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Published by: Anum Yousaf on Feb 21, 2011
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HABIB BANK GROUP is a leader in Pakistan’s services industry. An extensive network of 1425 domestic branches the largest in Pakistan and 55 international branches to meet customer needs. Perhaps the HABIB BANK LIMITED establish in 1941 at Bombay. But its history starts in 1841 when a young boy name Ismail Habib reach Bombay for job. After some time he got the job with a dealer in utensils and non ferrous metals. Ismail Habib was very keen and intelligent and became partner of his boss. Later on he was elected as a president of the market. Many years later he expended his business. He engaged in private banking. So’ HBL has come a long way from its modest beginnings in Bombay in 25 august, 1941 when it commenced business with a fixed capital of 25000 rupees. Impressed by its initial performance, Quaid-e-Azam Muhammad Ali Jinnah asked the bank to move its operation to Karachi after the creation of Pakistan, HBL establish itself in the Quaid’s city in 1943 and became a symbol of pride and progress for the people of Pakistan. During the early days of newly born state, government of Pakistan faces the great problem of fund shortage. This time HBL again helped the governance of Pakistan and came to rescue to provide Pakistan with assistance of no t less than 8 crore. Besides this, HABIB BANK has been a pioneer in providing innovative banking services such as first installation of mainframe computer in Pakistan followed by ATM and more Internet banking facilities in all branches. The main strength of HBL brand is its great services to all customers especially to the corporate customers and its prominent head office building that has dominated Karachi’s skyline for 35 years.

Mission statement

To be recognized as the leading financial institution of Pakistan and a dynamic international bank in the emerging markets. providing our customers with a premium set of innovative products and services. customers and employees . and granting superior value to our stakeholders – shareholders. Humility: We encourage a culture of mutual respect and treat both our team members and . Values of HBL • customers with humility and care.

change. PRODUCTS AND SERVICES OFFERED BY HBL PRODUCTS: o HBL Muhafiz Rupee Travellers Cheques . from selection to advancement. a common set of goals and a spirit to share the glory and the strength to face failures together. to offer you. organization. a level of service beyond your expectations. • Meritocracy: At every level. based on objective criteria throughout all the layers of the organization. We are. leaders and creators of change. This force is derived from participative and collective endeavors. • Team Work: Our team strives to become a cohesive and unified force. able to achieve a specific level of performance at every layer of the organization. integrity means a synergic approach towards abiding our core values. we form a network of a well-integrated team.• Integrity: For us. therefore. we have designed a consistent system of human resource practices. United with the force of shared values and integrity. the customer. and to respect and reward the agents. • Culture of Innovation: we aim to be proactively responsive to new ideas.

and forms the basis for many of our other business lines: corporate and investment banking and treasury activities. and forms the basis for many of our other business lines: corporate and investment banking and treasury activities. The network provides HBL with the largest diversified low cost deposit base of any bank in Pakistan. with 1425 branches. is the core strength of Habib Bank. o Commercial Banking: .o HBL Auto Finance o HBL Flexi Loans for salaried personnel o HBL LifeStyles Financing Scheme o HBL i-Card o HBL House Financing Loans o HBL Easy Access o HBL Fast Transfer o Haryali Agricultural Loans o HBL E-Bank SERVICES: o Retail Banking The Retail Banking network. The network provides HBL with the largest diversified low cost deposit base of any bank in Pakistan.

SWOT ANALYSIS . Renovation of is being carried out in order to give a professional look to all the Commercial Banking Centers. The objective of setting-up Commercial Banking was two-fold:  First to stop the erosion of market share in the middle market. On November 1. o International Operations: HBL’s ability to operate successfully in diversified markets and cultures is a function of a long history in international banking – when first international branch was opened in 1951.Enterprises operating in the middle market contribute significantly to the economy of a country. o Corporate Banking: The Corporate Banking Group serves large institutional customers who require sophisticated products in an environment of intense competition. HBL Corporate & Investment Banking Group is now recognized as a market leader and regularly arranges and participates in most large structured finance deals. to regain the lost market share Commercial Banking is making headway with improvement not only in terms of the business figures but also in its ambiance. The Bank’s branches in financial centers continue to provide efficient trade settlement and reimbursement services to the entire network and business with other banks. 2000 Commercial Banking came into being. During FY-2000 HBL’s management decided to address this issue.  Second.

