fixed assets |
||||
|
Operating fixed assets |
32.98 |
30.91 |
43.5 |
|
|
Assets subject to finance lease |
3.44 |
2.04 |
3.29 |
|
|
Capital work in process |
1.16 |
12.31 |
1.08 |
|
|
Long Term Investment |
14.75 |
11.68 |
9.78 |
|
|
Long Term loans, deposits, prepayments |
0.53 |
0.65 |
0.7 |
|
|
Current Assets |
||||
|
Stores, spare parts and loose tools |
5.05 |
4.26 |
3.81 |
|
|
Stock in Trade |
16.92 |
11.85 |
13.83 |
|
|
Short term investment |
0.06 |
0.05 |
0.04 |
|
|
Trade Debts |
11.97 |
11.84 |
14.26 |
|
|
Advances, deposits and prepayments |
6.13 |
4.02 |
2.66 |
|
|
Other Receivables |
2.4 |
4.05 |
4.43 |
|
|
Cash At Bank |
4.08 |
6.34 |
2.57 |
|
|
47.15 |
42.41 |
41.6 |
||
|
333333333333333333333333333333333333333 TOTAL ASSETS |
100 |
100 |
100 |
|
INTERPRETATION
NISHAT MILLS limited operating assets increased in the year of 2001 as compared to year 2000. Firm’s redeemable capital also increased as compared to previous years. Overall performance of Nishat mills limited remains satisfactory.
TREND ANALYSIS
“Trend analysis shows the direction upward or downward and involves the computation of the percentages relationship that each statement item bears to the same item in the previous year.”
Interpretation of Income Statement
v
SALEThe increase in sales illustrates that it is showing an upward trend due to the increase in the wholesale price of the commodity in the market. The unit produced has also been increased and the company also captured more buyers in 2001 resulting in greater sales volume.
Sales volume in 2000 is greater as compared to the previous year and lesser as compared to 2001 showing the company’s inability to capture more buyers.
v
Cost of Goods SoldIncreasing trend in the cost of goods sold is due to the reason that company also incurred more variable and fixed costs and other operating cost as well as compared to 1998 in 2000 and 2001.
v
Gross ProfitGross profit showing an upward trend in the year 2000 as compared to 1999 because sale volume increased in this year and cost of goods sold was 78.86% of sale in 2000 as compared CGS i.e. 82.08% of sale in 1999. In 2001, it again decreased because of increasing in cost of goods sold in 2001 i.e. 82.36%.
v
Operating ExpensesOperating expenses are showing an upward trend in 2000 and 2001 as compared to the previous years because sale volume has increased in these years. The company has a spent a lot of money on selling expense as advertisement and also on administration, due to these operating expenses are showing an upward trend.
v
Financial ChargesFinancial charges are showing an upward trend in the year 2000 and 2001. In 1999, it reduced from the 1998 expense because of the efficiency of the management to control on such expenses. In 1999 and 2000, it increases due to inefficiency of management. Management should take steps to avoid such expenses.
v
Earning Before Interest and TaxEarning before interest and tax at first reduced in 1999 as compared to 1998 because of increase in operating expenses in 1999. In 2000, it increased because in this year cost of goods sold decreased due to efficiency of the management and gross profit are also high.
In 2001, it again decreased because in this year the cost of goods sold increased as compared to previous year and gross profit ratio was also low. The operating expense also increased in this year due to inefficiency of management resulting in low earning before interest and tax.
v
TaxesTaxes are levied by the govt. and it can increase or decrease the amount of taxes when it likes or feels necessary. In 1999, the taxes decrease as compared to 1998 because of new govt. policies and enforced tax rates. In 2000, it increases because have in sale and profit as compared to 1999. In 2001, it again decreases due to decrease in profit.
v
Net IncomeThe net income has been increased over the year due to following reasons.
In 1999, it increased because of increase in sale volume and unit cost. In 2000, it again increases because of increase in sale, decrease in cost of goods sold and increase in earning before interest and expense. In 2001, it again decreases as compared to 2000 because of increase in cost of good sold, selling, administration and other taxation expenses.
