MAHMOOD TEXTILE MILLS LTD

Mahmood Textile Mills Ltd

FINANCIAL PROJECT
DEPARTMENT BUSINESS MANAGEMENT SCIENCES

UNIVERSITY OF EDUCATION
OKARA CAMPUS

UNIVERSITY OF EDUCATION OKARA CAMPUS [SUMAD PURA ROAD OKARA]

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MAHMOOD TEXTILE MILLS LTD

SUPERVISOR

MR. RANA IMTIAZ
RESEARCH AND DEVELOPED BY

SADAF AMBREEN
BBA (HONS) FINANCE SESSION 2006-2010 ROLL NO 607(E) SEMESTER 8Th

UNIVERSITY OF EDUCATION OKARA CAMPUS [SUMAD PURA ROAD OKARA]

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MAHMOOD TEXTILE MILLS LTD

Dedication
I dedicate this project to Almighty Allah, The Creator of worlds
UNIVERSITY OF EDUCATION OKARA CAMPUS [SUMAD PURA ROAD OKARA] 3

MAHMOOD TEXTILE MILLS LTD And Hazrat Muhammad (P.B.U.P), the cause of The creation of the Universe And To my parents, To the persons who loved me, persons whom I loved and for all those who prayed for me.

Acknowledgment
First of all thanks to Almighty Allah, who have given me the strength and knowledge to complete this project. I would like to specially thank for the help of my finance teacher

UNIVERSITY OF EDUCATION OKARA CAMPUS [SUMAD PURA ROAD OKARA]

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MAHMOOD TEXTILE MILLS LTD Sir IMTIAZ who helped me a lot regarding this project. I have learned a lot with the kind guidance of Sir IMTIAZ and I think I have achieved my goal of learning practical things.

SADAF AMBREEN BBA (Hons) Finance

UNIVERSITY OF EDUCATION OKARA CAMPUS [SUMAD PURA ROAD OKARA]

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MAHMOOD TEXTILE MILLS LTD

Table of Contents
Sr. No 1. 2. 3. 4. 5. 6. 7. 8. 9. 10. 11. 12. 13. 14. 15. 16. 17. 18. 19. 20. Description Executive Summary Vision Statement Mission Statement Company Achievement Production process Exports Purchases Personnel Management Organization Culture SWOT Analysis PEST Analysis BCG Matrix Analysis Summarized Balance Sheet Trend Analysis of Balance Sheet Vertical analysis of balance sheet Summarized Income Statement Trend Analysis of Income Statement Ratio Analysis Recommendations Conclusion

UNIVERSITY OF EDUCATION OKARA CAMPUS [SUMAD PURA ROAD OKARA]

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MAHMOOD TEXTILE MILLS LTD EXECUTIVE SUMMARY UNIVERSITY OF EDUCATION OKARA CAMPUS [SUMAD PURA ROAD OKARA] 7 .

Khan Road. The company's shares are quoted on Stock Exchange. The company's registered Head Office is located at Mehr Manzil Lohari Gate Multan.G. Muzaffargarh.MAHMOOD TEXTILE MILLS LTD Mahmood Textiles Mills Limited is a fully integrated organization. Maher fatima Muhammad muzaffar iqbal Muhammad Ilyas khawaja Muhammad Younus UNIVERSITY OF EDUCATION OKARA CAMPUS [SUMAD PURA ROAD OKARA] 8 . and Masoodabad. who are highly qualified and have vast experience in the field of Textile. The management body of the company consists of persons.Members of the board are: COMPANY PROFILE Chairman Chief Executive Directors khawaja muhammad masood khawaja Muhammad iqbal khawaja jalal -ud.din roomi Mrs. The company's mills are situated at Mahmoodabad. Multan Road. Muzaffargarh. D.

In addition to producing the yarn. permanent market. For the process of Spinning. Export and Local Sale.MAHMOOD TEXTILE MILLS LTD Bankers The Bankers of the company are. All are SULZER PROJECTILE UNIVERSITY OF EDUCATION OKARA CAMPUS [SUMAD PURA ROAD OKARA] 9 . the company also purchases the | yam from its various suppliers including competitors to make sure that enough yarn is available for export. •Japan •Hong Kong and •Korea. parties. the | company fulfills its Yarn requirement from its own Spinning units. Target Markets The company does the activities of both. Out of them 5 are big looms with a width of 165" and remaining are of 153" width. United Bank Limited and Habib Bank Limited. Muslim Commercial Bank Limited 2. the company has many competitors who produce and sell Yarn and Fabric but the company considers the following as main competitors. However in Export following countries are major customers of Mahmood Textile Mills. The company produces both. Demand from any city from the country and any country from the world is welcomed. For the process of Weaving. In both the areas company doesn't considers any market as its specific. •Khokhar Mills. The company has a total of 103 looms in its weaving unit. •Yahya Mills. •Fazal Cloth Mills. 3. In addition to that the company also purchases lint from various outside. MAHMOOD TEXTILE MILLS fulfills its lint requirements from its own eight Ginning factories located in different cities. In addition to that company also purchases the yam. Competitors In whole country. 100% cotton and blended yarn and fabric. The company has four Spinning units and one Weaving unit. 1.

Company has program to purchase 40 more looms to increase the capacity and soon the company is also going to start another Spinning unit. The company meets its electricity requirements from its own Electric Power Production Plant that is situated near Muzaffargarh.MAHMOOD TEXTILE MILLS LTD LOOMS. UNIVERSITY OF EDUCATION OKARA CAMPUS [SUMAD PURA ROAD OKARA] 10 .

MAHMOOD TEXTILE MILLS LTD VISION STATEMENT UNIVERSITY OF EDUCATION OKARA CAMPUS [SUMAD PURA ROAD OKARA] 11 .

quality conscious and ever progressive Textile Product manufacturer in the Textile Industry Of Pakistan UNIVERSITY OF EDUCATION OKARA CAMPUS [SUMAD PURA ROAD OKARA] 12 .MAHMOOD TEXTILE MILLS LTD VISION STATEMENT To be recognized internationally and locally as dynamic.

MAHMOOD TEXTILE MILLS LTD MISSION STATEMENT UNIVERSITY OF EDUCATION OKARA CAMPUS [SUMAD PURA ROAD OKARA] 13 .

Our motto: Honesty Fair Dealing Buyer Satisfaction Reliability UNIVERSITY OF EDUCATION OKARA CAMPUS [SUMAD PURA ROAD OKARA] 14 . We shall achieve quality by motivating all employees towards the satisfaction of our customers.MAHMOOD TEXTILE MILLS LTD MISSION STATEMENT We are committed to the achievement of excellence in the quality of our Product.

MAHMOOD TEXTILE MILLS LTD COMPANY ACHIEVEMENT UNIVERSITY OF EDUCATION OKARA CAMPUS [SUMAD PURA ROAD OKARA] 15 .

it is now a general rule that without ISO Certificate. It gives Mahmood Textile Mills the international recognition as the producer of High Quality Yam and Grey Cloth. Hence for Mahmood Textile Mills. The organization keeps formal record of establishing and maintaining procedures for every kind of activity starting from purchase of raw materials till the dispatch of finished products. 1. every customer has become quality conscious. an organization cannot export. Quality System. 2. Moreover they see various ISO documents. 3. Customers now days want the assurance of quality either through product design or through image or the personality of the product. The company is implementing following clauses of ISO. UNIVERSITY OF EDUCATION OKARA CAMPUS [SUMAD PURA ROAD OKARA] 16 .MAHMOOD TEXTILE MILLS LTD ISO 9002 In this era of rapid technological changes and new innovations. the auditors see the compliance of the organization with the ISO standards. In each External Audit. 4. They see the various clauses of ISO that whether the organization is implementing them. Document and Data Control. their awareness about ISO and their training levels. In response to this trend.90. management has a formal procedure to comply with the ISO 9002 requirements. but the External Audits are carried out after six months (Each External Audit costs almost Rs. Management Responsibility. At MTM. Contract Review.The ISO 9000 is the answer of every customer demand through which the organizations can assure customers of their products' high quality. All the procedures documented in the ISO 9002 requirements are thoroughly followed at each and every activity. They see people working. Moreover MTM carries out periodic Quality Control Audits to confirm its compliance with the ISO 9002 requirements The Internal Audits are carried out almost once in a month. marketers all over the world are either offering to the customers. Coping with this Mahmood Textile Mills has also achieved "ISO 9002" Quality Award. products with high quality design specifications or they are concentrating on the image marketing. ISO has become a basic requirement. 000). In the whole world.