425 branches with an international network of 48 branches in 26 countries  20% share of HBL in financial market  Large Balance sheet size  Decentralized authority WEAKNESSES:  Unfavorable union activities and management conflicts  Checking System is at intra-department level  Weak marketing policies  Nepotism & Favorism  Infected portfolio still exists as bad debts  Centralized management in particular areas .STRENGTHS:  Goodwill & historical background  Professional and well trained staff  Largest customer base  HBL is Pakistan's largest commercial bank  HBL has a domestic network of 1.

Therefore we can rightly state that deposits are the blood of the bank which causes the body of an institution to get to work.  Faster market growth represents opportunity to grow and diversify  Restoration of investor’s confidence and pick up in private sector investment flows. the difference between the rate of borrowing lending forms their spread or gross profit. TYPES OF ACCOUNT: .  Large deposit base and funds flow can help to avail related market opportunities THREATS:  Adverse & unstable government policies  Political instability  Advance technology  Competition from other banks DEPOSIT DEPARTMENT Bank deals in money and they are merely mobilizing funds within the economy. These deposits are liability of the bank so from point of view of bank we can refer to them as liabilities. They borrow from one person and lend to another.OPPORTUNITIES:  Opportunities for growth and expansion in cash management.

/Passport of Account Holder(s). Proprietor.1) CURRENT ACCOUNT: In this type of accounts the client is allowed to deposit or withdraw money as and when he likes. deposits or withdraws money several times in a day if he likes. Individuals (Single-Jointly) Companies/Firms etc. There is also no restriction of amount to be deposited or withdrawn. .  Certified true copy of rules and regulations or By-Laws (in case of association etc. there is requirement of minimum balance maintenance of Rs. Any Foreign National Individuals (Single-Jointly) having valid Resident Pakistan VISA/Work Permit can open and operate the Account.  Certified true copy of the certificate of commencement of business (in case of public limited companies only).C. Requirements for Opening of Account:  Duly filled prescribed A/C opening FORM.  Certified true copy of the memorandum and articles of association (in case of limited companies).  Attested photocopy of N.I.  Certified true copy of the certificate of incorporation or registration (in case of limited companies & registered bodies only).). However. ii. No profit is paid by the bank and no service charges are deducted by the bank on current deposits account.5000/-. Partners. Usually this type of account is opened by the businessmen. Directors and office Bearers as the case may be. Eligibility: i. He may. All Pakistani’s Resident/Non-Resident. can open and operate the Account but he should be a corporate customer. thus.

 Certified true copy of the resolution of the Board of Directors/Managing Committee/Governing Body regarding conduct of the account. The requirements for this account is duly filled prescribed A/C opening FORM. Photo copy of Passport with Page bearing Resident Visa of the Country where Pakistani Residing. 1000/.  No profit is paid. Photo Copy of National Identity Card (Resident Pakistani).  Checking balance at any time during banking hours.or the amount prescribed from time to time. .  There is no restriction for withdrawals of amount and number of cheque.  Statement of Account dispatched on request letter. 2) Profit and loss sharing savings: This type of account is for those persons who want to make small savings'.1000/. This type of account is opened with a minimum deposit of Rs. The profit is paid on these accounts on the minimum balance during a month for the whole of that month.with no maximum limit. Zakat & other taxes are deducted as per rules of the government. two Passport size photographs and signatures on A/C Opening Form for Non-Resident Pakistani with Signatures/Thumb Impression etc. Features:  Account can be OPENED with Minimum Balance Rs. two Passport size photographs with Signatures/Thumb Impression (Resident Pakistani).

 Profit is Paid/Credited in Account on half yearly basis in case of six monthly PLS saving accounts. 4) PLS term deposit: A type of term deposit. These receipts are encashable after expiry of the period for which they were issued. 3) PLS special notice deposit: Special notice deposit is paid on daily product bases.or prescribed limit that is announced time to time with no maximum limit. they are 7 days and 30 days notice deposits. Under this deposit scheme. The profit is paid on these deposits but it is nearly equivalent to saving account rate that is paid on special notes. in which a receipt is issued for varying tenors ranging of deposit. There are two types of special notice deposit. It has no maximum limit but not less . It is in the form of receipts and profit on these receipts is paid biannually.1000/.Features:  Account can be OPENED with Minimum Balance Rs.  Profit is calculated on monthly products  Zakat will be deducted on valuation dates of account.  Profit is payable at monthly subject to adjustment on deceleration of actual profit rate declared every half year. a deposit is received from the depositor under the condition that he will intimate the bank before a certain period in case of withdrawals.  Statement of Account dispatched on half yearly basis after posting of profit. Different profit rates are applied to different type of term deposit.  There is no restriction for withdrawals of amount and numbers of cheque.

