AZGARD NINE LIMITED

2.5 Km off Manga, Raiwind Road, Pakistan Phone: +92 (0)42 111-786-645 Fax: +92 (0)42 538 3591 Website: www.AZGARD9.com

Supervised By: Saqib Hussain
Business Development Manager Email: Saqib.Hussain@azgard9.com

Internship Advisor: Tariq Hameed Alvi
Lecturer Management Sciences

Submitted By: Saad Mahmood
MBA-FA08-124

Submission Date: September 1, 2009

Azgard Nine Limited

Internship Report

Acknowledge

At first I am thankful to Almighty ALLAH and the Holy Prophet (P.B.U.H), their blessings have been have with me in all good and bad times. Then I’m grateful for the thorough support by my advisor Prof. Tariq Hameed Alvi for helping me determine the objective of the report and guiding me though to get to the end. He made me grateful with his valuable suggestions from time to time during my internship. I must thank Mr. Saqib Hussain (Business Development Manager) and Shah Bano ( Deputy Manager Marketing) for providing related information on which this project is based. He has been a great support from the choice of the topic, learning of different part of research and understanding the difference between theory and practices. I really should thank every other employee of Azgard9, whom I found during different phases of my internship. Most of them have been very open and friendly with me and provided me with the answers I needed from them. They were the constant source of inspiration and encouragement that helped in completion of my internship.

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Table of Contents
Page

1. Executive Summary 2. Industry Overview
2.1 2.2 Textile Industry Spinning Industry

1 2
2 3

3. Introduction of Organization
3.1 3.2 3.3 3.4 3.5 3.6 3.7 3.8 3.9 3.10 3.11 3.12 3.13 3.14 History of Azgard9 Company Vision Company Mission Core Values Corporate Philosophy Code of Business Principle Products Services Name of Department Name of Unit Structure of Unit Culture Customer Markets

6
7 7 8 8 9 9 10 10 10 10 11 12 12 12

4. Introduction of Business Division
4.1 Spinning and Specialized Yarn 4.2 Spinning Process 4.3 Denim Fabric Division 4.4 Denim Fabric Process Flow Chart 4.5 Garment Division 4.6 Garment Division Process Flow Chart

13
13 14 15 16 17 18

5. A Managerial View
5.1 Departmental Flow Chart of GBU 5.2 Planning Process and Tools / Techniques 5.3 Organizational Structure and Design 5.4 Communication 5.5 Motivational Techniques Used 5.6 Controlling Authorities 5.7 Control Approaches Used

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19 20 36 37 39 39 39

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6. Structure, Design and Issues
6.1 Divisions and Groups of its Units 6.2 Azgard9’s Business Include 6.3 Graphic Distribution of Azgard 6.4 Structural Dimensions 6.5 Contextual Dimensions 6.6 Decision Making 6.7 Conflicts and their Resolution 6.8 Power and Policies

40
40 40 40 40 41 41 41 41

7. Strategies & Analysis
7.1 Competitive Strategy 7.2 Marketing Strategy 7.3 SWOT Analysis 7.4 Financial Analysis

42
42 42 42 43

8. Core Internship Experience
8.1 Hierarchy of Marketing Department 8.2 Export Section 8.3 Export Order Execution 8.4 Procedure Inquiry 8.5 Production Mix 8.6 Local Sale Section

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44 45 46 46 50 51

9. Conclusion 10. Recommendations 11. Bibliography 12. References 13. Glossary

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1. Executive Summary

This report consists of my six weeks internship at Azgard9 Limited which is situated at Manga, Raiwind Road, near Lahore. Azgard is consistently focusing on improving performance so that risks can be left far behind. Azgard is a responsible entity which is highly committed to comply with the corporate, envoi mental laws and to conduct their business with utmost honesty and sincerity. At Azgard it is believed that development can only be achieved by equality and respect at work place. They have been doing it for decades and there is no doubt they are reaping its benefits. The Company’s management, combining innovative strategies, aggressive

marketing, creative synergy and visionary approach together with a lean organizational structure capable of efficient response, succeeded in establishing Azgard9 as the largest Denim Products Business in the country, with sales to the tune of Rs.6,628,341,926. Azgard9 has been benefited by the management’s highly responsive approach, increasing its profits significantly since its acquisition from the Government of Pakistan. 2008 posed to be challenging, primarily owing to the high raw material prices, comparatively less productive workforce as compared to the major competing countries, rising fuel prices resulting in higher domestic and International freight costs, and probable rise in minimum wages, these factors are mitigated by Azgard9's stronger business model within the Division and the Company.