FORMULA USED
Current year amount – previous year amount
Chain base = ------------------------------------------------------------------------ X 100
Previous year amount
Assets
Fixed assets In 1999, the company fixed assets has been increasing by 0.08% as compared to previous year and similar fashion is noticed the year 2000 and 2001. We have noticed that the sale volume over the year has been increased. This is due to increased volume of fixed assets.
v
Long Term InvestmentLong-term investment is showing decreasing trend in the year 1999 and 2000 as compared to previous year. In 2001, it is same that is in 2000 i. e. no increase in long-term investment. It shows that company is more interested in investing his current assets.
v
Long Term Loans, Deposits, Prepayment and Deferred CostLong-term loans, deposits, prepayment and deferred cost showed a positive sign in 2000 and 2001. In 1999, it decreased because there were political crises in the country. The firms do not involved in more investing in other companies because of risk of loss. The increase in 2000 and 2001 is a healthy sign in the country; in these years there was political stability, showing that the investment of the company in other companies has considerably increased.
v
Current AssetsCurrent assets comprising of stores, spare parts and loose tools have shown increased pattern in the year 1999 and 2000 representing the expansion of the business. In the year 2001, it reduced as compared to 2000 because these assets were sufficient to meet next year requirement. Stock in trade showed as increasing trend in the year 1999 showing inefficiency of the management because management fails to dispose it of in time. The decline in stock in trade in the year 2000 shows efficiency of management also the buyers are satisfied by the decisions. In the year 2001, it again showed an increasing trend showing inefficiency of the management.
Trade debtors showing declining trend in the year 1999 as compared to 1998 which is a positive sign but trade debtors which includes account receivables and debtors have been increased in the year 2000 and 2001 which shows the following:
Company collection on accounts is slow.
Ø
Company is selling the goods on credit rather than cash basis.Ø
Management should take remedial measures to lesson the trade debtors at reasonable level.Ø
Short term investment cash and bankShort term investment cash and bank balance have been increase in 1999 and 2000 showing a positive sign to meet the working capital requirement of the firm. In 2001, the balance reduced because of the inefficiency of the management and it reduces the ability to meet working capital requirement of the company.
FORMULA USED
Current year amount – previous year amount
----------------------------------------------------------------
Previous year amount
LIABILITIES AND OWNER EQUITY
v
Issued Subscribed and Paid Up CapitalWe have observed that the issued subscribed and paid up capital of the company remained the same throughout the years.
v
Share Holder EquityThe shareholder’s equity is showing a positive sign that the share holder’s share in the business have been increased
v
Long Term LiabilitiesLong-term liabilities have been decreased in the year 1999,2000 and 2001 respectively, showing the efficiency of the management in retiring its debts.
v
Deferred LiabilitiesDeferred liabilities show the decreasing the trend that shows the efficiency of management in retiring them off.
v
Liability against Assets Subject To Finance LeaseLiability against assets subject to finance lease shows the decreasing trend in the year 2000 and 2001 that shows firms took less loans against assets in this year and shows less expansion in business but in the year 2001 it again rose that shows expansion of business.
v
Current LiabilitiesCurrent liabilities shows the liquidity position of the company short term borrowing of the company have been increased in the year 1999 but in 2000 and 2001 it shows the decreasing trend representing its control on borrowing depicting the efficiency of the management
Creditors, accrued and other liabilities have shown a positive trend in the year 1999 that it decreased. Firm has to pay less amount money to others. It again increased in the year 2000 and decreased in 2001. The increase depict that company is postponing payment to creditors. Creditors may find in convenience in receiving their money back. It will effect their goodwill but in the year 2001 the management controlled it by their efficiency.
v
Proposed DividendProposed dividend and dividend payable shows that the company has accumulated greater profit which would be distributed after some time.
FORMULA USED
Current year – previous year
-----------------------------------------------------
Previous year
Training Programme
While at Nishat, I worked in different department. My focus of intention was on finance department, where I spent most of my time in understanding the procedure of opening of letter of credit and other export details. This enabled me in understanding the function performed by bank, in relation to letter of credit. Here I am presenting a brief summary of department, their functions and what I understood there.
Brief Introduction of Different Departments
In company’s office there are followings types of departments.
·
Purchase Department·
Export Department·
Accounts& finance Department·
M.I.S (Management Information System)Purchase Department.
Purpose
The main purpose of department is to maintain the desirable level of purchase, so that ideal funds are not stuck up in the shape of heavy purchase or a position not arise that mill stop due to non-availability of raw material or store and spares.
In addition to this purchase department is also responsible for checking of following.
·
Checking quantity of purchased goods.·
Checking rates of purchased goods.·
Checking quality of purchased goods.Procedure
Firstly different departments according to their requirement put their demand. Higher authorities will check the authenticity of demand. They scrutinize that the goods, which are demanded, actually required.
