Ahmad Fine Textile Mills

Ahmad Fine Textile Mills Ltd.
AHMAD FINE TEXTILE MILLS LIMITED

STATUS
The Company is limited by shares incorporated in Pakistan on December 13, 1989 under the Companies Ordinance, 1984 with an Authorized Capital of 10000000 Ordinary Shares of Rs. 10/- each i.e., Rs. 100000000/-. The Issued, Subscribed and Paid up Capital of the Company is 3800000 Ordinary Shares of Rs. 10/- each full paid in cash i.e., Rs. 38000000/-
NATURE OF BUSINESS
The Principal Business of the Company is Manufacture and Sale of Yarn and Cloth.
MANUFACTURING UNITS
The Company has two manufacturing units, one is spinning unit and the other is Weaving unit. The Spinning Unit is located at District Rahim Yar Khan and the Weaving Unit is located at District Multan in the Province of Punjab.
OFFICES
Head Office of the Company is located at Ist Floor, International Plaza, Bohra Street, Multan Cantt. Sub Office is located at 35-KM, MultanBahawalpur Road, Near Adda Basira, Multan. Another sub office is located in the Spinning Unit at Rahim Yar Khan.
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AUDITORS
M/S M. Yousuf Adil Saleem & Company, Chartered Accountants, a member of HLB International, a world wide organization of accounting firms and business advisers. 2nd Floor, 6-Commercial Plaza Opposite Civil Hospital Abdali Road, Multan.
FINANCIAL YEAR
Financial Year of Company starts on Ist October and lasts till September. 30th
BANKERS
Muslim Commercial Bank Limited. Habib Bank Limited. Askari Commercial Bank Limited.
PRODUCTS
Major Products of the company are Blended Yarn Grey Fabric
RAW MATERIALS
Raw materials of productions are Ginned Cotton, Polyester and Yarn.
WORK FORCE
The Company has a total work force of 743 including skilled and unskilled.
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CAPACITY
Number of Spindles installed Number of Spindles worked Number of Shifts per day Number of working days Installed Capacity after conversion Into 20/s count kgs Actual production of yarn after conversion into 20/s count kgs 7626423 5632450 03 365 17280 17280
PORTION OF EXPORTS
The Company exports more than 90% of the produce.
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MISSION STATEMENT
To produce superior quality of Yarn by focusing on customer demand in order to face the competition in international market and at the same time taking care of its employees, suppliers, shareholders and society.
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PURCHASE DEPARTMENT
The purchase department is divided into to two sections, cotton purchase department and store purchase department.
PURCHASE DEPARTMENT
COTTON PURCHASE
STORE PURCHASE
COTTON PURCHASE DEPARTMENT

Cotton purchase department is most important department in textile industry. Quality of yarn depends upon cotton that has been purchased. It becomes most important when there is business of export. There is no question of compromise on quality. Because your minor mistake may result in huge losses. Moreover you will loss your credibility. From director to cotton selectors all are involved in cotton purchase process.
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PURCHASE PROCESS
The following steps are involved in the purchase of raw material i.e. cotton. Demand of purchase from mill
Purchase Requisition
Sample from different suppliers and quotations Sample Testing Decision-making
Agreement with the Party Receiving Writing delivery order for factory
InGate pass + D.O + Purchase Invoice + Purchase Requisitions are supplied to accounts
department
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VISIT OF COTTON SELECTORS

The cotton selectors of AFT visit the cotton ginning factories. Cotton selectors may visit the factories on their own behalf and some times the cotton factories call them. Their visits are very important because purchase process starts from here.
SELECTION OF SAMPLE
Samples are selected from huge amounts of cotton. Samples are taken from different suppliers. These samples are then tested. The most suitable sample at lowest price is selected for Purchase of cotton. As there is centralized management system so the Director himself takes the decision of selection and purchase of cotton. In other words Director is final authority in making decision.
STORE PURCHASE DEPARTMENT

The store purchase department is headed by Stores Incharge. The setup of purchase department is as under: Director Purchase Officer Assistant Purchase Officer Purchase Clerk The store purchase department is responsible for the purchase of items like Spare parts of machinery, store and Packing material spares, electric items, oil and lubricants, Stationery items, Building Material, and General Store,
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DOCUMENTS
Demand Requisition. Invoice of Purchase Delivery Order In Gate Pass
PROCEDURE
The following is the procedure for local purchase department. The purchase department receives the demand requisition from store in charge at store at mills this is in fact an intention or requirement of commodities at mill The purchase demand requisition contains a full detail of quality and quantity of commodities required. It also contains price detail of goods purchased previously The purchase department on the basis of indent does an inquiry for rate from at least two suppliers from approved suppliers list. After inquiry Purchase Manager discusses with Director for approval of rate and other necessary requirement. After the approval the Purchase Department purchases the items from suppliers and sent them to the mill with three copies of delivery orders In case of no rejection of items store in charge send one copy of delivery order back to the purchase department along with one copy of In Gate Pass. Store in charge also keeps a copy of delivery order and in Gate Pass for his own record. In case of rejection of items store in charge sends all copies of Delivery Orders with items back to the purchase department at Multan Office of AFT.
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IMPORT DEPARTMENT
AFT has also an import department. The import department is responsible to import those items, which are not available in Pakistan. The structure of this department is as under:
Chief Executive Director Senior Manager Import Assistant PROCEDURE

