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nishat

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INTRODUCTION When Pakistan came into being there was only 16 textile mills out of which only 12 were

in operation. It grew to 70 in 1957 as industrial development takes place. Now a day there are 596-textile mills out of which 442 are in operation. The export revenue of textile industry contributes a large share to the GDP of Pakistan. Textiles Exports from Pakistan Textiles constitute a major exporting sector for Pakistan, which accounts for about 60% Of the country s total foreign exchange earnings. The major export items are yarn, gray Cloth, finished cloth, towels and bed sheets and their major customers are the USA, EU, Japan and Hong Kong. Many textile exports take place under quota arrangements With the EU and the United States. Gray cloth constitutes roughly 16-18% of total cloth

Exports from Pakistan. Nishat gray cloth exports account for roughly 20 % of Pakistani gray cloth exports. The Firm has been exporting to the USA for many years, and has only recently started to export to EU countries. In Pakistan, the cotton crop season runs approximately from August to March. Prices are generally high at the start of the season in August/September, and fall later on as supply increases. Following income tax law, the fiscal year runs from October to September for textiles sector. NISHAT MILLS LIMITED NISHAT MILLS LIMITED (NML) commenced business in 1951 as a partnership concern, which was converted into private limited company in 1959. In 1961, the company went public and was listed on the Karachi stock exchange, the only stock exchange in the country at that time. NML started out as a weaving unit with 500 semi-automatic looms; later 10000 spindles were added, laying the foundation on nation s biggest textiles composite project. Composite project at Nishat mills limited Faisalabad covering 98 acre of land is providing all production process under one roof i.e. spinning, weaving, processing, stitching and power generation. The Founder A man of vision, courage and integrity, Mian Mohammad Yahya was born in 1918 in Chiniot. In 1947 when he was running a leather business in Calcutta, he witnessed the momentous that swept the indopak sub-continent and resulted in the emergence of Pakistan. Like many of his contemporaries, he also

migrated to the new country to help establish its industrial base. His is a story of success through sheer hard work and an undaunted spirit of enterprise. Beginning with a cotton export house, he soon branched out into ginning, cotton and jute textiles, chemicals and insurance. He was elected Chairman of All Pakistan textile Mills Association (APTMA), the prime textile body in the country. He died in 1969, at the age of 51 having achieved so much success in so short period. The Chairman Today Mian Mohammad Mansha, the chairman of Nishat Group, like his father, continues the spirit of entrepreneurship and has led the group to become a multi dimensional corporation, with wide ranging interests. Nishat has grown from a cotton export house into the premier business group of the country with 5 listed companies, concentrating on 4 core business, Textiles, Cement, Banking, and Power Generation. Today, Nishat is considered to be at par with multinationals operating locally in terms of its quality products and management skills. Firmly believing in Growth through Professional Management our corporate culture is based on decentralization, delegation of authority, encouraging the acceptance of responsibility and inculcating quality consciousness. It is our conviction that every successful organization is a reflection on the commitment, dedication, and team spirit of its employees, and Nishat is no exception. Our people are all imbued with the spirit, a fact manifested in our rapid growth and low turnover Nishat continue to strive to be a better group today than what they were yesterday, for their customers, for their shareholders, for their investors, for the environment, for the community and for their employees, for it is with them that Nishat has achieved so much success in last fifty years. COMPANY INFORMATION

BOARD OF DIRECTORS: Mian Hassan Mansha

Mr. Fayaz Ahmad Longi (NIT)

Mr. Muhammad Bilal Sheikh (PICIC)

Mr. Aftab Ahmed Khan

Mr. Khalid Qadeer Qureshi

Mr. Muhammad Azam

Rana Muhammad Mushtaq

Mr. Muhammad Ali Zeb

CHIEF EXECUTIVE: Mrs. Naz Mansha

CORPORATE DEPARTMENT: Mr. Muhammad Azam Company Secretary

Mr. Khalid Mahmood Chohan Senior Manager corporate

AUDITORS: Riaz Ahmad and Company

Chartered Accountants

LEGAL ADVISOR: Mr. M. Aurangzeb Khan, Advocate,

Chamber No. 6, District Court, Faisalabad.

BANKERS TO THE COMPANY: ABN AMRO Bank

Allied Bank of Pakistan Limited

American Express Bank

Askari Commercial Bank Limited

Credit Agricole Indosuez

Citibank N.A.

Deutsche Bank

Emirates Bank International P.J.S.C

Faysal Bank Limited

Habib Bank Limited

Habib Bank A.G. Zurich

Mashreq Bank P.S.C.

M. Faisalabad (Spinning. Weaving. Processing. Faisalabad Road.National Bank of Pakistan Standard Chartered Grind lays Societe General The French And International Bank The Hong Kong & Shangai Banking Corporation Limited Union Bank Limited United Bank Limited MILLS: Niashatabad. Stitching units & Power Plant) 12 K. Shiekhupura .

Tel: 021-6367812-16 Fax: 021-2412936 HEAD OFFICE: 3rd and 4th Floor E. House.M.U.(Weaving units & Power Plant) 21 K. (Stitching unit) 5 K. Lahore. Main Gulberg. Lahore. 53. Jail Road. Karachi Chamber Hasrat Monani Road. Lahore (Dyeing & Finishing Unit and Power Plant) 20 K.M Ferozepur Road. 6-D.F. Froze Watwan (Spinning Unit) REGISTERED OFFICE & SHARES DEPARTMENT Nishat House.M Ferozepur Road.M. Shiekhupura Faisalabad Road. Nishat Avenue off 22 K. Tel: 042-5715646-52 Fax: 042-5715644-5 . Karachi. Lawrence Road. Tel: 042-6367812-16 Fax: 042-6367414 LIAISON OFFICE: 1st Floor. A. Lahore.

FEROZE WATTOAN · NISHAT SEWING. FAISALABAD · NISHAT DYEING AND FINISHING.NUMBER OF EMPLOYEES Year 1998 1999 2000 2001 No. Of employees 9445 10331 10090 13146 NISHAT GROUP OF COMPANIES · NISHAT MILLS LTD. BEDDING · Sheet sets · Quilt cover sets . LAHORE · NISHAT FABRICS. LAHORE PRODUCT LINE Products line of Nishat mills limited consists of following items. BHIKHI · NISHAT SPINNING.

FURNITURE & KITCHEN ACCESSORIES · Tea cozy · Table mats · Table cloth and napkins · Aprons · Kitchen gloves · Pot holders .· Bed spreads · Comforters · Bed skirts · Oxford pillow cases · Blanket covers · Sleeping bags CURTAINS & ACCESSORIES · Embroidered curtains · Pencil pleat tape curtains · Pinch pleat lined & unlined curtains · Tab top & rod pocket curtains · Assorted pelmets and window dressings · Oxford cushion covers · Frilled and piped cushion covers · Frilled. piped and pleated tie backs TABLE.

processing. engraving. Europe and United States. Export Oriented Organization Nishat mills limited is an export oriented organization. . Banking 4. and finishing. Nishat mills limited exports more than 90% of its products mainly to the Far East. Power generation 3. when Mian Mohammad Yahya founded Nishat Mills. Cement I did my internship in the head office of Nishat NDF(nishat dyeing and finish). The textile capacity of the group is the largest in the country. 740 looms and dyeing and finishing capacity of 5 million meters. Nishat Group is among the leading business houses of the country and ranks among the top 5 groups in terms of assets and sales revenue. weaving. The group is the largest exporter of textile products from Pakistan for more than a decade. 100 new air jets looms and new dyeing plant has increased the existing capacity of 24000 spindles. Textiles 2.· Chair pads with circle tacks · Couch cove HISTORY AND PRESENT STATUS OF NISHAT The history of Nishat dates back to 1951. The processing includes dyeing. An addition of 20000 new spindles. The group has its roots firmly planted into four-core business namely 1. After almost half a century of undaunted success. TEXTILE CAPACITY Production process consists of spinning.

DGKCC Unit No I has a capacity of 2. Nishat Group ventured into the financial sector through the acquisition of Muslim Commercial Bank.G khan Cement Company limited In 1992. DGKCC has become the largest manufacture cement of Pakistan.000 people Management of Nishat Mills Limited Nishat Mills Limited employees are highly qualified professionals and have a young. It must provide the product with consistent quality at a level that appeals to intended customers and satisfy their needs. With addition of unit NO 2. international Finance Corporation and Common Wealth Development Corporation have finance this unit.D.G Khan Cement Company LIMITED from the government of Pakistan. It must provide a product (good or service) that suits best to the company s capabilities and for which there is a sufficient market. 2.300 ton was established in 1997. It must provide a product at a cost that always an adequate profit and a reasonable sale pri . Muslim commercial bank In 1991. Managers are responsible for the task assigned to them in their departments and also have to match whether their respective department is achieving the desired efficiency level or not There are at least three basic requirements for a successful company and the managers of Nishat Mill Limited are made to think on these lines: 1. DGKCC is the second largest project of the group and is ideally located in the heart of the Pakistan. MCB has the grown ever since and is now the largest in the private sector. MCB has a network of over 1500 branches employing over 12. 3. a new unit having the capacity of 3. energetic and dedicated team of professionals who have a lot of knowledge to their credit.200 tons per day. Nishat group acquired D.

This performance shows that Nishat mills limited have sky-high goals. they become cause of success for organization. Responsibility and authority Nishat is fairly decentralized organization. it declared dividend of 26%. Board of directors include professional of great repute. i. Various training programs are offered for upgrading the skills of staff. Human resource management also exists. iv. v. They are committed toward achieving a good name for Nishat mills limited. Orders are not dictated but they are made with effective participation from staff. They have ensured that. Middle level management makes most of decisions and matters are decided in a friendly environment. In order to achieve this certificate following requirements should be fulfilled. It is the responsibility of management to do so. Nishat is working hard to ensure that they produce quality products. Resource management Utilization of resources play crucial role in the success or failure of organization. iii. In the financial year of 1999-00. Nishat is effectively using its resources and thus has achieved ISO 9001 and ISO 9002. which is highest so far. ii. it is utmost responsibility of management to devise policies that provide quality products to customers. . (1) MANAGEMENT RESPONSIBILITIES Management responsibilities includes the following. Nishat cares a lot for its staff. right man is placed at right job and also at the right time. Customer expectation It is essential that customer expectation should be fulfilled. If resources are effectively utilized. Management representatives Nishat governing body is highly talented. Since Nishat is an export-oriented organization so utmost attention is paid to meet customers need and requirements. Quality policy According to the ISO 9001 and ISO 9002.INTERNATIONAL STANDARD OF ORGANIZATION (ISO) Nishat mills limited have achieved ISO 9001 and ISO 9002 certificate in 1997.

Standardization of work is necessary for achieving effective certification. For this production and planning department has been established. IV. ii. they bring success to firms. and it is exactly in its true spirit followed at Nishat mills limited. they should be made with authorized person. that reviewing must be in proper manner. Contract should be given keeping in view of interest of the company. If plans are well planned. And management should be fully informed with that. (3) CONTRACT REVIEW i. which ensures quality products to their customers. Objective at Nishat is to provide only quality products to their customers. . Reviews Sometimes contracts are reviewed. Amendments If the amendments are made in the contract. Quality Planning Effective planning is required for the success of organization. That s why they achieved quality certification like ISO 9001. III. Standard Operations Nishat mills limited have established a quality control lab.(2) QUALITY SYSTEM I. Work Instructions Instruction should be provided for better handling of job. System Procedure ISO 9001 requires that there should be proper system for each work. II.

This design should have some characteristics that should be in accordance with the business practices. 3. Design and Development Planning For designing of products. there should be proper arrangements. It should not be similar with other products in terms of its name. This is to provide customers list if required by the top management. (5) Customer Data Control It is the perquisite for ISO 9001 that proper customer data should be there. if the enterprise want to achieve quality certificate like ISO 9001 and ISO 9002. Department of design planning should be established.iii. there should be specific arrangements. Design review Design should be reviewed once made by the firms. It should have some characteristics that distinguish it from others. (4) DESIGN CONTROL 1. (6) Control Of Customer Supply Product There should be proper control over customer s products. Verify Validity Of Design Once design is complete. the competent authority should verify it. . logo etc. Cash should be paid by cheques. Each item in accounts should be properly coded and placed. Quality record For the storage of record. (6) Product Identification and Tracebility Product should be clearly identified and traceable. 2.

Uses of information technology. (11) Statistical Techniques Various statistical tools are required to better controls the affairs of organization. So all discrepancies should be disclosed. (8) Corrective and Preventing Measures There should be check and balances. there should be proper systems so that they are identified and corrected. If the mistakes are made. (9) Internal Audit There should be strong internal audit. On the job training programs should be provided so that workers get knowledge about work.(7) Inspection There should be proper inspection of stores so that every thing functions according to manners prescribed by certificates. They should be available to achieve quality awards. In order to get ISO 9001 there should be separate internal audit department. (10) Training Programs Training programs should be there to upgrade the skills of employees. automation of factory. Internet and computer technology are prominent features in achieving ISO 9001 and ISO 9002. Preventing methods should be there. .

The Registered office of the company shall be situated in the Province of Punjab. III. liabilities and undertaking of the NISHAT MILLS.MEMORANDUM OF ASSOCIATION NISHAT MILLS LIMITED I. The name of the company is NISHAT MILLS LIMITED. To acquire and take over as a going concern the business rights. II. LYALLPUR a firm belonging to: o Mohammad Yakub o Mohammad Shafi o Abdul Hamid o Mohammad Fafiq o Mohammad Yaha . The objectives for which the company is established are as follows: OBJECTS . Pakistan.

cutting. and manufactured articles. jute. wool. 5. spinning. hemp. silk. weave. preparing. dyes. To purchase or take on lease or otherwise acquire and work and spinning mills. jute and materials. jute hemp. To purchase. selling. silk. jute rejections. coloring or bleaching processed and mercantile business that may be necessary or expedient.o Mohammad Ayoob o Mohammad Farooq o Haji Maula Baksh 1. curing. 4. cotton. 6. prepare. exchange and deal in cloth. To carry on the business of textile manufacturers and of dyeing. silk. raw cotton. combing. And to carry on the same business in whole or in part. to enter into the agreement referred to Clause 3 of the Company s Articles of Association and to carry the same into effect with or without modification. weaving mills. . flax. hair and other fibrous material. flax. shares or otherwise and with a view thereto. weaving. buying and otherwise dealing in yarn. manufacturing. or in extended form and pay for the same in cash. weavers manufacturers balers and pressers ofall jute. metal. To carry on the business of spinners. preparing. stores and other articles and things. Linen. cloth and other goods and fabrics made from raw cotton. spin. hemp. import. ginning factories or presses for pressing merchandise into bales or any other similar concern an the property. and to transact all manufacturing. business and goodwill appertaining thereto. wool. 2. dye and otherwise deal in cotton. and to vend the raw material. bleaching printing. export. wool. and other fibrous. 3. cotton in process. To purchase. sell. comb. Also drugs chemicals. and all or any fibrous and other allied products. sell. dying. yarn.

stock. export and otherwise deal in all kinds of cloth and other goods and fabrics including textile. their spare parts and accessories and to manufacture and deal in articles of all kinds required for the manufacturers of yarn. purchase. haberdashers. To carry on all or any of the business of silk mercers. refine. outfitters. sell. stocking. wool. rubbers and allied goods. underwear. import. sell or otherwise deal in all kinds of textile machinery and equipment. export. 8. chawls. tailors. import. dressmakers. 9. build and construct thereon such factories (ginning or otherwise). clothiers. filted. mufflers. To weave and otherwise manufacture. 13. or take on lease for any term of year or otherwise acquire land with or without buildings thereon at such price or rent and under and subject to such terms and conditions as to title or otherwise as may be thought fit and to erect. To make arrangements for the supply of cotton. wool. linen and cloth and other allied products. importers. tanks. To carry on the business of manufacturers. silk weavers furriers. glovers. bands or any other articles of knitting line or embroidery of every description. store or otherwise deal in woolen. cotton. mills warehouses. American clothe. lace manufacturers and feather dressers and allied products of every description. tapes. buy. silk. 12. To purchase. silk. importers.. estates and other establishments. either directly or in cooperation with any other person and for this purpose to set up farms.7. engines and apparatus and other property and erect them and such other therein as may be necessary for the purposed of the company. Pauline. flax. To import. outwear. banyans. sell. manufacturers. silk. buy. exporter. 11. jersey. . hosiers. jute and other fibrous and similar products for use in the mills run by the company or otherwise. improve. sellers and dealers in waterproof material and fabrics. buyers. 10. and other buildings. and to purchase take on lease or otherwise acquire such machinery. floor cloth and imitation leather. milliners. goods. export. hemp. or mercerized articles. To manufacture. laces or any other goods of similar nature. hatters. netted and looped goods. and wholesale and retail dealers of and in textiles and gold and silver thread fabrics of all kinds. beads. yarn or raw material or nay other quality of the same and to dye it or to manufacture there from articles of hosiery such as socks.

render marketable and manufacture all articles or rubber including Motor and Cycle tyres. manufacturing and financial transactions and to act as agents of any person. company. raising. prepare. To carry on all or any of the business of oil from cotton seeds. To transact or carry on all kinds of agency commissio0n and contract business in Pakistan or abroad and in particular in relation to industrial. .14. 20. factors and warehousemen except managing agents. 17. khaddies or otherwise. 18. To promote and establish working of woolen. silken and woolen goods. agents. exporters. articles and yarns. cotton or spinning and weaving mills. manufacture. Government or local authorities except managing agents. locals bodies and other authorities. To carry on business of dealers and importers of chemicals of all sorts. firm. carding. install. 19. 21. mills and factories for the manufacture of starch and other allied products. contractors. contract. rape seeds and all other varieties of seeds and other sorts of oil and any products thereof and the manufacturers and dealers of vegetable ghee. To carry on the business of dealing and importing rubber in its raw or manufactured state and to treat. 16. To carry on business as general merchants. importers. 15. machining and finishing of all cotton. To carry on all kinds of contracts of Government. To erect. purchase or hire machinery.

lamps and works and to generate. obligations and securities of all kinds. rewards and donations. character. inventions or rights which the company may acquire or propose to acquire. constituted in Pakistan or abroad or issued or guaranteed by any Government. 26. exchange or transfer shares. and the like. commissioners. protection. and use and turn to account and to manufacture under or grant licenses or privileged. suppliers. and either . prospects. sovereign. brevent. cables. dry cells. accumulation and employment of electricity. participation term certificates. To purchase or by any other means acquire and protect. in respect of the same and to spend money in experimenting upon and testing or in improving or seeding to improve any patents. 25. constructors. licenses. supply. To adopt such means of making known the products and business of the company as may seem expedient and in particular by advertisement and publicity in the press or otherwise. whether in Pakistan or elsewhere any patent rights.22. accumulate. electricians. motive power and for all other purposes for which electrical energy can be employed and to manufacture and deal in all apparatus and things required for or capable of being used in connection with the generation. local or others and to exercise and enforce all rights and power conferred by or incidental to the ownership thereof. engineers. debentures-stock. bonds. To carry on the business of electrical engineers. supreme. wire-lines. or by instruments of transfer or otherwise and either perpetual or terminable. contractors. publication of books and periodicals and by granting prizes. invest. which may appear likely to be advantageous or useful to the company. concessions. distribution. 27. 24. hold. concerns and undertakings and generally of any assets. and secure same as may seem expedient. of and dealers in electrical and other appliances. value. and to frame. property or rights. invention. with full power to make the transferable by delivery. State. including in the term electricity all powers that may be directly or indirectly derived there from or may be incidentally hereafter discovered in dealing with electricity. 23. and circumstances of any business. sell. distribute and supply electricity for the purpose of light. or on personal security or without security. debentures stocks. subscribe. exhibitions. modaraba certificates. acquire. manufacturers. To employ experts to investigate and examine the condition. To underwrite. term finance certificate or other securities issued or guaranteed by any company. bonds. public body or authority. prolong and renew. constitute. heat. accumulate. To borrow raise or secure the payment of money by the issue of debentures. rulers.

To draw. bills of lading. trusts and conveniences calculated to benefit employees and ex-employees of the company. To acquire and carry on all or any part of the business or property and to undertake any liabilities of any person. To pay for any property or rights acquired by the company. or aid in the establishment and support of association. 30. make. either in cash fully paid shares or by the issue of securities. To invest and deal with any money of the company in such form as may be though expedient. or partly in one mode and partly in another and generally on such terms as may be determined. discount. firm. warrants. and to make payments towards insurance. execute and issue promissory notes. hold and dispose of shares and securities in any other company having objects altogether or in part similar tot those of this company. To receive fixed and other deposits. debentures. 28. . accept. or its predecessors in business or the dependents or connections of such persons and to grant pensions and allowances. To promote and form and to be interested in and to take. accepts the business of a banking company. To establish and support. general or useful object. 29. Association or company carrying on any business which the company is authorized to carry on or possessed of property or rights suitable for any of the purposes of this company and as the consideration for the same to pay cash or to issue any shares stocks or obligation of this company. institutions. 31. present and future of the company. funds. and other negotiable or transferable instruments. bills of exchanges. or for any exhibition or for any public. endorse.redeemable or otherwise on the undertaking of the company or upon and specific property and rights. 32. rights and liabilities of this company and to subsidies or otherwise assist any such company. 34. and to subscribe or guarantee money for charitable or benevolent objects. or carrying on any business capable of being conducted so as directly or indirectly to benefit this company and to transfer to any such company all or any of the property. 33.