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2. Industry Overview

2.1 Textile Industry
In 1947, at the time of independence Pakistan Textile Industry was like a feeble child with only three cotton mills, a small woolen spinning, whereas weaving, hosiery and knitwear were features of cottage industry. Now when we have entered into new millennium, Pakistan’s Textile Industry has become a stalwart fellow, which has grown in all sections. Now we are not only self-sufficient but are also exporting surplus products. Today we have over 8358 million installed spindles, 166,000 installed rotors, 20,000 shuttle less looms, 200,000 power looms, 8,000 terry towel looms, 7620 canvas looms, 157,000 woolen/worsted installed spindles, 15,000 woolen looms, 12,000 knitting machines, over 600 processing units and over 2500 garments units. We all know, journey of textiles start from seed and culminates at ready-towear garments and in present competitive world scenario, it is combination of high production efficiencies, most appropriate technologies and work methods, together with trained work force, management and marketing skills which give any Industry a successful status. Textile industry today is the backbone of economy of Pakistan and provides the largest number i.e. about 40% of total industrial jobs and very vast industrial service opportunities. It has always been the pillar of Pakistan’s economy contributing substantially to Govt. revenues. It also has a dual linkage. As a major consumer of domestic cotton, it provides a market for a leading cash crop and thus has a critical influence on the growth and productivity in agrarian sector. Hence the performance of the textile industry has a vital impact on the overall growth and performance of the textile industry has a vital impact on the overall growth and development of the economy. The industry also tops, as an earner of ever-so-scarce foreign exchange and exported goods worth US $4.9 billion last year and this amount is about 60% of the total national exports. Its share in total GDP is 8.5%. The investment in Textile Industry is 31% of the total investment. The interest that banks and other financial institutions earn from Textile sector is Rs. 4 billion per annum.
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The salaries and wages that Textile sector provides to workers is 40 billion per annum. Its contribution to R & D is Rs. 116 million per annum. This very remarkable achievement did not come easily and is due to combined and tireless efforts of the Govt. planners, industrialists, technical support staff and our hard working and inexpensive labor. On the top of these, Pakistan has been blessed with suitable climate and perennial supply of good quality water to grow about 1.7 million tons per annum of lint cotton, “the silver fiber” that forms a natural and sound base for a viable textile industry. Pakistan textile industry consumed 1441 million Kg raw cotton and 406 million Kg fiber during 1998 – 1999. Value-added product exports of Pakistan Textile industry are very less. The percentage of yarn exports in total textile exports in total textile exports in 20% and percentage of cloth is 24% while 56% of total textile exports includes others textile manufacturers. We should product more value-added products because if we see the value addition chain the prices of cotton, yarn, cloth, garments, towels, bed wear are US$ 1.33, US$ 2.33, US$ 5.41, US$ 6.71, US$ 4.05, US$ 5.51 per Kg respectively. Thus we can earn additional foreign exchange by exporting valueadded products.

2.2 Spinning Industry
Areas comprising West and East Pakistan were big producers of good quality cotton and jute fibrous raw materials but the value-added conversion industries were mainly located around the Indian cities if Bombay and Calcutta in the respective order. At the time of independence Pakistan was producing about one million bales of cotton, which were exported and from the receipts, cloth and yarn for the handlooms were imported. The Govt. took notice of this situation immediately and encouraged setting up mills in both the wings of the country and in 1960 installed two million spindles and 30,000 looms. In those days Govt. sanctioned only composite mills with 25,000 spindles, 500 looms and a wet processing unit to finish the cloth produced in mills. The balanced quality of yarn was required to be sold often through an official channel to the weavers of handlooms and later to the power looms. The mill owners made huge profits but their efforts for further investment were hindered due to paucity of foreign exchange.
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This situation, however eased when the machinery manufacturers started offering their plants under “the suppliers credit or pay as you earn” plans. This facility brought is its wake escalation of prices of the textile machines and this started a new development of installing only the spinning units of 12,500 spindles. Many of the spinning units were then sanctioned on political consideration but went into the hands of genuine entrepreneurs is no time. At the time Govt. tried to disperse the industry away from the existing industrialized cities and new textile centers emerged in small towns like Kotri, Sheikhupure etc. although these were quite close to the existing centers in the big cities. By 1971, Pakistan had a substantial textile industry with about 3.5 million spindles and 38,000 looms in the mills sector and exported textile goods worth US$ 400 million. After the separation of East wing, Pakistan was left with about 2.5 million working spindles but growth was continuous and rapid and by 1985, the figure reached 3 million. At that time the Govt. took a decision to convert all the home growth cotton into yarn and for the first time, decided to waive the requirement of getting official sanction for setting up a spinning mill. This decision opened the floodgate and in just five years, the capacity increased to 5 million spindles. The present working capacity is about 8,358 million spindles and 166,000 rotors. It may be mentioned that about 1.724 million spindles are lying idle in 143 financially sick mills which being of old technology have become redundant. In 1998-1999, the spinning industry produced 1542 million Kg of yarn out of which about 26% was blended yarn, 47% was coarse count yarn, 24% was medium court yarn, 2% fine and 1% super fine yarn. Development in the spinning sector is not in numbers alone but there is also an improvement in average productivity. On the basis of 20/1 count productivity has gone up from 190 grams in 1986-87 to 235 grams per shift per spindle in 1996-97. Pakistan exported 508 tons that is about 33% of total cotton yarn produced in 199697 and this makes her the largest exporters in the world with a share of about 28%. This is not to be very proud of because of the yarn in a primary and not a valueadded commodity. Incidentally it has been estimated that about 70% of the total cotton yarn is exported directly or after conversion into the value-added products.

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During 1998-1999 textile industry produced 1,542 million Kg of yarn, out of which 54.94 million Kg (3.56%) was consumed in mill while 417.78 million Kg (27.10%) was exported and 1,069.2 million Kg (69.34%) was available for local market. The price of yarn (20/1) during 1998-1999 was Rs. 472.61 per bundle of 10 lbs. Pakistan exports yarn to the following major countries: Hong Kong (25.38% of total yarn export), Japan (19.72%), South Korea (8.90%), Asian countries (8.31%), Dubai (3.72%), China (7.77%), and USA (4.81%).