5) PLS khas term deposit: Pls khas term deposits are acceptable for a period ranging from one and half year to five years in multiple of six months.than 1 month. Firms/Companies. The one thing that is provided extra by the blind person is two photographs duly attested by an authorized person.  Any Foreign National having valid Resident Pakistan VISA can purchase TD. Account opening rate is 1000 and the zakat is deducted on the rules and regulation. Account opening in special cases Blind person account: A blind person can easily open an account in the bank like other persons but it is preferred that he should open a joint account with a normal person. Zakat will be deducted only once at the time of maturity or before maturity. . If he wants to open the account individually. In this regard the profit is declared from time to time but will be paid only once at the time of encashment of receipt of maturity. Eligibility:  All Pakistani’s Resident/Non-Resident individuals. The banker can not fill the amount and check the signature. there should be an authorized person with him who checked the signature and the amount filled by blind person. Departments can purchase the TD. Govt/Semi Govt.  Resident Visa of Pakistan (Foreign Nationals).

 Government account. After getting this information State Bank give instructions to bank about handling of not resident person’s account.  Non Muslim’s account.  In case of Pakistani not more than 90 days etc. According to the tax authority the non-resident persons are those who live in Pakistan:  In case of foreigner not more than 180 days. The logic behind this is that the bank insures the entry and the exit date of the person in Pakistan. only one thing that is passport copy of the person will have to provide to the bank.Non resident person account: Non-resident persons are those who do not live in Pakistan permanently. SWIFT .  Trust account. Zakat treatment on all accounts Zakat will be deducted on all accounts except the followings:  Fiqah Gafreia account.  Non Pakistani’s account.  Defense account.  Provident fund. The person has to inform bank 15 days before entering in Pakistan and the bank also send this information to State Bank of Pakistan.  In proceeding 4 years not more than 365 days. All things will remain same.

[SWIFT]  Only for banks  Telecommunication not transition  Head office in Belgium  Run by different country members  Lease lining by head office  Start in pak 1995-96  Awareness seminars start in 1997  Work through coding &decoding  Swift provide to members an id &password for connect  Charges from customers depend on message size  Min changes is 120  Changes for one LC is 1400  Code not more than three degits (ID and Passward code)  Authentic mode.21  Centralized system( send message to different countries at once) REMITTANCES . people satisfied  Less chances of fraud  Work as E Mail  Version 2 relate to bank to bank information  Version 4 relate to bank to bank Document  Version 7 relate to bank to bank LC  In HBL use in domestic  In overseas branches ---------.70 branches ---------. Society for worldwide inter bank financial telecommunication.

It can be issued to the customers as well as non customer against cash cheque and letter of instruction.  Amount in words and figures must be same  The applicant on two places should sign application. The DD application must be scrutinized by the counter clerk in respect of following points.  Full name of payer should be mentioned.  There should be branch where payment is to be made. In telegraphic transfer the bankers use secret codes. TELEGRAPHIC TRANSFER: Telegraphic transfer means the transfer of funds from one branch to another branch of the same bank or upon other bank under special arrangements just like a telegram. Telegraphic transfer is not negotiable and the funds are not payable to bearer. Its Legal provisions are same as that of cheque.DEMAND DRAFT: Demand draft is a written order drawn by a branch of a bank upon the branch of same or any other bank to pay certain sum of money to or to the order of specified person. Demand draft is negotiable instruments that can be negotiating at any time before its cancellation. Following parties are involved in demand draft:  Applicant  issuing branch  drawee branch  Beneficiary A demand draft may be issued against the written request of the customer before issuing it must be seen that the demand draft is in order. Minor cannot avail this facility. One .