Senior Manager is responsible for import of machinery, equipment, spare parts, raw material, etc. An indent for import of item after the approval of Chief Executive is sent to import department. The Senior Manager Import selects a subcontractor from approved suppliers list. In reply, a quotation from the subcontractor is received .A copy of quotation is sent to concerned department for evaluation and checking of specification. The received items are sending to the mills where these are opened. The items are checked against quotations. In case of any damage, the import department is informed immediately. Import department do the necessary arrangements for survey of goods from insurance agencies
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ACCOUNTS DEPARTMENT
Accounting is the art or science of interpreting, measuring, and communicating the results of economic activities whether you are paying your phone bill, balancing your checkbook, preparing your income tax return or managing an international corporation, you are working with accounting. Accounts Manager makes the important financial decisions with consultation of Director and Chief executive of company. Record of all departments like import department, Export department, Purchase and sale department, are maintained here. So this department feels a burden of work. Accountant is very much busy person who gives instructions to six members of finance department and checks their work time-to-time .His ten-year experience has made the work easier for him. All types of tax rates, recent changes in tax policies, different codes, companies names are on his fingertips. The accounts department is responsible for the entire accounting process of the organization regarding the recording of transactions, designing the accounting policies and accounting system, preparing financial statements and computer application. If we consider a company a cell then we can say that accounts department has role of nucleus. Without accounts department there is no possibility of doing business even sight weakness on the part of accounts department can badly effect the performance of whole organization.
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FUNCTIONS OF THE DEPARTMENT