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3. Introduction of Organization

We are a vertically specialized textile company. We manufacture virgin fibers to retail ready products, which are marketed through our global sales and distribution set up. Azgard9 Ltd is about a 100 million US $ company with sales offices in five (5) countries. Our business includes Specialized Yarns, Denim Fabrics and Denim Garments.

Azgard9 Limited The Origins and the Inception ‘A place at the centre of the universe inhabited by the GODS’ Azgard is represented and embodied by the LOGO we have created; the oval male form is representative of the universe and the void or female portion in the centre, where ‘THE GODS RESIDE’. The universe is cradling the void as if to protect as well as nurture it as it is contained in the centre of the ‘WOMB’ of the universe in a fetal position. In the ancient legend ‘AZGARD’ was one of nine worlds in NORSE MYTHOLOGY- it was protected by ‘HEIMDALL’ the son of nine different mothers each attributing him with a particular skill and power- and thus he would protect Azgard from the powers that be.

The significance of nine for the members of Azgard The significance of Nine for our company is not just based on this mythology but also connected with the auspicious nature of this number throughout many different elements in and of the world today that affect humans and their behavior. The number ‘NINE’ is considered to be an auspicious and important number in Indian, Chinese, Japanese, and Greek, cultures for various different reasons.
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In

Chinese

culture

the

number

Nine

represents

‘Change’

and

‘Transformation’, as is the case with Azgard Nine Limited, which is changing and transforming itself into a global entity with new goals, aspirations, and targets. Nine is much of Ancient Greek Mythology also has represented ‘Gestation’ and ‘Fulfillment of Creation’ as it does for us at Azgard Nine- The ‘Fulfillment of Creation’ for us being the forming of this global entity incepted by Nine members on the Ninth day of February sowing the seeds for an auspicious and rewarding future.

3.1 History of Azgard9
Azgard-9 Nine Limited is one of the oldest business groups on the Asian subcontinent. It was started as a family business over four generations ago. The Sheikh Family, now in the fourth generation, is one of the oldest business families in the Sub Continent with experience in many different sectors. The family began its first operations in 1886 as a first Ginning factory in Shamkot India. After the formation of Pakistan in 1947, the group saw massive growth, whilst consolidating its position in the market. At the end of this period the group employed over 15000 people. In 1972 the group became international by expanding to Ireland in the textile sector. In 1978 the group established a presence in the United States by acquiring Burke Mills Inc. in North Carolina. By 1980 this presence was also expanding and fortified with the addition of another company Tennessee Textiles. The group was now solidly focused on the textile sector. We set up AZGARD NINE LIMITED in 1994 as a fully integrated vertical denim unit for fabrics and garments in collaboration with LEGLER SPA. Of Italy. In 1996 we expanded our American operations to Mexico where we set up a yarn twisting operation as another joint venture between the NAFEES group and the Alpha group, which is the largest industrial group in Mexico.

3.2 Company Vision
Our vision is to become a major global fashion Apparel Company
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3.3 Company Mission
“To retain a leadership position as the largest value added denim Products Company in Pakistan”

3.4 Core Values
(a) (b) (c) (d) Respect For All Integrity Hard Work Ethics

(a) Respect for All     Does not discriminate on the basis of race, religion or ethnic background Respect for Women Strongly prohibit all forms of harassments. For example racial, sexual or any kind Attract, retain and develop outstanding people (b) Integrity  Honesty to self, colleagues and Azgard9

(c) Hard Work   Company mission can be only achieved by hard work Honesty and hard work is appreciated and rewarded such as: (i) (ii) (d) Ethics     Professional behavior shall be entertained. e.g. gifts and favors will not be accepted Personal beliefs of employee will be respected Responsibility and accountability Changes in Policies/Procedures shall be informed beforehand to the concerned individuals
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Incentives upon achievement of target Performance based incentives and promotions

Azgard Nine Limited
 Work ethics:          Attendance Teamwork Appearance Attitude Productivity Cooperation Respect Character Communication

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3.5 Corporate Philosophy
Azgard9 is a centralized and formalized organization. It believes in teamwork.

3.6 Code of Business Principle
AZGARD 9 is an equal opportunity employer and safe guards the    Rights of gender Religion Race

Encourage Employees on the basis of    Education Experience Professionalism

The Company does not discriminate on the basis of       Religion Race Ethnic Values Gender Cost Nationality
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3.7 Products
   Specialized Yarns Denim Fabrics Denim Garments

3.8 Services
     Construction of 2.5 Kms road leading from the main Multan Road to a nearby village. Set up a Police Post in the adjacent village Cost sharing with Punjab Govt in arranging Annual Lahore Marathon Race (All categories) To promote & set-up facilities for technical as well as general education programs. To start community social development programs in areas of health, education, civic facilities etc.

3.9 Name of the Department
 Marketing Department

3.10 Name of the Unit
 Garment Business Unit (GBU)

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3.11 Structure of Unit
This Departmental Flow Chart shows the structure of GBU

PRODUCT DEVELOPMENT

PRODUCTION PLANNING CONTROL

MERCHANDISING

SAMPLING

CUTTING

STITCHING

WASHING

FINISHING & PAKING

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3.12 Culture
“The high speed passionate pursuit of progress through teamwork”; Azgard believe in team work and all the departments follow the hierarchy levels of reporting strictly.