To undertake and execute any trust the undertaking whereof may seem desirable and either gratuitously or otherwise. with any person or persons company or cooperation engaged or interested or about to become engaged or interested in the carrying on or conduct any business or enterprise which the company is authorized to carry on or conduct or from which the company would or might derive any benefit whether direct or indirect. trustees. 42. debentures stock or securities or any other company whether promoted by this company for the purpose or not. develop. To appoint such person and/ or firm as may be deemed expedient to be secretaries. managers or accountants or other experts. of any company or undertaking and for the purpose to act as directors. dispose off turn to account. subsidizing. To pay all the preliminary expenses of any kind and incidental to the formation and incorporation of the company out of the funds of the company. lease. or otherwise deal with all or any part of the property and rights of the company. manage. 41. secretaries or in any other capacity and to appoint and remunerate any directors. To take part in the formation. To procure the company to be registered or recognized in any foreign country or any place.35. To sell or dispose of the undertaking of the company or any part thereof in such manner and for such considerations as the company may think fit and in particular for shares. To enter into partnership or arrangement in the nature of a partnership. and to improve. 39. 36. or district representatives of the company upon such terms as the company may determine. branch managers. administrators. managers. . exchange. supervision or control of the business or operations. To distribute any of the company s property among the members in specie or in any manner thereof. 40. cooperation or union of interests. management. managers. 38. 37. administrators.

To remunerate any person or company for services rendered or to be rendered. debentures-stock. 48. supreme. 50. the placing of or under-writing of any of the shares in the company s capital or any debentures. debentures-stock to other securities of the company. all right. and to carryout. To give any guarantee in relation to the payment of any loan.43. municipal. or in or about the formation and promotion of the company or the conduct of its business. exercise and comply with any such arrangements. 45. To constitute any trust with a view to the issue of stocks or securities based on or representing any shares. To carry on various other businesses which in the opinion of the company it is desirable or convenient to carry on in conjunction with or in lieu of any other business which the company is authorized to carry on. dispose or hold any preferred. obligation. 47. in placing or assisting to place or guaranteeing. To enter into any arrangement with any Government or authority. privileges and concessions. . local or otherwise that may seem conductive to the company s objects or any of them. rights. To cause the company to be registered or recognized in Pakistan or any other country. 46. or other assets specially appropriated for the purpose of any such trust and to settle and regulate. To issue any shares of the company at par or at a premium or debentures at premium or at a discount. stocks. 44. 49. concessions and privileges which the company may think it desirable to obtain. To advance and lend money on the security of assets of all kinds or without security upon such terms as may be arranged. and if thought fir. and to obtain any such Government or authority. to undertake and execute any such trusts and to issue. bonds. securities and to guarantee the payment of interest thereon or of dividends on any stock or shares of the company. deferred or other special stocks or securities.

and conveniences of all kinds. reduce or reorganize the said capital and divide shares in the capital for the time being in several classes in accordance with provisions of Companies ordinance. To do all such other things as are incidental or the company may think conducive to the attainment of the above objects or any of them. To do all or any of the above things in any part of the world. dealers. 1984. o The authorized share capital of the company shall be RS. 1500000000 (one billion five hundred million) divided into 150000000 (one hundred fifty million) ordinary shares of Rupees of 10 each. subcontractors. 53. shall not be restricted by reference to any other paragraph. by through agents.51. trustees or otherwise. o The liability of members is limited. or otherwise and either alone or in conjunction with others and. and either at principals. The company shall have the power to increase. or by the juxtaposition of two or more objects and that in the event of the any ambiguity in this clause every paragraph thereof shall be constructed in such a way as to widen not to restrict the power of the company. agents. It is hereby declared that in the interpretation of this clause the power conferred upon the company by any paragraph. . To carry on all or any kind of the cement business of manufacturers. 52. sellers. trustees.

g) Register means. c) Company means NISHAT MILLS LIMITED d) Director s means the directors for the time being of the company or as the case may be. 2. the directors assembled at a board. The regulations in Table A in the first schedule of the company s ordinance. b) Board means a meeting of directors duly called and constituted or as the case may be the directors assembled at a board. the register of members to be kept pursuant to Section 147 of the ordinance. PRELIMINARY 1. 1. . their remunerations. various matter like appointment of directors. unless the context or the subject matter otherwise requires: a) Articles mean these articles as originally framed or as from time to time altered in accordance with law. accounts of company are frequently discussed. Ordinance means the company s ordinance. company seal. disqualifications. winding up of company. i) Section means section of the ordinance.ARTICLES OF ASSOCIATION OF NISHAT MILLS LIMITED Actually the main purpose of including memorandum and articles of association is to get knowledge about company internal management and affairs. In these articles. It also sets the boundary wall for the company. 1984 shall not apply to the company except as reproduced herein. e) Month means calendar month according to the English calendar. 1984 or any modification or re-enactment thereof for the time being enforce. h) Seal means the common seal of the company. f) Office means the registered office for the time being of the company. unless the context otherwise requires.

j) Special resolution means the special resolution of the companies defined in section 2(1) (36) of the ordinance. No shares shall be offered to the public for subscription except upon the term that the amount payable on application shall be the full amount of the nominal amount of the shares. o) The head notes are inserted for convenience and shall not affect the construction of these articles. if and so far as. be entitled to receive within three months after allotment or within forty-five days of the applications for registration of transfer. Provided that. lithography. those restrictions are binding upon the company 111. without payment. . 6. a certificate under the seal specifying the share of shares held by him and the amount paid upon thereon. photography and other method of representing or reproducing words in a visible form. in respect of a share or share held jointly by several persons. unless the contrary intention appears. BUSINESS 3. 5. as a member in the register shall. The directors shall. I1. k) Words importing masculine gender include the feminine gender. duly comply with such of the provision of section 68 to 73 as may be applicable to the company. The directors shall have regard to the restriction on the commencement of business imposed by section 146. p) Unless the context otherwise requires words or expressions contained in these articles shall bear the same meaning as in the ordinance. be construed as including references to printing. n) Words importing person shall include bodies corporate. Every person whose name is entered. SHARES 4. l) Words importing singular number include the plural number and vice versa. as regards any allotment of shares. m) Expression referring to writing shall.

No transfer shall be made to an infant or person of unsound mind. ads to evidence and indemnity and payment of expenses incurred by the company in investigating titles as the directors think it. iv. 8. they shall within thirty days after the date on which the transfer was made lodged with the company send to the transferee and the transferee notice of the refusal indicating the defect or invalidity to the transferee. and on such terms if any. it may be renewed on payment of such fee. Except to the extent and in the manner allowed by section95. not exceeding one rupee.the company shall not be bound to issue more than one certificate. if any. If the directors refuse to register a transfer of shares. and the transferor shall be deemed to remain holder of the share until the name of the transferee is entered in the register in respect thereof. or in loans upon the security. the company s shares. and such other evidence as the directors may reasonably require showing the right of the transferor to make the transfer accompanies the duly stamped instrument of transfer. no part of the funds of the company shall be employed in the purchase of. who shall. 7. TRANSFER OF SHARES 9. lost or destroyed. If a share certificate is defaced. The directors may decline to recognize any instrument unless the certificate of the shares to which it relates. The instrument of transfer of any share in the company shall be executed both by the transferor and transferee. The directors may also suspend the registration of transfers prior to the determination of entitlement or rights of the shareholders by giving seven days previous notice in the manner provided in the ordinance. . 10. and delivery of a certificate for a share to one of several jointly holders shall be sufficient delivery. after removal of such defect or invalidity be entitled to re-lodge the transfer deed with the company. The directors shall not refuse the transfer any time unless the transfer is defective or invalid.

In the case of share registered in the name of two or more holders. to be divided into shares of such amount. Subject to the provisions of the ordinance. to make such transfer of the share as the deceased or insolvent person could have made. The executors. have the right. Any person becoming entitled to a share in consequence of the death or insolvency of a member shall. except that he shall not. be entitled in respect of it to exercise any right conferred by membership in relation to meetings of the company. or on the receipt of an intimation from the person to whom the offer is made that he declines . But the directors shall. be offered to such persons as at the date of the offer or entitled to receive notices from the company of general meetings in proportion. the survivor or survivors shall be the only person recognized by the company as having any title to the share. ALTERNATION OF SHARE CAPITAL 14. before being registered as a member in respect of the share. VI. A person becoming entitled to a share by reason of the death or insolvency of the holder shall be entitled to same dividends and other advantages to which he would be entitled if he were registered holder of the share. The company may. in either case have the same right to decline or suspend registration as they. to the amount of the existing shares to which they are entitled. all new shares shall. heirs of nominees. 15. and limiting a time within which the offer. will be deemed to be declined. from time to time. 13. The offer shall be made by notice specifying the number of shares offered. of a deceased sole holder of a share shall be he only persons recognized by the company as having any title to the share. as the resolution shall prescribe. either to be registered as a member in respect of the share or. as the case may be. as nearly as the circumstances admit.v. by ordinary resolution increase the share capital by such sum. upon such evidence being produced as may from time to time be required by directors. before issue. 12. if not accepted. instead of being registered himself. and after the expiration of that time. administrators. TRANSMISSION OF SHARES 11. would have had in the case of a transfer of the share by the deceased or insolvent person before the death or insolvency.

to accept the shares offered. The directors may likewise so dispose off any new shares which (by reason of the ratio which the new shares bear to shares held by person entitled to an offer of new shares) cannot. by special resolution. The company may. in the opinion of the directors. The new shares shall be subject to the same provisions with reference to transfer. 21. The company may by ordinary resolution: a) Consolidate and divide its share capital into shares of larger amount than its existing shares. to the provisos. The statutory general meeting of the company shall be held within the period required by section 157. nevertheless. GENERAL MEETING 20. and subject to. the directors may accept from any member the surrender of all or any of his shares on such terms as shall be agreed. A general meeting to be called annual general meeting shall be held in accordance with the provisions of section158. within eighteen months from the date of incorporation of the company and thereafter once at least in every year within in a period of six month following the close of its financial . reduce its share capital in any manner and with. 18. 16. 19. 17. the directors may dispose off the same in such manner as they think most beneficial to the company. subject. transmission and otherwise as the shares in the original share capital. Subject to the provisions of the ordinance. VII. to clause (d) of sub section of (1) of section 92. conveniently offered under this regulations. b) Sub-divide its existing shares or any of them into shares of smaller amount than is fixed by the company s memorandum of association. any incident authorized and consent required by law.

the day and the hour of meeting and. in case of special business. and extraordinary general meetings shall also be called on such requisition or in default. NOTES AND PROCEEDING OF GENERAL MEETING 24. No business shall be transacted at any general meeting unless a quorum of members is present at that time when the meeting proceeds to business.year and not more than fifteen months after the holding of its last preceding annual general meeting as may be determined by the directors. Three members present personally who represent not less than twenty-five percent of the total voting power either on their own account or a proxies shall be a quorum . VIII. The directors may whenever they think fit. under the ordinance or the regulations of the company. balance sheet and the reports of the directors and auditors. any member shall not invalidate the proceedings at any general meetings. and the fixing of the remuneration of. 22. but the accidentally omission to give notice to or the non. All business shall be deemed special that is transacted at an extraordinary general meeting. the appointment of. Twenty one days at the least (exclusive of the day on which the notice is served or deemed to be served but inclusive of the day for which notice is given) specifying the place. 25. the consideration of accounts. call an extraordinary general meeting. entitled of receive such notices from the company. any director of the company may call an extraordinary general meeting in the same manner as nearly as possible as that in which meetings may be called by the directors.receipt of notice by . and also all that it is transacted at an annual general meeting with the exception of declaring a dividend. 26. 23. may be called by such requisition. shall be given in the manner provided by the ordinance for the general meeting. All general meetings of the company other than the statutory meeting or an annual general meeting shall be called extraordinary general meetings. the general nature of that business. the auditors. the election of directors. to such persons as are. If at any time there are not within Pakistan sufficient directors capable of action to form a quorum. as is provided by section 159.

or willing to act as chairman. and if none of the directors is present. if any. 28. shall have an exercise a second or casting of vote. . and. The chairman of the board of directors. 33. a declaration by the chairman that a resolution has. A poll demanded on the election of chairman or on a question of adjournment shall be taken at once 34. and an entry to that effect in the book of the proceedings so the company shall be conclusive evidence of the face without proof of the number or proportion of the votes recorded in favor of or agent that resolution. been carried or carried unanimously. in any other case. or if at any meeting he is not present within fifteen minutes after the time appointed for the meeting. shall preside as chairman of every general meeting of the company. the members present shall choose on of the their member to be chairman. or at which the poll is demanded. with the consent of any meeting at which a quorum is present (and shall if so directed by the meeting) adjourn the meeting from time to time but no business shall be transacted at any adjourned meeting other than in the business left unfinished at the meeting. A poll may be demanded only in accordance with the provisions of section 167. whether on a show of hands or on a poll. if called upon the requisition of members. shall be dissolved. The chairman may. on a show of hands.27. If a poll is fully demanded. Unless a poll is so demanded. or he is unwilling to act as chairman. any one of the directors present may be elected to be chairman. 29. it shall stand adjourned to the same day in the next week at the same time and place. 32. it shall be taken in accordance with the manner lay down in section 168 and result of the pool shall be deemed to be the resolution of the meeting at which the pool was demanded. 31. At any general meeting a resolution put to the vote of the meeting shall be decided on a show of hands unless a poll is (before or on the declara5ion of the result of the show of the hands) demanded. In the case of an equality of votes. but if there is no such chairman. or by a particular majority or last. 30. the chairman of the meeting at which the show of hands takes place. the members present. being not less than two. shall be a quorum. If within half an hour from the time appointed for the meeting a quorum is not present the meeting. if at the adjourned meetings a quorum is not present within half an hour from the time appointed for the meeting.

36. the vote of the senior who tenders as a vote. and for this purpose seniority shall be determined by the order in which the names stand in the register. In case of joint holders. 37. by his committee or other legal guardian. shall be deposited at the office not less than forty-eight hours before the time for holding the meeting at which the person named in the instrument proposes to vote and in default the instrument of proxy shall not be treated as valid. On a poll votes may be given either personally or by proxy. 39. on a show of hands every member present in person shall have one vote except for election of directors in which case the provisions of section 178 shall apply. VOTES OF MEMBERS Subject to any rights or restriction n for the time being attached to any class or classes of shares. The instrument appointing a proxy shall be in writing under the hand of the appointer of his attorney duly authorized in writing. An instrument appointing a proxy may be in form. A member of unsound mind. On a poll every member shall have voting rights as laid down in section 160. 40. Provided that nobody corporate shall vote by proxy as long as a resolution of its directors in accordance with the provision of section 162 is enforce. or in respect of whom an order has been made by any court having jurisdiction. or a materially certified copy of that power or authority. and any such committee or guardian may.IX. whether on show of hands or on a pool. may vote. A proxy must be member of the company. 38. . shall be accepted to the exclusion of the votes of the other joint holders. 35. on the pool. The instrument appointing a proxy and the power of attorney or other authority (if any) under which it is signed. in lunacy. whether in person or by proxy. vote by proxy.

The remuneration of a director for performing extra services. however. and may exercise all such powers of the company as are not by the ordinance or by there regulations. The numbers of the directors and the names of the first directors shall be determined in writing by a majority of the subscribers of the memorandum of association. in any case. and may exercise all such powers of the company. including holding of the office of chairman and the remuneration to be paid to any director for attending the meetings of the directors or a committee of directors shall from time to time be determined by the board of the directors in accordance with law.25000 in his own name.41. DIRECTORS 42. so. no person shall be appointed as a director unless he is a member of the company and holds shares of the minimum value of Rs. who may pay all expenses incurred in promoting and registering the company. Save as provided in section 187. that such number shall not in any case be less than seven. POWERS AND DUTIES OF DIRECTORS 45. insanity revocation or transfer as aforesaid shall have been received by the adjourned meeting at which the proxy is used. subject nevertheless to the provisions of the ordinance or to any of these regulations. A note given in accordance with the terms of any instrument of proxy shall be valid notwithstanding the previous death or insanity of the principal or revocation of the proxy or of the authority under which the proxy was executive. Provided that no intimation in writing of such death. XI. or the transfer of the share in respect of which this proxy is given. and such regulation being no inconsistent with the aforesaid provisions as may be prescribed by the company in general meeting but no regulation made by the company in . acquire the same within in two month of appointment. 43. A director who is required to hold qualification shares may act as a director before acquiring his qualification shares but shall. required to be exercised by the company in general meeting. The business of the company shall be managed by the directors. X. relax able in the case of directors representing interest of other concerns. 44.

The directors may from time to time. a) All appointments of officers made by the directors. The directors shall duly comply with the provisions of the ordinance and in particular with the provisions in regard to the registration of the particulars of mortgages and charges affecting the property of the company or created by it. . 46. if authorized by the directors delegate all or nay of the powers vested in him/ them. to the keeping of a register of the directors and to the sending to the registrar of an annual list of members and summary of particulars relating thereto and notice of nay consolidation or increase of share capital. and discretion (not exceeding those vested in or exercisable by the directors under these presents) and for such period and subject to such conditions as the directors may from time to time think fit. 47. 49. by power of attorney under the company s seal appoint any person or person to be the attorneys of the company for such purposes and with such powers. Any such attorney (s) may. The directors shall appoint a chief executive in accordance with the provisions of section 198 and 199. 48. And every director present at any meeting of directors or committee of directors shall sign his name in a book to be kept for that purpose. b) The name of the directors present at each meeting of the directors and of nay committee of the directors. authorities. The board shall determine the terms and conditions of appointments of the chief executive. or sub-division of shares.general meeting shall invalidate any prior act of the directors which would have been valid if that regulation had not been made. The directors shall cause minutes to be made in books provided for the purpose of. c) All resolution and proceedings at all meeting of the company and of the directors and of committee of directs. copies of special resolution and copy of the register of directors and notifications of any changes therein.

the chairman shall have and exercise a second or casting vote. the directors present may choose one of their number to be chairman of the meeting. A committee may elect a chairman of its meetings. PROCEEDING OF DIRECTORS 51. adjourned and otherwise regulate their meetings.XII. Any committee so formed shall. confirm to any restrictions that may be imposed on it by the directors. and if he does so vote. No person shall become a director of the company if he suffers from any of the disabilities or disqualification mentioned in section 187 and. 54. but. XIII. his vote shall not be counted. but. The director may elect a chairman of their meetings and determine the period for which he is to hold office. in the exercise of the powers so delegated. questions arising at any meeting shall be decided by a majority of vote. whichever is greater. any work for. The company may meet together for the dispatch of the business. Provided however that no director shall vacate his office by reason only of his being a member of any company which has entered into contracts with. DISQUALIFICATION OF DIRECTORS 50. summon a meeting of directors to. The quorum for a meeting of directors shall not be less than one-third of their number of four. shall cease to hold such offers from the date he so becomes disqualified or disabled. The directors may delegate any of their powers not required to be exercised in their meeting to committees consisting of such member or members of their body as they think fit. A director may. 53. 52. or done. if already a director. if no such chairman is elected or if at any meeting the chairman is not present within ten minutes after the time appointed for holding the same or is unwilling to act as chairman. it shall not be necessary to give notice of a meeting of directors to any director for the time being absent from Pakistan. In case of an equality of vote. the company but such director shall not vote in respect of any such contract or work. and they think fit. at any time. and the secretary on the requisition of a director shall. or if at any meeting the chairman is not present within ten minutes after the time appointed for holding the same . if no such chairman is elected.

ELECTION AND REMOVAL OF DIRECTORS 58. be as valid as if every such person had been duly appointed and was qualified to be a director. 59. All acts by any meeting of the directors or of a committee of directors. or that they or any of them were disqualified.or is unwilling toast as chairman.] XIV. 56. question arising at any meeting shall be determined by a majority of votes of the members present. A committee may meet and adjourn as it thinks proper. In case of any equality of votes. 60. the chairman shall have and exercise a second or casting vote. or by any person acting as a director. shall not withstanding that it be after wards discovered that there was some defect in the appointment of such directors or persons acting as aforesaid. A resolution in writing signed by the directors (not being less than one-third of their number or four whichever is greater) or affirmed by them through telex or telegram shall be as valid and effectual as if it had been passed at the meeting of the directors duly convened and held. the members present may choose one of their members to be chairman of the meeting. 55. 57. At the first annual general meeting of the company all the directors shall stand retired from office. The number of directors determined by the board shall be elected to office by the members in general meting in the following manner. and directors shall be elected in their place in accordance with section 178 for a term of three years. . a) A number shall have such number of votes as it equal to the product of the number of voting shares held by him and the number of directors to be elected. A retiring director shall be eligible for re-election.