Very first and an important function of accounting department is recording the business transactions on vouchers. This is also called process of vouching. This is made for internal record keeping. Auditors specifically audit vouchers. Wrong vouching will lead to error in the system and ultimately create problems. From vouchers information is recorded in daybook and cashbook. As each voucher along with its invoice, DO and other necessary documents are kept in the record room so daybook is one that can give information about parties DR and name of account CR along with amount. In order to see accounts in condense form ledger is used. From daybook all the entries are posted in ledger. Ledger represents DR or CR balance of each party. So from ledger we can see amount that is to be paid to a party or the amount that is to be received and the balance at the end of the month. After this all the DR balances and CR balances of all the parties are posted in trial balance. The trial balance must be equal at both sides. Otherwise there is any error in recording the transactions. Now trial balance becomes the source of profit and loss and balance sheet. This department also designs the accounting policies. All the work in this department is being take place on accrual basis. The department prepares trial balance at the end of every three months and Profit and loss accounts and balance sheet are prepared at the end of year. The financial year ends on september30 of each year. The financial statements are presented to shareholders
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THE SETUP OF DEPARTMENT
Chief Accountant Accountant Accountant Asst Accountant Computer Computer Operator Operator Cashier Cashier Record Keeper Record Keeper
The accounting department is mainly divided in to following three sections: 1. Stores section 2. Salaries and Wages Section 3. General Accounting STORE SECTION Store section is mainly concerned with store accounting. This section deals with many accounts heads that are concerned with stores. Such as stores &spare A/C, oil and Lubricant, Packing material A/C, General Store A/C, Building Material A/C and many others. The major responsibilities of this department are
To record the store purchases To record all store issues To prepare various reports relating to store i.e. material consumption report, party wise purchase report To keep a check on all stores by surprisingly checking their record and physical existence of items stored. Because of the above mentioned duties. This section has a key position in the company. No payment is made to any body unless it is checked and verified by this section. SALARIES AND WAGES SECTION This section is responsible of making payments to the employees. This section plays an important role in safeguarding the interest of the company as well as employees. This section also insures all the labor laws; certain laws relating to company are as under: Leave Procedure There are three types of leaves. Sick Leaves Sick Leaves are eight in year Casual Leaves Casual Leaves are ten in each year Annual or Earned Leaves There are twelve earned leaves. Companys rule doesnt allow any employee to do four-day leave without application. In case any employee does so then he cant avail annual leaves
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Attendance Allowance Leave encashment is given to those employees who save their holidays and dont avail them. This is given according to their per day salary multiply with number of days of holidays not availed. Salaries and Wages Minimum salary is not less than Rs1950. The breakup of salary is as under Basic Salary Badli allowance Cost of living Allowance House Rent Allowance Utility Allowance Special Allowance Income Tax Income tax is deducted from salary of all those employees whose annual salary is greater than Rs.40000.An entry is passed on voucher while deducting income tax and this is paid to tax department Advances and Loans Advances and loans are given to the Employees on their application and are adjusted against their salaries every month. It is the sole discretion of the management whether they approve advances and loans are not Gratuity Amount of gratuity is deducted from salary of employee with passage of time and he gets a lump sum amount at retiring time ________ 50 18% of basic salary 10%of basic salary 10% of basic salary 300
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ACCOUNTING SYSTEM
Accounting System at here is centralized and on accrual basis. All accounts are maintained in Multan head office. The process of accounting system starts from the preparation of voucher. The following are different types of vouchers prepared at AFT Mills: Journal Voucher Bank Voucher Payment Voucher Credit Voucher JOURNAL VOUCHER (JV) As accounting system is on accrual basis, so accounting entries are passed on journal voucher at first step. This is also known adjustment voucher. This is prepared for adjusting entry. Vouchers are prepared after every transaction. Accounts Manager and Director verify the voucher respectively. If they have any question they can ask relevant person if there is no enquiry then they will put their signatures on voucher. Now it is time to record these vouchers in books of accounts. BANK VOUCHER (BV) Bank voucher is used when any transaction is made with bank . Amount may be drawn from bank and can be deposited in bank. You can receive DR advice or CR advice from bank
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DR ADVICE When issued by bank, it means bank has deducted some amount from your account or when has been made through your account CR ADVICE When issued by bank to you, it means some amount has been added in your account .It normally takes place when some foreign remittances has been received by bank in your account. This is usually sent by your customer in foreign country to which exports has been made. PAYMENT VOUCHER This voucher is prepared at the time of making payments to any party. Party name is debited with the amount to which payment has been made. Payment vouchers are used for the payment up to Rs.5000. Payments more than this are made through bank CREDIT VOUCHER As name of voucher represents, this voucher is prepared when some amount is received from any party. In this case party name is credited by the amount that has been received IMPORTANT BOOKS Cash Book Bank Book Bought Day Book
Sale Day Book
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CASH BOOK In this book cash payment and cash receipt vouchers are recorded on daily basis. The vouchers are numbered serial wise and cash-closing balance is calculated on daily basis. BANK BOOK This book is maintained for all the bank accounts of the company. When any amount is withdrawn or deposited in the bank that amount is also recorded in the bankbook. At the end of month bank account is reconciled with the statements of the banks BOUGHT DAY BOOK The bought daybook is maintained for recording the purchases made by the company. The balances from the bought daybook are entered in the relevant supplier ledgers. At the end of the month the balances from the bought day book is posted in the main ledger for control purposes SALE DAY BOOK In this book sale bills are entered and then posted in the customer ledger. At the end of month balances are posted in the main ledger for control purposes. When the transaction is properly recorded in the books of accounts then these balances are posted in the ledgers. The following are the types of ledgers maintained in this organization. Main ledger Profit &Loss Ledger
Customer Ledger Supplier Ledger Staff Ledger MAIN LEDGER It is a control ledger, which maintain all heads of accounts from which balance sheet is prepared. All assets and liabilities accounted, profit&loss, customer, supplier and personal Ledger are maintained in it. Posting of sub ledger is made in main ledger on closing of month. From basic books like cashbook, bank book, bought daybook and sale daybook. At the end of month trial balance is prepared to check the accuracy of accounts maintained during the month by observing the debit and credit balance as they are equal or not. PROFIT AND LOSS LEDGER In profit and loss ledger all accounts of income and expenses are maintained .The following are the heads of accounts maintained in the profit and loss ledger: Sales Account Local Sales Export Sales Commission on sales Excise duty on yarn Export development Charges Manufacturing Expenses Administration Expenses
Selling Expenses Financial Charges Miscellaneous Charges MANUFACTURING EXPENSES They are like purchase of cotton, wages and salaries, fuel and power, insurance, repair and maintenance of plant, packing material and depreciation. ADMINISTRATION EXPENSES These are traveling expenses, salaries, communication expenses like fax, phone and telex, rent, electricity, entertainment, advertising, vehicleup charges, depreciation, printing and stationary expenses SELLING EXPENSES These include export expenses, corporate freight, ocean freight, trailer freight and local selling expenses FINANCIAL CHARGES They are like interest on long term loan, markup on short term finances, exchange risk coverage fee, commission on bank guarantees, letter of credit commission, excise duty on long term and short term finances. MISCELLANEOUS CHARGES Miscellaneous charges include auditors fee, legal and professional charges, donations, fines and penalties.
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CUSTOMER LEDGER It is maintained by company in which all accounts are opened to whom the company sells yarn. Posting in customer ledger is made from cashbook, bankbook and daybook. The balances of customers are worked out daily and the report of receivables is prepared daily and submitted to the management. SUPPLIER LEDGER In supplier ledger the goods supplied by the parties is recorded. Partys account is credited and goods purchased are debited. PERSONAL LEDGER To record all transactions relating to the personal accounts of employees of the company, this ledger is used. Advances and loans made to the employees, and the monthly deductions from their accounts of loans are recorded.
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INTERNAL AUDIT DEPARTMENT