3.13 Customers
             Montebello (Azgard9’s Italian Subsidiary through Fartital AB) JC Penney Levi’s Diesel Mango Yellow H&M Old Navy GAP ESPRIT Tommy Hilfiger Nike C&A

3.14 Markets
 Azgard9 have strong roots in the foreign market. The company is providing very little of overall products and services to the local market.  51% Direct Exports, 32% Indirect Exports &17% Local sales

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4. Introduction of Business Divisions

4.1 Spinning & Specialize Yarn

The department of specialized yarn started its production in 1972. And they are yearly producing 67 million/ LBS per year. And the department of spinning division started its production in 1995, its produce 400 bags per day. The company focus is on producing fashion oriented yarns developed in close cooperation with our customers and our raw material suppliers so that we can provide products, which are already in demand in the market place. The range includes both Greige cotton and dyed cotton yarns, blended yarns and pure synthetic yarns we also offer organic cotton yarns for those customers who demand it. We are cotton ASA certified and can provide certificates upon request. Our open end yarns are used primarily in the denim sector. They lend themselves perfectly for these applications and have achieved a very high degree of brand loyalty in the markers in which they are sold. Technical data about machinery and plant equipment and capacities is available in the “technical data” section.

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4.2 Spinning Process

Plucker

Steamer

Separator

Sensor

Carding

Laboratory

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4.3 Denim Fabric Division
The department of denim division started its production in 1995. And they are yearly produce 14.4 million meters of fabric. The primary focus and concentration of the denim division is to produce value added fashion forward advanced denim fabrics which are in line with the marker leaders located around the world. But at a proce point that truly offers the best buy to our customers. We are nominated to be the only supplier in Pakistan for some of the largest and most prestigious customers from around the world. Azgard-9 has state of the art manufacturing facilities employing rope dyeing and air jet weaving technology. Our total capacity will be 26 million linear meters by year’s end 2005.

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4.4 Denim Fabric Process Flow Chart

INPUT

SPINNING

BALL WRAPING

DYING

REBEAMING

WEAVING

FINISHING FABRIC

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4.5 Garment Division
The department of garment division started its production in 1996. They are fulfilling the initial minimum order quantity 7000 pieces. But, now the total production of the garment division is per day 12000 pieces. The garment operation is the newest addition to complement. The azgard-9 portfolio and thus completes the fully vertical aspirations and visions of the group.

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4.6 Garment Division Process Flow Chart

CAD

Cutting

Stitching

Washing

Finishing

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5. A Managerial View

5.1 Departmental Flow Chart of GBU

PRODUCT DEVELOPMENT

PRODUCTION PLANNING CONTROL

MERCHANDISING

SAMPLING

CUTTING

STITCHING

WASHING

FINISHING & PAKING

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5.2 Planning Process and Tools/ techniques
5.2.1 Product Development (PD) First of all OCS (Order Confirmation sheet) is received from merchandiser, which is attached with following details, which are as follows;       Customer specification A/W sheet. Cutting details. Packing details. Approved trim cord B/W and A/W. Original sample which is valid for styling. Thread and washing details.

After receiving OCS the PD department send MS (merchandising sheet), which is also known as work order sheet to MMC (Merchandiser Material Control) department. It is basically a procurement or purchase department. This department then purchase and provide the material listed in the MS sheet. The 2nd main function of PD department is to issue the Technical sheet which is also known as production sheet. This Technical sheet describes every single complication in the order. Many Technical problems are solved and explained in this sheet. The technical book contains the following contents:      Style summery Stitching standards. Accessories standards. Packing standards. Customer specs MS.

This technical book is then distributed to all departments

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5.2.2 Product Development Flow Chart (PD)

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Detailed Information Along With Order Confirmation Sheet Thread Calculation, Fabric Consumption,

Merchandising Sheet NO Verification Of Merchandising Sheet Forward Merchandising Sheet to Concerned Department

Technical Sheet NO Verification Of Technical Sheet Production Check Run Activity NO Audit Of Production Check Run Final Verification of Technical Sheet Forward Technical Sheet to All Concerned Department

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5.2.3 Production Planning Control (PPC) The main function of PPC is to plan from booking to shipment and giving the final dates to the marketing department for the completion of orders. In this process the confirmation of order is first received from marketing department with order number and desired date for completion. PPC department receives availability report of goods and trims from the supply chain department. If there is any shortage of fabric or before wash (B/W), after wash (A/W) accessories then PPC demands estimated date for the availability of trims and fabric from MMS (Main & fabric store) department for the procurement of goods .Then PPC department make analysis of the capacity of the all operations in the company and then give their possible date of completion to the merchandiser with the addition of few days to the calculated completion date as a factor of safety. If there is much difference between the desired date of merchandiser then marketing department negotiate with customer and the date is then finalized .It is PPC department which defines the targets for all the functioning departments on daily basis also. For this purpose a graphical chart is made which tells the starting and completion time of stitching operation. This chart can be based on coming 2 months or more depending upon the load of orders. The chart on next page shows it clearly. The main functions of PPC are:    Potential Planning Departmental Goals Time and Action Plan.