THE SEAL 64. which the addition on its face of the name of every territory. 65. the company may from time to time in annual general meeting increase or decrease the number of directors. The directors shall provide a common seal of the company which shall not be affixed to any instrument except by the authority of a resolution of the board or by a committee of directors authorized in that behalf by the directors. and two directors or one director and the secretary of the company shall sigh every instrument to which the common seal is affixed. Subject to the provision of the ordinance. The directors may provide for the use in any territory. c) The candidate who gets the highest number of votes shall be declared elected as directors and then the candidate who gets the next highest number of votes shall be so declared and so on until the total number of directors to be elected has been so elected. The company may remove a director but only in accordance with the provisions of the ordinance. of an official seal which shall be a facsimile of the common seal of the company. 61. The provisions of section 213 shall apply to the use of the official seal. . Any casual vacancy occurring on the board of directors may be filled up by the directors. district or place where it is to be used. 63. but the persons so chosen shall be subject to retirement at the same time as if he had become a director on the day on which the director in whose place he is chosen was last elected as director. 62.b) A member may give all his votes to a single candidate or divide them between more than one of the candidates in such manner as he may choose. XV. district or place not situated in Pakistan.

but if and so long as nothing is paid upon any of the share in the company. The company in general meeting may declare dividends but no dividend shall exceed the amount recommended by the directors. and pending such application may. 72. which they may think prudent not to distribute. without setting them aside as a reserve. 70. or for equalizing dividends or for any other purpose to which the profits of the company may be properly applied. 69. set aside out of the profits of the company such sums as they think proper as a reserve or reserves which shall. DIVIDENDS AND RESERVE 66. The directors may. The directors may carry forward any profits. all dividends. 71. dividends may be declared and paid according to the amounts of the shares.XVI. The directors may from time to time pay to the members such interim dividends as appear to the directors to be justified by the profits of the company. shall be declared and paid according to the amounts paid on the shares. 67. be applicable for meeting contingencies. subject to the provisions of the ordinance. of paid up shares. Any general meeting declaring a dividend may resolve that such divided be paid wholly or in part by the distribution of the specific assets and in particular. from time to time think fit. 68. . No dividends shall be paid otherwise than out of profits of the year or any other undistributed profits. or debentures in stock of the company or other company or in one or more of such ways. at the like discretion either be employed in the business of the company or be invested in such investments (other than shares of the company) as the directors may. Subject to the rights of the persons entitled to shares with special rights as to dividends. at the discretion of the directors. before recommending any dividend. No amount paid on a share in advance of calls shall be treated for the purposed of this regulation as paid on the share. debentures.

75. The dividend shall be paid within the period laid down in section 251. A transfer of shares shall not pass the right to any dividend declared thereon before the registration of the transfer. 79. any one of them may give effectual receipt for any dividend payable on the share. If several persons are registered as joint-holders of any share. debentures or debenture-stock of the company which shall be distributed accordingly and that such distribution or payment shall be accepted by such share holders in full satisfaction of their interest in the said capitalized sum. or other assets forming part of the undivided profits of the company standing to the credit of any reserve or other fund or in the hands of the company and available for divided 74. Notice of any dividend that may have been declared shall be given in the manner hereinafter mentioned to the persons entitled to share therein. . 77. 76. All dividends unclaimed for six year after having been declared shall be kept in trust by the company but may invested or otherwise made use of by the directors for the benefit of the company until claimed.73. (or representing premiums received on the issue of the shares and standing to the credit of the share premium account) be capitalized and distributed amongst such of the share holders as would be entitled to receive the same if distributed by way of dividend and in the same proportions on the footing that they become entitled thereto as capital and that all or any part of such capitalized fund be applied on behalf of such share holders in paying up in full any unmissed shares. 78. Any general meeting may resolve that any money investments.

The balance sheet and profit and loss account shall be accompanied by a report of the auditors of the company and the report of directors. 84. 85. The directors shall from time to time determine whether and to what extent and at what time and places and under what conditions or regulations the accounts and books or papers of the company or any of them shall be open to the inspection of members not being directors and no member (not being a director) shall have any right of inspecting any account and book or papers of the company except as conferred by law or authorized by the directors or by the company in general meeting. ACCOUNTS 80. Every account of the directors when audited and approved by a general meeting shall be conclusive except as regards any errors discovered therein within three months next after the approval thereof. at least twenty-one days preceding the meeting be sent to the persons entitled to receive notices of general meeting in the manner in which notices are to be given as hereinafter provided. A copy of the balance sheet and profit and loss account and reports of directors and auditors shall. 81. 82. and other reports referred to in the preceding articles shall be made out in every year and laid before the company in the annual general meeting made up to the date not more than six month before such meeting. Whenever any such error is discovered within that period the account shall forthwith be corrected and thenceforth shall be conclusive. The directors shall cause to be kept proper books of account as required under section 230. . The directors shall keep the books of account at the office on at such other place as the directors shall think fit and shall be open to inspection during business hours. The directors shall as required by section 233 and 236 cause to be prepared and to be laid before the company in general meeting such profit and loss account and balance sheets duly audited and reports as are referred to in those sections. 86. profit and loss account.XVII. A balance sheet. 83.

and shall be such declaration pledge himself not to reveal any of the matters which may come to his knowledge in the discharge of his duties except when required to do so by the directors or by any general meeting or by any a court of law and except so far as may be necessary in order top comply with any of the provisions in these presents.87. trustee. mystery of trade. Auditors shall be appointed and their duties regulated in accordance with section 252 to 255. auditors. XVIII. The company shall give notice to members and auditors of the company and other persons entitled to receive notice in accordance with section 50. . 88. in the interest of the members of the company. to communicate. NOTICES 89. accountant. 91. or secret process or of any matter whatsoever which may relate to the conduct of the business of the company and which in the opinion of the directors will be in expedient. The directors shall in all respect comply with the provisions of section 230 to 236. if so. to require discovery of or any information respecting any detail of the company s trading or any matter which is or may be in the nature of a trade secret. servant. required by the directors before entering upon his duties sign a declaration pledging himself to observe a strict secrecy respecting all transactions of the company with its customers and the state of accounts with individuals and in matters relating thereto. or other person employed in the business of the company shall. manager. officer. advisor. member of a committee. No member or other person (not being a director) shall be entitled to enter upon the property of the company or examine the company s premises or properties without the permission of a director subject to articles 82. SECRECY 90. agent. XIX. Every directors.

divide amongst the members in specie or kind the whole or any part of the assets of the company (whether they shall consist of property of same kind or not) and may. set such value as he deems fair upon any property to be divided as aforesaid and may determine how such divisions shall be carried out as between the members or different clauses of members. or vest the same in trustees for them. INDEMNITY 94. XXI. or in connection with any application under section 488 in which relief is granted to him by the court . shares or other securities. or any other properties of the company amongst the members without realization. accept those brought by the company against him in which judgment is given in his favor or in which he is acquitted. whether civil or criminal. and all holders of shares shall be bound to accept and shall be bound by any valuation or distribution so authorized. The liquidator may. with the sanction of a special resolution of the company and any other sanction required by law. for such purpose. debentures or securities or any other company. RECONSTRUCTION 92. in case the company is proposed to be or is in the course of being wound up.XX. On any sale of the undertakings of the company the directors or the liquidators on a winding up may. shall think fit but so that no member shall be compelled to accept any shares or other securities whereon there is any liability. and wave all rights in relation thereto save only such statutory rights (if any) as are. WINDING UP 93. the liquidator may. vest the whole or any part of such assets in trustees upon such trust for the benefit or the contributories. if authorized by a special resolution. If the company is wound up. as the liquidator with the like sanction. benefits or property. with the like sanctions. otherwise than in accordance with the strict legal rights of the members or valuation of any such securities or property at such price and in such manner as the meeting may approve. incapable of being varied or excluded by these presents. and any special resolution may pro-vide for the distribution or appropriation of the cash. XXII. and the directors (if the profits of the company permit) or the liquidation (in a winding up) may distribute such shares or securities. either then existing or to be formed for the purchase in whole or in part of the property of the company. Every officer or agent for the time being of the company may be indemnified out of the assets of the company against any liability incurred by him in defending any proceedings. accept fully paid shares. arising out of his dealings in relation to the affairs of the company.

or any statutory modification thereof and any rules made there under. 1940. ARBITRATION 95. every such difference shall. their executors administrators or assigns on the other hand. before proceeding on the reference and such decision shall be final and binding on the parties Director Finance Company Secretary Chief Executive Board of Directors ORGANIZATIONAL STRUCTURE NISHAT MILLS LIMIT . touching the true intent or construction or the incident or consequences of these articles or of the statutes. omitted or suffered in pursuance of these articles or of the statutes or touching any breach or alleged breach of these articles. or in the event of the two arbitrators not agreeing. then of an umpire to be appointed by the two arbitrators. or touching anything there or thereafter done. or to these articles or to any statue affecting the company or to any of the affairs of the company.XXIII. executed. as a condition precedent to any other action at law be referred in conformity with the arbitration act. Whenever any difference arises between the company on the one hand and any of the members. to the decisions of an arbitrator to be appointed by the parties in difference or if they cannot agree upon a single arbitrator to the decision of two arbitrators of whom one shall be appointed by each of the parties in difference. in writing.

M.M. Export Legal Advisor G. Finance G. Weave G. HRM G. Stitching Chief Engineer .Director Purchase Director Processing Director Marketing ORGANIZATIONAL STRUCTURE NISHAT MILLS LIMITED G.M.M.M.

M. Purchase Director processing Chief Executive ORGANIZATIONAL STRUCTURE NISHAT MILLS LIMITED Assistant manager waste Assistant manager sales AM quality control Deputy Manager Waste Assistant Manager Deputy Manager Quality .Director spinning G.

Manager processing printing Dy. Manager folding Dy. Manager processing dying .Incharge fair price shop GM MARKETING Assistant manager ORGANIZATIONAL STRUCTURE NISHAT MILLS LIMITED Director processing Manager processing Manager folding Dy.

ORGANIZATIONAL STRUCTURE NISHAT MILLS LIMITED G. assistant manager waste Assistant manager Assistant manager fair price Assistant manager waste Assistant manager waist Assistant manager sales . Manager Quality Sr.M LOCAL MARKETING In charge fair price Dy.

sales officer Asst. sales officer Computer programmer . Manager sales Sales officer Sales officer Sales officer Asst.M SALES Sr.ORGANIZATIONAL STRUCTURE NISHAT MILLS LIMITED G. Assistant manager Asst. manager sales Asst.

Computer programmer

Part 2 GROUP PERFORMANCE Playing a crucial role in the private sector, Nishat Group rank among the top five business houses in Pakistan, in terms of sales and assets. There open and decentralized management structure helps us in making decision, vital to remain competitive in their businesses. Their team is proud of their achievement and work together to maintain high standard of quality and service. As a responsible corporate citizen, they continually strive for the beneficial partnerships with the communities in which the CARING FOR THE ENVIRONMENT is undertaken. Nishat Group is playing a leadership role in setting the pace for environmental protection in the country. To control pollution and provide safe working and living conditions in and around Nishat Mills Limited, a sophisticated Water Treatment and Disposal System has been installed which removes hazardous materials from effluents. This system was the first of its kind in the Pakistan.

Different Management Styles at Nishat Mills Limited

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

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

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

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

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

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

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

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

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

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

The basic Objectives of job assessment are · Check the overall performance of employees · Whether the job assigned is fully done or not · Integrity, honesty · Loyalty · Devotion and commitment of the part of employee to achieve organizational objectives § Measures To Check Overall Performance Higher manager to check the performance of employees adopts following measures, · Standards are established first · Measure the individual as well as collectively performance · Compare actual performance with planned · Taking corrective action · Reviews of job are made. · Superior management assesses accuracy of work.

On the basis of performance appraisal awards and rewards or punishments are given. § Accountability Employees have to face inquiries or suspensions, if they are involved in activities which are not according to the goal of Nishat mills limited. They are often terminated from their jobs, if they are not performing well. They can be demoted from their ranks. In Nishat mills limited, promotion is granted on performance basis so they are also accountable if they are performing poorly. If the employees are not obedient to their superior or involved in unethical activities, they have to face the circumstances. Severe punishment like demotion, firing and suspensions are given to nonperforming or low-performing employees.

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

Plant location Plant location is one of the main long-term strategic decisions normally taken by top management. Nishat mills limited is ideally located in, Niashatabad Faisalabad. 12- K.M Faisalabad road Shiekhupura. 21- K.M ferozepur road Lahore. 5 - K.M Nishat avenue Lahore. Off 22.K.M ferozepur road Lahore. 20-K.M Shiekhupura Faisalabad (ferozewatan) Main factory is located at Niashatabad. It is a composite unit.

Composite unit means all the process i.e. from spinning to stitching takes place under one roof. Product process includes spinning, weaving, processing, finishing and stitching units. While at Shiekhupura, weaving process is being carried out. At 21. K.M ferozepur road, Lahore a stitching unit has been established to meet the customer s requirements. Finally 20.K.M Shiekhupura Faisalabad road is a spinning unit is working. This unit involves converting cotton into yarn. Plant location is critical success factor. It involve huge investment and irreversible. It is either a life long asset or life long liability because building and other structure once made cannot be moved. Now we see the appropriateness of Nishat plant location,

NISHATABAD DYING & FINISHING

The history of Nishat mills limited date back to 1951. When Mian Muhammad Yahya founded Nishat mills limited at NDF. This plant is ideally located at 5 km, NISHAT AVENUE, off 22km, Ferozepur Road Lahore. Plant was established keeping in view of following considerations,

Ø Availability of cotton Ø Technical people Ø Housing and other facilities Ø Infrastructure Ø Cost of transportation of labor Ø Land Ø Proximity to market Ø Stitching and its worker Ø Availability Of Cotton

Since Faisalabad and its surroundings are known for fines kind of cotton so it is easy to acquire to raw material. Cotton is procured at the start of season to avoid any variation, which may occur in the crop from time to time, enabling the mills to produce consistent quality all the year. For this purpose a fully

electricity. like TEXTILE COLLEGE FAISALABAD. Goods can be transported either by road or by railway. A housing scheme was introduced. so delivery of finished products becomes very easy. There are certain objective factors. Its plant location enables it to invite celebrities from Faisalabad chamber of commerce to share their personal experiences. In order to promote their skills. government has established various training schools. This colony provides residential facilities to workers. To fully exploit the skills of worker Nishat is providing them various facilities. Ø Technical People Faisalabad is an industry-boosting city. There is also a dry port at Faisalabad. Ø Infrastructure It includes availability of water. People have technical skills. disposal of wastage etc. roads (roads from factory to market). Road conditions are absolutely perfect for the transportation of products. This college is providing skilled persons to NISHAT MILLS LIMITED. It was named at NISHATABAD COLONY. Other facilities include in-house training school to upgrade the skills.equipped cotton laboratory is established and it is working day and night during cotton seasons to select the best quality crop to be purchased. Seminars/lectures are arranged to acquire satisfactory results. all the facilities are available there. gas. which include Ø Cost Of Transportation Of Labor . Ø Housing And Other Facilities Satisfaction of employees both manager and worker is necessary and inevitable to achieve organization goals.

.. Dry Port. it has become heart of industrial area.Plant is not far enough from city. Nishat mills limited do not have any subjective factors. I want to serve my people and I want to serve my homeland. They invest money to get return. Nishat mills Faisalabad covers 98 acre. Ø Stitching Unit And Its Worker Stitching unit is not far from city so female workers are not reluctant to work in stitching department. Europe and use. Ø Proximity To Market Nishat mills limited are export-oriented organizations. This is another advantage of plant location. Frankly speaking capitalist do not believe. It has quality with adequate provisions for future expansion. The major products are exported to Japan. Later on 10000 spindles were added. which are considered. laying the foundation of nation s biggest textile composite project. Logistics are available to carry goods. infact with increase in population. Far East. Cost of transportation of labor/material is low as compared to its competitors. railway and roads all are in perfect conditions. Ø Land At Reasonable Price Nishat mills limited started out as a weaving unit with 500 semi-automatic looms. There are certain subjective factors like emotional sentiment of people. before location of plant. South America.

Furniture & Kitchen Accessories · Tea cozy . piped and pleated tie backs Table. Bedding · Sheet sets · Quilt cover sets · Bed spreads · Comforters · Bed skirts · Oxford pillow cases · Blanket covers · Sleeping bags Curtains & Accessories · Embroidered curtains · Pencil pleat tape curtains · Pinch pleat lined & unlined curtains · Tab top & rod pocket curtains · Assorted pelmets and window dressings · Oxford cushion covers · Frilled and piped cushion covers · Frilled.PRODUCT LINE Products line of Nishat mills limited consists of following items.

· Table mats · Table cloth and napkins · Aprons · Kitchen gloves · Pot holders · Chair pads with circle tacks · Couch cove PRODUCTION UNITS OF NISHAT MILLS LIMITED The Company s production facilities comprises of: v Spinning v Weaving v Processing v Design studio v Engraving v Rotary screen printing section .

v Finishing section v Dyeing section v Inspection and rolling section v Quality control section v Production planning section v Stitching units v Power generation Plant Capacity UNITS Scale 1998 1999 2000 2001 SPINNING Kgs .

54969 51989 48362 52467

WEAVING Sq. Mt. 118008 140229 142304 152619

POWER PLANT KWH 264902 264902 264902 315418

Actual Production

UNITS Scale 1998 1999 2000 2001

SPINNING Kgs 53968 50529 46729 50907

WEAVING Sq. Mt. 107661 128130 130444 140046

POWER PLANT KWH

182090 189273 174829 179882

Reason for Low Production Under utilization of available capacity is due to normal maintenance. The generation capacity of power plant was increased due to installation of gas turbines in last quarter during the year under reference. Production Machines

No. Of Spindles 176452 178324 166792 153192 172992

No. Of sulzer looms 338 338 388 284 284

No. Of Air jet looms 120

120 180 244 244

No. Of Thermo sole dyeing 1 1 2 1 3

No of Rotary printing machine 2 2 3 3 3

SPINNING Nishat Mills Limited initially started business with 10,000 spindles, which later on with the gradual increase reached 165,800. The entire machinery is from world-renowned manufacturers from Japan. A China and Europe. For reaching high quality standards, research and development is imperative for which Nishat Mills has state of the art yarn and cotton laboratories with world class scaling standards. Cotton is procured at the start of the season to avoid any variation, which, can occur in the crop from time to time enabling the mills to produce a consistent quality all the year round. For this purpose a fully equipped cotton laboratory with HVI-900/I and ASIF-N is working day and night during the cotton season to select the best quality crop to be purchased.

880 spindles. each with a distinctive product range and capacity to keep a check on the quality standards. Here under are summarized details of spinning machinery: 1) BLOW ROOM Toyofa-Ohara-Heregeth (Japanese origin with German technology know how) 2) CARD Trytzschler (German Origin) Crosrol (U. The major production from the spinning is exported to Japan. Spinning production capacity for both cotton and Blended yarn is 120 Tons/Day. South America. In addition the spinning also provides the same high quality yarn to their own weaving mills going into fabric production. A Brief Range of Machinery and Production Range is Given Below A) Machinery Details Nishat Mills Limited (Faisalabad only) has seven spinning units with a total of 165. Far East.Korigin) Toyoda (Japanese Origin) Howa (Japanese) 3) DRAWING Toyoda& Howa (Japanese Origin) Rieter (swiss Origin) 4) COMBER .NML spinning is operationally organized into seven spinning units. every cone undergoes inspection before packing to ensure that the buyer gets only the best out of the lot. NML spinning is thus renowned for being one of the most trusted brand names in the market enjoying the trust and confidence of the consumer s world over. Europe and the USA.

Toyoda& Howa (Japanese Origin ) Rieter (Swiss Origin) 5) SIMPLEX Toyda&Howa (Japanese Origine) 6) RINGFRAMES Toyoda& Howa (Japanese Origine) FA-507 (Chinese Origin with Germen Drafting) 7) AUTO CORNER Murata (Japanese Origin) 8) DOUBLE INCH& TWISTING EQUIPMENT Murata (Japanese Origin) COUNT RANGE 100% Cotton Carded From New 12 /1 to Ne32/1 From New 12/1 to New 32/1 All double Yarn in 100% Knotless/ auto-spliced 100%Cotton Combed From New 12/1 to New 32/1 From New 12/1to New 32/1 .