When demand is approved. Purchase department gets different quotation for this product and after making a reasonable decision in this regard, they will issue a purchase order. . Purchase order declares the terms and conditions of order and finally deal between the parties are decided. The supplier will send the goods along with the delivery order.
On receiving the goods the purchase department will make a goods receipt note on which the name of goods and it quantity is shown. The supplier will send the commercial invoice or sales tax invoice according to the product and finally purchase department will make a store purchase voucher, which provides the evidence of transaction.
ACCOUNTS DEPARTMENT
Accounts Department
Accounts Department
There are four sections, which are described below in details,
1) Payroll section
2) Costing section
3) Payable section
4) Receivable section
·
Account payable sectionIt primarily deals with supplier, contractors, creditors, to whom Nishat mills limited make the payments. A person designated as assistant manager heads account payable section. Accounts officer and assistant account officer work under his supervision. Before payment is made to supplier or contractors following supporting documents are required.
Ø
Sales tax invoiceØ
Inward gate passØ
Good inspection noteØ
Delivery challan1. Sales tax invoice
Invoice is prepared which shows the amount of sales tax deducted etc. this invoice usually contain the following column.
Sr no quantity particulars amount rate of sales tax amount total
2. Inward gate pass
In the supporting documents inward gate pass is also very essential. When things are purchased from outside parties they reach factory premise so entry is made. And a pass is issued by the concerned authorities that allowing the entrance of goods. Account payable department require a copy of inward gate pass. Most important thing to remember, that it deals only with the quantity. It has no concerned with quality. Inward gate pass no is checked by
1) Gate clerk
2) Security officer
3) Store auditor
3. Goods inspection note
When purchase process of goods (commodities is initiated a purchased order is made, a copy of purchase order is given to payable department, when goods are received the concerned department (issuing purchase order) inspects the goods to know whether they are according to their specification mentioned in purchase order. So a copy of good inspection note is prepared. Goods inspection note should be received within one day after the storeroom receives goods
4. Preparation of checks
After receiving the invoices and checking their accuracy finally account payable department prepares cheques. Chief controller of Nishat mills limited signs these. Nishat mills limited have totally computerized system so items are identified and coded. Every party is allotted certain codes and entry is made in them as and when they take place.
Entries in books of accounts
Party sends the bill, once it is approved. Two vouchers are prepared,
J.V (journal voucher)
Expense account (debit) Amount
Party account (credit) Amount
Expense account is debited because company has incurred certain expense. Party is credited because payment is going to be made to him.
B.P.V (bank payment voucher)
Party account (debited) Amount
Bank (credited) Amount
Tax Amount
Deduction of tax is made at source under the section 50 of the income tax ordinance 1979.
FUNCTIONS
The main function of account department is to keep proper record transaction and maintain the accounts.
Procedure
Firstly the account department makes the recording of transaction by different type of vouchers according to the nature of transaction. The vouchers provide the evidence of transaction.
As books of NISHAT MILLS are computerized and ledgers are being prepared in computer, so vouchers are sent to computer operator for posting.
Here a daily print out of all entries is being checked in order to check the accuracy and then posting made to respective ledger.
q
FINANCE DEPARTMENTPurpose
The main purpose of the department is ensuring the availability of the funds for operation and also better allocation of these funds.
Functions
The most important function of finance manager is to arrange different types of loan according to the requirement, like:
·
Long-term loan·
Leasing·
Short-term loan
One of the main important functions performed by finance department is to prepare loan proposals.
LOAN PROPOSAL
Nishat mills limited generate funds from inside and outside parties. Inside parties include shareholders, while outsider parties are banks and various loan providing agencies.
Difference between fund based and non-fund based credit
1. Fund base credit
In fund base credit there is actual disbursement of cash by the bank to Nishat mills limited.
2. Non fund base credit
In non fund base credit bank only provides guarantee no disbursement of cash is made.
When loan proposal is made various consideration should be kept in mind, first we will see the matter from the point of Nishat mills limited then apprehensions of bank will be discussed in detail,
Points to remember
Following points should be kept in mind before making a loan application.
·
Loan amount·
Date of expiry·
Rate of interest (important consideration)·
SecuritiesNishat mills limited in following forms offer the securities,
1) Pledge of cotton
Mostly or frequently offered security is cotton. Usually loan is obtained from bank after pledge of cotton. In pledge ownership and possession is with the bank. There is important point to remember that although cotton is stored in the god own of NML but all the keys are with the banks. The bank releases when payment is made to bank cotton. Generally cotton purchase is heavily financed by bank. Bulk of cotton is purchased in the season so to avail the benefit of huge quantity.