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5.2.4 PPC Flow Chart

Order Inquiry from MRC

Potential Analysis (Unit Selection) Deliverance Finalization

Order Allotment

Monthly Cut\Shipment Induction Plan

Distribution Of Orders in Lines

Plan Discussion With Production

Distribute Of Plan

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5.2.5 Marketing Department

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First of all, the Customer sends inquiry to the marketing department. There are two ways regarding inquiry depends on the demand of the customer. i.e.   With Garment Without Garment

After this, 1st sample or prototype is sent to customer for approval. If it is rejected then 2nd prototype is made for approval of the order. If rejection continues, then this process continues until the sample is approved. In case of approval of the order, the customer tells its demand regarding order of SIZE SET or demand for SMS (Sales Man Sample), its all depend on the customer requirements. It would be delivered to customer for final approval of order. After approval of the order from the customer, order confirmation is required from the marketing department. After this, the customer sends purchase order to marketing department. The marketing department sends the sales contract to the customer. Then the production starts. After completing the target the finish garment ready for shipment. Before the 15 to 20 days of shipment payment should be received.

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5.2.6 Flow Chart of The Marketing Department

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Customer

Inquiry

Without Garment

With Garment

Sample 2nd Prototype Reject

1st Sample (prototype)

Send Customer (for approval)

SMS (Sales man sample)

OR

Size Set (Sales man sample)

After Approval Order Confirmation Purchase Order Sales Contract Performa Invoice Production Payment Shipment

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5.2.7 Sampling Department

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First of all the customer specification page is received in which sizes of different parts are stated, with the help of these specifications the pattern master makes the hard pattern of the different parts of the sample. Then a sample called inquiry sample is sent to the customer in which some developments are made. Customer can make changes in it by giving suggestions. After making some modifications the customer sends the sample to sampling department. Where another sample is made which meets the customer modifications and suggestions. This sample is called ‘approved sample’. A size set is then sent to the customer along with preproduction sample. The customer select one specific size called base size out of that size set provided if he passes the sample. This selected sample is called ‘sealed sample’. After the approval of this sample it is sent to the marketing department and then to Production Development (PD). Where Technical sheet is received. This Technical sheet along with sample of fabric is sent for the Production Check Runner (PCR) where shrinkage of swatches is measured. The values of shrinkage allowances based on PCR are noted on shrinkage report and sent to the GGT, where values of allowances are adjusted in the base pattern. Then final marker is received for the purpose of cutting fabric for at least 6 pieces. Then fabric is cut according to the marker and ready to be stitched. Cuttings are stitched and sample is created. Before wash and after wash measurements are made in the sample. Change in dimensions is noted on a report and that report is again sent to GGT. Where some amendments are made in the drawing to overcome the shrinkages in bulk production. The sample is sent to Quality department which send a quality report to Quality manager. There should be more pattern makers (trained) as the load to pattern master ratio seems too much. Wastage of time can be controlled.

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5.2.8 Flow Chart of Sampling Department

Flow of Sub Departments

CAD (Computer Aided Design)

Cutting

Stitching

Washing

Finishing & Packing

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Flow of work In CAD

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Pattern through e-mail

Customer Send Sample

Digitizing

Converter

Marker Making

Send to Plotter

Out Put (Send to cutting department)

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5.2.9 Cutting Process

In Put (From CAD)

3 manual Cutters

Stitching Department

Small Parts + Back Parts Front Parts + Assembling

Washing Department

Finishing & Packing

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5.2.10 Flow Chart of Cutting Department

PPC

MARKER CHECKING

FABRIC AVALIABILITY SPREADING

ORIGNAL SAMPLE TECHNICAL SHEET

CUTTING

NUMBERING PCR CUTTING STACKING

PCR MEASUREMENT/ WIP CHECKING

AMENDMENT ON PCR

PATTERN CHECKING

NO

YES

MARKER MAKING

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5.2.11 Flow Chart of Stitching Department

Small Parts

Back Parts

Front Parts

Assembling

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5.2.12 In-Depth Look over the Flow of Work

Small Parts

Back Parts

Watch Pocket

Panel Patch NO.1 Attach

Pocket Formation

Panel Patch NO.2 Attach

Front Right &Left Pocket Attach

Panel Patch NO.2 Attach

Back Pocket Formation Right & Left Panel Attach Front Fly

Dart Formation

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Front Parts

Assembling

Panel Patch NO.1 Attach

In Sean

Out Sean Panel Patch NO.2 Attach Labeling Panel Patch NO.2 Attach Waste Band

Right & Left Panel Attach

Hamming

Belt Loops

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5.2.13 Washing Flow Chart

WASHING

AFTER WASH QUALITY CHECKING

WASH CHECKING

SAND BLAST CHECKING

DISPATCH TO FINISHING

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5.2.14 Finishing & Packing

WIP

Accessories

Cutting & trimming

Finishing

Press

Packing

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5.3 Organizational Structure and Design

Organization Structure designates formal reporting relationships. It identifies the grouping together of individuals into departments and of department into the total organization. It includes the design of systems to ensure effective communication and coordination across departments.

Organization Structure
Employees of AZGARD NINE GROUP

on cti i re rD ea Cl

Pe ac r form hie ve ance tar , c ge om ts pe te n cy ,n ew

sk ills ,

CEO

Shift In charge

Business U nit M anager

S enior S uperv isor

General Manager Manager

Assistant Manager

Management Trainee Management Staff

i si ,V es alu -V , on Mi on ssi ls oa ,G

Supervisor Asst Supervisor Skilled Workforce Un-skilled Workforce Non-Management Staff
Human Resources Depa rtment

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5.4 Communication
In Azgard9, there is paper-less communication. Communication plays a vital role in daily routine of Azgard9 culture. The means of communication used by the management are: Office telephone extensions, E-mails, Notice boards.