. Quantity per FCL 39000 lbs.All double Yarn in 100% Knotless/auto spliced We are also producing finer counts i. Supported by their own in house spinning units. for both knitting (waxed or UN waxed) and weaving. Their fabrics are not only rated as the top quality but also enjoy a premium for their superior quality all over the world. 100 lbs. Standard packing 24 cones per carton Carton Wt. the weaving sector of Nishat mills limited produces fabric range form light to heavy percales to satin and traditional to twill dobby items. 42/1 combed and Above with the bending of imported cotton of longer staple length.e.. (40ft High cube container) WEAVING NML weaving enjoys the reputation for being the market leader in the loom state fabric business in Pakistan. BLENDED YARN Poly cotton Poly 52%: cotton 48% carded New 10/1 to Ne30/1 Poly 52%: cotton 48% carded New 10/1 to Ne40/1 Poly 65%: cotton 35% carded New 10/1 to Ne30/1 Poly 65%: cotton 35% carded New 10/1 to Ne45/1 Cotton Rich (CVC) Poly 45%: cotton 48% carded New 10/1 to New 30/1 Poly 45%: cotton 48% combed New 10/1 to Ne 40/1 Poly 40%: cotton 48% carded Ne 10/1 to Ne 30/1 Poly 40%: cotton 48% cambed Ne 10/1 to Ne 40/1 All yarn made at Nishat Mills Limited is ring spun.

the facility is highly regarded for the production standard and quality control. Subsequently merged into Nishat Mills Ltd. but also in Dobby items.) This unit has been producing top qualities fabric for export as well as for consumption of their own processing unit. This unit is comprised of 188 SULZER. Satins (regular /broken &stripped. Established initially by the name of Nishat fabric limited 1992. the highly sophisticated labotary also insured total quality control in yarn purchase and fabric production. Besides export they are also supplying grey fabric to their dyeing and printing units. Drills. Twills.RUTI P7100 Looms and state of the. with equally efficient quality control and packing department. NML SHEIKHUPURA MACHINERY 96 SULZER-ruti.looms (unit -1) 120 Tsudakoma air jets (unit-2) 60 Tsudakoma air jets (unit-3) 64 Tsudakoma air jets (unit-4) CAPACITY: 4. Africa. . in plain weaves. back up process. NML FAISALABAD: Machinery: 188 sulzer. NML Shiekhupura is one of the most advance unit In the country equipped with the state of art machinery and back processes.1 million meters per month Product range 100% cotton and poly cotton fabrics. Recently awarded the ISO9002 certification.Their fabric is well established all over the world with their exports going to the America the Far East. Australia Europe and Japan.Ruti looms Capacity: Approximately 2. and other64 tsudakoma air yet looms have added (unit 4) recently along with the back process. Bedford cordsm herring bones pique and Rib cords. customized to the buyer need.5 Million meters per month PRODUCT RANGE The products in this unit range are not only the traditional 100% cotton polyester cotton fabrics.

Bleaching Sometime cloth is bleached according to customer requirements. Brushing It helps to remove thread. batch number. 3. meters of cloth are written on paper and stocked with batcher. At the end cloth is raped on a batch. Bleaching helps to remove impurity from the cloth. At the end. PROCESSING Nishat processing plant with monthly capacity of 3 million meters is one of the largest processing facilities of Pakistan. The processing plant has recently been awarded ISO 9001 Certification. which will be give a boost to the production capacity and the product the range the unit will also expand subsequently.Future programs for the unit include the purchase of some new air yet looms. Chemicals tanks It is used to remove oily and stain spots on cloth. quantity. Polies then bags are used to prevent air penetration. Yet another achievement in this regard by Nishat mills limited. Desizing . 2. Singeing It removes pills by temperature. The processing division has been divided in to different section to facilitate uninterrupted process flow and to insured quality control at all stages almost 75% chemical and dyestuff being used is of European origin and independent quality control department with a strong backing of fully equipped laboratory insured quality standard at all level. it is the geared to meet the ever increasing the demand of there client. With and array of month modern machines. 1. For this purpose singeing machines are used where cloth is bleached in three steps.

At. MACHINERY Singeing/Designing vollen weides 118 Singeing/Designing Kyoto 108 Bleaching plant benninger 95 Bleaching plant Kyoto 95 Mercerising C. along with these a team of convention manual color separation artist is also maintained. accommodates a STORK STK image 3000. as the successful out come of all subsequently operations is dependent on it.Sometimes cloth is desized according to customers requirements. to reduce the natural impurity of cotton and to impart good hydrophilic properties. Scovring It is done in bleaching machine. grease etc. Besides preparing fabrics for dyeing printing. Less goller 95 DESIGN Studio The state of the art design studio. Nishat. known for producing transparencies of the highest quality. this section employees too singing machine and two modern open with width bleaching plants. It is used to remove the grey fabric stiffness of the cloth that helps in bleaching for easy washing. it helps to remove artificial spot like oil. to give more luster and strength one chain less mercerizing machine is also in operation.a CST Ramste lll silicon graphic 02 and STORK Drum scanner plotter. this section also bleach bacteria killer fabric for Japanese hospital linen and fire retardant low pill fabric for contract textiles. . PRE-TREATMENT SECTION Fabric preparation is crucially important.

Living up to this reputation. They are known for halftone work in single step designing. ROTAARY SCREEN PRINTING SECTION In another step to upgrade the existing machine mix. Tracing table is used to examine designs and it helping tracing of design. Germany waterproof ink is sued to avoid the ink expansion. Here cloth design is made. Engraving at this high resolution with digital technology enhances the print quality to a great extent and reduces the existing human error margins to the minimum.2m (126 ) Regina printing machine. Ink is used to fill scratches and unwanted graphics. Positive film is sent for processing. Tracers are there to trace out different pattern and design of cloth. with a facility to print 16 colors has been installed. Digital design studio is also complementary department of design studio. For each type of color different films are made. NML has a well-trained work force to print extremely intricate and complex toe-on tone designs. Anew 3. NML is reputed for the most efficient use of the STORK engraving systems for manual exposing. ENGRAVING Technology advancement in the field of rotary printing necessitates upgrading the pre-print line-up.820 and 9144mm. Different trace papers that are sued at Nishat are of Kodak and AGFA. printing in puff effects. there are positive and negative films.Design studio is a sub department of processing. Where design are made on computer program and using information technology. Monthly printing capacity of the section is about 203 million meters. MACHINERY: Printing machine Reggiani 126 16 colors Printing machine john zimmer 110 12colours Printing machine stork 72 16 colors . This machine with UNICA system successfully combines production and quality performance at the highest possible level in rotary screen-printing. resist and discharge dyestuff is also done. For each color separation. Besides conventional printing in pigment and reactive dyes. they have recently added to their line lf production the ROTARY WAX JET With exposing resolution at 1019dpi and a screen circumference of 640.

this section also full fills the demands for scotch guard protection for soil release and resist finish.Following files are maintained in printing department of Nishat mills limited. anti crease and easy care finish. . This machine combines tried and tested drying technology with innovative electronic control system. · Process sheet · Job description specification · Audit report · ISO 9001 · Assessment file · Purchase order · Work instruction · Staff document · Worker document · Reactive color document Standard operating procedure · Customer letters and fax · Organizational chart · Technical literature · Daily production report FINISHING SECTION Offering optimal final fabric quality and handle very recently this section has been equipped with a new generation/ Babco-starter. peach skin affect finish (emerizing). Fire Retardant finish. Besides offering normal finished. Ensuring absolute reproducibility of fabric qualities and full documentation on the quality control checks. water proofing.

Vat and sulphur is possible. DKNY. Old Navy. a designated Apparel Fabric Dyeing Unit is being set up near Lahore. Banana Republic. this has been made possible by using high quality grieve from the mills own weaving units and by using expensive dyestuffs. Highly trained Chinese technicians keep a close check on all stages of production. dyeing in reactive. It will help Nishat mills limited to improve its market access and consequently profitability. which will have a monthly capacity of 2. disperse. pigment. To further enhance their existing dyeing capacity of 1.MACHINERY: Stenter Babcock 130 Stenter Monforts 110 Stenter Monforts 95 Stenter Monforts 73 Stenter Krantz 95 Stenter Krantz 73 Sanforizing M/c monforts 73 Raising for Flannel sucker &muller118 Emerizing M/c sucker &muller 71 Calenders Ramish 110 DYEING SECTION Nishat provides quality piece died fabrics in heavy twills to some of the world leading brand names like Gap. Depending upon specifications. . The machinery and land have been purchased for this project. has been designed to give the optimal results due to the custom built machinery purchased after careful and lengthy consideration of the technical and Marketing teams This would certainly give them an edge over their competitors and would be welcome addition in the ever-changing apparel fabric market.5 million mergers.000. and sears.000 meters per month. CHAPS. Tommy Hilfiger. This unit. which is planned to be operational by the end of year 2000.

Following files are maintained in dyeing section. · Training files · Dyeing files · Washing file · Lab to bulk · Sample received file · Singeing file · OK for curing · Sample status · Sample letter · Shortfall file · Daily stock file · After curing file · Folding return file · Daily attendance register · Water fall card MACHINERY Pad steam Goller 95 Pad thermosal monforts 95 Washing range Goller 95 .

Apart from rolling and folding. but also is also actively involved in standardization of process routes and operating procedure.INSPECTION AND ROLLING SECTION To roll and pack 100. Quality control lab Nishat mills limited has not only build an international standard quality control lab to meet customer s satisfaction but also to improve their own product quality. QUALITY CONTROL SECTION And independent on line quality control section monitors all production operation to the required levels. The quality control lab is fully equipped to conduct all relevant tests. Two Types of Cloth Are Required By Customer 1. The staff not only keeps control of the bulk production. all equipped with photo censors and inspection frames. To assist in shade checking a data color computer system is also used.000 meters per day. they show their product quality sample books to customer. When Customer Needs Specific Cloth When customers need specific type of cloth. the fabric undergoes a100%inspecion system. That cloth is already available with Nishat whose production is carried on according to the instruction of customers. When Marketing Deppt Offers Design When marketing department officers approaches customers. 2. Customers can select any leaf of them and can place order for this type of cloth. Various type of test is conducted at this quality control lab to improve the quality of products and to meet customer requirements. he sends his own sample whose composition is tested is laboratory and production is made according to sample. the primary responsibility of rolling section is to prevent faulty fabric reaching the customer. this section has 8 rolling Machines. .

in order to motivate employee and workers toward quality management. For this they plan thing ahead. Counter tests 1) To count warp and weft 2) Count Glass 3) To count ends and picks 4) Weight 5) To measure weight of cloth 6) Cock meter test It examines dry rub and wet rub 7) Pilling test It is used to test pilling of cloth 8) Durra test It is used to examine fastness of cloth . fresh ideas are developed. and keep on updating the skills of the employee by training. make more effective use of time. Quality has no finish line Quality is degree of excellence According to juran Quality is fitness for use Quality ensures our future Tests to Ensure Quality Following test are conducted in quality control lab. In the factory. put the right man in the right place. many billboards are they re containing various statements like.Quality Control Policy Nishat mills limited are committed to move things in direction of TQM. Their prime Objective is comically produce products for the satisfaction of buyers.

13) Curring It is used to examine shade of cloth 14) Light box test It is used to examine fastness of light on cloth. .9) Auto wash It is used to examine change in shade 10) Vasctor It is used to examine shrinking of cloth 11) Tumble dryer This test is used to examine dryness of cloth 12) Padder It is used to examine matching and finishing of cloth. 18) Chemical analysis It is used to examine acidity. 16) Visco meter It is used to measure viscoty of cloth. 15) Presser It is used to determine pressing of cloth. 20) Perma meter test It is used to measure passage of air from the cloth. 17) Inspection table Here warp and weft and other type of faulth are examined. 19) Spectro photo meter It is used to examine shading.

First copy is remained in production and planning department. And second goes to grey stock room. This production planning system is designed to be fine tuned with the clients needs and thereby ensures responsive handling of all accounts by fore-casting demands from each client in terms of greige quality and quantity. For this job number is . First export manager creates orders from the customer and record specification of that order on a paper. Daily production reports are received in this department. It issues daily production program to each processing unit. It is generally more than demanded cloth because some cloth expected to be damage. Here various type of analysis are conducted like. 1) Bleaching production analysis 2) Printing production analysis 3) Dyeing production analysis 4) Finishing 5) Folding 6) Damage trend analysis 7) Monthly maintenance breaks down analysis Data flex program is used to save the date at production and planning department. Nishat group is pioneer for making production and planning department.These types of tests are conducted keeping in view market requirements. on time deliveries and less quality hassles. Then work is planned accordingly. The cloth required is issued against the grey demand letter. it makes their system work efficiently. This program is sent to the production and planning department. New product development letter is also received in this department. Coupled with forecast from their buyers. Instructions are first given to production and planning department and then distributed to other processing units. It is an intermediate party between marketing department and processing department. Advantages of this system include shorter lead times. weather requirements and customer demands. On this letter grey issued is returned. space on print/ dye machines and space on stitching machines. Ø Production Planning Section To control all production priorities and to load machine on day-to-day basis. a full fledge production planning cell is in operation.

It started commercial operation in September 1995. Power Generation The power generation unit formerly known as Nishat Tek Limited. fitted sheet . From purchasing of material to cutting and stitching right till folding and packing of the final product. Commercial production sanded in 1992 with three KRUPP-Macungie s with generating capacity of 5. valances. bias binding.5 Mw each. folding and packing department. the assembly line consists of combination of manual and automated operation designed to provide the required flexibility in its system to allow processing of a wide product range and versions of its existing product line the units current product line includes bed sheet. In addition. stitching.000 bed sets and 2000 curtain pair per day. Capacity at Faisalabad has since eon increased to 27MW. each aspect is scrutinized and controlled to the international quality standards.cushion cover. department has an average capacity to process up to 10. quilt covers. approximately 40000 meters of fabric. STITCHING UNITS Apart of Nishat plan to have a totally integrated textile sector the stitching unit was set up in 1989. . With an array of 250 modern new generation machines. datable linen. Procedure of Conducting Quality Control Quality control procedures are carried out at every stage during production.issued to work. baby sets. facility to handle small volumes of decorative embroidery is also on line. a range of embellished products with piping. lot number is given than production and planning department issues program according to specification of each processing unit. quilted throwovers and curtains in various specifications and model customized to the requirements of individual market . the stitching.the unit has a string work force of 400 skilled and semi-skilled workers mainly in cutting. bulk over lock.Nishata Tek also establishes a power-generating unit of 6Mw at Shiekhupura to supply power to sulzer unit lll and Tsudakoma unit ill. was the first ever power generation company in the private sector in Pakistan. Supplying power exclusively to NML. decorative trimming and bourdon stitching is also being offered to customers. quality control. When grey material is issued.

Improvement in quality and production capability was the main area of concentration. designs and also by providing our customers with efficient service and excellent quality. Nishat Mills Ltd pursued its strategy of value addition that in command reducing the dependency on Grey Fabrics and Grey Yarn.672 spinning has also commenced. Japan. Leaving behind the traditional way of doing business and in our journey towards excellent it has consistently expanded its buyer base and explored the different markets around the world. Fancy and special items like Dobby Designs. Countries like China. and Sri Lanka etc. We have constantly updated our machinery. replacing old machines with new ones upgrading the existing set-up. India and Bangladesh played an active role in the fabric market. Market for Yarns and Grey fabrics was diversified to increase the customer base and reduce dependency on the Far East. which caters to the weaving units in Shiekhupura. Italy. Nishat Mills Limited worked towards the achievement of its goal of future increasing its capability in value addition. Bedford Cords. France. Taiwan. A new spinning unit of 21. Quality control Nishat has established its name in new markets be creating specialized fabrics. Grey Fabric Market In case of Grey Fabric market business was initiated in South Africa.MARKETING STRATEGY & FUTURE PROSTECTS Future prospectus of Nishat mills limited are given as under The past year has been tough for the textile industry as competition is steadily and margin of profits is becoming smaller day-by-day. and Cavairy Twills and stretch fabrics were developed which are being sold at premium prices. Our competitors from Asia have come up in a big way with lower prices resulting from lower overhead. Korea. Indonesia. . Product range was also increased to cater to the differing needs of the buyers. cheaper and better raw materials and machinery. In this effort business with Malaysia. Value Addition Strategy Keeping in view demand of the World market. North America. Having the foresight to assessing year s value addition will be the thing of the future. leading to better efficiencies and quality products. UK and South America was initiated in case of Yarns.

Nishat is in the process of updating its machinery to cater the needs of the wider width fabric requirement for USA bedding business. In the short term we are building a small amount of quota. . we have to review and analyze them very thoroughly to associates with the right people in the long run. which are so dear to the American consumers. These categories are best served with new product development (NPD). different finishes and embellished products. Bedding is the bulk of the home textile business. This included yarn dyed dobbies. which will give us recognition as a bedding supplier. It s a new market for it after breaking up the exclusive arrangement with our previous sale set-up. The plan is to continue with this winning strategy and at the same time we are trying to find new clients in the high end. Social Responsibility Nishat is also taking up the social accountability issues very seriously.Nishat will coordinate the effort for NPD by all markets to optimize results. Nishat has achieved the highest sales in 1999-2002 for North America market. Nishat has made the most growth in the year 1999. In Europe. Lot of big brand US companies have visited us and are discussing the possibilities of a joint venture. We are also exploring business opportunities in countries like Spain and France where Nishat has very little business at the moment. The quota is coming down in 2005 and we have started to prepare for it internally as well as for the external environment.The export of processed fabric and made-Ups has shown market improvement as compared to last year. North America Market North America is the star market for Nishat. Future Prospectus in Non-Quota Countries Nishat is very strong in non-quota categories like curtain and table linen. Opportunities The opportunities are limitless. It has placed us successfully in the middle to upper end of the market. Our strength in Europe is the curtain division. On top Nishat has developed more direct and closer relationship with our end customers. engineered confections.

Position With Regard To Competitors The latest addition is the most ambitious Apparel Dyeing plant setup near Lahore. it has maintained our sales figures in the year under review. Jordan etc. In business terms it is our cash cow market. Despite economic problems in that region. Primarily due to being a non-quota market it had no real limitations in this market. which enhanced efficiency and out put. Saudi Arabia. The effectiveness and productivity of this plant will be further enhanced as Nishat Mills Ltd moves towards becoming a more vertically integrated organization. . which has started its production. procuring better raw material and most importantly kept a very close association with its customers.Oceanic has been our most lucrative and mature marker. Nishat has dedicated new staff with fresh energy for the emerging market. which is helping us to maintain our print volumes. They have successfully broken the ground and we have very strong faith that these markets will give us good volumes in the near future. Middle East Countries Middle East market is composed of South Africa and the new emerging markets like the UAE. This market is a good design source for other markets. It is being exported to some of the leading brands of the world. § Best Working Environment Nishat has provided its staff with better working environment and facilities. We are also targeting printed apparel business for the first time. It visits its business partners frequently and provides them with the best service possible. Market leader in textile sector why? Nishat has increasing its profitability by working efficiently. All of the above mentioned points led to strengthened relationship with its business partners making it very difficult for its competition to penetrate into its market share. Our dyed fabric has already established its name in the market. Egypt.

Ø MARKETING & SALES DEPARTMENT In marketing department I learned how the orders are executed from the old buyers and how the new markets and buyers are discovered than orders are executed. i. R& D for marketing a. Its marketing and production team s co-ordinance at all times and it focus remains on maintaining its position as the market leader in the textile sector of Pakistan. During my internship I also worked in Sales & Marketing department. Normally what happen is that the buyers contacts the marketing department and ask for the sample. Meeting with buyers ii. Company profile iii. Intranet . Marketing department than issue a sales contract to the buyer. Contact with agents vi. APTMA buyer dictionary d. Through Internet b. it is prospering due to our professional commitment toward excellence and giving the best results at all times and against all odds. Marketing strategies Marketing strategies includes. if buyer accepts he gives order.§ Professional Commitment At Nishat. Buyer visits iv. Free sample v. Yellow pages c.

fabrics and made-ups. 3. So to capitalize foreign market. Free Samples This strategy is widely used to boost up exports. Nishat is offering for their valuable customers. Various broachers are also published. Buyers Visit Sometimes buyer s visits are arranged to familiarize them with products. This strategy helps to introduce the company in out side world. Company Profile Nishat mills limited has also published it profile introducing its key products to customer.1. Through negotiation you win the sympathy of buyers and business for the company. This strategy is useful when company is not able to communicate with buyers. Customer s satisfaction is a important aspect because customer is a person who gives meaning to company. Nishat marketing department frequently invites buyer to show them excellent production process and quality productions. introducing Nishat products to prospective buyer. it can hire services of agents who for commission introduce their products in market. Relationships with distributors or agents are recognized as critical success factors so lot of importance is paid to agents who are valuable asset of firm. free samples are sent to loyal customer to show firms concern for them. 4. Free samples are delivered to customers to show how best our products are? Free sample is useful techniques in winning the loyalty of customers. Theses visits are crucial for the growth of the company because they help in introducing products to others and also win a lot of business for the company. Nishat has long list of its agents working in foreign market. This strategy helps manager to understand the needs and requirements of buyers as well as marketing people are aware of current trends of market. More that 85% of its sales constitutes exports. Meeting with buyers Marketing manager meets with buyer. Contacts with Agents Nishat mill limited is an export-oriented organization. When new product is made. 5. . 2. This booklet is send to various agencies dealing in purchase of cotton.

Some organizations feel that they cannot survive without R & D. APTAMA buyer s dictionary All Pakistan textile mills association publishes a directory. products are introduced and customers are accessed. Through Internet Nishat has recognized the importance of information technology in business field and very quick to capitalize this opportunity. This dictionary is published regularly. Price 4.6. c. Intranet Through computers. Following are some research and development techniques a. R & D for Marketing Research and development is key to success. Organizations finances research and development projects using either % age of sales of method or financing as many projects as possible. It has launched its website which tells buyers about Nishat products. 4 Ps of Nishat Mills Limited 1. Marketing department carefully analyses it and find buyers for its quality products. Place . Nishat is one of these organizations. Promotion 3. which includes prospective buyers. Product 2. b.

Furniture & Kitchen Accessories · Tea cozy · Table mats . Product Line BEDDING · Sheet sets · Quilt cover sets · Bed spreads · Comforters · Bed skirts · Oxford pillow cases · Blanket covers · Sleeping bags Curtains & Accessories · Embroidered curtains · Pencil pleat tape curtains · Pinch pleat lined & unlined curtains · Tab top & rod pocket curtains · Assorted pelmets and window dressings · Oxford cushion covers · Frilled and piped cushion covers · Frilled. piped and pleated tie backs Table. Product Product includes product line.1.