2) Mortgage of factory premises
Factory premises are also mortgaged with bank. Sometimes buildings and factory machinery are mortgaged with bank.
Types of mortgage
There are two types of mortgage
·
Equitable mortgage·
RTG mortgage·
Equitable mortgageUnder this type mortgage deed is not registered in the court of law. Normally court fee is paid when mortgage deed is registered. Registration of mortgage deed means that lien of bank is marked on the premises in the register of ownership so further purchase and sale of this property is not allowed.
Equitable mortgage is preferred when client is trust worthy, his track record has been established and he enjoys a favorable repute in the market.
·
Registered mortgageIn this type of mortgage, deed is registered in the register of ownership and further sale is not allowed. Court fee is paid in this type of mortgage, this is opted when client is new and his track record has not been established.
3) Personal guarantee of directors and chief executive
Personal guarantee of company chief executive Mrs. Naz Mansha is also offered. Bank before sanctioning loan to Nishat mills limited ask for certain type of guarantee by it directors. So directors give personal guarantee to the bank that its loan will be secured enough, they take the responsibility.
ü
Bankers point of viewNow we see the loan proposal from bankers’ point of view, banker has various apprehensions before sanctioning loan to borrower. Bank analyses 3 Ps before advancing loan,
1. Person
2. Purpose
3. Papers
1. Person
First of all person is important. Who is going to be on receiving end? In the past loans were given to people according to their political status. Now a day’s bank cares a lot before advancing loan.
2. Purpose
What is the purpose of loan? Is it short term or long term loan? The motive behind the loan is of immense important. Question should be asked whether the loan is obtained for purchase of machinery or for construction of building.
3. Papers
The securities against which loan is granted are of great importance. Whether the securities offered are good enough to secure the loan amount of bank. Now we come to the lending policy of bank.
ü
Lending policy of bankFirst of all loan proposal should meet the prudential regulations requirements. That is maximum exposure to a single party should not exceed 30% of bank unimpaired capital. The unimpaired capital of bank is equal to paid up capital plus reserves. Another consideration is that current ratio should not fall below 1:1 although Nishat mills limited current ratio is not 1:1 but since its track record has been established and it enjoys a favorable repute in textile sector ,of course one of the leading exporter of textiles products so banks normally do not pay much attention to this one.
The points which bank takes into account before sanctioning the loan are summarized as under:
We can use word camel to denote them,
CAMEL
“C” stand for CAPITAL ADEQUACY
“A” stand for ASSET MANAGEMENT
“M” stand for MANAGEMENT SOUNDNESS
“E” stand for EARNING AND PROFIT
“L” stands for LIQUIDITY
So we can summarize banks consideration into the above mentioned points.
ü
Credit Policy of BankHow bank advance credit?
Before advancing the loan, bank do calculate certain ratio analysis,
Financial analysis of Nishat mills limited includes,
·
File work·
Loan processing·
Previous recordAlong with loan application following documents are attached
·
Annual report·
Directors NIC copies·
Signature specimen of directors·
Last 3 years exports and imports details·
This statement verifies the financial position of Nishat mills limited Company
q
Management Information SystemManagement information system makes the financial analysis regarding the operation of business. By the calculation of different ratios and other procedures of analysis, they indicated the reasons if the company is not showing progress and also recommend the method by which the weakness of company can be removed. They also make the forecast about the future and then suggest that how the company can make improvements in future.
If the company wants to start a new project it is MIS, which prepare its feasibility report.
EXPORT DEPARTMENT
Functions & Procedure
This department is responsible for the export of yarn, grey cloth and processed fiber. This department has to fulfill all the legal requirements and prepare important documents involved in the export of yarn, grey cloth and processed fiber. This department starts working from getting purchase order to deliver the shipment to the buyer.
The export department performs 3 major functions,
1. SHIPMENT OF YARN, GREY CLOTH & PROCESSED FIBER.
After receiving packing list from shipping department, export departments starts its main functions. It usually prepares the following documents to ensure the timely shipmen
The most commonly documents which export department has to prepare and deal with are:
o
Letter of credit (L\C)o
Bill of exchangeo
Commercial invoiceo
Export declaration form.o
Certificate of origino
Packing listo
Customs invoiceo
Textile declaration formo
Inspection certificateo
Shipping bill/bill of lodging/air way billo
Manufacture’s certificateo
Form “E”In some special cases, some other documents as and when required by the buyer are also prepared like;
o
Certificate of child laboro
Certificate of forced laborContract
First of all, contract between Nishat Mills limited and importer takes place. Nishat mills limited find its buyer through marketing department. Then negotiation starts and finally terms and conditions of contract are finalized.