Audit means checking the accounts prepared by others with a view to express an opinion. An auditor is appointed to go through the accounting and other records. Internal audit is essential for large-scale companies. It is a review of operations and records under taken within a business by specially assigned staff. The management can appoint staff to go through the business activities. The suggestions given by auditors can be applied for the business benefit. This organization has also a separate department for performing the internal audit. The internal auditor heads this department. The audit department develops audit program before conducting an audit. this department works on continual basis. The internal auditor of the company visits the mill on weekly basis and conducts the audit according to the checklist framed by the internal audit department. The department is responsible to keeps its eyes on the implementation of management policies. This department is also responsible to inform the top management regarding the accuracy of all accounting information and their analysis
MAIN FUNCTIONS OF THE INTERNAL AUDIT DEPARTMENT

Following are the main functions of internal audit department: REVISION OF THE SYSTEM The internal audit department revises the system if there arises any discrepancy.
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CHECK ON THE SYSTEM The internal audit department checks whether the revised system is being followed or not, if there arises any deviation that is reported to the management. CHECK ON THE MANAGEMENT POLICIES This department also examines whether management policies are being followed or not PROPER MAINTENANCE OF BOOKS OF ACCOUNTS The internal audit department also examines that whether books are being properly maintained as required by the Companies Ordinance 1984. Assets Safeguarding This department also safeguards the companys assets. MAIN FUNCTIONS OF INTERNAL AUDIT DEPARTMENT AT THE HEAD OFFICE MULTAN. Checking of posting from clock cards to wages sheets Price Checking Recovery of advances Checking of rebates and discounts Continuous checking of assets of the company Checking of Bank vouchers, Journal vouchers, Payment vouchers, Credit vouchers Checking of trial balance statement after every three months. Checking of bank reconciliation statements every month. An internal auditor can check any document at any time or can ask the accountant to provide the necessary documents.
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PRODUCTION DEPARTMENT
Ahmed Fine Textile Limited Company has a Spinning Unit which is situated at District Rahim Yar Khan. This unit is equipped with highly modern and automated machinery. Following sections are there in their Production Department or Spinning Unit.
PLUCKER ROOM
Now a days most of the Spinning Mills are using the Auto Plucker Plants. The function of this plant is the breaking and opening of the bales of cotton. The cotton in these bales is in the pressed form. It cannot be used for further processing until and unless it is opened and made in the loose form. Firstly the cotton bales were opened manually but in that way, so much cotton was wasted and instead of remaining clean it became dirtier. Further more it took a lot of time. Along with opening, the blending of different lots is done in this plant, a lot is consisted of 100 bales of cotton. For blending the bales contain the specifications as given below: Lot Number Station Kind of Cotton/Quality of Cotton Weight
CONDITIONING
Conditioning is a term, which is directed towards a task in which the opened cotton from plucker room is placed in open form before feeding in the Blow Room. In this way the cotton absorbs the air and automatically comes into
loose form, which is helpful in the smooth functioning of Blow Rom machines. For the purpose of conditioning the cotton poles are allowed to lie for 12 to 16 hours.
BLOW ROOM
The main function of the Blow Room is cleaning and purifying the cotton. In Blow Room, the raw cotton is first time processed. Input of this room is the raw cotton while the output is the lap. In Blow Room, the Bale Breaker machines are installed. These perform the function of breaking cotton into the loose form then cotton is passed artificially the lighted path so that any impurity such as stones, clots can be removed. The Bale Breaker machine contains the beaters in them these beaters move the cotton into different ways and open it the spikes installed on the edges help in splitting the cotton.
DISTRIBUTORS
These are the pipes through which the cotton is sent to Scutchers where the raw cotton takes the shape of final product of Blow Room. Firstly, the cotton was put into scutchers manually therefore lot of cotton was wasted but now the help of distributors the cotton is not wasted.
SCUTCHERS
These are the machines where output of Blow Room Lap is shaped.
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HOPPER FEEDERS
Hopper Feeders are used to regulate the flow of cotton to Scutchers. These ensure the uniform supply of cotton to scutchers.
KRISCHNER BEATER
These are the beaters installed in scutchers. They perform the function of opening and cleaning. They contain wooden laps and spikes which are installed on the edge of these .
CARDING SECTION
The completed lap, which is the output of the Blow Room, is the input of the Carding section. So, the out product is the Card Sliver. Here the laps are opened, cleaned, drafted and short fiber is extracted from the Card Sliver. Sliver is fiber of cotton in the shape of thick rope. Drafting in the process in which the length of the cotton fiber is increased through automatic machine process. The lap, which is raped on the lap rod, is placed and feeded to these machines, these machines perform different functions to covert this lap into Sliver. The production speed of the carding machines is 122m/m. The rollers and cylinders in these machines, which perform these functions, include the followings: Feed Roller Taker in Cylinder Doffer Stripping Roller
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DRAWING SECTION
Here the functions including doubling, drafting, and parallelization and straightening are done. Doubling refers to the doubling the length of cotton fiber. This section is divided into the two sections including the Passage 1 and Passage 2.
DRAFTING
In drafting the length of the fiber is increased 50% that it can be converted into yarn/
PARALLELIZATION
In parallelization process the fibers of the sliver rope are make in the parallel form to each other this is done along with drafting the sort fiber is extracted.
STRAIGHTENING
Here the fibers are made the straight, the hooks of the fibers are removed, and all the zigzagging is eliminated to reduce the waste.
FINISHER DRAWING
Here the input is breaker drawing sliver, the cross canning is done also in this section as was in previous section so as to bet evenness sliver.
PRE COMBER
Here the pre combing machines are used the main objectives of which are the followings: Parallelization Removed of short fiber
Doubling Straightening Drafting
LAP FORMER
Lap former is the machine, which are reserved for the formation of lap of drawn, breaker sliver. Its main purpose is lap formation by doubling. 452 cones are used for making one lap. In product here is breaker sliver while the out product is the comber yarn. The lap is rapped on the plastic bobbins. Yellow bobbins are used for the combed yarn while the Pink and green are used for the carded yarn.
COMBER
Comber machines perform two basic functions: Parallelization Extraction of short fiber
SIMPLEX SECTION
Here roving machines are installed, the functions involved are twisting, and drafting in twisting the machine twists the thread so as to make it cohesive. In this way the string gets the strength and cannot break easily so ensuring the smooth functioning of the machines. Here the in product is finishercombed sliver and out product is the Roving. The relative humidity needed is 55% to 60%. Weight of roving package is 1.52 kg.
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RING SECTION
The main function of this section is drafting and twisting, 32 ring frame has been installed in this unit. The machinery in this section is the most expensive of all. Main functions of the spindles are to wrap the thread bobbins and the speed difference between speed of the spindles and of the rings is the cause of the winding but both travels in the same direction. There are overhead cleaners in this section they are moving overhead cleaner and ensure the cleaning in this section they by providing the air pressure, for two machines there are one overhead cleaner. floor. Here the input is roving package and the output is the Yarn. The waste material is extracted from the sucking pump in the plant these plants are installed on the
AUTO CONE SECTION