Pay order is meant for bank own payment but in practice they are also issued to customers.  All the remittance must be controlled through number or codes.  Instruction regarding mode of payment should be obtained. Following parties are involved in TT  Applicant  Drawing branch  Drawee branch  Beneficiary Following important things should be included in TT:  Full name of the beneficiary or account number should be mentioned in the application form.code is with issuing person and the second is with an other person. Following parties are involved in pay order:  Applicant  issuing branch  Payee .  A record in the remittance outward register should be maintained. PAY ORDER: Pay order is an instrument through which payment can be made from one bank to another bank. The payment is made after the confirmation of the check. When they combine the codes it’s become an amount that is called check.

outside the city of outside the country the first thing he has to do is to fill an application form.MAIL TRANSFER: Mail transfer is not negotiable and the procedure of it is same with the procedure of DD. If the customer is not the account holder of the bank. In which he states that I want to transfer the money from this bank to that specific bank by mail. then firstly he has to deposit the money and then rest of the procedure will be adopted to transfer his money. If the customer is the account holder of this bank. .When a customer request the bank to transfer his money from this bank to any other bank of the branch of same bank in the city. the bank will debit his account and the concerned officer will fill forms to make the mail transfer complete.

if any violation occurs SBP imposed penalty. Features: • • • • • • • Concessions rate of markup as compare to commercial banks rate of markups. print. . SBP may cause to impose not any penalty but also termination of bank employee or change of management or authorized dealer’s reputation may destroy. bed sets. Refinance allows against value added products i. Cheating or misuse of funds. This scheme had been amended by time to time. the SBP recover its principal loan amount. dyed cloths.e. Proceeds repatriated through banking channels. Risk: • • If the exporter has been / will be defaulted the laps of funds of authorized dealers. This scheme is operated through authorized dealers under SBP control. Allow credit loan amount within 248 hrs. Export refinance allow to exporters via authorized dealers.SBP ERF Scheme SBP had introduced this scheme to promote country ‘s export and to earn foreign exchange. Misutilization of SBP funds has been prohibited. In case of default. markup & penalty through the bank to which exporter has submitted his refinance claim. garments.

The accommodations generally allowed against collateral security. Hypothecation: When the property in the goods is charged as security of loan from the bank but the ownership & possess . The customer is in advantageous position in a running finance because he has to pay mark up only on balance outstanding against him on daily products basis. Pledge: It is entitled to the exclusive possession of the property until the debt is charged. his banker allows withdrawals from his account and running finance thus occurs. Running Finance: This form of financing was known as Overdraft when a bank customer requires temporary accommodation. The party due to facility of a paying mark prefers the financing up only on the amount it actually utilizes.Demand Finance & Running Finance: Demand finance : This is common form of financing to commercial industrial concerns and is made available either on pledge or hypothecation of goods. In demand finance the party is finance up to certain limit either at once or as and when required. produce or merchandise.

 Photocopy of I. No importer and exporter who has no granted registration shall indent. The authority of registration has been given to export promotion bureau.  Ownership deed of office.  Copy of memorandum and article of association (in case of limited company). Pakistan is developing country and like other developing countries its imports exceeds than exports.D card. To control this situation the registration of import and export has been made obligatory under the registration order 1993. The requirements for getting registration are as under:  Application form.  Fee payment.Imports and exports department: Exports: Introduction and registration: Imports and exports act 1950 have empowered the federal Govt to control the import and export in Pakistan. import and export of any good into or out of Pakistan. .

 Applicant should regular taxpayer.C comes to the advising bank from the issuing bank then the concerned officer allot the number to the L. The major exports from Pakistan are surgical goods. Export procedure: All the exports work under the imports and exports act that is changed by the state in every year.C to bank in respect to import or when the L. sports goods hand noted goods.C and get registered. Certificate of incorporation. The concerned officer write down the name of issuing bank and the party name in a register and intimate the party about L. textile goods.C. the exporter after receiving the L. leather goods.C from bank will prepare the documents as per the L. When the importer send the L.C usually the following documents have to be prepared by the exporter:  Bill of lading  Covering letter  E. etc.Form  Bill of exchange  Packing list  Commercial invoice  Quota documents in case of quota country  Certificate of origin  Special custom invoice .