Inspection and Test Status. 8. 11 . 17. Statistical Techniques. UNIVERSITY OF EDUCATION OKARA CAMPUS [SUMAD PURA ROAD OKARA] 17 . Product Identification and Traceability. Training 18. 15. Control of Inspection. Corrective and Preventive Action. Storage. 9. Process Control. 14. 6. Internal Quality Audits. Inspection and Testing. Preservation and Delivery. 16. Purchasing. MTM proud to have achieved this award and hopes to keep up its compliance with it in the long run. Control of Customer Supplied Products. 12. Control of Quality Records. Packaging. Handling. Measuring and Test Equipment. 7.MAHMOOD TEXTILE MILLS LTD 5. 10. 13. Control of Non-Confirming Products.

MAHMOOD TEXTILE MILLS LTD UNIVERSITY OF EDUCATION OKARA CAMPUS [SUMAD PURA ROAD OKARA] 18 .

MAHMOOD TEXTILE MILLS LTD COMPANY ACHIEVEMENT UNIVERSITY OF EDUCATION OKARA CAMPUS [SUMAD PURA ROAD OKARA] 19 .

The documentation of the Yarn Store is done in the following manner. Closing Balance. Documentation for the Yarn Store (1). •Date of Receipt and Issuance. Supplier.MAHMOOD TEXTILE MILLS LTD WEAVING MAHMOOD TEXTILE MILLS is producing Grey Cloth. •Kind of packing required. A Yarn Store Assistant is there who is responsible for receiving the yam and shifting it in the Yarn Store. (3). Yarn Store Ledger When the yarn reaches the mill. Yarn Store When the yarn reaches the mills. •Count specification for Warp and Weft. •The Pattern of Warp and Weft •The ratio of chemicals used for Sizing. •Net Weight and Gross Weight of the Packing. Yarn Requisition UNIVERSITY OF EDUCATION OKARA CAMPUS [SUMAD PURA ROAD OKARA] 20 . •Closing Balance and Opening Balance. •Quality. it is sent to the Yarn Store. Count and Brand of Yarn. After the buyer places the order. Receipt. •Remarks (If any). Transfer. He also maintains proper record for Yarn. all the information is entered in the Yarn Store Ledger Such as. •Number of Ends and Picks per inch. the Director decides whether the yam should be purchased or it should just be transferred from MTM's one of spinning unit to the Weaving unit. Issued. When the buyer places the order he/she makes specifications in the order as. •Count and Brand of Yarn. Yarn Received and Issuance Report In this report following type of information is inked. (2). The process of Weaving starts from the Placement of Order by the buyer (The buyer places the order at the Head Office). •Date & Amount of Opening Balance.

No. 8. PRODUCTION PROCESS Warping The production process starts from Warping. Based on this requisition the Yarn is issued from the Yam Store and the production process starts which is as under. If in any case like when cotton sticks in the yarn or when yarns breaks. which flies of from the machines and falls on the floor (Fluff). Yarn is transferred from the store to the Warping Department. It takes the yarn from the cones and then according to the specification it wraps the yarn on the beams. No. Weight of Beams. Other one is warping machine. 6. It causes disruption. The company also keeps control of Non UNIVERSITY OF EDUCATION OKARA CAMPUS [SUMAD PURA ROAD OKARA] 21 . Count and Brand of Yarn. of Break Downs.MAHMOOD TEXTILE MILLS LTD To start any process. 4. Here only warping is done (lengthwise yarn is enrolled). Machine on which cones are attached i-e Creel. a requisition for yarn is sent to the Main Office of the Mill specifying the Quantity. 2. 7. For what Quality. there are two machines. Length of Yarn Enrolled. also called Short Cones are discarded off. 5. Also the workers do continuous reporting during the process of Warping. After Warping is performed for a certain quality. a detailed report is prepared about the whole process that explains. Date in which the Process was carried out. Warping is done. 1. From here the Preparatory section starts. the machine automatically stops working so that the workers can correct the problem. Workers' names. Of Beams Produced. On the machine every kind of detail about the requirement is fed. During the process a Floor Cleaner cleans any cotton. 2. In warping department. 1. What was the Duration of the Process? 3. After the process the cones left over. which are partially used.

Stock Report (Beam Stock) The Stock Report gives information as. That is. the Warped Beams are converted into a Sized Beam. they are separated from one another with the help of needle like pins. the ends of all the warped beams are combined together and they are sized on a single beam. After the ends are dipped into chemicals. •No. of Beams Produced. Size CB. Sizing Sizing department is the second department in Preparatory Section Process Basically here two large types of activities are performed in the process. (2). then the Sized Beam will be having 8*625=5000 ends. PVA. Second. the ends of the Warped Beams are dipped into the Chemicals so that the yarn could become tense strong and it could bear any jerk in the next department. T. First. With the help of this report. Note On each beam a sticker is attached that conveys information about the beam. Weight of Beams produced and the Amount of Yarn Wasted during the process etc. if there are eight warped beams each of 625 ends. There are various chemicals used in this process. Reporting done for Warping Department (1).Wax. one can calculate the Amount of Yam consumed for the process. and Arkofil. For example. The success of the whole Warping process can be judged from this report because this report contains very important information.MAHMOOD TEXTILE MILLS LTD Conforming Products. Wax. For Warping Department proper documentation is done which is explained as under. UNIVERSITY OF EDUCATION OKARA CAMPUS [SUMAD PURA ROAD OKARA] 22 . "Daily Yarn Performance on Warping” Report This is very important report. •Quality Code of the Beams and •Length of the Beams. These are Maize Starch.

One report is prepared "Set Wise". •No. The water of the steam comes back from the sizing department to the Boiling Room and is then reused. •No. When a certain set ends. Boiler is run by different things such as. This steam is then sent to the Sizing department for the purpose of heating the Chemicals. Reporting at the Main Office of the Mills At the Main Office of the Mills. the level of water is kept at a certain level. The job of Boiler is to boil the water with the help of certain fuel to convert it in Steam. •No. •Yam Count and Quality Code •Machine Stoppage. then after that a report is prepared on which different information is listed such as. of Beams moved to Weaving dept. •Date and Duration of the Set etc. The information on the report contains details as. (1). Furnace Oil. is kept at 150 Pounds/Square Inch. of Beams produced with their specification.MAHMOOD TEXTILE MILLS LTD Boiler Boiler plays very important role in the Sizing department. •Yam Count and Quality Code for each Beam. The Boiling Point is maintained at 100 degree centigrade. Coal and Sui Gas but at MTM it is run by the Sui Gas. Reporting for Sizing Department Reporting at the Production Spot Two types of reports are prepared at the production spot. An FD (Force Drive) fan is there to push the fuel into the Boiler. A second report is prepared when the beam is issued to the Weaving dept. of Beams brought in from the previous deptt . "Stock Report of Sized Beams" is prepared. along with their specification. Along with this a "Material Statement" is made which gives all the detail about the chemicals used in the Sizing process. •Weave (Drawing Department) . The pressure with which the steam is sent to the Sizing dept. During the working of the Boiler. (2). UNIVERSITY OF EDUCATION OKARA CAMPUS [SUMAD PURA ROAD OKARA] 23 .

Efficiency of the whole unit depends upon the efficiency of the looms in this department.MAHMOOD TEXTILE MILLS LTD Note On each beam a sticker is attached that conveys information about the beam. the Drawers work on the Sized Beams. Basically in this department. In the drawing section specific reeds are used for specific order. For an average order the reed requires six to eight hours to be prepared. the Weave is given. UNIVERSITY OF EDUCATION OKARA CAMPUS [SUMAD PURA ROAD OKARA] 24 . first. Weaving Introduction Weaving department is the most important department for any textile mill. under their supervision. If weave is 3/1. The yarn is passed in the reed frame according to the requirement of the design of the fabric. Scale of operation is dependent on the working of this department. 3 yarns pass. Drawing In "Drawing" the activities are performed manually. All this is done manually. After that according to the requirement of the quality. It is actually the drawing section which has to take care of the construction of the cloth. After this whole work is done. The supervisors produce different beams of different specifications. here the drawers work on the part of a loom that is temporarily separated from the loom for drawing purpose. droppers and then Heild I (single yam). for the Weaving Department actually. The basic and huge investment of installation I-e LOOMS is done in this department. the whole pattern is carried to the Weaving Department and fixed on the loom. •Reed •Droppers •Heild 1The yam (single) passes through. the weave is given. yarn is weaved i-e in Reed. then from reed single yam passes through dent of reed and from next dent. This part contains following basic things. In this department.