In each country a display center has been established names as CMD Company (concept marketing design).· Table cloth and napkins · Aprons · Kitchen gloves · Pot holders · Chair pads with circle tacks · Couch cove 2. Promotion Nishat mills limited run advertising and promotion campaign on large scale. (c) Agents Direct marketing is done through agents. Ø Direct Marketing Ø Indirect Marketing Direct Marketing Promotional activities include presentations. In Germany. (b) Free Samples Free samples are also provided so that customer may get an idea about the quality and excellence of Nishat mills limited. free samples. . products of Nishat mills limited are displayed in an exhibition (Frankfurt). (a) Presentations These are given to customer in a hotel at Karachi. The promotion of products can be classified into two ways.

Customer is of utmost important. his track record is good and enjoys a favorable repute so profit margin may be reduced. After signing the contract the buyer opens L/C in the favor of the seller. In 2005 when all quota barriers would be lifted. channels from producers to final consumers. Placement of Order Sometime buyer asks for sample. These tours are arranged to find new buyers in foreign market. If customer is old. 3. § Specification of goods § Quantity § Price . when it is accepted the buyer places the order. Ø Indirect marketing (a) Chain stores Companies in foreign countries make product from Nishat mills limited but sell them on their own name. Prices area determined on cost basis by adding certain percentage of profit.(d) Territorial Manager Tours Territorial manager tours are also arranged. This is another way to increase fir sales by increasing the number of chain stores. Pricing Before setting prices of products various elements are kept into mind. Now we shall discuss contents of sales contract in details. 4. This is highly sensitive area. Nishat mills limited has its agents in each exporting country. Place As mentioned earlier. Marketing department issues sales contract that contains the below mentioned details. so pricing would become a crucial factor. Territorial managers are required to submit their reports at the end of their tours. Place includes. after the opening of the L/C the marketing department plans for the production and arranges the shipment.

packing charges. fabrics and garments. freight. it is US dollar. . price. if a number is allotted to them than that number is also written. In the sales contract goods are mentioned. Different kinds of fabrics are produced so quantity is expressed sometimes in yards and sometime in meters. Nishat is an export-oriented organization and mainly exports yarn. carriage.e. It is very important to mention whether it is FOB value or C&F 4) Shipment Details Shipment details address basic questions. Unit price is also written. 2) Quantity In the sales contract. 3) Price Now comes very important content of sales contract i. In case of foreign buyer price is normally written is US dollar. ship will reach buyers country? 5) Terms & Conditions The buyers and sellers decide terms of shipment mutually.§ Contract amount § Shipment details § Terms & conditions 1) Specification of Goods In the sales contract. the quantity is written in yards. whether partial shipment is allowed or not? Transshipment is allowed or not? In how many days. what goods are intended is written. It depends on the negotiation between buyer and seller and if they agree that price will be shown on US dollar. certificate of origin and any additional conditions are set by importers and exporter. value of goods exported. gray cloths. Matters regarding insurance.

· Arrange production after contract · Select the MILL for production in which the specified yarn of the required quantity can be produced · Adjust frames according to no. check the freight of that line · Arrange container of that shipping line · Negotiation with transporter · Giving shipment details to buyer · Fax all documents to buyer before shipment reaches destination. of spindles · Calculate daily production · Give expected time of shipment to buyers · Tell packing people what shipping marks should be on cartons · Size of carton required by buyer · No. Nishat was the pioneer in establishing production-planning department. · Negotiation with shipping company · Arrangement of container · Settlement of freight .Coordination between production planning & marketing department Coordination between production planning & marketing department is essential. In production planning following things are done. of cones in one carton required by buyer In arrangements regarding the shipment following things are done. · Arrange dispatch from mill after production · Follow ship terms according to contract · If any shipment line is nominates. In fact there is very close relationship between production planning and marketing department. The production staff carries out all the orders that are obtained by the marketing personnel.

this diagram depicts the export to USA. Marketing department successfully cope with opportunities available in Singapore market. Singapore Market Following chart depict the total export made to Singapore market. Overall performance remains satisfactorily. When contract is received from the buyer. Marketing department performance remains goods during last six month. marketing department hand over task to production people who arrange all the products according to the terms of contract. In the month of December.All these arrangements are made regarding the shipment. scenario is totally different and policies of American government are not fully supporting Pakistan exporters. After the production of goods arrangements are made to deliver goods to importer. During the last six month. . Malaysia Market Nishat mills limited also export goods to Malaysia and earn lot of foreign exchange. shipment to MALAYSIA remains stable. In the month of July shipment was made to Korea. sales decreases due to intense competition in the market. in remaining month there was no turnover. Container is arranged. United States of America One of the largest markets of the world. Korea Market Total sales/exports to Korea are depicted by this graph over the last six month ranging from July to December. In USA market there is ups and down because after nine September. This is because Nishat mills found no buyer in that period.

AUSTRALAS. Marketing Strategies Textiles industry faced many challenges during the year 1998-99 throughout the world. which increased the competition to a greater extent. In spite of the above facts Nishat mills ltd. ITALY etc. TAIWAN.Japan Market Nishat mills are one of largest exporter in cloth to Japan. Korea. had been successful in maintaining its market position and growth. Under this market diversification. new markets were developed for tray cloth. Hong Kong Hong Kong is another attractive market for Nishat mills limited. Nishat has very stable customers who believe that they are getting only quality products and they are assured of quality goods. The performance remained good and excellent. Ø Market Development In order to reduce their dependence on a few markets especially FAR EAST. Ø Diversification Strategy Market yarn is diversified to increase the customer base. Taiwan and UK have been initiated. . they started business with SOUTH AFRICA. and SRILANKA. This diversification not only reduced their dependence on Hong Kong but also gave those better profit margins at times when Hong Kong market was very depressed. business with Malaysia. Product range is also increased to cater for the different needs of increased number of buyers production volume is also increased by concentrating on coarse counts with a result of increase in volume from 90-95 containers per month to around 115 containers month. Inflation and decline in purchasing power resulted in decline in demand. diversification program. Under this.

Ø New And Innovative Product Development They have developed fancy and special items like Cavalry Twills. This revival gave both good volumes and better profit margins.Ø Contacting Old Customers The business with some of the old buyers in Europe was also revived during this period after intensive efforts. tighter fabrics inspection in folding and providing service to their customers. They keep on modernizing their equipment in order to maintain the high quality of their products. Ø More Quality Conscious With the increase of competition. Bedford Cords and dobby items. they have become more quality conscious. . which are being sold at premium prices. In order to achieve their quality standards. they are maintaining better quality by getting yarn from pre-approved sources.

RATIO ANALYSIS OF NISHAT MILLS LIMITED NISHAT MILLS LIMITED BALANCE SHEET AS ON SEPTEMBER 30. ------------1999 2000 2001 Equity and Liabilities RS IN (000) Share capital and reserves Authorized Capital 1500000 1500000 1500000 Issued and Subscribed and paid up share capital 1113444 1113444 1113444 .

Capital reserves 1027622 1027622 1027622 Revenue 201518 2428503 2566448 Surplus on revaluation of operating fixed assets 12118 12118 12118 Non Current Liabilities Redeemable capital 252120 919250 2205907 Long Term Loans 325429 228499 .

155639 Liability against finance lease 107806 103834 235220 Deferred liability for gratuity 1608 1091 843 Current Liabilities Current portion of long-term liabilities 562747 242729 768264 Short term finance 4479010 4397584 5001841 Creditors accrued and other liabilities 478364 533645 .

781352 Worker' participation fund 23247 41587 20959 Provision for Taxation 186884 164068 146087 Proposed dividend 194853 283928 167017 Unclaimed Dividend 5480 6955 9683 .

Total Liabilities and Owner Equity 10782776 11904857 14222444 Assets NON-CURRENT ASSETS 1999 2000 2001 Tangible fixed assets Operating fixed assets 3555922 3679482 6194523 Assets subject to finance lease 371014 243102 467330 Capital work in process 125014 1465706 154009 .

Long Term Investment 1590552 1390552 1390552 Long Term loans. deposits. spare parts and loose tools 544536 5071128 541611 Stock in Trade 1824542 1410306 1966667 Short term investment 5938 5938 5938 . prepayments 57151 76963 100136 Current Assets Stores.

Trade Debts 1290253 1409926 2027613 Advances. deposits and prepayments 660621 478999 377918 Other Receivables 316832 482438 630440 Cash At Bank 440401 754317 365707 5083123 5049052 5915894 .

----------1999 2000 2001 RS IN (000) .TOTAL ASSETS 10782776 11904857 14222444 NISHAT MILLS LIMITED INCOME STATEMENT AS ON SEPTEMBER 30.

SALES 9436104 10134014 11662457 COST OF GOODS SOLD 7745353 7991952 9605013 GROSS PROFIT 1690751 2142062 2057444 ADMINISTRATIVE SELLING AND GEN EXPESES 497043 545717 710360 .

OTHER INCOME 68480 102431 116363 EARNING BEFORE INTEREST AND TAX 1262188 1698776 1463447 LESS: FINANCIAL CHARGES 299208 669014 1049756 .OPERATING PROFIT 1193708 1996345 1357084 ADD.

WORKERS PARTICIPATION FUND 23247 41887 20960 PROFIT BEFORE TAXATION 439733 788175 392731 LESS: PROVISION FOR TAXATION 59719 87788 77769 PROFITAFTER TAX 380014 700387 314962 .

PROFITABILITY RATIO FINANCIAL HIGHLIGHTS 1997 1198 1999 2000 2001 PROFIT AND LOSS (RUPEES IN THOUSAND) Net sales 8557876 8919459 9436104 10134014 11662457 Gross profit 1622745 1956420 1690751 2145062 2057444 .

Profit before tax 379589 412273 439733 788175 392731 Profit after tax 324739 344397 380014 700387 314962 CASH OUTFLOWS Taxes paid 86522 111489 96326 47762 110060 Financial charges paid 820524 789018 .

836912 652024 941253 Fixed capital expense 342969 644944 386464 1895627 2416093 BALANCE SHEET Current assets 3161495 4209470 5083122 5049052 5915894 Current liabilities 3925000 4940337 5930586 6070496 6895203 .

Operating assets 3295763 3265748 3555922 3679483 6194523 Long term loans 8660045 9940818 10782777 11904857 14222444 Share holders equity 3818405 3967949 4153110 4569569 4717514 .

96 18.96 Net profit before tax 4.96 18.29:1 0.27:1 0.97:1 Gearing ratio 0.96 18.93:1 0.42:1 Gross profit ratio 18.44 .88:1 0.95:1 0.29:1 0.RATIOS Current ratio 0.44 4.96 18.97:1 0.23:1 0.

92 2.44 4.4.92 2.92 2.92 2.92 Proposed dividend 15 15 15 15 15 .44 4.44 Earning per share 2.

X 100 Net sales 1999 1690751 ---------.92% 2000 2142062 ----------.PROFITABILITY RATIO Gross profit ratio Gross profit ------------.X 100 9436104 =17.X 100 .

64%. The reason why the gross profit increased in 2000is that sale volume increased by 1. in 2000it increased to 21.14% 2001 2057444 ------------.In 1999 the firm earned a gross profit of 17.41%and in 2001 it decreased to 17.05%.10134014 =21.6% as compared to 1999 but cost of goods sold decreased by 8. It is due to management efficiency and effective policies . The gross profit is sufficient to recover all operating expenses and to build up reserves after paying all fixed interest charges and dividend .92%.X 100 11662457 =17.In 2001the gross profit decrease because sales volume does not increase in correspondence to increase in cost of goods sold because during this period the rate of inflation and dollar fluctuations was high.64% INTERPRETATION Gross profit ratio is the ratio of gross profit to net sales expressed as percentage .

X 100 10134014 .Net profit ratio Net profit after tax ---------------------.X 100 Net sales 1999 380014 ----------.X 100 9436104 =4.02% 2000 700387 --------.

19% and in 2001 it decrease by 4. Higher the ratio better for the organization it shows the firms ability to turn each rupee of sale into net profit.X 100 11662457 =2. In 1999.P was 4. .38% as compare to 1999. Higher ratio shows firms capacity to withstand adverse economic conditions.91% 2001 314962 ------------.21% to2.70% GRAPH SHOWING GROSS PROFIT IN THE LAST FIVE YEARS INTERPRETATION This is used to show over all profitability and hence it is useful to the proprietors.70%. N. It is also advantageous to survive even in the case of falling prices and sale volume.02%.=6. The reason why net profit decreased in 2001 is that operating expenses has increase by20. in 2000 it increase to 6.

Operating Ratio Cost of good sold + operating expense -----------------------------------------------.X 100 10134014 .X 100 9436104 =87.35% 2000 7991952+545717 ---------------------.X 100 Net sales 1999 7745353+497043 --------------------.

Expenses Ratio Particular expense -----------------------. In 2000.45% of sales have been consumed by cost of good sold and operating expenses and 12. In 1999. general rise in selling expenses and introduction of better substitute by the competitor. operating ratio was 87. in 2000-it decrease to 84. income tax.=84.55% of sales left to cover interest. in efficiency of marketing department. dividend and firm s need to retain profit for expansion.X 100 Net sales .X 100 116622457 =88.25% 2001 9605013+710360 ---------------------. This high percentage is due to above-mentioned factors. 2001 shows that 87.45% Interpretation This ratio shows the operational efficiency of the business.25% and it again increase to 88.35%. decrease is due to effective management policies.45%. It is consider to be yard stick of operating efficiency but it should be used cautiously because it may be effected by a number of uncontrollable factors like sale promotion expenditure.

X 100 9436104 =82.What do theses ratios signify? Expense ratio indicates the relationship of various expenses to the sale.x 100 . Lower the ratio better for the organization. It is use to depict the causes of the variation of the operating ratio. Cost Of Goods Sold Ratio Cost of goods sold ----------------------.08% 2000 7991952 ----------.X100 Net sales 1999 7745353 -----------. But some of the expenses may be increasing while some may be falling. The operating ratio reveals the average total variations in expense.

x100 11662457 =82.10134014 =78.36% Interpretation This ratio shows how much percentage of sales is the cost of goods sold.36%. in 2001. the cost of goods sold decrease because of efficient and effective management policies to control the wastage and loss. better for the organization.86%. In1999.6% 2001 9605013 ----------. . overhead etc. Lower the ratio. in 2000. In 2000.22% to 78. the cost of goods sold ratio was 82. it decrease by 3. it again rose to 82.08%.

000 n/a 2Q1997 n/a .000 n/a 0.Summary of dividend analysis Figures in Pakistan Rupees Quarters are Fiscal Quarters (4th quarter ends in September) Quarter EPS Divs TTM EPS TTM Divs Payout Ratio 1Q1997 n/a 0.

316 2.316 n/a .000 n/a 0.000 n/a 1.000 n/a 4Q1997 n/a 1.316 51.000 n/a 3Q1997 n/a 0.558 1.0.000 n/a 0.4% 1Q1998 n/a 0.

2Q1998 n/a 0.316 n/a 4Q1998 n/a 1.535 2.000 .711 1.535 56.000 n/a 1.000 n/a 1.316 n/a 3Q1998 n/a 0.6% 1Q1999 n/a 0.

535 55.535 n/a 3Q1999 n/a 0.535 n/a 2Q1999 1.1% .340 0.788 1.448 1.535 n/a 4Q1999 1.535 2.000 n/a 1.n/a 1.000 n/a 1.

662 2.628 0.1Q2000 n/a 0.535 n/a 4Q2000 3.535 n/a 3Q2000 n/a 0.000 n/a 1.535 n/a 2Q2000 2.550 6.290 .000 n/a 1.000 n/a 1.

5% 1Q2001 n/a 0.000 n/a 2.550 n/a 4Q2001 .960 0.550 n/a 3Q2001 n/a 0.2.000 n/a 2.000 n/a 2.550 40.550 n/a 2Q2001 1.

170 0.280 0.780 1.320 1.6% 3Q2002 0.000 3.0% 2Q2002 0.500 .460 0.0.000 1.500 2.870 1.000 1.500 113.500 53.830 1.000 1.500 50.0% 1Q2002 0.

15% IN 94 (B): CALCULATION BASED ON YEAR END OUTSTANDING SHARES (C): BASED ON AVERAGE SHARES OUTSTANDING Bottom of Form Selling and administration expense ratio Selling and administration expense -------------------------------------------.84.X 100 .22% DIV) IN 95. 23:20 RIGHTS ISSUE (4.3% TM: Trailing Twelve Months EPS: Earnings per share Divs: Dividends per share (A): ALL ITEMS ADJUSTED FOR STOCK SPLITS OR DIVIDENDS .120:100 RIGHTS ISSUE (14% DIV) IN 2000.

X 100 9436104 =5.Net sales 1999 497043 ---------.X 100 10134014 =5.27% 2000 545717 ---------.39% 2001 710360 .

09% Interpretation This ratio shows how much percentage of the sale is the selling and administration. Lower the ratio better for the organization.---------.X 100 11662457 =6.27%. In1999.09%. This percentage shows the increasing trend. it was 5.38% as compare to 1999. in 2000 it was 5. In 2001 the selling and administration expenses increases by 20.X 100 Shareholders fund Shareholders fund paid up capital + capital reserves + revenue reserves + unappropriated profit + surplus on revaluation of investment 1999 . This trend is due to expensive advertisement and sales promotion technique and administration staff salaries.39 % and in 2001 it rose to 6. OVER ALL PROFITABILITY RATIO RETURN ON SHAREHOLDER INVESTMENT Net profit after tax -----------------------.

28% 2001 314962 ----------.X 100 4582672 =15.380014 ---------.X 100 4730562 .X 100 4165228 =9.12% 2000 700387 ---------.

In 2001 shareholder fund increased by only 3. This ratio is of great importance to the present and perspective shareholder as well as management of the company.22% but net profit after tax decrease by 55%. Higher the ratio better for the organization. As the primary objective of the firm is to maximize it s earning. Decrease in profit resulted in 2001 due to increase in selling and administration expenses and financial charges in 2001 as compare to 2000. which is not in accordance with net profit before tax change.X 100 Equity share capital 1999 380014 . In 1999.62% Interpretation This ratio is one of the most important ratios used for measuring the overall efficiency of the firm. in 2000 it increase to 15 paisa and in 2001 it reduced to 6 paisa that is in 2000. Return on equity capital Net profit after tax -----------------------. return on shareholder fund increased because shareholder fund increase by 10% in 2000 as compare to 1999 and net profit before interest and tax increased by 84% in 2000 as compare to 1999. this ratio indicates the extent to which this primary objective of the company is being achieved. This ratio shows how well the resources of the company are being used. the return on the shareholder fund is 9 paisa per rupee.=6.

---------.X 100 1113444 =62.X 100 1113444 .91% 2001 314962 ---------.X 100 1113444 =3.13% 2000 700387 --------.

The reason for increase in return on equity capital is the increase in sale and decrease in cost of goods sold that resulted in an increase in overall profitability and in 2001.X 100 111344 =3.28 of net profit that is still quite satisfactory. the profit decrease because cost of goods sold and financial charges increased in 2001. In 2001.=28. better it is. every 100 rupee of share capital is earning Rs. In 1999 it was 34.X 100 No of equity shares 1999 380014 --------.13%. 28.28% Interpretation This ratio is meaningful to the equity shareholders who are interested to know the profit earned by the company and those profit which can be made available to pay dividend to them higher the ratio. Earning per share Net profit after tax -----------------------. it increase to 62.28% in 2001.90% in 2000 and then again decrease to 28.41 per share .

X 100 111344 =2.2000 700387 ---------.29 per share 2001 314962 ---------.85 per share .X 100 111344 =6.

it is a valuable and widely used ratio. LIQUIDITY RATIO (a) Current ratio Current asset ---------------- Current liabilities 1999 5083123 ---------- 5930585 . But as a profitability index. 3.29 and in 2001.and it decreased to Rs.PRE-TAX PROFIT This graph depicts the pre-tax profit during last 5 years. Interpretation Earning per share calculated for a number of years indicate whether or not the earning power of the company has increased.83 per share. In 1999 earning per share was Rs. firm earned huge amount of profit. This is because of improvement in management decisions. in 2000.It does not reflect how much is paid as dividend and how much is retained in the business. The earning per share simply show the profitability of the firm on a per share basis . In the 1999-2000.41. it increases to 6.2.

83:1 2001 5915894 ----------- 6895203 0.86:1 .=0.86:1 2000 5049052 ----------- 6070496 0.

It cannot pay its short-term liabilities. ANALYSIS SUMMARY SEPTEMBER Note: All figures are in Pakistan Rupees Ratios Equity Capital Dividends Year Last Price P/E P/Bk Earned Growth % Profit Rate % Book Value . It shows firm s liquidity position is not strong enough.Interpretation Current ratio is general and quick measure of liquidity of a firm. It is an index of the firm s financial stability. the current ration is 0. The financial position of the firm is not strong.86 is available to pay an obligation of Rs 1. It is also an index of technical solvency and an index of the strength of working capital. In 1999. But it has improved its liquidity from 2000 to 2001.86:1 that is Rs 0. It represents a margin of safety or cushion available to the creditors.

0 1995 .00 0.65 n/c n/c n/c n/c n/a n/a n/c A 0.Begin Yr Earnings Per Share % Chg Divs Per Share Avg Yield 1994 65.