FORM: E. Short shipment notice: A shipment may be cancelled by the importer or exporter due to many reasons. It is control instrument by Govt of Pakistan by which it monitors the receipts from exports and checks the goods that are transferred without foreign exchange. On issuance of E forms the banker lists it in the register and makes sign from the exporters.FORM is an important document for export. all banks which are engaged with the foreign exchange are required to print and maintained the E form that is checked by the state bank of Pakistan. On the other hand bank at the time of receiving the letter will stop the e form and cancelled the all documents.The export form (E-FORM): E-FORM means “export form” which is the first and foremost requirement for the exports from Pakistan. Banks record the name of party. The cancellation of the export letter is called short shipment notice. It shows the terms of payment by the importer and the delivery terms by the both parties that is helpful in case of any discrepancy during the contact. It shows the total quantity and quality of the goods that is sending to another country. the goods description. Company has to give a written letter to the bank that he is not the export so please cancelled their e form. port of destination. So it creates a check and balance on the foreign exchange. It has its own importance such as this form is used as a checker means it monitor that what things are going abroad and in return what things we are getting. An E – Form shoe the party worth that is very helpful for the party and the bank. For export an e form is issued by the bank on the request letter of a company. In this situation the company has to inform the bank. importer name port of loading etc. Bank can create a party limit for the credit on the behalf of it and a party can arrange a loan for its future requirements from the bank. amount. . Two separate registers are maintained by the bank one for his use and the other one are for the requirement of the SBP. Usage of E.

IMPORTS Imports regulation: Import is being regulated by the ministry of commerce and the government of Pakistan under the import and export act: Categories of imports: Imports are classified into the following categories:  Commercial sector imports  Industrial sector imports  Public sector imports Modes of payment: Sight letter of credit: The seller submit all the documents with draft in the importer country .

So the payment is made after or on the expiry of that date. Exporter’s risks:  He does not know the buyer.  He does not wait for exchange control. .  He does not know that goods will be delivered in time.  License authorization and formalities. Buyers and sellers obligations: The seller’s obligations:  Provision of goods as per contract.  He does not know how to check the goods. The payments are made on the presence of the documents.Complying with the all terms and conditions.  He does not know the credit worthiness of the buyer. Risks for importer and exporter: Importer’s risks:  He does not know the seller. Usance letter of credit: Under these circumstances it is agreed that the payment will be made after a specified period.  He does not wait for payment.

 Transfer of risk.  Delivery at time.  Transfer of risk.  License authorization and formalities.  Financing.  Inspection of goods.  Division of cost.  Good checking marking and packing.  Notice to seller.  Division of cost. Possible problems in international trade:  Non-payment.  Delay in delivery.  Proof of delivery.  Notice to buyer.  Currency restrictions. how and against what.  Proof of delivery. Buyer’s obligations:  Payment of price.  Contract of carriage and insurance.  Taking Delivery at time. Contract of carriage and insurance.  Other obligations. .

HUMAN RESOURCE DEPARTMENT FUNCTIONAL RESPONSIBILITIES: Right Now the responsibilities assigned to HR department at Corporate Center can be categorized under three heads:  Staff matters / Basic HR Functions  Expenses control  Security matters Now I’ll discuss these one by one: Background: The banking council of Pakistan was responsible for the recruitment. The training is through the lectures regarding banking procedural guidelines and other behavioral aspects.  ICC rules and INCO terms. Regulatory restrictions. Procedure: Staff requirements are met according to the changing needs of macro environment scenario and particularly the arising needs of the bank itself. selection and allocation of human resources.  Documentation and mode of settlement. Short listed candidates are called for an interview for personality and social appraisal. the Banking & Financial Services Commission of Pakistan is responsible for these activities. most probably. After the completion of training employees are allocated to different . After assessing the human resources requirements and screening of the applications. the suspects are invited for a written test. Interviews are a mix of direct and indirect interviewing techniques and information required. After the dissolution of the Pakistan Banking Council. The selected candidates are sent for training of six months training from MDI’s. A need analysis is conducted.