Letter Of Credit
The import and export of goods throughout the world is now usually arranged by documentary letter of credit. The importer requests his bank to open LC in the favor of exporter. The bank in pursuance of that request issues LC is favor of exporter. The LC is a promise or guarantee by the bank to honor bill of exchange drawn by exporter, provided the conditions of letter of credit are fulfilled.
Definition
“Letter of credit is an undertaking by a bank to meet the drafts drawn by exporter”
“Letter of credit is the conditional undertaking on the request of the importer/buyer”
“A written undertaking by the bank of importer” i.e. issuing bank at the request of buyer or importer to make payments at sight or at
Parties Of Letter Of Credit
Four parties are involved in the payment of the goods,
I. Buyer
II. Buyer bank
III. Beneficiary
IV. Advising bank.
How L/C is opened
The import department receives the Performa invoice from purchasing department, after getting the approval from the authorized person (Mian Umer Sahib in Nishat Mills Limited) the concerned person write an Application in the name of his authorized bank requesting him to open a Letter of Credit in the favor of a particular party in a foreign country. Insurance Certificate is obtained from the Insurance Company for the protection of damages. H.S Codes are also required for the confirmation of duty charged by the Government on different item of goods. (Harmonized System Codes)
The department according to the requirement makes sometimes amendments.
Import documents are retired by paying the all dues to bank. L / C and Bill of Lading are given to the clearing agent for clearing the consignment.
Finally bill of entry is received which has three copies in which every concerned party give its remarks with stamp. One copy is sent to the SBP for maintaining records of Imports.2nd copy is sent to the custom department and 3rd is retained by department for record.
After clearance of the export documents, export department negotiate the paper with bank and receive payment from the bank. Then our local bank sends documents to the buyer bank and foreign bank release payment to our bank with the permission of the buyer.
In foreign trade, letter of credit has gained tremendously importance. It has facilitated the trade, two unknown parties come together and both are benefited.
ü
Points To Remember In Letter Of CreditWhat I did at Nishat mills limited? I came to know lot of things about letter of credit.
Contents of letter of credit are summarized as under,
I. Shipper’s name
ii. Consignee name
Never importer, according to State Bank regulations, consignee of goods can ever be importer unless mode of payment is advance. State Bank of Pakistan point of view in this regard is to secure the payment of letter of credit. Goods are received in foreign country either by bank or some one other. The purpose is that foreign remittance should come inside PAKISTAN.
iii. Mode of payment
Iv. Kind of letter of credit
V. Port of shipment
Vi. Port of delivery
Vii. Special instruction, if any
viii. Customs Invoice
After opening letter of credit, invoice is prepared. One of for customs authorities, so proper shipment takes place. It is sent along with goods shipped to foreign country.
ix. Form E
E stands for export. When Nishat mills limited exports yarn or processed fiber, form E is taken from the bank. In which bank describes quantity and price of goods exported. Nishat mills limited obtain FORM E from Credit Agricol Indosuez, Citi Bank etc.
I want to mention a very interesting point there. Normally in case of small exporter, bank inspects goods and issues FORM E. but in case of Nishat mills limited, blank FORM E are issued by the bank, they are filled by the export documentation department. Since Nishat is a large group and enjoys a favorable repute in the eyes of banks so they do not care much is issuing blank FORM E. Nishat mills limited have given written undertaking to bank that in case of unfavorable events. Nishat mills limited will settle the matter with SBP.
x. Packing list
It describes goods, their quantities which are packaged. This packing list is sent to the shipping company.
XI. Shipping bill/ bill of lading/ airway bill/ railway receipt.
When goods are sent by sea, five copies of bill of lading are prepared. If the goods are sent by air, air way bill is prepared. When the goods are sent through railway, railway receipt is prepared.
Company carrying goods issues bill of lading. It describes nature of goods exported their value.
·
Date of shipment·
Date at which ship will reach the destination·
Shipping bill no·
M.R nosIt is mate receipt number. When captain of ship receives goods and place it in ship he issues a mate receipts numbers.
xii. Commercial invoice
Invoice can be of following types;
1. Cost and freight
2. FOB (freight on board)
If we deduct freight from cost and freight, we get FOB value. Cost and freight means this cost also covers the freight charges from port to importers godown. FOB value includes charges only up to port.