25.0 1997 14.91 .21 n/c n/c n/c n/c n/a n/a n/c 0.0 1996 9.00 0.66 n/c n/c n/c n/c n/a n/a n/c A 0.00 0.

711 6 1.2 .5 1999 8.8 1998 9.9 9.54 16.0 30.5.32 8.30 3.3 3.4 0.8 n/c n/c n/c n/a 2.82 3.18 2.558 n/c 1.

3 4.5 31.4 19.9 11.5 0.6 9.95 3.2 32.55 9.1 2001 10.36 C 2.4 2000 28.54 17.10 4.290 110 A 2.9 0.788 10 1.0.3 .81 B 6.

6 0.50 13.05 n/c 0.00 0.3.37 n/a n/c 0.4 n/a .9 41.830 -55 1.0 11/15/02 19.4 n/c n/c 42.7 2002 16.2 6.00 13.15 C 2.

50 7.n/a 42.9 (A): ALL ITEMS ADJUSTED FOR STOCK SPLITS OR DIVIDENDS . So while in obtaining loan not a greater importance is paid to current ratio. 15% IN 94 (B): CALCULATION BASED ON YEAR END OUTSTANDING SHARES (C): BASED ON AVERAGE SHARES OUTSTANDING Current Ratio This graph depicts current ratio of last 5 years.120:100 RIGHTS ISSUE (14% DIV) IN 2000. Although current ratio of Nishat mills limited is below the standard but since it enjoys an excellent credit rating in the eyes of lenders so it does not matter.350 n/c 1.22% DIV) IN 95. (b) QUICK RATIO / ACID TEST RATIO Liquid assets ---------------- Current ratio .37 1. Its track record is also excellent. Actually management of Nishat mills limited firmly believes in fair business practices. 23:20 RIGHTS ISSUE (4.

46:1 2000 3122112 ---------.X 100 5930585 0.X 100 6070496 =0.Liquid assets = Current asset (inventories + prepaid expenses) 1999 2706725 -----------.49:1 2001 .

it has shown more liquid and readily cash convertibles assets of 0. In 1999. In 2000. It measures the capacity of the firm to pay off current obligation immediately and is a more rigorous test of liquidity than current ratio.49:1 Interpretation Quick ratio is very useful in measuring the liquidity position of the firm. the liquid ratio was 0.X 100 6895203 =0. CURRENT ASSET MOVEMENT AND ACTIVITY RATIO (a) Stock turn over ratio Cost of goods sold ------------------------ .46 to pay off the obligation of Rs 1.49:1.3397960 ----------. The liquid ratio is better in 2000 as compared to 1999 and 2001. as inventories are not absolutely non-liquid.51:1 and in 2001 it was 0. A lower liquid ratio does not mean a bad liquidity position.46:1. It does not represent good financial position. it rose to 0.

73 times 2001 9605013 .Average stock 1999 7745353 ----------- 1931547 =4 times 2000 7991952 ----------- 2143256 =3.

In 2000.34 times Average stock = (opening stock +closing stock)/2 Interpretation Inventory turnover ratio measures the velocity of conversion of stock into sales. In other words. how rapidly inventory is turning into receivables through sales. In 2000 the ratio was low because of over investment in inventories. This low ratio represents in efficient inventory management. (b) Inventory turnover in days 365 ------------------------- Inventory turnover ratio . stock accumulation.34 times. it decreased to 3.the turnover was 4 times.73 times and in 2001 it again increase to 4.---------- 2212850 =4. In 1999.

1999 365 ------ 4 times =91.73 times =97.85 days .25 days 2000 365 ------------- 3.

25 days Interpretation It shows in how many days an average. The management should take prompt action to reduce these days Debtor s Turnover Ratio Sales ------------------- AV. In 1999 and 2000 it was 91 and 98 days respectively and in 2001 it was 84 days.2001 365 ----------- 4 times =91. trade debtors . before any inventory is turned into account receivables through sales.

1999 9436104 -------------------------------- 1674052+1290253/2 =6.37 times 2000 10134014 --------------------------------- 1290253+1409926/2 =7.51 times 2001 .

37 times. It suggests that management is inefficient in management of debtors Average Collection Period NO. as normal to interpret the ration. There is no rule of thumb.11662457 ----------------------------------- 1409926+2027613/2 =6. It increases to 7. which may be used.78%in 2001. the more efficient is the management of debtors. In 1999 the debtor s turnover ratio was 6.1% in 2000 and decrease to 6. or more liquid the debtors. The higher the value of debtors turnover.78 times Interpretation It indicates no of times debtors are turned over during the year. Of working days ----------------------------- Debtor s turnover 1999 .

51 = 49 days 2001 2001 365 ------ .365 ----- 6.37 =57 days 2000 365 ----- 7.

78 =54 days Interpretation This ratio measures the quality of debtors. A short collection period implies prompt payment of debtors. AVERAGE PAYMENT PERIOD NO of working days ------------------------- Creditors turnover ratio* 1999 365 .6. It shows inefficient credit collection performance. it reduces to 49 days in 2000 and then increase to 54 days in 2001. Management should take prompt action to control it. This period is high. It reduces the chances of bad debts. In 1999 the collection period was 57 days.

----- 17 = 21 days 2000 365 ----- 10.56 = 35 days 2001 365 ----- .

On other hand. In 1999 it was 21 days. it rose to 35 days in 2000 and decrease to 27 days in 2001.13. High creditor s turnover ratio and low average payment period represents creditors are being paid promptly. it maintain the goodwill of the company by increasing credit worthiness on prompt pay back .42 = 27 days Creditors Turnover Ratio Credit purchases --------------------- Average trade Interpretation It represents the no of days taken by the firms to pay its creditors. Thus enhancing the credit worthiness of them. It shows that firm is not taking full advantage of credit facilities allowed by the creditors.

buys. Stock Chart Stock Price (11/15/02): 19. accumulates and distributes electricity.9% 13 Weeks 22.5% 4 Weeks 15. linen. spins.Nishat Mills Limited The Company manufactures. synthetic fiber and cloth. stitches.2% 52 Weeks Officers Chairman & Chief Executive Naz Mansha 14. weaves. sells textiles and otherwise deals in yarn.00 Recent stock performance 1 Week 3. The Company also generates. combs.5% Secretary Muhammad Azam Earnings / Dividends (as of 6/30/02) Earnings Dividends . dyes. bleaches. cloth and other goods and fabrics made from raw cotton. prints.

Most Recent Qtr 0.07 Dividend Yield 7.46 1.18 Payout Ratio 111.11% Price / Book Ratio 0.50 Last 12 Months 1.50 Ratio Analysis Price / Earnings Ratio 14.89% Price / Sales Ratio 0.35 1.43 % Held by Insiders .

Debt-Equity Ratio OUTSIDERS FUND ------------------------- SHAREHOLDERS FUND Outsiders fund Redeemable capital + debentures + long term loans + current portion of long term liabilities + short term finances 1999 5727113 ----------- .00% ANALYSIS OF LONG TERM FINANCIAL POSITION AND SOLVENCY TEST.5.

37:1 2000 6291896 ----------- 4582672 =1.37:1 2001 8366871 ----------- 4730562 =1.4165228 =1.7:1 Interpretation .

The purpose is to get an idea of the cushion available to outsider on the liquidation of the firm.76:1.37: 1and in 2001 it was 1.76 rupees worth creditors investment. In 1999. 2000 the ration was 1. The interpretation of the ratio depends upon the financial and business policies. it shows that management want to do business with maximum outsider funds in order to take lesser of their investment.53:1 . Debt To Total Asset Ratio TOTAL DEBTS -------------------- TOTAL ASSTS 1999 5727112 ----------- 10782776 =0.The ratio indicates the proportionate claim of owners and outsiders against the firm asset. the shareholders have invested RS 1. It shows that for every 1.

53. We can observe in our analysis that for every RS 1 of assets we have 0. 0. We can also say that how much is that external financing is our total assets. and 0. Now.59 debts respectively.53.53.53 and 0.53:1 2001 8366871 ------------ 14222444 =0.2000 6291896 ----------- 11904857 =0.59 in respective years and rest will go to the shareholders.59:1 Interpretation It shows how much sufficient our assets are in retiring the total debts. . if the firm liquidates the creditors will owe 0. 0.

v Interest Coverage Ratio EBIT ---------------- Interest expense 1999 1262188 ------------ 799063 =1.58:1 2000 1698776 ----------- .

It indicates the no of time interest is covered by the profit available to pay interest charges.55:1 2001 1463447 ---------- 1048467 =1. In 2001 it reduced to 14 times. It is an index of the financial strength of an enterprise.667188 =2. But the weakness of the ratio may create some problems to the financial managers in raising funds from debt sources. In 2001 the company has RS 14 of profit to pay RS 1 of interest.40:1 Interpretation The interest coverage ration is very important from the lender point of view. v Inventory Turnover in Days . A high ratio assures the lender a regular and periodic interest income. The ratio is quite high and helps financial manager to raise funds from debts sources. In 1999 the ratio was 15 times and in 2000 it was 25 times.

73 times .365 --------------------------- Inventory turnover ratio 1999 365 ------ 4 times =91.25 days 2000 365 ------- 3.

=97.10 days Interpretation It shows in how many days an average.34 times =84. In 1999 and 2000 it was 91 and 98 days respectively and in 2001 it was 84 days.85 day 2001 365 ----- 4. The management should take prompt action to reduce these days v Total Asset Turnover / Capital Turnover Ratio Net sales ------------ . before any inventory is turned into account receivables through sales.

Total asset 1999 9436104 ------------ 10782776 =.85 times 2001 . 88 times 2000 10134014 ------------- 11904857 =0.

82 times Interpretation It shows that firms must manage its total assets efficiently and should generate maximum sales through their proper utilization. In 2001. v Proprietary Ratio SHAREHOLDERS FUNDS ------------------------------------ TOTAL ASSETS 1999 . In 1999.11662457 ------------- 14222444 =0. 0. 2000 and 2001 the ratio was 0. As the ratio. The firm ability to produce a large volume of sales on a small total asset based is an important part of the firms overall performance in terms of profits. 0. the ratio indicates that it is producing RS 0.85.88. increases there are more revenue generated per rupee of total investment in asset.82 sales per rupees of investment in total assets.82 times respectively.

X 100 11904857 =38.X 100 14222444 .6% 2000 4582672 -----------.X 100 10782776 =38.4165228 ----------.5% 2001 4730562 ----------.

Operating cycle = Inventory turnover in days + Receivable turnover in days 1999 = 91+57 = 148 days 2000 = 98+49 = 147 days . It shows that in 2001 the shareholders contribution was RS 33 for every RS 100 employed in business and creditor s contribution would be the remaining RS 77. v OPERATING CYCLE Operating cycle measures the length of time from the commitment of cash for purchase until the collection of receivables resulting from the sale of goods or services. In 2001 it is reduced to 33%. Higher the ratio. In 1999 and 2000 this ratio was 38. better the long term solvency of the company.6% and 38. Low proprietary ratio will include greater risk to the creditors. which is readily converted into cash.5% respectively. It is also regarded as a test of the soundness of the capital structure. Operating period of an enterprise is the time period between acquisition of raw material till the realization into cash or any other instrument.=33% Interpretation This ratio puts light on the general financial strength of the company.

in year 2000 it was 147 days and in 2001 it is 145 days.Payable turnover in days 1999 = 148-21 = 127days 2000 = 147-35 = 112 days 2001 = 145-27 = 118 days Cash cycle of Nishat Mills is in year 1999 is 127 days. sell it and collect cash for it.2001 = 91+54 = 145 days OPERATING CYCLE Operating cycle shows how much days are required from the purchase of material to realization of cash. . v CASH CYCLE Cash cycle measures the length of time from the actual outlay of cash for purchase until the collection of receivables resulting from the sale of goods and services. The lesser the days of completing the cash cycle. The length of time from the incurrence of cash for purchase of raw material until the collection of receivables resulting from the sale of goods or services. Nishat is maintaining its cycle. Operating cycle for 1999 is 148 days. Company trend is going in appositive ways. The firm is liquid in the dynamic sense that it can produce product. Nishat is maintaining its operating cycle. Long Cash cycle might be the warning of excessive receivables and inventory. A firm with short operating cycle can operate efficiently with relatively small amount of current assets and relatively low current and acid test ratio. Cash Cycle = Operating cycle . There is no fluctuation. It indicates the better circulation of cash. It shows efficiency of the management that is why inventory is regulating efficiently. Short cycle is sign of good management. higher be the business activity and company efficiency. in year 2000 it decreases to 112 days and in 2001 it is 118 days. It might lead to more chances of bad debts.

000 0.Stock Price Analysis Figures in Pakistan Rupees Quarter High Low Close Qtrly Change 12 mo.000 . Change Apr .Jun 1994 0.

6% n/a Oct .250 26.643 n/a n/a Jul .713 46.068 46.134 25.643 57.5% n/a Jan .924 -28.092 .234 65.Mar 1995 47.651 -19.Sep 1994 81.81.Dec 1994 74.

513 22.368 25.Dec 1995 30.Sep 1995 40.658 0.4% n/a Apr .Jun 1995 26.3% -69.7% -60.070 25.482 22.351 28.0% .658 1.725 25.9% Oct .-44.219 -3.1% Jul .

Mar 1996 31.3% -5.904 12.-45.140 21.3% Jul .561 -4.491 24.377 8.Sep 1996 13.3% Jan .0% -64.772 9.281 12.211 -25.1% .0% -51.9% Apr .Jun 1996 23.281 -50.

447 8.754 17.167 22.Jun 1997 23.9% Apr .553 14.Mar 1997 25.596 16.368 59.035 52.544 -21.Dec 1996 16.219 14.4% -8.9% .3% Jan .Oct .4% -45.6% 42.

Jun .Sep 1997 21.5% 47.Mar 1998 12.Dec 1997 16.5% -59.035 9.632 9.6% Apr .807 -5.6% Oct .930 11.7% Jan .596 -22.8% -8.754 12.035 -29.Jul .596 13.930 13.

Mar 1999 .254 6.6% Jan .6% Oct .184 8.789 9.1998 9.5% -33.3% -60.868 5.167 5.0% Jul .298 32.5% -31.018 -22.921 7.Dec 1998 9.509 -8.Sep 1998 9.

Sep 1999 9.404 8.509 .5% Apr .816 5.167 7.114 9.763 8.333 -9.8% -5.939 8.912 7.2% Oct .1% 18.11.825 7.Dec 1999 23.7% 1.Jun 1999 9.8% Jul .

150 23.333 23.300 19.800 22.7% 176.3% 290.8% Jul .800 52.544 35.Sep 2000 28.250 23.200 .8.Mar 2000 35.150 -35.3% Jan .3% 177.Jun 2000 44.509 166.5% Apr .

900 26.550 17.000 16.2% Jan .300 -37.5% Apr .750 16.800 19.28.300 .Dec 2000 29.7% Oct .Mar 2001 27.9% 11.300 15.7% -54.100 21.Jun 2001 19.150 -6.4% 218.

600 16.0% Jan .Mar 2002 20.850 26.750 10.8% .6.700 14.3% Jul .650 10.Dec 2001 17.200 13.950 -36.450 18.1% -25.Sep 2001 16.250 10.0% Oct .7% -61.5% -47.

8% Jul .550 15.050 2.750 11.100 15.000 22.2% 14.5% .9% 46.150 16.Jun 2002 17.0.600 -5.2% -9.6% 11/15/02 19.Sep 2002 17.9% Apr .

X 100 .Top of Form Bottom of Form v Return on Investment Net profit after tax ---------------------------------------.X 100 Total assets 1999 380014 -----------------------.

X 100 11904857 =5.88% 2001 314962 ---------------------.10782776 =3.X 100 14222444 .52 % 2000 700387 -------------------.

bef Extra % of sales Emps Sales/ Empl 1992 .21% Sales & Profitability Summary Figures expressed in billions of Pakistan Rupees Year Sales Sales Growth EBITDA % of sales Inc.= 2.

3.8% n/a n/a 1998 8.0% 0.7% 0.344 .688 n/c 0.325 3.919 4.8% 0.0% n/a n/a 1997 8.579 15.0% 1.527 17.572 n/c 1.874 21.223 6.

9% n/a n/a 1999 9.8% n/a n/a 2001 .6% 1.3% 1.3.9% 0.594 7.0% n/a n/a 2000 10.297 7.700 6.5% 0.529 15.909 18.380 4.

X ------------------.149 Top of Form Bottom of Form v Return on Investment Net profit after tax sales --------------------------------.146 887.777 15.662 13.11.7% 13.3% 1.X 100 Sales total assets 1999 .315 2.2% 0.

87 2001 314962 11662457 ---------------.50 2000 700387 10134014 ------------------.X 100 10134014 11904857 = 5.380014 9436104 --------------------------.X 100 .X -------------------.X ------------------- 9436104 10782776 = 3.X ----------------.

This is showing the Total Quality Management (TQM) and efficiency of management.21 Interpretation Return on investment is an important ratio in measuring the trend of the organization and thorough analysis of the company. Net Profit margin ignores the utilization of assets and total assets turnover ratio ignores the profitability on sales. One variation in Du Pont analysis is to understand the firm s return on investment. In the year 2001. an increase in net profit margin ratio or both.11662457 14222444 = 2. Neither the net profit margin nor the total assets itself provide adequate measures for overall effectiveness. net profit margin and total asset turnover ratio. . the return on investment remained low but in 1999 and 2000 there is positive trend and there is an increase in return on investment because of increase in both. An improvement in the earning power of the firm will result if there is increase in total assets turnover ratio. The return on investment ratio or earning power resolves this shortcoming.

86 82.36 GROSS PROFIT 17.14 17.64 .NISHAT MILLS LIMITED INCOME STATEMENT VERTICAL ANALYSIS 1999 2000 2001 SALES 100% 100% 100% COST OF GOODS SOLD 82.92 21.08 78.

ADMINISTRATIVE SELLING AND GEN EXPESES 5.27 5.39 6.09

OPERATING PROFIT 12.65 15.75 11.55

ADD; OTHER INCOME 0.73 1.01 1

EARNING BEFORE INTEREST AND TAX 13.38 16.76 12.55

LESS: FINANCIAL CHARGES 8.47 8.58 9

WORKERS PARTICIPATION FUND 0.25 0.41 0.18

PROFIT BEFORE TAXATION 4.66 7.78 3.37

LESS: PROVISION FOR TAXATION 0.63 0.87 0.67

PROFITAFTER TAX 4.03 6.91 2.7

Interpretation Percentages of cost of goods sold to sales remain with in range of 78% to 80%. It means that cost of goods is being strictly controlled at Nishat mills limited. In the year of 2000 administrative expenses were 5.39% but in the year 2001 administrative expenses increased to 6.09% that depicts the inefficiency of management in curtailing its administrative costs.

Earning before interest and profit also reduced in the year of 2001 because of increase its selling and administrative costs. Financial charges also increase in the year of 2001 because firm financed its projects through borrowed financing. In the year 2001 profit after tax reduced as compared to 2000 because of increase in cost of goods sold, increase in selling and administrative cost and increase in financial charges. NISHAT MILLS LIMITED BALANCE SHEET VERTICAL ANALYSIS 1999 2000 2001

Equity and Liabilities Share Capital and Reserves

Authorized Capital

Issued and Subscribed and paid up share capital 10.33 9.35 7.83 Capital reserves 9.53 8.63 7.23

Revenue 18.65 20.4 18.12

Surplus on revaluation of operating fixed assets 0.0046 0.1 0.09

Non Current Liabilities Redeemable capital 0.11 7.72 15.51

Long Term Loans 2.34

1 Current Liabilities Current portion of long-term liabilities 5.4 Short term finance 41.17 .09 Liability against finance lease 3.4 5.87 1.92 1.22 5.02 0.54 36.94 35.01 0.1.65 Deferred liability for gratuity 1 0.

22 0.03 Proposed dividend 1.06 0.05 0.44 4.15 Provision for Taxation 1.38 1.07 .35 0.38 1.Creditors accrued and other liabilities 4.49 Worker' participation fund 0.17 Unclaimed Dividend 0.48 5.81 2.73 1.

5 Assets subject to finance lease 3.31 1.91 43.29 Capital work in process 1.08 .44 2.98 30.16 12.04 3.Total Liabilities and Owner Equity 100 100 100 ASSETS Non-Current Assets Tangible fixed assets Operating fixed assets 32.

Long Term Investment 14.65 0. spare parts and loose tools 5.81 Stock in Trade 16.06 0.53 0.05 0.68 9.83 Short term investment 0.26 3.75 11.85 13.7 Current Assets Stores.78 Long Term loans. prepayments 0.05 4. deposits.04 .92 11.