This is to ensure that nothing sticks in the looms. the system of Reed. the loom stops and the "Knotting" or “Article is done. 3. UNIVERSITY OF EDUCATION OKARA CAMPUS [SUMAD PURA ROAD OKARA] 25 . Loom Stoppage The loom stops due to following reasons. which moves in paths between the looms and sucks any wasted cotton or yam. •When a yarn breaks. which takes the yam and passes it through ends according to the weave. Here basically the activity of "Wafting" is performed i-e "PICKS" are made here. The loom draws the yam from the beams and then weaves it and the finished Grey Cloth is then. wrapped on a rod called "Cloth Roll". Heilds. The workers put on new cone. of rounds completed during the year i-e T counts. •The loom can stop in case of malfunctioning.MAHMOOD TEXTILE MILLS LTD Process A loom prepares the “Fabric". •When a cone ends. The weave (3/1 or 4/1 etc) depends upon the order. Every loom has got its own meter where Different information is available as. Droppers along with manually adjusted yam in them is brought from the drawing dept. No. Under each shed there are usually 3 or 4 Air Jet Cleaners. On every loom. In this department special attention is paid on each and every loom to avoid down time and supervisors and foremen play main role here. "CAM" which is on the upper side of the loom facilitates this process. of rounds' completed. maximum two beams can be attached. Here. RPM of the loom. there is a machine called “AIR JET OVERHEAD CLEANER". During the process. As described earlier the drawers make weave by passing yarn through "Dents". by a machine and is fixed over the looms. The loom weaves the cloth in the same manner as it is designed by the drawers. the loom stops. B. 1. (In shift A. •When a beam ends. When the loom starts working the weaving is done by the "Projectile". No. So the design and construction of cloth made on looms depends upon the design and construction that the workers of drawing department give to it. the loom stops. C) 2.

Article When a beam becomes empty. Reading Report A third kind of report is made by taking continuous information from the Weaving Dept. this report gives it's •Present and Previous Reading. It also tells the reading of the loom in all three shifts. (1). It tells the Efficiency of Looms. the beam replaced is of same quality. After that a new beam is attached to it. A person called “Time Keeper" informs the Main Office about the reputation of the Weaving dept. on which Article is done. This process is called "Knotting". •T counts* and •RPM * 100 UNIVERSITY OF EDUCATION OKARA CAMPUS [SUMAD PURA ROAD OKARA] 26 . on which efficiency of whole weaving unit depends upon. Article Report This report is prepared daily by the sizing department to form a link between the sizing and weaving department. Reporting for Weaving Department Following reports are prepared to view the working of the Weaving Department. then when the new beam of another quality is attached to it. this process is called "Article". In Knotting. (3).MAHMOOD TEXTILE MILLS LTD Knotting One beam usually takes ten days to become empty. It is a daily report in which Efficiency is calculated as: Actual Picks / Total Picks (2). For every loom. Efficiency Report It is the most important report for any weaving unit. This report specifies the Old and New Quality replaced on a loom along with the Quality specification. •Difference of the two readings.

S. it is thoroughly inspected to ensure quality. the cloth is unrolled on the Unrolling Machine.I. Inspection. Then this unrolled cloth is taken to the machines where "Inspection Supervisors" check. Standard)". One is "Ten Point Standard (J. There is a formal procedure for "Fabric Inspection”. There. the Inspection Supervisors inspect the cloth on machines and give points to the faults in the cloth. Also the amount of cloth inspected by each inspector is written there. A Daily Roll Cutting Card is also made. in Inspection. Cutting and Packing is done in the same shed i-e "Folding Department". After the cloth is unrolled. they write different information as •Inspector name •Shift •Loom no •Quality •Width •Total yards/meters •Type of faults and their points •Grade of cloth. If the fault can be corrected at the spot. it is sent for inspection. It is followed by Japanese. correct and mark the faults in the cloth. Inspection Unrolling the Cloth First of all. The procedure follows one of two choices of standards. On a chart called” Cloth Inspection Chart". it is fine otherwise it is marked and passed on to the cutting area. Whenever a Cloth Roll enters the Folding department. This card gives details about the length of certain quality cloth cut in a day and other related information. The workers on the unrolling machine list various details about the process. The UNIVERSITY OF EDUCATION OKARA CAMPUS [SUMAD PURA ROAD OKARA] 27 . all the information related to it is listed in a report. is the Folding Department? After the cloth is prepared on the looms.MAHMOOD TEXTILE MILLS LTD Folding Next to the weaving department.

In both the standards the "Grading" done is different.MAHMOOD TEXTILE MILLS LTD other is "Four Point Standard". It is followed by Americans. UNIVERSITY OF EDUCATION OKARA CAMPUS [SUMAD PURA ROAD OKARA] 28 .

whenever the buyer places an order. This is to take strict notice of the fault so that B and C quality cloth must be avoided. Cutting and Packing is done. Quality of Cloth. Folding. •Length of B Grade Cloth. Folding After the inspection activity is performed. Folding is done on the Folding Machine. The Inspection Supervisors give the Cloth Inspection Chart to the personnel of the cutting area that specifies the fault i-e place from which the cloth is to be cut. Every fold of cloth is of one meter. Cutting Length (specified by the buyer). he specifies the cutting of the cloth. UNIVERSITY OF EDUCATION OKARA CAMPUS [SUMAD PURA ROAD OKARA] 29 . and then an "Action Slip" is made.MAHMOOD TEXTILE MILLS LTD Hence when the cloth is inspected. A Folder is there to do that activity on the machine. Cutting After folding. Cutting is performed. Loom number. it is graded by counting the number of points in a specific count of yards. Hence at the time of cutting. •Length of C Grade Cloth. lower is the Grade. •Length of A Grade Cloth. Every fold of cloth is of one meter. •Length of Fents and •Total Length. Note that the fault which is corrected at the inspection spot is not given any point. Folding is done on the Folding Machine. There are 17 kinds of faults that can be in a cloth if the fault is serious and repetitive. When the cutting activity is performed. Hence according to this specification the cloth is cut. At a place of fault. Only the fault that cannot be corrected is given point. all its detail is entered in a register. For example. But first the Folding activity is performed. For example he can say that he wants his fabric in ten cuttings each of 110 meters. A Folder is there to do that activity on the machine. or he can say that the cloth should be in ten cuttings each one greater than 100 meters. the Inspection Supervisors attach a Strip that gives the detail about the fault. Moreover. More are the Points. in order to ensure quality. the faulted fabric (that is of either B or C quality) is separated from A Grade fabric.

a "Daily Summary of Packing" is made to know the amount of cloth made with reference to the Quality. At each and every stage of yarn production. Based on this report the performance and efficiency of employees in every shift is calculated and Rewards are given. UNIVERSITY OF EDUCATION OKARA CAMPUS [SUMAD PURA ROAD OKARA] 30 . Based on the order (Contract) of yam. For the organization's proper record. the cloth is weighted to calculate its "Net Weight". After the packing is performed. a list is made that is called the "Packing List". When the cotton reaches the unit. Issuance of Bales The production process starts from the issuance of cotton bales. then "Packing" starts but before packing. There.MAHMOOD TEXTILE MILLS LTD Packing When the cutting is done. the cloth is dispatched from the mill. proper record is kept about the amount of cloth and its quality and weight. the cloth is shifted to the “Fabric Godown". the bales are weighted and their moisture is checked. Dispatch After the packing. an estimate is made for the amount of cotton required for the process. one has to take care of all the instructions and technical things to produce a good quality yam. It is given to the buyer when the cloth is dispatched. It explains the cloth damaged in daily production (in every shift). Moreover on the bale or roll a Sticker is attached that gives information about the packing. Spinning The procedure for making "Yarn" is called Spinning. After the packing the cloth is again weighted to calculate its "Gross Weight". Before packing. At the day of dispatch. The cotton is then transferred from one of the Ginning factories to the Spinning unit or it is purchased from the outside parties. cloth is first pressed to bring it in proper shape. There are many technical aspects involved in this process. After that according to the buyer's requirement the cloth is packed either in the form of a Roll or Bail. A "Damage Report” is prepared daily. After that they are shifted to the Cotton Godown. This activity is carried out by the "Hydraulic Pressing Machine". Spinning is a delicate process because the yarn produced in this process should be exactly of the same quality and count as specified by the buyer.