Here the yarn formed by the ring section is wrapped on cones. An important aspect about the cone formation is that different types of thread are wrapped on cones of different colors. Following features of Yarn are adjusted. Thinness of Yarn Thick places adjustment Short thick places Here if the thread breaks it is automatically rejoined and the waste is removed ultimately, overhead cleaners are also installed there.
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CHEESE WINDING SECTION

Some companies demand doubling Yarn production so for that purpose thread from two cones are twisted combines into one and wrapped into one cone this is the fine output.
PACKING ROOM
It is also yarn condition room the relative humidity is 90% and is provided to the combed yarn in this way the cotton regains the 8.5% moisture and it is the natural. The cones are then packed and different types of packaging is used for example for export purpose first it is packed into the polythene and then into the cartons and the cartons contain all details about the yarn including Count Brand Gross Weight Net Weight The final mark that is Made in Pakistan is placed.
TYPES OF PRODUCTION REPORTS

Different types of reports are prepared when yarn is received from the spinning section an all records are maintained completely. These are as under: Yarn Report Waste Report Daily Cotton Consumption Report
Efficiency Report (Spindles Worked) Daily Production Report
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QUALITY CONTROL MANAGEMENT

Quality Control refers to setting certain standards for production and matching production with those standards. Management of every company is specially committed to the good quality both in production and end results. The Management of AFT has been successful in creating and maintaining the quality culture in the organization. Daily quality report is sent to headquarter and it is checked here. Sine 90 to 95 percent of production is exported; therefore, it is highly intensified. Following are the characteristics of the Yarn that are checked for the equality assurance: Weight of Fiber Length and Strength Dia Weight and Final Yarn Evenness of Yarn Relative Humidity Temperature
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MARKETING MIX
Marketing mix is the set of marketing tool that the firm uses to get its marketing objective in the target market.
PRODUCT
AFT is dealing in the textile area, the products which the AFT is manufacturing is the yarn and the grey fabric. AFT is producing the best quality yarn there and the different types. The construction of the grey fabric differ due to the differ in the quality of the yarn. There are counts. AFT produces the yarn of different counts. From 1 count to 20 count yarn& above, according to the specification of the customers. AFT exports about 95% of its produce to the foreign markets. It exports to the Europe, Asia& the other neighboring countries. Due to the spinning unit. AFT has an advantage in the weaving, that they use their own yarn in the manufacturing of the grey fabric also has the different quality constructions. The combed & the carded yarn. The combed is the yarn which is more refined on compared to the carded. The products are produced according to the specification of the customers. AFT also sells & purchase the products from the local market to fulfill its orders. These products are building the image the progress and developments of the organization.
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PRICE
PRICING OBJECTIVES
The obvious pricing objectives, of AFT. Maximization of profit To achieve the target return and targeted sales. Maintain the market share. PRICING METHOD The pricing method AFT is adopting is profit based. The AFT policy about pricing is that the profit should be reasonable. And also they keep in mind the competitors because they are also providing the products at the competitive rates. Fixed cost Variable cost
The total cost is calculated. while all the expenditure related to the products production are added. The total expenditure are divided by the production. There the per unit is obtained, also a margin is added. FIXED COST
Fixed cost in value, the cost related to the machinery.
Building cost. Electricity change. Salaries & wages Insurance expenses Plant cost. VARIABLE COST Part time workers. Transportation charges
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Miscellaneous. Fixed Cost + Variable Cost +Desired Profit