26 Advances.57 47.34 2.Trade Debts 11.13 4.97 11.43 Cash At Bank 4.15 42. deposits and prepayments 6.41 41.02 2.08 6.66 Other Receivables 2.05 4.6 .84 14.4 4.

v Cost of Goods Sold Increasing trend in the cost of goods sold is due to the reason that company also incurred more variable and fixed costs and other operating cost as well as compared to 1998 in 2000 and 2001. TREND ANALYSIS Trend analysis shows the direction upward or downward and involves the computation of the percentages relationship that each statement item bears to the same item in the previous year. Firm s redeemable capital also increased as compared to previous years. Overall performance of Nishat mills limited remains satisfactory.333333333333333333333333333333333333333 TOTAL ASSETS 100 100 100 INTERPRETATION NISHAT MILLS limited operating assets increased in the year of 2001 as compared to year 2000. Sales volume in 2000 is greater as compared to the previous year and lesser as compared to 2001 showing the company s inability to capture more buyers. The unit produced has also been increased and the company also captured more buyers in 2001 resulting in greater sales volume. . Interpretation of Income Statement v SALE The increase in sales illustrates that it is showing an upward trend due to the increase in the wholesale price of the commodity in the market.

v Earning Before Interest and Tax Earning before interest and tax at first reduced in 1999 as compared to 1998 because of increase in operating expenses in 1999. it increases because have in sale and profit as compared to 1999.08% of sale in 1999.86% of sale in 2000 as compared CGS i. v Taxes Taxes are levied by the govt.e.36%. . due to these operating expenses are showing an upward trend. The operating expense also increased in this year due to inefficiency of management resulting in low earning before interest and tax. v Operating Expenses Operating expenses are showing an upward trend in 2000 and 2001 as compared to the previous years because sale volume has increased in these years. 82. In 2001. it again decreased because of increasing in cost of goods sold in 2001 i. In 2000.v Gross Profit Gross profit showing an upward trend in the year 2000 as compared to 1999 because sale volume increased in this year and cost of goods sold was 78. In 2001. In 1999. In 1999 and 2000. it increases due to inefficiency of management. 82. it reduced from the 1998 expense because of the efficiency of the management to control on such expenses. In 2001. the taxes decrease as compared to 1998 because of new govt. it again decreased because in this year the cost of goods sold increased as compared to previous year and gross profit ratio was also low. In 1999. The company has a spent a lot of money on selling expense as advertisement and also on administration. policies and enforced tax rates.e. and it can increase or decrease the amount of taxes when it likes or feels necessary. it increased because in this year cost of goods sold decreased due to efficiency of the management and gross profit are also high. Management should take steps to avoid such expenses. In 2000. it again decreases due to decrease in profit. v Financial Charges Financial charges are showing an upward trend in the year 2000 and 2001.

In 1999. In 2000. In 2001. decrease in cost of goods sold and increase in earning before interest and expense. in these years there was political stability. Deposits. the company fixed assets has been increasing by 0.08% as compared to previous year and similar fashion is noticed the year 2000 and 2001. v Long Term Investment Long-term investment is showing decreasing trend in the year 1999 and 2000 as compared to previous year. selling. showing that the investment of the company in other companies has considerably increased. We have noticed that the sale volume over the year has been increased. The increase in 2000 and 2001 is a healthy sign in the country.X 100 Previous year amount Assets Fixed assets In 1999. prepayment and deferred cost showed a positive sign in 2000 and 2001. FORMULA USED Current year amount previous year amount Chain base = -----------------------------------------------------------------------. In 1999. The firms do not involved in more investing in other companies because of risk of loss. no increase in long-term investment. Prepayment and Deferred Cost Long-term loans. it again increases because of increase in sale. administration and other taxation expenses. . It shows that company is more interested in investing his current assets. it increased because of increase in sale volume and unit cost. it again decreases as compared to 2000 because of increase in cost of good sold. e. In 2001. deposits. This is due to increased volume of fixed assets. v Long Term Loans. it decreased because there were political crises in the country. it is same that is in 2000 i.v Net Income The net income has been increased over the year due to following reasons.

spare parts and loose tools have shown increased pattern in the year 1999 and 2000 representing the expansion of the business. FORMULA USED Current year amount previous year amount ---------------------------------------------------------------- Previous year amount . Ø Management should take remedial measures to lesson the trade debtors at reasonable level. In the year 2001. Stock in trade showed as increasing trend in the year 1999 showing inefficiency of the management because management fails to dispose it of in time. it reduced as compared to 2000 because these assets were sufficient to meet next year requirement. Trade debtors showing declining trend in the year 1999 as compared to 1998 which is a positive sign but trade debtors which includes account receivables and debtors have been increased in the year 2000 and 2001 which shows the following: Company collection on accounts is slow. The decline in stock in trade in the year 2000 shows efficiency of management also the buyers are satisfied by the decisions. Ø Short term investment cash and bank Short term investment cash and bank balance have been increase in 1999 and 2000 showing a positive sign to meet the working capital requirement of the firm. Ø Company is selling the goods on credit rather than cash basis. the balance reduced because of the inefficiency of the management and it reduces the ability to meet working capital requirement of the company. In 2001.v Current Assets Current assets comprising of stores. In the year 2001. it again showed an increasing trend showing inefficiency of the management.

v Share Holder Equity The shareholder s equity is showing a positive sign that the share holder s share in the business have been increased v Long Term Liabilities Long-term liabilities have been decreased in the year 1999. v Current Liabilities Current liabilities shows the liquidity position of the company short term borrowing of the company have been increased in the year 1999 but in 2000 and 2001 it shows the decreasing trend representing its control on borrowing depicting the efficiency of the management . showing the efficiency of the management in retiring its debts. v Deferred Liabilities Deferred liabilities show the decreasing the trend that shows the efficiency of management in retiring them off. v Liability against Assets Subject To Finance Lease Liability against assets subject to finance lease shows the decreasing trend in the year 2000 and 2001 that shows firms took less loans against assets in this year and shows less expansion in business but in the year 2001 it again rose that shows expansion of business.LIABILITIES AND OWNER EQUITY v Issued Subscribed and Paid Up Capital We have observed that the issued subscribed and paid up capital of the company remained the same throughout the years.2000 and 2001 respectively.

Firm has to pay less amount money to others. . accrued and other liabilities have shown a positive trend in the year 1999 that it decreased. FORMULA USED Current year previous year ----------------------------------------------------- Previous year Training Programme While at Nishat. Here I am presenting a brief summary of department. This enabled me in understanding the function performed by bank. It will effect their goodwill but in the year 2001 the management controlled it by their efficiency. in relation to letter of credit. where I spent most of my time in understanding the procedure of opening of letter of credit and other export details. My focus of intention was on finance department. v Proposed Dividend Proposed dividend and dividend payable shows that the company has accumulated greater profit which would be distributed after some time. Creditors may find in convenience in receiving their money back. The increase depict that company is postponing payment to creditors. their functions and what I understood there. It again increased in the year 2000 and decreased in 2001. I worked in different department.Creditors.

. The supplier will send the commercial invoice or sales tax invoice . In addition to this purchase department is also responsible for checking of following. · Checking rates of purchased goods. Purpose The main purpose of department is to maintain the desirable level of purchase. When demand is approved. so that ideal funds are not stuck up in the shape of heavy purchase or a position not arise that mill stop due to non-availability of raw material or store and spares. which are demanded. · Checking quality of purchased goods. Higher authorities will check the authenticity of demand. they will issue a purchase order. · Purchase Department · Export Department · Accounts& finance Department · M. The supplier will send the goods along with the delivery order.S (Management Information System) Purchase Department. Purchase department gets different quotation for this product and after making a reasonable decision in this regard. Purchase order declares the terms and conditions of order and finally deal between the parties are decided. Procedure Firstly different departments according to their requirement put their demand. They scrutinize that the goods. · Checking quantity of purchased goods. actually required.Brief Introduction of Different Departments In company s office there are followings types of departments. On receiving the goods the purchase department will make a goods receipt note on which the name of goods and it quantity is shown.I.

A person designated as assistant manager heads account payable section.according to the product and finally purchase department will make a store purchase voucher. ACCOUNTS DEPARTMENT Accounts Department Accounts Department There are four sections. Ø Sales tax invoice Ø Inward gate pass Ø Good inspection note Ø Delivery challan . which are described below in details. to whom Nishat mills limited make the payments. 1) Payroll section 2) Costing section 3) Payable section 4) Receivable section · Account payable section It primarily deals with supplier. creditors. which provides the evidence of transaction. Before payment is made to supplier or contractors following supporting documents are required. contractors. Accounts officer and assistant account officer work under his supervision.

this invoice usually contain the following column. Chief controller of Nishat mills limited signs these. Goods inspection note should be received within one day after the storeroom receives goods 4. Nishat mills limited have totally computerized system so items are identified and coded. Every party is allotted certain codes and entry is made in them as and when they take place. Sales tax invoice Invoice is prepared which shows the amount of sales tax deducted etc. Inward gate pass In the supporting documents inward gate pass is also very essential. Goods inspection note When purchase process of goods (commodities is initiated a purchased order is made. Most important thing to remember. And a pass is issued by the concerned authorities that allowing the entrance of goods. It has no concerned with quality. Account payable department require a copy of inward gate pass. When things are purchased from outside parties they reach factory premise so entry is made. Sr no quantity particulars amount rate of sales tax amount total 2. Inward gate pass no is checked by 1) Gate clerk 2) Security officer 3) Store auditor 3. . when goods are received the concerned department (issuing purchase order) inspects the goods to know whether they are according to their specification mentioned in purchase order. So a copy of good inspection note is prepared. Preparation of checks After receiving the invoices and checking their accuracy finally account payable department prepares cheques.1. that it deals only with the quantity. a copy of purchase order is given to payable department.

so vouchers are sent to computer operator for posting.V (journal voucher) Expense account (debit) Amount Party account (credit) Amount Expense account is debited because company has incurred certain expense. Party is credited because payment is going to be made to him. As books of NISHAT MILLS are computerized and ledgers are being prepared in computer.P. Procedure Firstly the account department makes the recording of transaction by different type of vouchers according to the nature of transaction. q FINANCE DEPARTMENT Purpose .Entries in books of accounts Party sends the bill. J. FUNCTIONS The main function of account department is to keep proper record transaction and maintain the accounts. B. once it is approved. Here a daily print out of all entries is being checked in order to check the accuracy and then posting made to respective ledger. Two vouchers are prepared.V (bank payment voucher) Party account (debited) Amount Bank (credited) Amount Tax Amount Deduction of tax is made at source under the section 50 of the income tax ordinance 1979. The vouchers provide the evidence of transaction.

Inside parties include shareholders. LOAN PROPOSAL Nishat mills limited generate funds from inside and outside parties. first we will see the matter from the point of Nishat mills limited then apprehensions of bank will be discussed in detail. 2. Non fund base credit In non fund base credit bank only provides guarantee no disbursement of cash is made. like: · Long-term loan · Leasing · Short-term loan One of the main important functions performed by finance department is to prepare loan proposals. while outsider parties are banks and various loan providing agencies.The main purpose of the department is ensuring the availability of the funds for operation and also better allocation of these funds. Functions The most important function of finance manager is to arrange different types of loan according to the requirement. Difference between fund based and non-fund based credit 1. . When loan proposal is made various consideration should be kept in mind. Fund base credit In fund base credit there is actual disbursement of cash by the bank to Nishat mills limited.

In pledge ownership and possession is with the bank. his track record has been established and he enjoys a favorable repute in the market. Generally cotton purchase is heavily financed by bank. Normally court fee is paid when mortgage deed is registered. The bank releases when payment is made to bank cotton. Equitable mortgage is preferred when client is trust worthy.Points to remember Following points should be kept in mind before making a loan application. · Loan amount · Date of expiry · Rate of interest (important consideration) · Securities Nishat mills limited in following forms offer the securities. Sometimes buildings and factory machinery are mortgaged with bank. Bulk of cotton is purchased in the season so to avail the benefit of huge quantity. There is important point to remember that although cotton is stored in the god own of NML but all the keys are with the banks. Types of mortgage There are two types of mortgage · Equitable mortgage · RTG mortgage · Equitable mortgage Under this type mortgage deed is not registered in the court of law. Registration of mortgage deed means that lien of bank is marked on the premises in the register of ownership so further purchase and sale of this property is not allowed. Usually loan is obtained from bank after pledge of cotton. 2) Mortgage of factory premises Factory premises are also mortgaged with bank. 1) Pledge of cotton Mostly or frequently offered security is cotton. .

Naz Mansha is also offered. ü Bankers point of view Now we see the loan proposal from bankers point of view. Court fee is paid in this type of mortgage. they take the responsibility. 2. Purpose What is the purpose of loan? Is it short term or long term loan? The motive behind the loan is of immense important. So directors give personal guarantee to the bank that its loan will be secured enough. Question should be asked whether the loan is obtained for purchase of machinery or for construction of building. this is opted when client is new and his track record has not been established. Person 2. Bank analyses 3 Ps before advancing loan. Who is going to be on receiving end? In the past loans were given to people according to their political status. Now a day s bank cares a lot before advancing loan. 1. 3) Personal guarantee of directors and chief executive Personal guarantee of company chief executive Mrs. Person First of all person is important. Purpose 3.· Registered mortgage In this type of mortgage. deed is registered in the register of ownership and further sale is not allowed. . banker has various apprehensions before sanctioning loan to borrower. Papers 1. Bank before sanctioning loan to Nishat mills limited ask for certain type of guarantee by it directors.

bank do calculate certain ratio analysis. CAMEL C stand for CAPITAL ADEQUACY A stand for ASSET MANAGEMENT M stand for MANAGEMENT SOUNDNESS E stand for EARNING AND PROFIT L stands for LIQUIDITY So we can summarize banks consideration into the above mentioned points.3. Papers The securities against which loan is granted are of great importance. That is maximum exposure to a single party should not exceed 30% of bank unimpaired capital. Whether the securities offered are good enough to secure the loan amount of bank. The points which bank takes into account before sanctioning the loan are summarized as under: We can use word camel to denote them. The unimpaired capital of bank is equal to paid up capital plus reserves. ü Lending policy of bank First of all loan proposal should meet the prudential regulations requirements. .of course one of the leading exporter of textiles products so banks normally do not pay much attention to this one. Financial analysis of Nishat mills limited includes. Another consideration is that current ratio should not fall below 1:1 although Nishat mills limited current ratio is not 1:1 but since its track record has been established and it enjoys a favorable repute in textile sector . Now we come to the lending policy of bank. ü Credit Policy of Bank How bank advance credit? Before advancing the loan.

grey cloth and processed fiber. they indicated the reasons if the company is not showing progress and also recommend the method by which the weakness of company can be removed. grey cloth and processed fiber.· File work · Loan processing · Previous record Along with loan application following documents are attached · Annual report · Directors NIC copies · Signature specimen of directors · Last 3 years exports and imports details · This statement verifies the financial position of Nishat mills limited Company q Management Information System Management information system makes the financial analysis regarding the operation of business. EXPORT DEPARTMENT Functions & Procedure This department is responsible for the export of yarn. The export department performs 3 major functions. They also make the forecast about the future and then suggest that how the company can make improvements in future. GREY CLOTH & PROCESSED FIBER. . If the company wants to start a new project it is MIS. This department starts working from getting purchase order to deliver the shipment to the buyer. By the calculation of different ratios and other procedures of analysis. This department has to fulfill all the legal requirements and prepare important documents involved in the export of yarn. which prepare its feasibility report. SHIPMENT OF YARN. 1.

export departments starts its main functions. It usually prepares the following documents to ensure the timely shipmen The most commonly documents which export department has to prepare and deal with are: o Letter of credit (L\C) o Bill of exchange o Commercial invoice o Export declaration form. o Certificate of origin o Packing list o Customs invoice o Textile declaration form o Inspection certificate o Shipping bill/bill of lodging/air way bill o Manufacture s certificate o Form E In some special cases.After receiving packing list from shipping department. Letter Of Credit . o Certificate of child labor o Certificate of forced labor Contract First of all. Nishat mills limited find its buyer through marketing department. some other documents as and when required by the buyer are also prepared like. Then negotiation starts and finally terms and conditions of contract are finalized. contract between Nishat Mills limited and importer takes place.

after getting the approval from the authorized person (Mian Umer Sahib in Nishat Mills Limited) the concerned person write an Application in the name of his authorized bank requesting him to open a Letter of Credit in the favor of a particular party in a foreign country. The bank in pursuance of that request issues LC is favor of exporter. Buyer bank III. L / C and Bill of Lading are given to the clearing agent for clearing the consignment. Insurance Certificate is obtained from the Insurance Company for the protection of damages. The LC is a promise or guarantee by the bank to honor bill of exchange drawn by exporter. Import documents are retired by paying the all dues to bank. Definition Letter of credit is an undertaking by a bank to meet the drafts drawn by exporter Letter of credit is the conditional undertaking on the request of the importer/buyer A written undertaking by the bank of importer i.S Codes are also required for the confirmation of duty charged by the Government on different item of goods. I. provided the conditions of letter of credit are fulfilled. H.e. Advising bank.The import and export of goods throughout the world is now usually arranged by documentary letter of credit. . Beneficiary IV. How L/C is opened The import department receives the Performa invoice from purchasing department. Buyer II. (Harmonized System Codes) The department according to the requirement makes sometimes amendments. issuing bank at the request of buyer or importer to make payments at sight or at Parties Of Letter Of Credit Four parties are involved in the payment of the goods. The importer requests his bank to open LC in the favor of exporter.

Special instruction. Contents of letter of credit are summarized as under. It is sent along with goods shipped to foreign country. Consignee name Never importer. so proper shipment takes place. consignee of goods can ever be importer unless mode of payment is advance. ü Points To Remember In Letter Of Credit What I did at Nishat mills limited? I came to know lot of things about letter of credit. if any viii. Port of delivery Vii. Customs Invoice After opening letter of credit. Kind of letter of credit V. State Bank of Pakistan point of view in this regard is to secure the payment of letter of credit. Then our local bank sends documents to the buyer bank and foreign bank release payment to our bank with the permission of the buyer. Port of shipment Vi. I. iii. two unknown parties come together and both are benefited. Form E . After clearance of the export documents. One copy is sent to the SBP for maintaining records of Imports.Finally bill of entry is received which has three copies in which every concerned party give its remarks with stamp. In foreign trade. ix.2nd copy is sent to the custom department and 3rd is retained by department for record. invoice is prepared. Goods are received in foreign country either by bank or some one other. Shipper s name ii. Mode of payment Iv. letter of credit has gained tremendously importance. export department negotiate the paper with bank and receive payment from the bank. One of for customs authorities. The purpose is that foreign remittance should come inside PAKISTAN. It has facilitated the trade. according to State Bank regulations.

x. This packing list is sent to the shipping company. I want to mention a very interesting point there. It describes nature of goods exported their value. air way bill is prepared. they are filled by the export documentation department. their quantities which are packaged. FOB (freight on board) If we deduct freight from cost and freight. When the goods are sent through railway. but in case of Nishat mills limited. · Date of shipment · Date at which ship will reach the destination · Shipping bill no · M. Nishat mills limited obtain FORM E from Credit Agricol Indosuez. Normally in case of small exporter. form E is taken from the bank. If the goods are sent by air. 1. Xiii. FOB value includes charges only up to port. Commercial invoice Invoice can be of following types.E stands for export.R nos It is mate receipt number. Cost and freight 2. Nishat mills limited will settle the matter with SBP. Nishat mills limited have given written undertaking to bank that in case of unfavorable events. we get FOB value. railway receipt is prepared. Packing list It describes goods. five copies of bill of lading are prepared. Citi Bank etc. Shipping bill/ bill of lading/ airway bill/ railway receipt. When goods are sent by sea. In which bank describes quantity and price of goods exported. When captain of ship receives goods and place it in ship he issues a mate receipts numbers.Certificate of origin . xii. Since Nishat is a large group and enjoys a favorable repute in the eyes of banks so they do not care much is issuing blank FORM E. Company carrying goods issues bill of lading. XI. bank inspects goods and issues FORM E. Cost and freight means this cost also covers the freight charges from port to importers godown. When Nishat mills limited exports yarn or processed fiber. blank FORM E are issued by the bank.