Near this gathering of cotton there is a machine that is called "Breaker". At this time the laboratory personnel came to know that exactly how much cotton would be needed for the production process with a particular amount of moisture. In the Filter room there are different machines that clean the cotton very thoroughly to make sure that the cotton passed to the UNIVERSITY OF EDUCATION OKARA CAMPUS [SUMAD PURA ROAD OKARA] 31 . This machine also cleans the cotton. The machine does this role by sucking the cotton into it. Impurities may include jute. leaves. In this machine cotton is mixed. In this. So. As explained before that cotton taken is from 20 different bales. the basic objective of this room is to clean the cotton to assure quality in the product. After this the cotton reaches another machine called "Multi Mixer". The role of this machine is to separate the cotton layers because the cotton is in form of layers when the ginning factory packs it. plastic bags and other impurities. First of all in the blow room. The cotton cleaned by ladies is gathered on one side. there is another machine. After this. cotton is loaded which is cleaned and its wastage called "Dropping" is removed. The dust in the cotton is sent outside the blow room through a pipe.MAHMOOD TEXTILE MILLS LTD The moisture of cotton bales is again checked when they are issued for the production process. After that the cotton reaches a machine called “RM" which further purifies the cotton. which is called “TX". After the Plucker has done its job then the job of women start who clean the cotton by removing different impurities from it. Relating to this a Daily Moisture Report is also prepared Blow Room Blow Room is the first stage in the making of Yarn. there is a machine called “Plucker". It means that from every one lot one bale is taken. After this machine has done its job there are two workers who remove any impurity like jute left over by the machine. sending it in a "Condenser" which forwards the cotton to other place. 20 bales of 20 different lots are placed. In this. After that the cotton moves along a path and reaches another machine called "Exi Flow". Here there are different machines on which different activities are performed in order to clean the cotton. So the cotton is mixed together so that the mixed variety produced should be good enough to produce a high quality yarn. This machine exerts a very strong pressure on the cotton in order to remove any impurity and then sends it to the “Filter Room". It is first wastage that is removed with the help of machines.

MAHMOOD TEXTILE MILLS LTD "Carding Section" is clean to produce a high quality yam. the mill either makes "Carded Yam" or "Comber" or. Other wastages are Card Fly and Filter Fan. They are "Carding. These are long. Basically in this department three different major activities are performed. For Comber. the job of carding department starts. the slivers are combined to form a single sliver of a larger length. a special process is there in a comber section where "Laps” are made. These are DRAWING In the drawing section. Drawing and Simpering". soft and thick ropes of cotton. Here. based on the order.Dropping Lacreen is the cotton containing different things such as leaves. thus. Lacreen. both. After UNIVERSITY OF EDUCATION OKARA CAMPUS [SUMAD PURA ROAD OKARA] 32 . These Slivers are placed in drums called "Cans". Carding Department After the blow room. Comber and Carded Yarn After the Drawing activity. Twelve (12) canes of slivers are placed in a sequence and after that slivers from these canes are combined to form a single sliver of larger length. This process is called "Drafting". Carding In Carding "Slivers" are made. Comber is finer than the Carded Yarn. So the job of blow room is to clean the cotton to make sure that fine quality lint is there for the production of Yam. The cotton passed to the "Carding Section" is clean to produce a high quality yam. Dropping is same as Lacreen but it is worse than Lacreen. a process is there where the lengths of the slivers is increased. These are made by making rolls from the slivers and removing any further waste (Comber Noil) to ensure quality. Here cleaning the cotton gets different kinds of wastage.

Another waste (Short Fiber) goes outside the process with the help of pipes. UNIVERSITY OF EDUCATION OKARA CAMPUS [SUMAD PURA ROAD OKARA] 33 .MAHMOOD TEXTILE MILLS LTD removing the waste. again the slivers are made to prepare them for the "Simplexing” process.

Auto Cone Department After the yam is made on "Rings". UNIVERSITY OF EDUCATION OKARA CAMPUS [SUMAD PURA ROAD OKARA] 34 . joins it and wraps it on the cones. Here. At spindles the yarn is made which is of the count specified by the buyer. from slivers. the yarn is transferred to the Yam Godown. Basically in the previous department the yam has been made and the only objective of this department is to join the yarn and bring it on the cones. the cones are packed. In this Godown. These roving are then carried over to the Ring department.MAHMOOD TEXTILE MILLS LTD SIMPLEXING In the Simplexing section the Frames of carded yarn and comber are separately run. Note that a certain amount of temperature is also maintained in all the departments to avoid some technical problems. “Roving” is made. This is basically thick yarn from which later the yam with specified counts is made. Packing Department Here at the Packing dept. Yarn Godown After packing. The "Rings" are placed on the machines that draw the yam from them one by one. These Spindles are run in frames. These roving are wrapped on specially made thing called "Bobbins". the yam with specified count is made. Ring Department Here at the ring department. it is carried over to this department which is called "Auto Cone". Export packing is finer than the Local packing. all the record is kept about the amount of yarn. One is the Export Packing and the other is the Local packing. its quality and the count. Each frame is of 480 spindles. The Bobbins made in the previous department are carried to this department where these are run on "Spindles". The packing is of two types. At this department a certain amount of moisture is maintained to add a certain amount of weight to the yarn.

More over the laboratory also prepares report of various wastage for different departments. work in process inventory and finished good inventory is kept. This report contains information as. (1). monthly production and wastage etc. The laboratory prepares different reports relating with the production process. The managers keep record of each and every activity. Daily Cotton Issuance Report This report is prepared when the bales are issued to the Blow Room. •Date of Issuance of Cotton. Station (Ginning factory from which the bales are transferred or purchased). the reports prepared in the Spinning unit are less. Cotton Stock Report This report is prepared about the daily stock of cotton. Documentation for Spinning Like Weaving. •No. For each and every order. the laboratory checks their moisture and a Moisture Report are prepared for that. the record about raw material inventory.MAHMOOD TEXTILE MILLS LTD Laboratory The laboratory plays very important role in Spinning. of Bales Issued. In each department the raw material is checked by the laboratory for its moisture. It keeps record of daily production. let’s have a view of the reports that are prepared in the documentation of the Spinning. Now. UNIVERSITY OF EDUCATION OKARA CAMPUS [SUMAD PURA ROAD OKARA] 35 . Its role starts from the issuance of the bales. This report contains information as. But in contrast to Weaving. for Spinning unit proper documentation is done. When the bales are issued. •Daily Incoming Cotton • Cotton in Opening Balance • Previous Outgoing Cotton • Daily Outgoing Cotton and • Remaining Stock of Cotton (2).

•Station and Moisture. •Lot No. This report contains information as. yarn Packed (Export and Local) and yarn in the Closing Balance. (5). •Excess. •Cotton Received. This report contains information as. Cotton Summary Report This report is about the Opening. • No. (4). •Opening Balance of Cotton. Shortage occurs when the moisture is lessened due to heat in the mills. Yarn Produced. •Cotton Issued to B/R (Blow Room). • Yarn's Production Report. Production Accounts of each Month UNIVERSITY OF EDUCATION OKARA CAMPUS [SUMAD PURA ROAD OKARA] 36 . •Yarn's Clearance Report. Yarn Stock Report This report gives information about the amount of Yarn in the Opening Balance. That is why a report is prepared about "Shortage and Excess".MAHMOOD TEXTILE MILLS LTD •Purchase Weight of Bales • Mills Weight of Bales. (3). •Closing Balance. •Shortage. • Yam's Doubling Report. • Hard Waste Report and •Shut Down Report. (6). •Total Balance . Excess occurs if the bales are kept exposed to any rain in the mills. Shortage and Excess Report Due to the moisture in the bales Shortage or Excess occurs in the bales. • Shortage or Excess in Weight of the Bales (due to the moisture). in one day. of Bales. Received and Issuance of cotton which is prepared in a summary form. This report also contains other small reports about yarn as.

Installed.MAHMOOD TEXTILE MILLS LTD In Production Accounts for a month. •Net Cotton Consumed UNIVERSITY OF EDUCATION OKARA CAMPUS [SUMAD PURA ROAD OKARA] 37 . •No. •Cotton Opening Work in Process. •Cotton Issued. of Spindles. (1). two reports are prepared. Available and Worked. •Moisture in Cotton and Yam. One report contains information as.

MAHMOOD TEXTILE MILLS LTD . UNIVERSITY OF EDUCATION OKARA CAMPUS [SUMAD PURA ROAD OKARA] 38 . •Recovery of Cotton from the Waste and •Detail of Cotton Waste.

MAHMOOD TEXTILE MILLS LTD EXPORTS UNIVERSITY OF EDUCATION OKARA CAMPUS [SUMAD PURA ROAD OKARA] 39 .