How to get information regarding Office telephone extension? There are two main sources from where information can be obtained regarding office telephone extensions i.e. Consult the Telephone list in your department or Dial “0” to talk to company operator for further details.

How to get direct dialing from operator for official works? The direct dialing from operator for official work can be managed through dialing “0” from the office extension. Please note that mostly we dial “0”; the operator will attend your phone; provide your information regarding your name, department and office extension; the operator will ask you to hold; operator will dial the number and direct you to talk. The maximum period for one call is restricted to 5 minutes due to pressure of calls on telephone lines / telephone exchange. Please show patience when dialing the operator.

How to create E-mail account? To create the E-mail account of an employee, the employee will communicate the name, designation and department with the Information Technology (IT) department. The employee has to fill the “User Account Creation Form” to activate the Login name and E-mail address. E-mail shall be provided if recommended by Head of Department (HOD), otherwise only Login name will be created for the employee. Those employees who were recommended to get E-mail address shall submit the “User Account Creation Form” to IT department and the System Administrator will activate their E-mail address.

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How to use Microsoft Outlook for E-mail? Major applications: 1. 2. 3. 4. Send / Receive E-mail Address Book Create Signature Attachment of file

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Consult Key book at IT department

Where IT department is located? The IT department is located on the first floor near Managing Directors (MD) room.   IT Support Services Extension no # Extension no # to confirm the purchase of system: 125, 225 325

Where main notice boards are located? There are two main notice boards for administrative information located in the garment passage hall. There are two directions to reach the notice boards. Firstly, enter the garment gate, pass the IN/OUT machine, walk ten (10) meters and you will find the notice board at your right hand wall. Secondly, enter the reception gate, pass the reception, enter the tunnel passage and turn to your right or left at the end of the tunnel passage. You will find the notice board pasted on the adjust walls. However, there are departmental notice boards located in each department to paste their information. The further departmental notice board information can be gathered from the respective departments in detail.

What are the major information’ communicated by the means of Notice board? The major information regarding Gazetted holidays, announcements, policies and administrative matters are communicated through two major notice boards.
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5.5 Motivational Techniques Used
Pay increment is being provided not on experience basis but on performance basis. Also there are lists of benefits which are being provided to employees to increase their productivity level.

Employee Benefits Highlights
• Incentive Scheme
(On achieving tar gets)

• Foreign Training Trips

• Provident Fund
Scheme

• Residential Colony • Performance Based Annual Increments • Variable Pay Scheme • Car Scheme • 32 leaves per annum

• Group
Insurance

• Health Insurance • Pick and Drop
Facility

• Company Paid
Mobile Phone

• Company Loan Facility • Recreational Subsidized Trips Lunch Facility
Human Resources Depa rtment

5.6 Controlling Authorities
Managing Director (MD) and General Manager (GM) are the controlling authorities over there.

5.7 Control Approaches Used
  Personal observation Statistical Reports

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6. Structure, Design and Issues

6.1 Divisions and Groups of its businesses
   Specialized Yarns Denim Fabrics Denim Garments

6.2 Azgard Businesses Include
 Azgard 9 diversified into this sector by acquiring PAFL from Government of Pakistan in 2006. The unit manufactures ammonia & urea.  Azgard Project Management &Engineering Solutions manages two power Plants, which provide maintenance & support services.

6.3 Geographic Distribution of Azgard
    Garment business unit (Manga Site) Garment business unit (Ferozpur Road/ FPR) Spinning Unit (Multan) Pak American Fertilizers Limited (Mianwali)

6.4 Structural Dimensions

Formalization: “The act of making formal by stating formal rules and standards.” Azgard9 is a formalized Organization. There are some set rules and standards which every employee has to follow.

Specialization: Azgard9 is a composite unit and its specialization is Yarn.
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Centralization:

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Its both FPR i.e. Ferozepur Road site and Manga site are

centralized except their production department.

6.5 Contextual Dimensions
Size: Azgard9 Ltd is about a 100 million US $ company with sales offices in five (5) countries. Our business includes Specialized Yarns, Denim Fabrics and Denim Garments. Technology: AZGARD 9 has state of the art manufacturing facilities employing rope dyeing and air jet weaving technologies. Our Total capacity will be 28 million linear meters by year ending 2010. External Environment: As Azgard9 deals with the foreign market only. So the company strong competition with its foreign competitors.

6.6 Decision Making
GM and MD are involved in decision making. And also head of the departments take part in formal decision making.

6.7 Conflicts and their Resolution
Being formalized organization, all the disputes and conflicts are sent to the next higher authority in the hierarchy. And authority decides its resolution.

6.8 Power and Politics
Power is in hands of top management like higher authorities. There is no any concept of employee empowerment. Politics exists everywhere in the company. No employee can escape from that politics. Leg pulling is also there.