The information such as (1) name and address of exporters / Importers (2) commodity (3) quantity / rate / amount etc. It is an assurance that goods are of Pakistani origin. Proforma Invoice and similar other documents evidencing purchase of goods by foreign buyers. confirmation order for sale. Firm Export Order Irrevocable Letter of Credit The term Firm Export Order shall include contract of sale. Importers import fabrics because of finest cotton. . EXPORT FINANCE UNDER PART. Signature of exporters / importers should be provided in such documents. (4) period of shipment (5) terms of payment. As for L/C it would be enough that it indicates the name of commodity and the amount. for example Certificate of no child and forced labor HISTORY OF EXPORT FINANCE SCHEMES State Bank of Pakistan introduced a scheme in the year 1973 Known as Refinance Scheme for NonTraditional and newly emerging Exports with a view to providing adequate bank credit for exports of non-traditional and newly emerging commodities on favorable terms. Subsequently in October 1977 the scope of scheme was further enlarged and a new scheme was introduced named Export Finance Scheme. xiv. It is a declaration by NML that goods are of Pakistani origin.Some importers requires certificate of origin from NML. Export Promotion Bureau normally issues this certificate. Later in May 1976 it was decided to include all manufactured goods in the scheme. In some special cases. purchase order.I Under Part I of the scheme. Beneficiary certificate Export department also prepares it. some other documents as and when required by the buyer are also provided. The exporter must verify the signature of the buyer. the commercial banks provide concessionary finance to exporters for financing the exports of eligible commodities on case-by-case basis against individual.

they are hesitating / reluctant in establishing letter of credit in respect of contract. Submission of Substituted Documents As the loan mature after 180 days the documents must be submitted on 179th day if these are submitted on 180th day then late substitution fine is paid. 2. They expressed their inability to accept the shipment at this stage and have accordingly cancelled the contract. Therefore exporter requested to allow substitution of the contract and adjust the amount of Re-Finance against substituted letter of Credit. which informs you that what Type of documents is enclosed herewith.The maximum period for which export finance under Part-I of the scheme can be extended to the exporter is 180 days. Pre-Shipment: Demand Promissory Note Undertaking as per Annexure A on non-judicial stamp paper Copy of Letter of Credit or Firm Export Order Demand Promissory Note On demand the exporter promise to pay bank or order the sum or value received from this date which includes the amount of profit / rate @ XX rate when converted into annual % terms. APPLICATION FOR EXPORT FINANCE SCHEME UNDER PART I SCHEME: Exporter are required to submit following documents to their bankers for obtaining export finance for onward submission to respective office of State Bank of Pakistan. The application for substitution is submitted with following documents: Covering Letter: It is a Letter. 3. Undertaking by Exporter: In which the exporter. informs the bank that due to un-expected crisis of the buyer. Original Sales Contract .

destination of the goods. no. Date and amount of re-finance loan obtained from State Bank of Pakistan and due date of repayment of the re-finance loan. date till which that contract is valid. and shipment date of the goods in Case of already exported goods. the amount of the contract. value of goods yet to be exported. Certificate to Be Given By the Bank in Cases of Substitution of Firm Export Order / Letter Of Credit under the Export Finance Scheme: . Undertaking by the Exporter Exporter finance has been availed against this sales contract or will be availed of by us against this new firm order or against a portion of the transferable L / C duly transferred in the name of above exporter or against the firm export order (s) in relation to which under noted L / C or a transferred portion of it was received from our bank or from any other bank under Part-1 of the export Finance Scheme. 6. name of buyer of contract. Particulars of Sales Contract Performa These particulars include no. And date of contract. and the export proceeds realized against shipment (s) made under the aforesaid documents have not been / will not be accounted for matching purpose by the aforesaid exporters under part 11 of Export Finance Scheme. Telex It is sent by the buyer in which he informs the seller that due to some crisis in the international market he is not in a position to open the L/C against that contract so please treat the contract as cancelled. The contents of sales contract are · Buyer s name & address · Product description · Quality & packing · Shipment date · Price · Payment date etc 4. 5.Indicates the date at which contract is issued. 7.

Destination. The shipping company issues it. price and packing. Date of shipment of above goods. which includes no. DE FORMS 2 & FORM ED-I . 1. Date of which above goods are to be shipped. Bill of Lading 3. the Shipping Documents must be submitted within three working days.Form is submitted under foreign exchange regulation Act 1947. last date of shipment. quantity. It includes the particulars of the new firm export order(s) and L/C (s) a portion of transferable L/C. size of commodity. And Date of L/C. DE Form 2 & Form ED-I 1. amount of L/C. 2. port of issue and date of issue of exported items. goods already exported. quantity. E Form 4. Ü Shipping Documents After receiving these documents. name of buyer. Invoice 2. Invoice Invoice indicates the particulars of contract. and quality. Bill Of Lading: (B/L) B/L Indicates the exporter s name. date till which that L/C is valid. Value of goods yet to be exported. E-FORM E.This certificate is issued to certify that they availed of no finance against this contract. notify party. 3. The following documents are submitted which are the proof of shipment. quality. . and destination. Value of above goods. 4.

sales contract No. issue date. contract L/C Nos. Collection Basis . type of commodity. ü Collection And Negotiation Of Documents Documents sent to banks mostly on collection basis as well as negotiation / discounted. The loan may be matured at sight 15 days to 120 days if more days are required then permission is taken from SBP. EXPORT PROCEEDS REALIZATION CERTIFICATE If amount is paid by own sources then after the amount is received the exporter has to send EPRC to SBP. 1..This form indicates the bank name. amount. date of obtaining finance and %age of commission. ü LOAN MATURITY On the maturity date the exporter has to repay the fund if amount is receivable after maturity date then the exporter has to pay the loan on his own sources. This amount is repayable within 3 working days if it is not paid then the bank has right of retention of fund. if the contract is at sight then the amount is received within 15 days and it is sent to the State Bank of Pakistan and not useable by the exporter after repaying the loan the amount is useable by the exporter. ü RETENTION OF FUND The amount of document is paid to SBP then it is usable by the exporter after repaying the loan the amount is useable by the exporter. For example. demand loan No. shipment date.. amount of shipping goods.

2.g. irrevocable & unrestricted L/C at sight. place of issue. 4. beneficiary s name and address. C&F Karachi by vessel e. Appendix-B This certificate is given to the bank for export of chemical. payment mode by L/C (type) e. On payments if the exchange rate of submission bank is better than the other we will credit the same bank. within 2 months after receipt of L/C. description. description of goods.g. 3. to be shipped from Export country to import country. 2. Covering Letter This indicates the detail and price of the imported items. port of shipment. Indenter s name and registration No. Validity until August 01. authorized bank. s name and applicant s name and address. amount. 5. Application for Opening of Letter of Credit In which request is made from bank to open L/C for the attached Proforma invoices. quantity. It indicates NIT No. . Proforma Invoice / Indent /Contract Indicates applicant s name. Form I Application for permission under the Foreign Exchange Regulation Act.g. items.These are forwarded to any bank without negotiating exchange rates. Shipment time e. Negotiations / Discount: We sell out our export documents depending upon better exchange rates of competitive banks. place of delivery e. unit price.g. PREPARATION OF IMPORT DOCUMENTS 1. date of issue.. 2001. currency. 1947 is made to purchase foreign exchange for payment of imports. carrying Co.

brief description of raw material and estimated annual imports requirements. Appendix-G This certificate is given in addition to appendix-G for import of spare parts & machinery. purpose for which machinery required that may be for one of the following: - a) New Unit b) Expansion c) Balancing d) Modernization e) Replacement Particulars of previous imports under expansion. date of original established of the unit. location of industrial unit with full address. products manufacture. ü Particulars of Appendix G: Name and address of importer. date of Government Sanction/Approval whether the unit was originally established against imported or local machinery. · Type of letter of credit · Beneficiary& amount · Applicant& advising bank · Transshipment/carriage doc . no. Applications and Agreement for Commercial Letter of Credit This prescribed form is given by Bank. brief description of machinery required along with H. detail of machinery. 7. It is not necessary to submit this document with L/C opening documents. But is not necessary to submit it at the time of retirement because the bank endorses it properly and it is used for shipment. income tax particulars. which includes. name of industry.6. Code No.S. rated capacity of new machinery applied for.

(2) Date (3) Issuing date. shipment date. payment period. 10. Insurance Arrangements Insurance of goods are made against the damages. 13. amount. 9. 12. and B/L . country of origin & B/L.g. indenter is involved etc. signed invoices that goods are of exported. L/C Scrutiny When the L/C is prepared by bank. then it is checked by import department with the L/C documents hold by the Department. This amount consists of total amount of goods plus 10% cushion.S. Codes These are codes used by custom department for imported commodity. Import Documents / L/C Retirement When L/C is reached to the bank then bank demands the amount of L/C from importer. certificate indicates: (1) Marine Cover Note No. expiry date. 14. Importer contacts the other bank for buying the foreign currency and advice the bank to deposit the amount in the bank in which the importer opened this L/C then the bank retires the document of importer L/C. The insurance Co. H. L/C Amendment Sometimes L/C is amended e. L/C Retirement Doc. 8. L/C Opening 1) Application 2) Performa Invoice 3) Insurance Cover Note 4) Form I 5) Appendix-G.To be presented within 15-21 days after the date of issuance of the shipping document(s) but within the validity of the credit. 11.

Partial shipment allowed / not allowed 5. no. Transshipment allowed / not allowed 6. Then he requires the cheques of the amount of custom and other charges/duties. L/C S PARTICULARS a) L/C type. Then the required amount is to be sent for costing in the Costing Section to check the exemption. 4. Outside bank charges are on beneficiary s a/c 2. & Amount b) Date & Place c) Favoring party d) Applicant e) Signed commercial invoices indicate the value not more than L/C s value. ACopy of insurance declaration to accompany the original documents. h) Packing list requirements Special Instructions 1. Bill of Entry In which every concerned party gives its remarks and stamped one copy and is sent to the SBP. Goods shipment from export country port to import country s port. must be presented for negotiation within 15 days after the date of shipment . Doc. one copy is sent to the custom department and the Company itself retains one copy. f) Full set of clean on Board marine Bill(s) of lading g) Insurance buyer s care declaration of each and every shipment is to be advised to Insurance Co. This L/C is available with any bank in Exporter s country 3. Shipment on enemy s flag vessels and / or parts strictly prohibited 7.These documents are given to the clearing agent for clearing the consignments. 15.

ü QUOTA SYSTEM . There is another non government organization known as ALL PAKISTAN CLOTHS EXPORTERS ASSOCIATION. If textile unit is worried about taxes. Code 9. Shipping Co. or there is any government intervention MA hold talks with Government to settle the disputes. 2. Its member through ballot chooses governing body of APTMA. 1. So it acts as an intermediate party between government textiles industry. ü All Pakistan Textiles Mills Associations (APTMA) It is an association of textile industry. Conduct seminars It regularly conducts seminars in which renowned persons are invited to share their experiences in the field of textiles. It is non government body and acts as a pressure group. Nishat mills limited are an active member of APTMA. 3. s name also indicated. It is a facilitating unit/body. Talks with government If a certain textile industry is facing problem. Short Form / Blank Back B/L(s) not acceptable 10.8. Arrange lectures Foreign delegations are also invited for prospective investment in textiles sector. it is the APTMA on which this matter will be frequently discussed. S. Must show H. Functions Following are the major functions performed by the APTMA. All shipping docs.

JAPAN. then government pays back some of its part. Infect quote is in quantitative and more than that can be shipped to non quota countries. iv. Rebate is actually a duty draw back . First come first serve II.Most of the customers are American and US Government allocate quota to third world. I. Auction quota This type of quota is available through auction. ii. This type of quota is non-transferable. First come first serve quota This type of quota is granted by Export promotion bureau through APTMA to those exporters who finds buyer in foreign quota country. Auction quota IV. Nishat mills limited not only fulfills it regular quota but also acquire it from auction. This pay back of duty is called rebate. q Export Rebate Department . Regular quota i. One time quota This form of quota is granted only once. It finishes when exporter export products to foreign importer. The duty which an importer pays to government for the product that is re exported after some process.NEWZELAND and AUSTRIALIA. Whosoever bids high gets the quota. like UEA. iii. It is usually granted for export of cloth. Regular quota This type of quota is granted on the basis of past performance and ability of exporter to find buyers in foreign market. One time quota III. Kinds Of Quota There are four kinds of quota. CLAIM FOR REBATE.

In this way LC is retired from. Government of Pakistan is providing relaxation/incentives for the export of textiles product. for example different rates are for different categories of export cloth and mentioned. Since Nishat is large group it has a established track record. These rates are subject to change and modifications Functions Function of export rebate department start with exporting cloth or cotton made items to abroad. so bank feel no hesitation is issuing ANNEXURE B in favors of Nishat mills limited so that claim could be filled. Remember no rebate is claimed on cotton export. we may request ANNEXURE B. · Bill of lading · Packing list · Goods dispatch report · Commercial invoice · Bill of export · Form E · Bank credit advice OR export proceed realization certificate Bank issues EPRC when payment is received from the importer bank. Usually bank issues ANNEXURE A when payment is received from the importer bank on this basis claim for rebate could be filed. Documents used in department In order to claim rebate following documents are sent to customs house. if these items are included in that list on which duty can be withdrawn under the orders of federal government then export documentations department sends relevant Documents to the export rebate so that claim could be filed properly.The export rebate department is charged with the responsibility of drawing duty back. But when LC involves some span of time say it is usance LC 60 days after or 90 days. bank issues it when payment has not been received from the importer on the basis ANNERURE B claim for rebate can be made. .

Rates of duty draw back are different for different exported items. I worked in the following departments. Cloth on which more processing is performed greater is the rate of duty drawback. WORK DONE DURING INTERNSHIP During my internship. Application for duty draw back is made U/S 21 and 37 of customs act 1969. ü Issuance of cheques After verification of export transaction custom authorities accept the duty draw back case and according to rules issue cheques.ü SR2 NUMBER When case is filed custom authorities issue SR2 number. · Accounts · Export documentation · Export rebate · Banking · Finance · Purchase .

ü Banking Department Functions The major function of banking department is to deal with banks. any interest received on account of Nishat mills limited by bank are recorded and then tallied. cheques. Mark Up Sheets Second major function of the banking department of Nishat mills limited is preparation of mark up sheet. Certifies that whether items debited or credited is true in all respect. A person designated as Assistant Manager heads banking department. If any discrepancy is found it is told to bank. which are presented for payments. The securities are (a) pledge cotton (b) mortgaging machinery etc . Since Nishat mills limited is a large organization so daily bank reconciliation are received from the bank Process All the cheques. When banking department receives such statement it tallies transaction with its own ledgers. any interest or commission charged by the bank. received by the banks and credited in the account of Nishat mills limited.· Management information system Therefore. during my internship I concentrate in account and finance department. Dealing with bank is normally by receiving bank reconciliation statements. Normally finance is obtained from banks against securities.

This loan is taken sometimes for short period and sometimes for longer period. ü Rules to Calculate Interest The basic rule which is followed to calculate interest is to include the day at which the loan is sanctioned and on that date when loan is paid back is not included in the interest charging days. This interest rate varies from 9 % to 14%. So in these loans interest is paid. Formula to Calculate Interest Interest= loan amount * days Days in working year Work done by banking department . This interest is calculated on daily basis.

· Cash payment vouchers · Cash receipts vouchers · Bank payment vouchers · Bank receipt vouchers . preparation of vouchers and ledger posing. ü Account department In account department. I came to know different type of vouchers being prepared and their process of preparation. I managed to understand the flow of transaction. which calculates the interest amount due on Nishat mills limited. The different type of vouchers being prepared by the account department of NISHAT MILLS is as under. Although interest sheet is sent by bank but it is reconciles by the banking department. Preparation of vouchers In account department under the supervision of concerned officers. it is the banking department. Vouchers are written evidence of any business transaction.When interest and loan amount is paid to bank.

entertainment etc. in order to record the expenses following entry is passed: Account code name of expense (debit) Amount Cash account (credit) Amount Evidence of expense is attached with the cash payment vouchers. repair. i.· Journal voucher or adjustment vouchers · Petty cash vouchers Now I discuss these types of vouchers one by one. These types of vouchers are prepared when cash payments are made against small expenses i.e. CASH PAYMENT VOUCHERS Being a public limited company cash payment vouchers are used for recording the expense of less than five thousand. .

Account officer prepares voucher on the basis of cash receipt prepared by the cashier. Account code cash account (debit) Amount Income A/C or receivable A/C (credit) Amount iii. In order to book the transaction the following entry is passed in the books. . Bills and invoices being approved by the competent authority reach at the table of account officer for payment.ii. Account officer first confirms the nature of expense i. these types of vouchers are small in quantity because majority of transactions are done by bank. However.e. capital or revenue and deduction of tax if applicable then pass the following entry. Account officer checks the approval and mathematical accuracy of the bill and prepares the bank payment voucher. Bank Payment Vouchers Being a public limited company the majority of payment transactions of the Nishat mill limited are carried out through banks. Cash Receipt Vouchers These types of vouchers are prepared when the cashier on behalf of the Nishat mills limited is receiving cash. On receipt of cash. cashier prepared the cash received slip.

iv. . On receipt of cheques account officer sends the cheques for clearing and passed the following entry.Account code Asset name or expense (debit) amount Bank account (credit) amount Deduction of tax at source (credit) amount Evidence of expense/asset is attached with the cash payment voucher. BANK RECEIPT VOUCHERS Bank receipt voucher are prepared when mill receives cheques against account receivable or advance payments.

ü On clearing of above referred cheques following entry passed in the books of account officers. ü If the collecting bank the reversal of above entry returns cheques is made in the books. Account code Bank A/C (debit) Amount Cheques clearing A/C (credit) Amount .Account code cheques clearing A/C (debit) amount Account receivable A/C (credit) amount Advance against sale A/C (credit) amount Copy of cheques is attached with voucher.

Writing off assets i.Purchase on credit .Sales on credit . depreciation store consumption etc. . In order to account them for the journal voucher are prepared by the concerned account officer .e. . stores and spares are purchased on credit.Rectification of mistakes or omissions Now I discuss them one by one ü Purchase on credit Generally raw material.ADJUSTMENT VOUCHER OR JOURNAL VOUCHERS These types of vouchers are generally prepared in the following circumstances.

sales (local and export) are made on credit and at the time of delivery of goods following journal are prepared by the account officer: Account code Account receivable A/C (debit) Amount Credit sales A/C Amount Copy of invoices is attached with voucher.Account code Purchase A/C (debit) Amount Account payable A/C (credit) Amount Copy of the invoices is attached with vouchers. ü WRITING OFF ASSETS . ü SALES ON CREDIT Like purchases.

ü To account for depreciation of fixed assets: Account code Depreciation A/C (debit) Amount Accumulated depreciation A/C (credit) Amount ü To account for the raw material consumption: Account code raw material concerned A/C (debit) amount Raw material store A/C (credit) amount ü To account for store consumption: Account code store concerned A/C (debit) amount .These journal vouchers are prepared in order to change the assets to expense for the preparation of monthly accounts.

Store and spares A/C (credit) amount ü To account for store consumption: Account code store concerned A/C (debit) amount Store and spares A/C (debit) amount ü To account for accrued expenses: Account code expense A/C (debit) amount Account payable A/C (credit) amount .

During my stay with NISHAT MILLS. ü FINANCE DEPARTMENT I also spent some time in finance department to understand the cash flow of the department . After checking the accuracy the master file is update and posting is made to respective account ledger by the computer. He then traces the reason for these entries and put bank reconciliation on the table of finance manager. On receipt of bank statement the manager prepares cash flow statement and presents it to the finance director for future actions. .the main purpose of the department is ensuring the availability of the funds for operation and best utilization of available funds. A weekly projected cash flows statement is also prepared in order to determine the need of the coming week. An account officer prepares bank reconciliation statement of all the banks and list out the outstanding entries. Finance manger prepares daily cash flows statement in order to determine needs and utilization of funds. LEDGER POSTING Computer operator put log no and make posting in computer. Accounts of NISHAT MILLS are computerized and ledgers are prepared in computer. I also worked with computer operator in order to understand posting process. After the preparation and coding of voucher it is sent to computer operator for posting A daily print out of all entries is checked to check the accuracy.In additional to above referred kinds journal voucher is also passed to rectify the mistakes made in voucher preparation or posting.

· Checking rates of purchased goods. so that ideal funds can stuck up in shape of heavy purchase or a position not arise that mill stop due to nonavailability of raw material or store and spares. · Accounts Department . In addition to this purchase department is also responsible for checking of following: · Checking quantity of purchased goods. The main purpose of purchase department is to maintain the desirable level of purchase. · Checking the quality for purchased goods. Problem s Identifications and Their Solutions · FACILITY FOR BONUS At present the facility for bonus is given only for the production department of the company. but in my view point such bonus facility should given to other department as well as like.ü PURCHASE DEPARTMENT.

· Sales & marketing Department · Management information system Department · Finance department · Export department · MEDICAL FACILITIES Medical facilities are provided in the mill where production work is carried out but such facility should also be provided to the employees who are working in the HEAD OFFICE in Lahore. New training courses will help in uplifting the quality of the work of employees. · EMPLOYEES TRAINING Although there are educated and talented staff working in Nishat Mills limited but it is the need of the hour that the staff should be given the time-to-time refresher courses for the up to date knowledge for meeting knew and dynamic challenges in the growing business concern of Nishat Mills Limited. . Company should take great and early care of this important matter because employees working need this very badly.

· NEED OF A CAFETERIA There is lack of proper facilities for food. There is no proper canteen or cafeteria or messing facilities. think they should also provide conveyance facility to the male employees as well. This will create the easiness for the workers to come on job on time without much difficulty. If there will be messing or cafeteria facility in the premises there will be saving of time and increase in the efficiency of the workers and it will be easy for the people to return on work after lunch on well in time. · TRANSPORTATION PROBLEM They provide transportation facility only to female employees. .

Strengths of Nishat mills limited v Export-oriented organizations v Highly skilled labor v Talented marketing managers v Qualified finance staff v Professionalism in the employees v Corporate culture v Sound policies v Strong group v Successful history v Computer information system v Paperless organization v Availability of raw material at cheaper rate . This strategy-formulation tool summarizes and evaluates the major strengths and weaknesses in the functional areas of a business. Conducting an internal strategic-management audit is to construct an internal factor evaluation matrix.SWOT ANALYSIS Now we shall conduct swot analysis for Nishat mills limited.

Key opportunities available to Nishat mills v In 2005 when all quota barriers would be lifted v Increase demand of Pakistan cotton-made products v Advertising growth v To use information technology Key threats to Nishat textiles v Intensive competition v WTO v Child labor propaganda by various NGOs v Political instability in Pakistan v Mostly operating in overseas market . over and all it is a successful organization.v Products are technologically competitive v Innovative products v Customer orientation v Efficient production system Weakness of Nishat mills limited v Rely on foreign customers These are only few weaknesses in Nishat textiles.

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