2) Letter of Credit: After the contract is developed. Engine In Fabric MTM have 214 qualities of grey cloth. Export at Mahmood Textile Mills The activity of Export is carried out at the Head Office of Mahmood Textile Mills. the buyer opens Letter of Credit in his bank (foreign bank) and that LC is sent to MTM's bank by that foreign bank. Then MTM's bank forwards the LC to it. They are. the buyer opens Letter Of Credit (explained below). After the contract. It is the most powerful weapon that MTM has got in the field of Textile. 1. it is removed. there is a separate department for export known as Export Department. These are explained below. 1) Receipt and Checking of Letter Of Credit (Loc) At Mahmood Textile Mills. Procedure for Export at Mahmood Textile Mills There are various steps involved in export. the export procedure begins by the Sales Contract. MTM exports both. The concern person of MTM studies the Letter Of Credit on receipt and makes sure that its particulars are according to the sales contract. It is a document that is cashed when exporter hands over the UNIVERSITY OF EDUCATION OKARA CAMPUS [SUMAD PURA ROAD OKARA] 40 . the Yarn and the Grey Cloth but major export is in the field of yarn. Hence yarn is the major contributor to the earnings from the export. For export. If there is any discrepancy between the sales contract and LC. Zaitoon 4. It is due to the export that today MTM has got a distinction in the production of textile products. Palm 3. Cotton King 2. Currently Mahmood Textile Mills has four brands of yarn.MAHMOOD TEXTILE MILLS LTD EXPORT Introduction Export is the most distinctive recognition of Mahmood Textile Mills.

Custom Clearance. Buyer Information •When the goods are produced. •Bank detail (that opens LC) Note that LC has an expiry date. In an LC the buyer quotes following important explanation. Shipment Schedule.e. UNIVERSITY OF EDUCATION OKARA CAMPUS [SUMAD PURA ROAD OKARA] 41 .MAHMOOD TEXTILE MILLS LTD negotiable documents to its bank. GM at the mill who makes the Production Schedule by keeping in view i. Shipment. •The Clearing Agent is also informed accordingly about the dispatch and all the documents are sent to him after they are checked by the Audit Department. the Office Manager finalizes and discusses all programs with Manager Export before dispatching the goods from mills and makes arrangements accordingly. then the LC cannot be cashed and it is expired. •When the goods are dispatched from the mills. and then the concern responsible person f the export department prepares the Shipment Schedule keeping in view i. Finalization of Production and Shipment Schedule Then the preceding procedure is over. 3). •Product Specification. If the shipment cannot be made on time. •Amount of the transaction in US dollars. the buyer is informed •The clearing agent arranges custom clearance and sends the Bill of Lading to the export department.e. •When the goods are dispatched from mills the office manager informs the export manager about the dispatch and gives Performa Detail of Dispatch (It is a small report that gives the details about the dispatched products) which is used in maintaining the export record. 2). booking. •Shipment detail •Packing detail. Hence the expiry date compels the exporter to send shipment on date. This schedule is finalized by the director and then it is sent to i.e.

•Shipper and Consignee's particulars. it is necessary to tell you about the Negotiable and Non-Negotiable Documents. the buyer is also informed about the shipment by Fax or by Phone. •Weight of Goods and •Total Freight (in US $ and local currency). 4) Checking of bill of lading and Buyer Information •against the Letter of Credit to make sure that there is no discrepancy between them. Exporter transfers the negotiable documents to its bank and receives the payment which is specified in the LC. •Forwarding Agent. •Port of Discharge. then the ipping company issues Bill of Lading to the exporter. •After checking the Bill of Lading. •An Export Register is maintained where all the information is entered about When the agent sends the Bill of Lading to export department. Bill of Lading intains following important information.MAHMOOD TEXTILE MILLS LTD 3) Bill Of Lading: When the goods are cleared from the custom and reach shipment. Now. If there is some. Negotiable Documents These are the documents without which exporter cannot take payment from its bank. •Container Numbers. •Description of Goods and Packages. •Country of Origin of Goods. These are the documents without which the buyer cannot receive the goods he imports. it is checked the documents. before explaining the next step. Loading and place of Delivery. This process is called Negotiation of Documents. •Place of Receipt. UNIVERSITY OF EDUCATION OKARA CAMPUS [SUMAD PURA ROAD OKARA] 42 . then it is the job of the agent to get it removed from the Shipping Company.

After their approval. Negotiation of Documents •After receipt/correction of Bill of Lading. Two copies of the Invoice and Bill of Lading are sent to the account section for Freight and Sale Booking. Following documents are the Negotiable Documents'. export department prepares the documents for negotiation/collection of the payment and sends them to the audit department for checking. •Bill of Exchange. •Certificate of Origin.. •Bill of Lading. These documents are sent directly to the buyer while the Negotiable documents are always sent via banks. •Invoice. •If the documents are passed by the audit dept. the director and the export manager sign the bill of exchange. •Form E and •Beneficiary Certificate.MAHMOOD TEXTILE MILLS LTD Our bank sends the documents to the foreign bank and the foreign bank transfers them to the buyer and the buyer receives the goods from the shipping company and gets them cleared from the custom. if pointed out by the bank and receives the payment from the bank on the same day. Non-Negotiable Documents These are the non-original documents (either photocopies or faxes) of negotiable documents that are given to the buyer just for providing him information about different steps. exporter cannot take the payment from the bank and the buyer cannot receive the goods. With the help of these documents. •Insurance Policy. the documents are sent to the bank for the negotiation. a person appointed by the export department follows up the documents in the bank. UNIVERSITY OF EDUCATION OKARA CAMPUS [SUMAD PURA ROAD OKARA] 43 . removes any discrepancy. •After this. •Letter of Credit. •Packing List.

(2). •After that the Demand Draft is sent to the shipping company along with •the Performa and its two copies are kept at the export department for recording purposes. Each and every information about the transaction is given in full detail here. UNIVERSITY OF EDUCATION OKARA CAMPUS [SUMAD PURA ROAD OKARA] 44 . From the two types of Invoices. Unit Price and Amount of goods (in any currency) is given to small extent for secrecy purposes. the second type of Invoice is prepared for the purpose of "Negotiation of Documents". the information about. Its only objective is to clear the goods from custom checks. this one is prepared first. Only that much of information is given that can serve the purpose of Custom Officers. This Invoice is submitted to the bank. •After or before receipt of Bill of Lading. The basic difference between the two is that. in first one. the invoice that is prepared is for the purpose of "Custom Clearance". Description of Goods. (1). Settlement/Payment of Expenses •With each shipping company. Bill of exchange Bill of exchange is a document that is used to draw money from the foreign bank. Sea Freight Payment Performa It is a Performa made by the export department specifying the terms of transactions with the shipping company. It is sent with the Demand Draft and contains following important information. Sea Freight Payment Performa•(explained below) is filled by the export department which is then sent to the account section for necessary action. First. After approval account section arrange Demand Draft. negotiation file is sent to the Rebate Assistant for the preparation of the rebate cases. Exporter sends this bill to its bank which forwards it to the foreign bank that opens LC. the Director or the Export Manager settles the rate of Sea Freight in American dollars for each destination. •The Performa is checked by the account and audit department and is sent to the Director for approval of Demand Draft Issuance. Invoice In MTM the invoices prepared are of two types.MAHMOOD TEXTILE MILLS LTD •After this.

there are three different conditions in which the freight is paid. •Freight in Rupees and US$. Payment of Foreign Commission •The export department prepares the Outstanding Commission Report and sends it to the accounts department for the issuance of Demand Draft. It means that along with paying freight till destination. hands over the documents to the audit dept. •Number and Date of Issuance of Bill of Lading. CF. CIF Means "Cost. •Invoice number. the exporter will also get the goods insured on his/her own expense. it then sends it to the audit department for further verification. AND FOB In Mahmood Textile Mills. Payment of Local Commission After the shipment is made. then they are sent to the director for the issuance of Demand Draft and the payment is made. •After the verification accounts dept. It means that exporter will pay the freight till destination. •If the audit department passes the documents. These are. After audit department's verification. CIF.MAHMOOD TEXTILE MILLS LTD •Containers' Numbers. When the account department checks it. Export Manager checks the contents of the request and sends it to the account department for payment along with some other concerned files. Insurance and Freight". •Destination. FOB UNIVERSITY OF EDUCATION OKARA CAMPUS [SUMAD PURA ROAD OKARA] 45 . the agent sends request for the payment of Local Commission. account department gets the Demand Draft issued from the director and sends it directly to the agent. •CF •CIF and FOB •CF Means "Cost and Freight".

•Export Registration Number •FOB in foreign currency •Freight •Rate of Exchange •Exporter's and Consignee's particulars.. Its important contents are. Remaining freight is paid by the buyer. he maintains its record and hands over the check to the accounts department. •Country of Final Destination. •With the help of some documents such as Shipping Bill. •Name of Vessel or Aircraft •Port of Discharge. Vessels name etc. Getting Rebate from the Government When the above steps are over. •He then follows the case till receipt of payment. the job of Rebate Assistant starts. otherwise State Bank of Pakistan takes strict notices to know. •Packages (description. Shipping Bill It is given to the exporter by the shipping company when the ds are shipped on board. marks and numbers)•Quantity (units and amount)•Description of Goods.MAHMOOD TEXTILE MILLS LTD Means "Freight on Board".) Other documents involved in Export Form E Form E is attached with the documents when the goods are being cleared from the custom. In this Form. It is so because there is a law in our country that the proceeds from exports should be realized within 120 days after shipment. •Export Value and •Other information (Form E No. where is the foreign UNIVERSITY OF EDUCATION OKARA CAMPUS [SUMAD PURA ROAD OKARA] 46 . In this the exporter will pay the freight till boarding only. •After the receipt of payment. the exporter informs the government that its specified bank will collect the payment from the buyer within 120 days. Unit Price. he prepares the rebate case and sends it to the custom for payment after the checking of audit department and export manager.