The profit margin depends upon the quality of the yarn and the grey fabric. As the high quality yarn is used in the construction of the grey cloth, then the price would be high. The price will be different to attract the customer and in local market.
PRICE METHOD FOR THE EXPORT

Pricing method for the export products is differ from the local pricing method. In the export, all the expenditure related to the export such as the custom clearance charges, port clearance charges, shipping line freight and other foreign agent commission is added. Also the charges related to the transportation and bank handling expenditure are considered while calculating the price of the export items.
PRICE METHOD FOR LOCAL

Pricing method for the local sale is different because all the cost involved in the export procedures is not included. So the price would be lower in this.
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PLACE/DISTRIBUTION
AFT exports about 95% of its produce. Therefore the distribution channel of the AFT is as follows.
AFT TO CUSTOMER
AFT is also dealing directly with the customers. As in the local market and the foreign, the buyers direct contact with the AFT. So the export department fulfill their orders by the transformers. The transporter help in delivering the products. The transporter are helping a lot in progressing the textile industry. The comely delivery to the buyer is the greatest service to the customer, timely delivery is important for the success and development of the organization. AFT has a direct contact with the shopping his and the port and customer clearance agents. They clear the containers from the port.
INDIRECT CHANNEL AFT to agent & to customer. In the export of textile products, the agents are the back bone of textile industry. They receive the order on behalf of the buyer, give to the seller. They receive their commission form the buyer and the seller. The agents also purchase the products, sell them directly to other buyers. So in this trading they earn enough profit. In Lahore & Karachi, there has been a large number of agents which are working for their organizations, in foreign countries as well as in this country. Mostly the export business is through these agents. The agents have been successful due to the credibility and honesty of their work. AFT mostly receive orders through agents, located in the Lahore and Karachi.
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AFT pays commission to them. Mainly the responsibilities lies on the agents in case of delayed shipments, payment problems and the quality problems. Mainly the products are exported through the different shopping lines. PROMOTION AFT promotes its products, but to a limited extent. AFT provides the company brouchers to the buyers. AFT provides the samples of the grey fabric. The yarn to the customers. AFT has a direct contact with the local and the foreign agents, so they also promote the company products. Visits to the customers. AFT marketing manager also visits its customers. Their high quality of the products on the fine count the Grey cloth is also promoting the company and establishing image and goodwill. AFT provides the timely information to customers which helps in promoting.
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EXPORT DEPARTMENT
Export department plays a vital role in any organization. AFT export department is headed by the export manager. The export manager supervises all the marketing & export activities. Export manager is also responsible for the exploration of local and foreign markets. He is also making efforts for the development and the progress of the company. OBJECTIVES 1) To increase the Export of the Grey Fabric and yarn. 2) To maximize the company profit by increasing exports. 3) Exploration of the new markets. 4) Market research making the better information system 5) Adopting the new technological a developmental changes in the field of textile. 6) To build the image a credibility of the organization. 7) To earn foreign exchange for the progress of the economy of the country.
FUNCTIONS
Following are the main functions of the export department. Export department is responsible for the production planning and the production follow up with the mill. Customer correspondence as well Export department also follow-up the local sale and purchase of the yarn and the Grey fabric. The important function of the export department is to make shipment schedule and the planning.
Visiting to the existing and new customer. Providing timely information about the production of the products to the customers which is also providing a service to its customers and promoting the company image. Improving the quality of the products with a collaboration with the buyer and the production department. Bank documents preparation and the follow-up. Preparing the custom documents Dealing with the agents and providing timely information to the parties. B/L follow-up with the shipping lines. Export system updation is also the responsibility of department. Preparing the quality analysis report and sending them to higher authorities. Maintaining the complete sale and purchase records Export department is helping in improving the quality and betterment of the products and the company. Providing timely information to the clients is the main service provided by the AFT export department.
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EXPORT DOCUMENTATION
Export procedure is a very lengthy process. It involves a number of documents required by the importer from the exporter. AFT export department carefully handle all the steps involve in it. Because a little bit of mistake can cause a great loss to the exporter and the importer. i. ii. iii. iv. v. vi. vii. ix. x. xi. xii. Indent Sales contract Letter of Credit Custom documents Packing list Bill of lading Bill of exchange Inspection certificate Form E Form M Shipping bill
viii. Certificate of origin
INDENT
Indent is the first export document which is send by the agents to export department. After the careful analysis of all the terms and conditions such as the quality description the selvedge, shipment date, piece length, price per unit, the packing and payments terms. It also contains the buyer name and the reference number of buyer or agent.