Xiii.Certificate of origin
Some importers requires certificate of origin from NML. It is a declaration by NML that goods are of Pakistani origin. Importers import fabrics because of finest cotton. It is an assurance that goods are of Pakistani origin. Export Promotion Bureau normally issues this certificate.
xiv. Beneficiary certificate
Export department also prepares it. In some special cases, some other documents as and when required by the buyer are also provided, for example
Certificate of no child and forced labor
HISTORY OF EXPORT FINANCE SCHEMES
State Bank of Pakistan introduced a scheme in the year 1973 Known as Refinance Scheme for Non-Traditional and newly emerging Exports with a view to providing adequate bank credit for exports of non-traditional and newly emerging commodities on favorable terms. Later in May 1976 it was decided to include all manufactured goods in the scheme. Subsequently in October 1977 the scope of scheme was further enlarged and a new scheme was introduced named Export Finance Scheme.
EXPORT FINANCE UNDER PART- I
Under Part –I of the scheme, the commercial banks provide concessionary finance to exporters for financing the exports of eligible commodities on case-by-case basis against individual.
Firm Export Order Irrevocable Letter of Credit
The term Firm Export Order shall include contract of sale, confirmation order for sale, purchase order, Proforma Invoice and similar other documents evidencing purchase of goods by foreign buyers. The information such as (1) name and address of exporters / Importers (2) commodity (3) quantity / rate / amount etc. (4) period of shipment (5) terms of payment.
Signature of exporters / importers should be provided in such documents. The exporter must verify the signature of the buyer. As for L/C it would be enough that it indicates the name of commodity and the amount.
The maximum period for which export finance under Part-I of the scheme can be extended to the exporter is 180 days.
APPLICATION FOR EXPORT FINANCE SCHEME UNDER PART I SCHEME:
Exporter are required to submit following documents to their bankers for obtaining export finance for onward submission to respective office of State Bank of Pakistan.
Pre-Shipment:
Demand Promissory Note
Undertaking as per Annexure A on non-judicial stamp paper
Copy of Letter of Credit or Firm Export Order
Demand Promissory Note
On demand the exporter promise to pay bank or order the sum or value received from this date which includes the amount of profit / rate @ XX rate when converted into annual % terms.”
Submission of Substituted Documents
As the loan mature after 180 days the documents must be submitted on 179th day if these are submitted on 180th day then late substitution fine is paid.
The application for substitution is submitted with following documents:
Covering Letter:
It is a Letter, which informs you that what Type of documents is enclosed herewith.
2. Undertaking by Exporter:
In which the exporter, informs the bank that due to un-expected crisis of the buyer, they are hesitating / reluctant in establishing letter of credit in respect of contract. They expressed their inability to accept the shipment at this stage and have accordingly cancelled the contract.
Therefore exporter requested to allow substitution of the contract and adjust the amount of Re-Finance against substituted letter of Credit.
3. Original Sales Contract
Indicates the date at which contract is issued. The contents of sales contract are
·
Buyer’s name & address·
Product description·
Quality & packing·
Shipment date·
Price·
Payment date etc4. Particulars of Sales Contract Performa
These particulars include no. And date of contract, date till which that contract is valid, the amount of the contract, name of buyer of contract, destination of the goods, and shipment date of the goods in
Case of already exported goods, value of goods yet to be exported, no. Date and amount of re-finance loan obtained from State Bank of Pakistan and due date of repayment of the re-finance loan.
5. Telex
It is sent by the buyer in which he informs the seller that due to some crisis in the international market he is not in a position to open the L/C against that contract so please treat the contract as cancelled.
6. Undertaking by the Exporter
Exporter finance has been availed against this sales contract or will be availed of by us against this new firm order or against a portion of the transferable L / C duly transferred in the name of above exporter or against the firm export order (s) in relation to which under noted L / C or a transferred portion of it was received from our bank or from any other bank under Part-1 of the export Finance Scheme, and the export proceeds realized against shipment (s) made under the aforesaid documents have not been / will not be accounted for matching purpose by the aforesaid exporters under part 11 of Export Finance Scheme.
7. Certificate to Be Given By the Bank in Cases of Substitution of Firm Export Order / Letter Of Credit under the Export Finance Scheme:
This certificate is issued to certify that they availed of no finance against this contract. It includes the particulars of the new firm export order(s) and L/C (s) a portion of transferable L/C, which includes no. And Date of L/C, date till which that L/C is valid, amount of L/C, name of buyer, Destination, last date of shipment, goods already exported, Date of shipment of above goods, Value of above goods, Value of goods yet to be exported, Date of which above goods are to be shipped.