•Reference of Bill of Lading or Airway Bill. pieces. etc. •Land Custom Post. •Quantity (In bales. other information is made available as. bundles. In case of no realization.)•Invoice Value (In $) and Terms. Ibs. On this Form. exporter's specified bank also gives its statement about the exporter that it knows the exporter and will collect the proceeds within 120 days. •Description of Goods in detail. tons. •Name and Address of Consignee •Name of Steamer or Air Company. UNIVERSITY OF EDUCATION OKARA CAMPUS [SUMAD PURA ROAD OKARA] 47 .MAHMOOD TEXTILE MILLS LTD exchange going. Station. •Destination. it will inform the State Bank about the circumstances. On Form E. Port. •Port of Shipment/Post Office of Dispatch.

Hence this is to make sure that the imported goods are not banned in the importing country. In this it accepts that it will buy the negotiated documents back from its bank. •Total Gross Weight •Total Net Weight. issues a Bill of Export. Certificate of Origin Certificate of Origin. as it is clear from the name is to certify that the goods being exported to the importing country are of Pakistan origin. •Measurement. This is also a negotiable document and is sent via bank. the Custom Office. •Bales numbers. It contains each and very information about all the transactions. It is a non-negotiable document and is only for buyer information. •Description of Goods. goods are cleared from the custom. Shipment Detail to the Buyer When the goods are shipped. It is a negotiable document and is sent via bank. by the government. Based on this bill. at the amount of bill of exchange plus all the bank charges and mark up at the rate specified by UNIVERSITY OF EDUCATION OKARA CAMPUS [SUMAD PURA ROAD OKARA] 48 . There are some countries in which goods of certain other countries are banned. a Packing List is prepared.MAHMOOD TEXTILE MILLS LTD Packing List For the purpose of Custom Clearance and later on providing it to the buyer. •Total number of Packages. a detail of dispatch is sent to the buyer that contains all the information about the Goods and their Packing. Bill of Export When the exporter submits different documents to the custom office for the purpose of Custom Clearance. Buy-Back-Cum-Indemnity for Export/Inland Bills After the exporter has negotiated the documents it signs a "Buy-Back-Cum-Indemnity for Export/Inland Bills". It contains information as.

MAHMOOD TEXTILE MILLS LTD the bank within settled number of days. in the event of the said documents being refused to the bank by the bank opening/confirming the credit or dishonored by the drawee after acceptance. insolvency of the drawee or the bank that has opened the LC or any other reason whatsoever. UNIVERSITY OF EDUCATION OKARA CAMPUS [SUMAD PURA ROAD OKARA] 49 .

MAHMOOD TEXTILE MILLS LTD PURCHASES UNIVERSITY OF EDUCATION OKARA CAMPUS [SUMAD PURA ROAD OKARA] 50 .

MAHMOOD TEXTILE MILLS LTD

PURCHASE
Every organization has the need to purchase the raw material, heavy machinery, daily used products etc., so has Mahmood Textile Mills. At MTM there is a separate department for purchase known as "Purchase Department" At MTM the purchase falls in four categories. 1. Import 2. General Purchase 3. Cotton Purchase and 4. Yarn Purchase Let's first have a look on MTM's Import.

Import
Mahmood Textile Mills imports the goods that are not produced locally. So far Import a proper procedure is followed at MTM. or every organization to import, it has to, first, register itself in the list of importers. After that, the Importer can import. MTM is also registered in importer's list.

Import at Mahmood Textile Mills
•The necessity to Import arises from the need. When the need of some thing arises at the mills, they make Purchase Demands and send it to the Import Department. •When Purchase Demand reaches the Import Department, the Import In charge studies the demand carefully and then sends the detailed information about the required item(s) to the Indenture (Agents of foreign Manufacturers. They act as middleman) for Indent/Performa Invoice. •When the Indenture sends the Indent/Performa Invoice to the Import In charge. The Import In charge sends it to the concerned department at the mills for the verification and the confirmation of the demanded goods. The Head of the concern department evaluates it after his approval sends it back to the Import In charge. •When the Performa Invoice is confirmed. Import In charge sends application for opening of Letter of Credit to the bank along with insurance Cover Note (Insurance is necessary

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MAHMOOD TEXTILE MILLS LTD for import. Without insurance, bank refuses to open LC). The Indenture informs the manufacturer about it and asks him to send the items. •When the shipment clearing documents come at the bank, the Import in Charge receives them from the bank and gives them to the Clearing Agent or Custom Clearance. •The Clearing Agent, after clearing the document form the custom, makes delivery Challan and sends them to the mills. Import In charge notes each and every detail about the Import in the import Register.

Performa Invoice
The Performa Invoice is made by the Indenture to confirm the goods and r particulars, the organization is demanding. Moreover it tells the importer about the Price, Payment, and other Terms and Conditions. Forma Invoice has following contents;  •Exporter's Name and Address.  •Importer's Name and Address.  •Description of items.  •Quantity.  •Terms and Conditions.  •Country of Origin.  • Delivery Date.  • Mode of Payment.

Other Documents Involved In Import Open Bond
Manufacturing Certificate (OBM)
It is an incentive that the government offers to the importers. It is only for the goods which are not manufactured in the local market (and must be imported).According to this incentive, when the Importer imports the goods, then the government doesn't receives Import duty on the goods, provided that the goods manufactured by the Imported machinery or part, later on, must be then exported. Later, the excise department is responsible to see whether the organization is fulfilling its obligations.

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MAHMOOD TEXTILE MILLS LTD

Form I
Form I is an application for permission under the Foreign Exchange Regulation Act, 1947 to purchase Foreign Exchange for payment of Imports. In this Form, the Importer declares; •That the mentioned payment is due and that he has not already obtained exchange for payment for Imports nor he has made any other application for this purpose. •That the amount of Foreign Exchange mentioned represents the correct prevailing marker price for the goods on the date of contract in the exporting country. •That he is neither connected with the exporter abroad directly nor indirectly nor do he has any financial or other interest in the exporters. The Importer certifies that; The imports are covered by a valid Import License/Import Permit/Sub unauthorization/Authorization duly registered with the State Bank of Pakistan. Importer undertakes that the remittances being made shall be utilized for e Import mentioned and he shall clear the goods for consumption in Pakistan with in four months from the date of application. A part of this Form I is completed by the Authorized Dealer who certifies that the statements made by the applicant in the form are to the best of its knowledge correct and it has seen documentary evidence in support there of. The dealer also certifies that the remittance has been made in accordance with method of payment as per existing Exchange Control Regulations.

Bill Of Entry
The Bill of Entry is just like Shipping Bill. With the help of this document, import department clears the goods from the custom. It carries all the information about; •The Importer. •Letter Of Credit. •Freight. •Goods (Their price, units, weight, packages). •Shipment detail. •Sales Tax, Income Tax, Custom and Excise Duty.

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Airway Bill possesses following information. •Amount of Insurance. •Port of destination. The goods purchased locally. General Purchase The Purchase department of Mahmood Textile Mills purchases different parts and daily used products from the local market too. The exporter also sends Certificate of Origin and Letter of Credit to the Import department which are both negotiable documents. •Nature and Quantity of Goods. •Payment (in importing country's currency). Bill of Lading is made. •Airport of destination. •Goods imported by MTM •Air Freight and Forwarding Charges. •Rate/Charge. •Flight/Date. fall in the category of General Purchase. because they offer high-class quality and prolong warranty periods. he sends Invoice to Import department that specifies. •Handling Information •Number of pieces of goods •Gross Weight and Net Weight. It is a negotiable document. General Purchase at Mahmood Textile Mills UNIVERSITY OF EDUCATION OKARA CAMPUS [SUMAD PURA ROAD OKARA] 54 . But Installations and other heavy machinery are imported. When the goods are sent by Air. Airway Bill is made.MAHMOOD TEXTILE MILLS LTD Invoice When the exporter negotiates the documents. •Type of Packing Airway Bill When the goods are sent by ship.