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7. Strategies and Analysis

7.1 Competitive Strategy
     Better performance Providing value added products Providing on demand washing effects Adopted pull and push strategy Providing better products at lower rates

7.2 Marketing Strategy
      Firstly improving own product Better research & development Product innovation Reasonable price against market Smart and excellent outlook of garments Using price strategy for youngsters

7.3 SWOT Analysis
Strengths:     Vertical Composite Unit Multinational Company dealing with worldwide big brands (e.g.: H&M, Diesel) Unique washing and dying Two power supply units

Weaknesses:   Health and safety Environment problems Manual cutting

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Opportunities:   Threats:   Competitors ( CBL, US Denim) Political instability in Pakistan Company is going to launch a new local brand in 2009 TQM Implementation is one of its big opportunities.

7.4 Financial Analysis
The challenging trading conditions have a great impact however the performance of Azgard9 shows a healthy growth trend. However the increase in finance cost was greater than the growth in income which significantly affected the bottom line. The rapid increase in the finance cost is basically due to the devaluation of the Pak Rupee. Company had borrowings in foreign currencies either directly or indirectly thus effecting the finance cost very badly.

Performance
     Equity of company is Rs. 10,317,920,684 Production reached 5 million tons, approximately. Sales Rs. 10,113,499,351 which is 53% change as compared to last year Profit after tax is Rs. 897,283,923 which is 17% change as compared to last year Having total assets of Rs. 29,600,032,254

Goals
      Continue with its low pricing strategy Keeping sufficient margins Further enhancing the product and services portfolio Ensuring seamless business process interaction with the customers Create a highly integrated supply chain Enhanced customer loyalty and value creation

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8. Core Internship Experience

Being a marketing internee, I was assigned a task related to marketing practices. Here firstly I am going to discuss briefly whatever I learned over there regarding other marketing practices. Marketing department is the key department of the organization and half of the success of the business depends upon the activities of this department because this department has direct contact with the customers. Marketing department deals with two types of markets   International Market Local Market

8.1 Hierarchy of Marketing Department
Hierarchy structure if the marketing department is as follows:

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8.2 Export Section
Azgard has local market as well as export market; therefore the major job of all the marketing managers is defined. The major steps, which are involved in the process, are as follows.

Broadly categorized there are two types of customers:

8.2.1 Direct Customers
Direct customers are those who directly import the yarn from Azgard. These types of customers enjoy the low prices because of the fact that there is no commission involved in that case. In this type of correspondence there is no intermediary.

8.2.2 Agent Customers
In this aspect there are three possibilities
1) Pakistani agent is involved First possibility occurs when a local agent has some direct customer in the local country and that agent contact with Azgard. The commission paid to the agent is added to the cost. The commission ranges from 2% to 3%.

2)

Foreign agent is involved Second possibility occurs when a foreign agent has some customers in his country and that person is in direct contact with Azgard. The commission in that case is also added to the cost. The limit of that commission ranges 2% to 3% according to the amount of the invoice. The percentage depends upon the profit margin which is given by the customer.

3)

Pakistani as well as foreign agent is involved Third possibility occurs when a foreign agent has some customers and that agent had no direct link with the company but with a local agent who have direct link with the company. In this case the maximum commission for both the agent is 4% which is distributed among them by mutual understanding.

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Azgard Nine Limited 8.3 Export Order Execution
Scope

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This procedure is applicable for all sort of yarn being produced.

Purpose
  To maintain & increase the export with better quality goods and services. To ensure that services fulfill the needs of customers

Responsibilities
C.O.O. Dept. In charge To give price approval To make inquiry to relevant section and watch all related activities Section In charge To do costing and setting approval & follow up.

Senior/Junior Staff To send samples To note dispatches orders To maintain all records in Customers Dockets

8.4 Procedure Inquiry
First of all, customer send enquiry. He tells about his requirements that how many quantity of yarn is required in what count and specification. In response the supplier sends quotation to the customer and tells about the detail of his order. Suppliers see whether he can meet his requirements or not. The negotiation is started between seller and customer in which prices are settled, delivery date is decided and other terms and conditions are discussed.

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At the end a sales contract is signed from parties, seller and customer. In his sales contract following things are mentioned.

Costing
Costing sheet is prepared for C.O.O approval. In absence of C.O.O department in charge approves the price.

Costing Approval
CEO gives approval or may suggest any other price to be offered.

Contract Review and Issue
Section in charge takes following steps before issuing a contract: 1. 2. Prepare contract review check sheet The requirements are adequately defined and involvements of production areas are specified. 3. In-house/Out-house, have the capacity to meet the order requirements.

In getting approval of costing and review of customers requirements prices are quoted to the customer for confirmation.

Confirmation of Sale Contract
If customer confirms the price offered, sale contract is issued to the customer with complete details of price, quality, delivery, payments terms etc.

Letter of Credit (L.C)
In this supplier’s bank and customer’s bank are involved. Therefore payment is done through banks.

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Procedure of Letter of Credit 1) LC Opening Bank It is also called the bank of importing country.

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2)

LC Advising Bank This bank provides LC to the suppliers. The supplier receives the LC and starts the production.

3)

Negotiating Bank The supplier submits the required documents to this bank. Then this bank provides the amount of LC to the supplier on certain terms and conditions.

Elements of Letter of Credit 1. 2. 3. 4. 5. 6. 7. 8. 9. 10. 11. 12. Name of issuing bank Form of LC Revocable of irrevocable Date of issue Buyer’s name Supplier’s name Currency code Amount Payment terms Shipments Loading Transportation

Performa Invoice
After the negotiation on prices took place and both the parties agreed, then the Performa invoice is formed in which all the conditions of LC and total quantity of order and the total price of that order is mentioned. The invoice is faxed to the buyer and after the confirmation and opening of LC production is started of that order.