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Shipping Documents
After receiving these documents, the Shipping Documents must be submitted within three working days. .
The following documents are submitted which are the proof of shipment.
1. Invoice
2. Bill of Lading
3. E Form
4. DE Form “2” & Form ED-I
1. Invoice
Invoice indicates the particulars of contract, size of commodity, quantity, quality, price and packing.
2. Bill Of Lading: (B/L)
B/L Indicates the exporter’s name; notify party, quantity, and quality, and destination, port of issue and date of issue of exported items. The shipping company issues it.
3. E-FORM
E- Form is submitted under foreign exchange regulation Act 1947.
4. DE FORMS 2 & FORM ED-I
This form indicates the bank name, demand loan No., type of commodity, contract L/C Nos. shipment date, amount of shipping goods, sales contract No., issue date, amount, date of obtaining finance and %age of commission.
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RETENTION OF FUNDThe amount of document is paid to SBP then it is usable by the exporter after repaying the loan the amount is useable by the exporter. For example; if the contract is at sight then the amount is received within 15 days and it is sent to the State Bank of Pakistan and not useable by the exporter after repaying the loan the amount is useable by the exporter. This amount is repayable within 3 working days if it is not paid then the bank has right of retention of fund.
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LOAN MATURITYOn the maturity date the exporter has to repay the fund if amount is receivable after maturity date then the exporter has to pay the loan on his own sources.
The loan may be matured at sight 15 days to 120 days if more days are required then permission is taken from SBP.
EXPORT PROCEEDS REALIZATION CERTIFICATE
If amount is paid by own sources then after the amount is received the exporter has to send EPRC to SBP.
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Collection And Negotiation Of DocumentsDocuments sent to banks mostly on collection basis as well as negotiation / discounted.
1. Collection Basis
These are forwarded to any bank without negotiating exchange rates. On payments if the exchange rate of submission bank is better than the other we will credit the same bank.
2. Negotiations / Discount:
We sell out our export documents depending upon better exchange rates of competitive banks.
PREPARATION OF IMPORT DOCUMENTS
1. Proforma Invoice / Indent /Contract
Indicates applicant’s name, to be shipped from Export country to import country, payment mode by L/C (type) e.g. irrevocable & unrestricted L/C at sight, Shipment time e.g. within 2 months after receipt of L/C, place of delivery e.g. C&F Karachi by vessel e.g. Validity until August 01, 2001, items, description, quantity, unit price, amount.
2. Covering Letter
This indicates the detail and price of the imported items.
3. Application for Opening of Letter of Credit
In which request is made from bank to open L/C for the attached Proforma invoices.
4. Form I
Application for permission under the Foreign Exchange Regulation Act, 1947 is made to purchase foreign exchange for payment of imports. It indicates NIT No, place of issue, date of issue, authorized bank, currency, beneficiary’s name and address, Indenter’s name and registration No., description of goods, port of shipment, carrying Co.’s name and applicant’s name and address.
5. Appendix-B
This certificate is given to the bank for export of chemical.
6. Appendix-G
This certificate is given in addition to appendix-G for import of spare parts & machinery. It is not necessary to submit this document with L/C opening documents. But is not necessary to submit it at the time of retirement because the bank endorses it properly and it is used for shipment.
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Particulars of Appendix G:Name and address of importer, location of industrial unit with full address, name of industry, detail of machinery, products manufacture, date of original established of the unit, no, date of Government Sanction/Approval whether the unit was originally established against imported or local machinery, income tax particulars, brief description of machinery required along with H.S. Code No, purpose for which machinery required that may be for one of the following: -
a) New Unit
b) Expansion
c) Balancing
d) Modernization
e) Replacement
Particulars of previous imports under expansion, rated capacity of new machinery applied for, brief description of raw material and estimated annual imports requirements.
7. Applications and Agreement for Commercial Letter of Credit
This prescribed form is given by Bank, which includes;
·
Type of letter of credit·
Beneficiary& amount·
Applicant& advising bank·
Transshipment/carriage docTo be presented within 15-21 days after the date of issuance of the shipping document(s) but within the validity of the credit, payment period, signed invoices that goods are of exported, country of origin & B/L.
8. Insurance Arrangements
Insurance of goods are made against the damages. This amount consists of total amount of goods plus 10% cushion.
The insurance Co. certificate indicates: (1) Marine Cover Note No. (2) Date (3) Issuing date.