In Mahmood Textile Mills. Mahmood Textile Mills also purchase the yarn from outside parties inspite of its own Spinning units. Yarn Purchase at Mahmood Textile Mills •Yarn Purchase is responsibility of the Director for Weaving. For them Purchase demand is not raised from mills. Purchase In charge asks for Quotations from various suppliers and makes Comparative Statements. to the Purchase Department. Yarn Purchase As mentioned earlier. •After Director's Approval. the concern department incharge checks that whether the thing lies in Mill's Store. The yarn is only purchased from the approved suppliers and it is made sure that the yarn purchased is of high quality to produce a good high quality fabric. •After analyzing the Purchase Demand. Based on them he makes Purchase Order which is then sent to the director for his approval. Quality and other specification) is made. Those items that do not affect the quality of the product can be purchased from unapproved suppliers. There is a formal system for the evaluation of the Suppliers/Subcontractors. then Purchase Demand (Purchase Demands contain detailed information about required items like Quantity. the goods are only purchased from Approved Suppliers. Note that Chemicals and Packing Material for Weaving and Packing Material for Spinning is purchased on the basis of Daily Stock Report. Also in case of emergency this can be done. After the suppliers are evaluated the Approved Suppliers' names are entered in Approved Supplier List. he gets it issued from the store. which after approval of the Head of the department goes to the Purchase department. He receives UNIVERSITY OF EDUCATION OKARA CAMPUS [SUMAD PURA ROAD OKARA] 55 .MAHMOOD TEXTILE MILLS LTD •Whenever some locally produced thing is required at the mills. Purchase order is sent to the Approved Supplier. If it is there. they are sent to the mills with a Delivery Challan •Store sends Goods Receipt Note after receiving the goods. •When the goods are received. If it is not there.

•Amount of Yarn (in meters) required for Weft. It specifies the. Daily Yarn Requirement Report The Daily Yarn Requirement Report carries information as. Cotton Purchase at Mahmood Textile Mills UNIVERSITY OF EDUCATION OKARA CAMPUS [SUMAD PURA ROAD OKARA] 56 . order is placed to the supplier. Daily Yarn Stock Report Daily Yarn Stock Report carries information about yarn available for production. •Opening Balance. •When the goods reach at mills. •Amount of Yam (in meters) required for Warp. Note that the order is made in anticipation. •Brands. •Total Yarn (of different Counts) required for production of different qualities. Inspite of the owners' own Ginning factories. •After Director's approval. •Percent PC. cotton is purchased from outside parties due to heavy requirement of cotton for four (4) spinning units. •Yam (of different Counts) available for production.MAHMOOD TEXTILE MILLS LTD •Daily Yam Requirement and Daily Yam Stock Report (explained later) from weaving mills and based on them he finalizes the purchase of yarn. The Brand is selected by the Director •Yam Purchase Assistant prepares the Purchase Order of Yam with concern of Director and the Director approves the order after analyzing it. Cotton Purchase MTM also carries the activity of Cotton Purchase. Yam Go down In charge receives them and sends confirmation of receipt of goods to the Head Office. Return) •Issued (for Warp and Weft)•Transfer and •Closing Balance. Hence no shortage of yarn occurs at the mills. •Receipt (Purchase.

the sample is sent back to director for approval/disapproval along with the Cotton Testing Report. •Local Sale Assistant discusses with the Director. A Grade products are exported and B and C Grade products are sold in the local market. • After testing. Local Sale at Mahmood Textile Mills •Local Sale Assistant receives Daily Stock Report for Cotton and Yam to see that the stock is available for sale.MAHMOOD TEXTILE MILLS LTD •For Cotton Purchase. On demand of cotton from the mills. •In case of approval. Mahmood Textile Mills also sells the Yarn and Fabric in the Local Market. •When the Cotton reaches the mill. he calls for sample from his selected Ginning factories and sends the sample to the mills for testing. Usually. daily. Godown Keeper receives it and informs at the Head Office about the receipt of goods. The Local Sale Director makes the contract and he is responsible for sale of cloth in the local market. Note that Purchase Order is only for outside parties. Local Sale In addition to Export. He takes help of the Local Sale Assistant. For owners' own ginning factories. cotton is just transferred from one of ginning factory to the mill by a Transfer Notice. UNIVERSITY OF EDUCATION OKARA CAMPUS [SUMAD PURA ROAD OKARA] 57 . the Assistant for Cotton Purchase makes Purchase Order for Cotton. the order is sent to the supplier and the Godown Keeper is also informed about the purchase order at the mill. Director selects Ginning factories based on their Site Location. •After the Director's approval of the order. Obviously the rate for B and C Grade products is less than the A Grade products but these are also easily sold in the local market as compared to the foreign market because foreign market is more quality conscious than the local market. about the dispatch of products to inform him about the amount of yarn and cloth to be exported and the amount of yarn and cloth available for local sale.

•Local Sale Assistant prepares the Invoice and sends it to the buyer after getting it approved from the Director. •The buyer. sends the goods to the proper buyer. •Local Sale Assistant sends this Purchase Order to the Office Manager.MAHMOOD TEXTILE MILLS LTD •When the buyer consults the director for purchase of either yam of cloth. which then UNIVERSITY OF EDUCATION OKARA CAMPUS [SUMAD PURA ROAD OKARA] 58 . the Local Sale Assistant makes Purchase Order Detail for Cotton or Yam explained later) and sends it to the buyer. sends it back to the Local Sale Assistant. after specifying his/her requirements in the Purchase Order.

•Number of Bales or Rolls needed etc. •Required Cones per Bag. •Order Number. •Total Bags required. •Yarn Count(s) required. •Type of Packing required. •Required Net Weight per bag. •Required Weight per Cone. It is sent to the buyer and based on this the Yam is prepared for dispatch. •Date and Buyer's Reference. Purchase Order Detail for Yarn Purchase Order Detail for Yarn is also made to know the buyer's requirements about yarn. •Quality of Cloth required. •Bags per Container. •Delivery Schedule: •Date of Delivery. •Quantity of Cloth required. The Order contains following contents. It is then sent to the buyer and based on this the Cloth is prepared for dispatch.MAHMOOD TEXTILE MILLS LTD Purchase Order Detail for Cloth Purchase Order Detail for Cloth is made to know the buyer's requirements. UNIVERSITY OF EDUCATION OKARA CAMPUS [SUMAD PURA ROAD OKARA] 59 . •Dispatch Schedule. The Order contains following contents. •Required Brand(s). •Yam Quality required. •Buyer's Name.

MAHMOOD TEXTILE MILLS LTD PERSONAL MANAGEMENT PERSONNEL MANAGEMENT UNIVERSITY OF EDUCATION OKARA CAMPUS [SUMAD PURA ROAD OKARA] 60 .

of workers Enrolled.MAHMOOD TEXTILE MILLS LTD Personnel Management is a very important activity for any kind of organization.  No. he is passed and in charge is informed that the person is fit for the job. If the person is working well in trial. Training and Trail Training and Trail is only for entry level positions. For workers it is in the concerned unit. middle and top managers. of workers absent etc. of workers to be enrolled in future. The concerned Officer or the Director is made responsible for conducting Orientation. day by day working is carried out in the Head Office.  No. that occurs in a normal. then. He reports to concerned in charge. The recruitment and selection of middle and top managers. His file is maintained with UNIVERSITY OF EDUCATION OKARA CAMPUS [SUMAD PURA ROAD OKARA] 61 . When a worker has successfully passed the trial.  No. A register is maintained in the Time Office which gives information about. he is then placed permanently and a "Worker Number" is allotted to him. Let us now see how this organization carries out various activities in the field of Personnel Management. The personnel of any organization are its keys and with the help of them the organization can do miracles in its business. Orientation Orientation is necessary for any kind of worker and the manager. Of workers on Leave  No. Sanction Strength is the estimate of the workers. GM (General Manager) or TM (Technical Manager) does that. Recruitment and Selection Whenever some unit of Mahmood Textile Mills starts its working the recruitment is done on the basis of Sanction Strength. The Foreman of the concerned department conducts the trial. passed through a Trial Session for 6 or 7 days. Mahmood Textile Mills also does Personnel Management in its own particular way. When a worker is selected. he is. It is but up to the organization that how it manages its employees.

the amount of reward which is given to the weavers is based on their work done.MAHMOOD TEXTILE MILLS LTD reference to his worker number in which every kind of information about him is inked. Hence. Overtime is paid according to the hours worked over and above one shift of eight hours. Name of weaver. The salary of the middle and top managers is determined by the concerned Director. The selection of the middle or the top managers is in the Head Office and at the time the managers are selected. 2100/. Efficiency of loom etc. Rewards which are given to weavers. the foreman also gives continuous training to the worker but long training sessions are not carried out in the organization. 2 . Salaries The salary of a single worker is Rs. 3 Loom number. UNIVERSITY OF EDUCATION OKARA CAMPUS [SUMAD PURA ROAD OKARA] 62 . There is lot of variation in it.per month which is called Gross Salary. 1 2 4 5 Length of cloth weaved. the worker is examined during his training that whether he can do the job. Placement The placement of the worker is temporary when he is selected and placed in a trial session. The job description is given to the worker or the manager after the selection and in this respect the documented procedures of ISO 9002 for job description are followed. (1). Rewards The rewards given to the lower level are of two types 1. they are placement as permanent. When a certain weaver weaves the cloth. The placement becomes permanent when the worker passes the trial. then the Time Keeper places a sticker (Tape) on the Cloth Roll which describes. For them there is no trial. Quality.Rewards which are given to workers. During the trial.