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SALES CONTRACT
The export department after the careful analysis of indent issues the sales contract. As they have the products and in the sales contract they confirm the terms and conditions of the indent, such as the quality, packing, payment terms, commission, shipment date and the price of the product. Issuing sales contract is the confirming the sale of the products to the buyer on the specified price. If there is changing made by the buyer or agent, so the later revised sales contract is issued by the export department. In which they can revised any thing, the shipment schedule, the price & the product specification. Export department handle carefully the steps of that procedure. Also the contract copies are sent to the agent, the buyer, the accounts and the audit department of the AFT for their record purpose.
LETTER OF CREDIT
Letter of credit is very important documents in the whole export procedure. Because without this the process could not be complete. L/C is a written instruction issued by buyers bank, authorizing the exports to draw in accordance with the terms and stimulate legal forms that bill will be honored. In the L/C all the term and the conditions are given by the buyer. What documents he needs. In the L/c there are important things mentioned there. 1. The Buyer name is there in the L/C 2. The bank of the importer is also mentioned. 3. The importer name and address is also given. 4. L/C number is mentioned on the top or the L/C
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5. Issuing date of the L/c, the expiry date of the L/C, the amount of L/C, the quantity of the products. 6. The complete description of the products and the rate. 7. The terms, either CNF or CFR, 8. The shipment date is also mentioned. 9. The port is given there in L/C. 10.The shipping line is given, so the exporter only sent the goods on that specific shipping line. 11.L/C terms are given, either it is 120 days, 90 days or sight from B/L date 12.On the L/C the rate per unit and the shipment schedule is give on what date the products would be shipped in what quantity. 13.Trans shipment or the partial shipment allowed or not is also there in the L/C
14. All the documents such as the invoices, the packing list, the certificate of origin and other inspection certificate are also mentioned as required by the importer.
TYPES OF L/C
Irrevocable or revocable Documentary or clean Un-confirmed or confirmed Sight The exporter has to fulfill the terms mentioned in the L/C. Both the importer the exporter are bound to fulfill their obligation mentioned his L/C
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TRANSPORT DOCUMENTS
The transport documents are very important because it provide the evidence that goods have been transported and it enables the importer to receive the goods from the custom authorities. As the order placed by the importer is ready on the due date, the export department issues the dispatch order to the mill. That the following quality should be dispatched on the containers specified on this L/C. The goods are loaded on the specified containers and they are sent to the Karachi port on the specified shipping line. AFT mostly does its shipment through the shipping companies. The shipping lines charge their freight and other charges are paid the agents as well as for clearance of the goods from the port. The agents handover the documents which involve packing list and invoices to the shipping lines. As the trailer number, the container number E form number, quality and the quantity is completely mentioned on this invoices. Mode By sea By Rail By Road By Air Document Bill of lading Receipt Road way bill Air way bill Carrier Shipping lines Railway service Transporters Air lines
NEGOTIABLE DOCUMENTS
In the negotiable documents the title of the good is transferred form one person to another when the existing holder produces the documents.
NON NEGOTIABLE
In the non-negotiable the title of the goods is non-transferable. In the exporting of good the number of the parties one involved.
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1) The firm or the company engaged in business of transporting products, such as the track company, shipping company a airline. 2) The exporter, who is exporting the goods to the buyer. 3) The importer who is importing the goods from the seller.
BILL OF LADING
Bill of lading is one of the most important documents in the whole export documents. Because without this the importer cannot receive their goods from the destination port. AFT first of all draft the bill of lading and that is sent to the shipping line. Bill of lading also contains the specifications related to the importer and the exporter. The name of the exporter, place, the importer, the bank, the quantity is mentioned, the quality with all the specifications required by that, the total value of the goods which are exported. The date of the bill of lading is mentioned. The shipping line and vessel name is given on B/L. B/L is a comprehensive documents that is issued by the shipping line. The date of shipment is also mentioned on that. Without this the importer cant clear the goods from the destination. AFT export department also very quick in follow up of the B/L because they have to transfer the information to the parties.
CERTIFICATE OF ORIGIN
Certificate of origin shows that the good which are being exported are originate from a country form which importer is allowed. These are required
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by the authorities in the importing countries. In order to satisfy and support a claim for the import duty. This certificate of origin may also be made by the consultants of the importing country in the form of consoler invoice or legalize the exporters commercial invoice. When explorer called for L/C, of is with the other documents by reference to the invoice number, L/C number and by quoting shipping marks and numbers in order to identify the goods.
PACKING LIST
Packing list is a document which involves all the complete list of the goods packed in the particular shipment. It is very important. Documents. It provides a convenience to the shipping and the clearance authorities.
FEATURES OF PACKING LIST