and day-to-day monitoring of credit-exposure. FUNCTIONAL RESPONSIBILITIES: The main responsibilities under this department are: • Implementation of credit facility and their maintenance according to terms of credit approved. reward systems. The effective management of people in an organization requires an understanding of motivation. • Maintain the safe custody of all collateral as per bank’s standard operating procedures.offices. the credit proposal and approval are handed over to CAD. • Ensure compliance with o Institutional credit policies & procedures o Local regulatory requirements. job design. Now CAD determines the nature of documentation required and on receipt of same . undertake periodic evaluation and inspection of hypothecated/ pledged inventories in accordance with the terms of credit. program design and implementation Performance evaluation Work-life initiatives CREDIT & ADMINISTRATION DEPARTMENT The responsibility of providing administrative support for the lending activities of the Bank. is vested in the Credit Administration Department (CAD). and group influence. • Ensure that standard loan documentation for each credit facility is maintained and the correctness & completeness of such documentation and also responsible for custody of all credit files. • • • • • • • • • • • Recruiting Retention Succession planning Risk Management Diversity in our workforce Management information Progressive compensation and benefits design and implementation Employee communications and relations Training needs analysis. CREDIT FACILITY IMPLEMENTATION PROCEDURE: Upon approval of credit proposal. • Prepare various portfolio composition reports and other documentation for submission to GRM’s & RM’s.

CUSTOMER DEALING: HBL corporate center only deal with the following categories of business: The organization that have minimum 250 million sales in a year. The organization that have availed 80 million finance Agri based industry. It is the main source of gaining and maintains the customers that can give a large profit to the bank. MARKETING DEPARTMENT The marketing department in HABIB BANK LIMITED is very strong. There are five relationship managers in Habib bank and every person is responsible for the credit of his party. After all these activities it can release the facility for utilization. First of all the customer request to the bank for credit and on the behalf of him the RM check the memorandum.     PROCEDURE FOR CREDIT APPROVAL: It is the responsibility of the relationship manager to provide or fulfill the requirement of the customer by checking his financial and position.ensures that all legal documents are obtained and are legally enforceable. HBL do not deal with the agriculture sector. The procedure of credit approval starts with the credit proposal. The Memorandum includes: .

Assessment of management.5 million Whichever is less? It is not more than 15 days if the customer wants to increase this facility he has to contact with the head office. Conclusion and recommendations. In this facility the bank actually provides fund to customers.       The company information. . Third party or other bank information. Then the RM sends it to the authorities who accept or reject the proposal. It may be up to 10 percent of excess amount OR 12. Purpose of credit. Risks. Financial analysis. 2) non fund base: Second type of credit facility that does not provides fun but only give the guarantee. EXCESS FACILITY CREDIT BY RM: Relationship manager is authorized to provide the excess facility to the customer than the credit line. TYPES OF CREDIT FACILITY: 1) fund based: It is first type of credit facility. If they accept the proposal they announced a credit range for the party. At the end RM sends the proposal to CAD deptt custody and check. If the customer is unable to make the payment at maturity date then bank will be responsible to make the payment.

7x 4 136 Current ratio Quick ratio Leverage( TL/N 1. 04 June 30.4x 2.03 Sep 30.2x 1.1x 0.8x 6 60 1.8x 0. 05 Audited Audited 9-Months Audited 1.4x 0.1x 0.BALANCE SHEET: particulars Sep 30.0x W) Days Receivable 2 Days Inventory 30 .

Days payable Net Worth 5 172 3 176 3 180 LIQUIDITY: The current assets increased from 198. prices of cotton went down in early 2005 which prompted the buyers to stock cotton in order to maximize gains. Total Net Worth increased during the period 03-05 from 172M TO 180M due to increase in retained earnings over the period.565M in 04 to 342. Receivables stand at 7. Sufficient stock at lower prices is inevitable for profitability in textile industry.. In addition to this the amount of cash also includes PKR 74M lying in escrow account of Bank Alfalah as sponsor’s equity because the company is under process of expansion for which they have also gone for consortium finance from BAL & ABL.797M in 2005.8 x & 2. More precisely. which highlight company’s policy of sales on cash basis. during the year under review. this increase is mainly due to increase in short term debt (Exposure of Working capital lines from banks) and this factor is very much obvious due to increase in company’s operations. Cash and marketable securities were built to accommodate banks for their June closing figures. LEVERAGE: The company has been low leveraged over the years with leverage standing at 1. and the same has been invested in inventory which increased by PKR 100m fully complying the matching principle requirement. LONG TERM LIABILITIES: Total Long term liabilities increased from 62 . the short term borrowings were raised by PKR 100M. Paid-up-capital stays same at 150M during the period 03-05. this increase in current assets is mainly associated with substantial rise in cash & marketable securities and inventory.566M in year 05 as compared to 16.582M In 04 to 383.7x in year 04 & 05 respectively.120M in 05. The current liabilities increased from 244.361M.513M in 04 to 139. Receivables have been nominal over the years.891M in 05. CASH FLOW: . mainly due to increase in Director’s Loan as the company is under process of expansion (new Ring spinning unit) and has made investment of its share through directors loan as authorised capital of the company has been matured.. In addition to this company has also gone for syndication with BANK ALFALAH Ltd and ALLIED BANK LTD and cash invested by the sponsors through directors loan is lying in escrow accounts parked in these banks.