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Description Count Quantity Packing Shipment Price Amount Payment 20/1 carded 100% cotton 660 cartons sea worthy standard July 3, 2000 US $ xxx per kg US $ xxx payment by confirmed irrevocable LC

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Commission 2% to foreign agent 1% to local agent

Production Memo
Production memo is a statement in which all types of instruction about the production of the given order are written.

Dispatch of Goods/ Yarn
Packed yarn is dispatched to the customers. If the shipment is to be custom cleared from Karachi, goods are sent to Karachi on trucks with all necessary records. Dispatched goods are detail noted in relevant registers.

Shipment
If the goods are to be custom cleared at Multan fry port, these are sent to dry port for clearance. Documents are sent to clearing agent same day or next day and followed up to ensure that these goods are custom cleared without any unnecessary delay. In case of dry port, original bill of loading and 4th copy of shipping bills are collected from shipment departments. Concerned staff follows up dispatch of goods with Karachi office port to ensure on time shipment.

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Post shipment documents are received from Karachi office and after proper recording, handed over to finance department for negotiation. Shipping details are noted in relevant registers. If there is any delay in receiving payments, relevant person sends telex/ fax to customer for timely payment. Order registers are updated periodically.

MIS Reports
Balance order instructions reports are updated periodically. Balance order list is updated fortnightly for their information. Sale comparison reports are updated in computer networks on monthly basis, it comprises one month’s status of shipment, invoice values, complaints and claims (if any).

Quota Restriction
There are some countries where the quota restriction is imposed by the importing countries. This quota is fixed on the basis of past experience. In these countries where there is no quota restriction you can export as much as you can. This is distributed by export promotion bureau among different mills.

8.5 Production Mix
Product
Azgard9 produces high quality yarn. It exports in foreign markets, sells in local markets and along with that uses a major portion of its yarn in its own garment department. All products are produced according to the requirements of customer orders.

Price
Pricing is an important factor in the marketing process for any company. The price policy of the company should be in such a way that it should produce a reasonable profit, for the company and should satisfy the customers.

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Place
Azgard9 is using two types of distribution channels 1) Direct Azgard Nine Limited Customer

2)

Indirect Azgard Nine Limited Middle Man (agent) Customer

Promotion
As the yarn is an industrial product, middle man (agent) plays a major role in selling the yarn. However on the other hand the marketing department personally contacts the customers and sells the product. Therefore personal selling is a major promotional tool for Azgard’s marketing department.

8.6 Local Sale Section
Local sale section deals with the sale of yarn in local market. Therefore manager local sales deal with the local parties for product selling.

Execution of Sales Process
For the sale in local market first they check industry rates and then they began bargaining with the customers. The manager sets the rates with the parties and terms and condition also by both the parties so in this way a contract is signed.       Buyer Name Seller Name Product Specifications Price Delivery Time Place etc

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Commission is also set by the company with agent if the agent is involved here. Then order is given to the production unit confirming the date of destination etc. So in this way local sale is done.

9. Conclusions

Being an HR internee in Azgard9, I would like to mention that Azgard9 provide us a great opportunity to learn practical knowledge. Azgard9 is a well reputed and a big garment company in the textile sector. I really enjoy a lot while doing work over there. Supervisor and managers of the department help and guide me a lot. One thing which I find missing over there i.e. strong communication between departments. Politics exists everywhere.

10. Recommendations

There is a need of strong communication within each department and between the departments.

Locate all the sub-departments of HR at same place. It will help to increase coordination between departments.

There should be separate uniform for workers of each department within a specific business unit.

Attendance procedure should be more appropriate. Finger prints should be taken from the employees.

 

Internees should be free to visit all departments. There should be proper equipment provided to employees and workers to prevent noise pollution and dusty areas. The workers should be strictly bound to use these equipments.

   

Stipend should be given to internees. There should be separate equipment for Training room. There should be separate cafeteria for female employees. There should be proper mosque for employees.
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11. Bibliography
      http://www.azgard9.com/html/financial-information.htm http://www.azgard9.com/html/Security-Analyst.htm http://www.azgard9.com/html/financialinfo/2008/Security%20Analys_g%20-%20Q1.pdf http://www.js.com/pakistan-financial-news-latest_75.asp http://www.pacra.com/ http://www.brecorder.com.pk/index.php?currMIndex=16&currPageNo=1

12. References
    Saqib Hussain (Business Development Manager, Azgard9) Tahir Munir (Business Unit Manager, Azgard9) Shah Bano (Deputy Manager Marketing, Azgard9) Bilal Afzar (Business Manager, Moody International)

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14. Glossary
A/W Azgard9 B/W CAD CEO COO E-mail FPR HOD IT LC MD MMC MS OCS PAFL PCR PD PPC R&D SMS T&D WIP After Wash Azgard Nine Limited Before Wash Computer Aided Design Chief Executive Officer Chief Operating Officer Electronic Mail Ferozpur Road Site Head of Department Information Technology Letter of Credit Managing Director Merchandiser Material Control Merchandising Sheet Order Confirmation Sheet Pak American Fertilizers Limited Production Check Runner Product Development Product Planning Control Research and Development Sales Man Sample Training & Development Work In Process

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