9. H.S. Codes
These are codes used by custom department for imported commodity.
10. L/C Opening
1) Application
2) Performa Invoice
3) Insurance Cover Note
4) Form I
5) Appendix-G.
11. L/C Scrutiny
When the L/C is prepared by bank, then it is checked by import department with the L/C documents hold by the Department.
12. L/C Amendment
Sometimes L/C is amended e.g. expiry date, shipment date, amount, indenter is involved etc.
13. Import Documents / L/C Retirement
When L/C is reached to the bank then bank demands the amount of L/C from importer. Importer contacts the other bank for buying the foreign currency and advice the bank to deposit the amount in the bank in which the importer opened this L/C then the bank retires the document of importer L/C.
14. L/C Retirement Doc. and B/L
These documents are given to the clearing agent for clearing the consignments. Then he requires the cheques of the amount of custom and other charges/duties. Then the required amount is to be sent for costing in the Costing Section to check the exemption.
15. Bill of Entry
In which every concerned party gives its remarks and stamped one copy and is sent to the SBP, one copy is sent to the custom department and the Company itself retains one copy.
L/C’S PARTICULARS
a) L/C type, no. & Amount
b) Date & Place
c) Favoring party
d) Applicant
e) Signed commercial invoices indicate the value not more than L/C’s value.
f) Full set of clean “on Board” marine Bill(s) of lading
g) Insurance buyer’s care declaration of each and every shipment is to be advised to Insurance Co. A-Copy of insurance declaration to accompany the original documents.
h) Packing list requirements
Special Instructions
1. Outside bank charges are on beneficiary’s a/c
2. This L/C is available with any bank in Exporter’s country
3. Goods shipment from export country port to import country’s port.
4. Partial shipment allowed / not allowed
5. Transshipment allowed / not allowed
6. Shipment on enemy’s flag vessels and / or parts strictly prohibited
7. Doc. must be presented for negotiation within 15 days after the date of shipment
8. All shipping docs. Must show H. S. Code
9. Short Form / Blank Back B/L(s) not acceptable
10. Shipping Co.’s name also indicated.
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All Pakistan Textiles Mills Associations (APTMA)It is an association of textile industry. It is non government body and acts as a pressure group.
Functions
Following are the major functions performed by the APTMA.
1. Talks with government
If a certain textile industry is facing problem, or there is any government intervention MA hold talks with Government to settle the disputes. So it acts as an intermediate party between government textiles industry.
2. Conduct seminars
It regularly conducts seminars in which renowned persons are invited to share their experiences in the field of textiles.
3. Arrange lectures
Foreign delegations are also invited for prospective investment in textiles sector.
It is a facilitating unit/body. If textile unit is worried about taxes, it is the APTMA on which this matter will be frequently discussed.
Nishat mills limited are an active member of APTMA. There is another non government organization known as ALL PAKISTAN CLOTHS EXPORTERS ASSOCIATION. Its member through ballot chooses governing body of APTMA.
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QUOTA SYSTEMMost of the customers are American and US Government allocate quota to third world. Infect quote is in quantitative and more than that can be shipped to non quota countries, like UEA, JAPAN,NEWZELAND and AUSTRIALIA.
Kinds Of Quota
There are four kinds of quota,
I. First come first serve
II. One time quota
III. Auction quota
IV. Regular quota
i. First come first serve quota
This type of quota is granted by Export promotion bureau through APTMA to those exporters who finds buyer in foreign quota country.
ii. One time quota
This form of quota is granted only once. It is usually granted for export of cloth. This type of quota is non-transferable. It finishes when exporter export products to foreign importer.
iii. Regular quota
This type of quota is granted on the basis of past performance and ability of exporter to find buyers in foreign market.
iv. Auction quota
This type of quota is available through auction. Whosoever bids high gets the quota. Nishat mills limited not only fulfills it regular quota but also acquire it from auction.
CLAIM FOR REBATE.
Rebate is actually a “duty draw back”. The duty which an importer pays to government for the product that is re exported after some process, then government pays back some of its part. This pay back of duty is called rebate.
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Export Rebate DepartmentThe export rebate department is charged with the responsibility of drawing duty back. Government of Pakistan is providing relaxation/incentives for the export of textiles product, for example different rates are for different categories of export cloth and mentioned. These rates are subject to change and modifications
Functions
Function of export rebate department start with exporting cloth or cotton made items to abroad. if these items are included in that list on which duty can be withdrawn under the orders of federal government then export documentations department sends rel