Gross operating funds generated are projected to be around 33. 2005) were 503.771M which were financed thru increase in short t term borrowings by PKR. This year company has also routed export business of 12M to Korea. the inventory requirements increased by 99. on the other side operating sources were reduced by 9. Access to required Working Capital Lines.These projections are supported by the fact that their sales by the end of 31stDec 2005(from July01. The operating needs increased by 93.in addition to this the company has also gone for the syndication( Long term senior Debt of PKR 210M) with BAL & ABL. gross operating funds generated were PKR 28. The company generated net operating cash deficit of PKR 73. on the other hand the Non-operating source side will increase by 289M to finance Non-operating need. CRITICAL SUCCESS AND RISK FACTORS Critical Success Factors : 12345Lower Costs (economies of large scale).383 was made during the year. Efficiency of Operations. which was financed thru gross operating funds generated of PKR 28. Deterioration in Law & Order in the country. Critical Risk Factors: 12345Recession in the Global Textile Industry.683M owing to growth in sales. Mitigating Factors .479M.196 M because of company’s policy of replacing costly market credit thus rendering increase in working capital requirements by 102.747 M.917M during the year.962M. 99. the company wants to finance the proposed project thru Directors loan (222M). Margins depend to an extent on size & quality of Cotton Crops.. Long experience of spinning.During the year 2005.879 M. Total Non-Operating needs in year 06 will be 366 M due to increase in proposed CAPEX. Projections The company has projected its total sales to be around 1034M by 30 thJune 2006. High Capacity Utilization. 2005 to Dec31.548M and remaining through gross operating funds generated. On the source side the long term liabilities are projected to be around 434M.962M. Foreign Competition in wake of WTO. 7. GOP Policies. Net fixed assets are projected to grow around 614M since company is intending to undertake the expansion project (New Ring Spinning) in the year under projection. CAPEX of PKR 12 .

THIRD PARTY INFORMATION: The sponsors enjoy excellent relationship with banks and are highly regarded for their reputation of meeting their financial obligations on ti 9. 1. The company has already started exporting quality yarn to various buyers in the region. they have sufficient liquidity (due to availability of required credit lines) which allows procuring cotton at the right time and competitive prices. 6. Experienced technical and operational staff to ensure smooth operation of the Unit. operational & marketing aspects of the business we should enhance our relationship with the customer while opting the “Growth strategy”. CONCLUSION / RECOMMENDATIONS : RAFIQ has become a creditable name in the textile industry of Faisalabad. their planned spinning unit will help them reap the benefits with competitive edge of cost effective. 3. The company has always emphasized on sheer commitment for quality improvement to capture the market.Mitigating factors to these risks include. 4. momentum of growth in sales and a team of professionals to look after the technical. 10. . In a bid to prepare itself for the challenges / opportunities of the barrier free trade Textile Vision 2005. 8.ACCOUNT RELATIONSHIP STRATEGY: Rafiq is one of our valued clients with clean history of relationship spanning well over four years. reduce costs. New spinning unit will enable the company to enjoy economies of large-scale production. 5. Regarding risks associated with size / quality of cotton crop. quality products. comfortable level of leverage. GOP policies are comparatively stable and a separate ministry for textile has been established with a leading Textile figure being in chair. we recommend the proposal for approval. Keeping in view sufficient equity injection. New spinning unit will enable the company to enjoy economies of large scale production. We may improve net return on funded facilities from the relationship by rationalizing the credit portfolio in accordance with their financial requirements as proposed. The company enjoys the edge of comparatively cheap raw material and labor force while maintaining strict quality measures at par with international standards. In view of the above. 2. improve quality of their products and enhance their productive efficiency.

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