1) It usually shows the marks a number mentioned on the packages. 2) It shows the weight also. 3) Each package is marked by a number. 4) It shows the contents of each package, what is nature, quality and quantity of the package. 5) It provides a linkage with the other documents to reference to the invoice number, date, letter of credit number, date and vessel name.
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FORM-E
Form E is a document issued by the exporter bank. Through Form-E the SBP controls the overall exports of the country. The form-E declares that the export information given on the form-E are correct and will submit the duplicate and triplicate copy of this form to authorized bank. Form-E contains the following important informations. 1) Description of the goods, the quality of the goods exported. 2) The quantity of the goods. 3) The Terms of the L/C. 4) Destination of the goods. 5) The consignee bank. The importer bank name through countries the payment would be released. 6) The Invoice value of the goods in the exported. 7) The port form where the good are shipped. 8) The place from where good are cleared. 9) Date of the form E is also on this form.
CERTIFICATE OF INSPECTION
Certificate of inspection is also a important document, it is in those consignments where the importer wants to assure himself, about the shipment of the correct goods, in terms of the quality, description quantity and size. The documents should specifically identify to the goods by having a reference to the marks and numbers of the package and linkage to the other documents by reference to invoice number, the letter of credit number, the vessel name and the shipping line.
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BILL OF EXCHANGE
It is unconditional order in writing, addressed by a person to another, signed by person giving it, requiring the person to when it is addressed to pay on demand or at a fixed determinable future date. When the L/C is opened the B/E must be strictly drawn according to the terms and conditions of the creditor may be drown on the request of the applicant or on the bank request through which the credit is opened. B/E is also a important document of export.
SHIPPING BILL
The customer clearing agents issue the shipping bill. It contains the complete information about the export bank the importer name, the exporter name, the weight of the goods, (Net and gross weight), number of packages, amount in US$, quality of the goods, the container number, the exchange rate and rupee amount.
FORM-M
It is also an important. It is used to pay the commission to the agents. AFT receive this from the agents. On this the amount of the commission is mentioned against invoices.
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PEST ANALYSIS
POLITICAL
The government taxes and the procedures about the taxes collection also have impact on the textile sector. Govt. rules & the regulation about the textile sectors they also influence on the small and the large textile industries. Duty drew back is also an other, which is important. Export policies and the quota policies play a vital role in developing the future of the textile Mill. Custom rules regulation are major factors in importing the machinery and exporting the products, such as the Grey Fabric the Yarn. The export surcharges also have the impact on the competitiveness of the organization. The discontinuity in the policies have the negative impact on AFT.
ECONOMIC
Growth rate of the country is also important for the progressive textile industry. Inflation rate shows the level of prices. The high rate of inflation level leading towards the lower profit margin. Macro economy will also keep in improving the industry growth. Foreign investment is also boosting the economy. Govt. rules & regulations also have influence in the textile industry. The fiscal balance also have impact. It is reducing so the interest rate is also decreasing.
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Balance of payment is also improving it is a positive indicator for the development of textile sector. Govt. incentives to the export of textile products also play vital role. The rupee increasing so we are getting more foreign exchange.
SOCIAL
Social unrest and disorder is also influencing. Work force attitude is positive which is improving the growth and development of AFT. The culture and the social norms.
TECHNOLOGICAL
Technological developments in the machinery and parts have a great impact. Internet access is other. It is improving the efficiency & the time is reducing. It is a great facility to the exporters. Computer aided designs are also improve the overall productivity and the efficiency. It has reduced the time cost as well. Customers quick access to the information due to the fast communication channels. The new technological developments such as e-commerce, e-banking and information technology are improving the efficiency and productivity.
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SWOT ANALYSIS
STRENGTHS
Good know how about the textile business. Which is improving the progress of the company. Cheap labour is available to AFT which is reducing the per unit cost. The products are at compatible prices. Cotton is also available at cheaper rates. It has its own spinning unit and the weaving unit also. Which is reducing the cost of production. AFT has well qualified staff. AFT has a good financial resources. So they can invest in other textile related products. AFT has its better market information system. AFT has good relations with local and foreign buyers.
WEAKNESS
Delivery time is more due to this the shipment are delayed. Lack of HR resources development. Lack of promotional activities. AFT should do the more effort in promotion. There is more decentralization in AFT. Less competitive in the fine count. Our cotton fiber is Short .Which is decreasing our productivity in fiber.
Non-professional attitude. Which is decreasing efficiency. Per unit cost is not decreasing .So we are less competitive in count Fiber. AFT is not exporting value added products.
OPPORTUNITIES
AFT has opportunity to export to the U.S.A and the Europe markets. There is more scope of exporting to these markets. Govt. is also providing lot of incentives to the exporters. The AFT can move in horizontal and the forward integration. The decreasing interest rates on the loans. AFT has opportunity to explore new international and growth oriented markets for the exports of Fabric. AFT can play the role of agent. So they can save the commission which is paid to the agents. AFT can better the marketing techniques. The company should import the latest technology to decrease the per unit cost of the production. The company should go in dying process also. The company should make efforts to improve the technical skills of the labour and employees which will improve the overall efficiency and productivity of the organization.
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THREATS
Quotas are lifting AFT will face the major threat. AFT has a threat from the domestic and the international China, Thailand and Indonesia are the emerging giants WTO regime will be a great threat. The AFT will face tough competition in domestic and Political instability is also a major threat. Govt. strict policies about the textile sector. The unreliable agriculture sector.
competitors. in textile.
international markets.
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INTERNSHIP REPORT
ON
AHMAD FINE TEXTILE MILLS LIMITED
SUBMITTED TO:
MR. NAUMAN ABBASI

SUBMITTED BY:
MUHAMMAD NASIR RIAZ MBA-I MB-00-30
INSTITUTE OF MANAGEMENT SCIENCES,
BAHAUDDIN ZAKARIYA UNIVERSITY, MULTAN
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