Those are taken into account. the managers see the faults in the cloth which are due to the sizers. (Percentage is determined by the concerned Director). the condition of the cloth is checked and based on the condition of cloth weaved. that is "number of faults" etc. follows the same rule. •Moreover the personnel are provided free Electricity and Gas into their home Workers Union concept is different here. the faults that are due to the workers of different departments is seen. Similarly the rewards given to the workers of Warping. From the cloth. Drawing departments etc. But usually they are the persons whom the owners want to be president or secretary. On various reports prepared. For example.MAHMOOD TEXTILE MILLS LTD After that at the Cloth Inspection level. Union in at the mills (production units). •Lower Managers are also been provided homes but for four lower managers there is one home. the reward of weaver is determined.. Facilities The facilities are provided to all the levels. 2 and 3 has one union. in case of Sizers. The length of the faulted cloth is subtracted from the total length of the beam and then based on this length the reward is determined. Bonus Bonus is given annually with respect to percentage of profit. for second type of rewards which is given to the workers of other depts. Unit #1. Union's President and Secretary are elected by the workers.• The GM of the unit as been given a good reasonable home and a car. (2).• Middle managers have been allotted homes. The rewards given to the middle and the top managers depend on the will of the concerned Director. the cloth which is at the end inspected determines the rewards. different faults with respect to different departments are mentioned. They take 1% share from the workers' bonus but according to the workers they are of no use to them. 4 and 5 has another union. Unit no. UNIVERSITY OF EDUCATION OKARA CAMPUS [SUMAD PURA ROAD OKARA] 63 .

No. he cannot take leave for the first three months. of workers that have come on time. of workers present. When a worker is newly selected. But the company has extended this benefit to 4 absentees apart from 18 leaves. even he was absent only once apart from his 18 leaves. From that card the attendance is shifted to a register for the purpose of making "Daily Attendance Report for a Shift". When ever a worker works more than 8 hours and does not takes overtime. Annual Leave or Earned Leave. then his salary is not deducted. No. 3. They are 14 per year. They are. If a person is on leave. No. No. 2. Sick Leave (SL). of workers actually on work. 1. No. They are 10 per year.MAHMOOD TEXTILE MILLS LTD Attendance For attendance every worker is given an "Attendance Card" and he brings it in the unit in the morning when he comes to work. 1. In this system there are three kinds of leaves. Overtime or 2. No. They are 8 per year. but his leaves are deferred in the proceeding months UNIVERSITY OF EDUCATION OKARA CAMPUS [SUMAD PURA ROAD OKARA] 64 . but if a person has taken his all leaves and is now absent then his salary would be deducted for that day. then he cannot take 14 Annual leaves the next year. Casual Leave (CL). This report contains information as. No. Leaves The company has a leave system for the benefit of the workers and the managers. of workers that should be on work. By working more than 8 hours a worker can take either. Of workers that have come late. of workers absent. of workers in trial. According to the government's law. then his CPL is noted and against this he can take one leave without marking himself absent. CPL (Compensation Pay Leave). If a person has taken all the 18 (SL & CL) leaves in a year and is now absent.

It is the one month's basic pay which is added to employees' Gratuity Account after completing his one year in service.1000 will be added to employees' Gratuity account but it will not be given to him. For example if the basic pay of an employee is Rs. There is no contract with the workers or managers for their job.MAHMOOD TEXTILE MILLS LTD Gratuity Gratuity is another benefit which is given to the employees. Especially the salaries of the middle managers are very low and the rewards and fringe benefits are limited UNIVERSITY OF EDUCATION OKARA CAMPUS [SUMAD PURA ROAD OKARA] 65 . When the employee will get resignation or he will get retirement then the whole gratuity will be given to him. If the above employee has retired after 25 years then his gratuity after retirement will be 25.000 rupees. The Personnel Management of the company is good but it is not like a Multinational company. However one has to inform one month before his resignation so that the mills can arrange another worker or the manager. then after one year Rs. Otherwise in case of no reporting. one month salary of that person is deducted. 1000 per month.

MAHMOOD TEXTILE MILLS LTD ORGANIZATION CULTURE ORGANIZATION CULTURE UNIVERSITY OF EDUCATION OKARA CAMPUS [SUMAD PURA ROAD OKARA] 66 .

As far as the rules and regulations are concerned. No one is seen sitting idle and having a chat with someone. the environment that is very important for any good and successful organization. •HARD WORK IS A KEY TO SUCCESS. Every department carries boards and charts with beautiful messages like. •COMMITMENT TO QUALITY IS OUR MOST DOMINANT TRAIT •CUSTOMER IS THE ULTIMATE JUDGE Hence whenever some one goes to the mills or at the Head Office. The organization values a safe. employees are expected to stick closely with them.MAHMOOD TEXTILE MILLS LTD The culture of the organization is very hard working where teamwork is appreciated and there is no communication gap between the various levels of the hierarchy. and predictable and rule oriented environment. The organization encourages the workers and the managers towards commitment to quality. All the Owners of the mills have a very strong control on the behavior of the personnel. stable. No negligence on the part of the workers or the managers is tolerated. he finds every one working in a much disciplined environment. •QUALITY IS THE ONLY WEAPON TO WIN CUSTOMERS' •LOYALTY. UNIVERSITY OF EDUCATION OKARA CAMPUS [SUMAD PURA ROAD OKARA] 67 . rather every one is seen working hard and committed to the Quality.

MAHMOOD TEXTILE MILLS LTD UNIVERSITY OF EDUCATION OKARA CAMPUS [SUMAD PURA ROAD OKARA] SWOT ANALYSIS 68 .

Supima.  Its annual turnover ratio is US $ 215 million.  Company is playing a significant role in textile exports with 90% export ratio. Lycra and Oko-tex. UNIVERSITY OF EDUCATION OKARA CAMPUS [SUMAD PURA ROAD OKARA] 69 .  MTM has a strong dealer ship network and large sales force to cater to its needs.MAHMOOD TEXTILE MILLS LTD SWOT ANALYSIS STRENGTHS:  The company has a vertical integration system  Adopting Farm-to-fabric strategy  Mahmood group consists of seven companies located in different cities of country  Company has many distinction certificates over the entire textile industry of Pakistan by ISO.

 Less mobilization of resources. UNIVERSITY OF EDUCATION OKARA CAMPUS [SUMAD PURA ROAD OKARA] 70 .  Broad production range. WEAKNESSES:  Lack of long term planning.  Safety measures of international standard are exercised.MAHMOOD TEXTILE MILLS LTD  Company is carrying its operations with the help of updated modern technology.  It is also member of responsible corporate citizenship.  Company has own testing labs to maintain strict quality controls.  Improper methods of inventory management. decisions are made keeping in view the short term benefits.  Too much centralization beurucratic control effects timely decision making.  Significant contribution towards the economic and agricultural development of the country.  MTM enjoy fair dealing with competitive prices  It provides pre and post services to its customers.  Company has dearth of trained manpower.  Excellent environmental and working conditions.  Monetary sensitiveness to foreign exchange exposure.  There is a lack of joint research and development activities.  Company also made an employee welfare and motivation association.  No deceptive n unethical practices in management.  Some little exposure of high-tech technology.

 High production cost can create problems for company. THREATS:  Crises of gas and water can effect its production.MAHMOOD TEXTILE MILLS LTD  Declines sales in economic zones of competitors.  Low price of market share as compared to competitors’ will effect investments.  Threat of entry of new competitors in market.  With the help of government subsidiaries.  Opportunity to appear as a multifunctional textile mill because of globalization factor.  More dependence on loans. automated in future.  Proper placement of warehouses.  Fewer trends in long or short term investments in other sectors. purchase of raw material in bulk form will cut company’s cost.  Expansion of plants to meet the demand more efficiently. OPPORTUNITIES:  Great opportunities for joint ventures. UNIVERSITY OF EDUCATION OKARA CAMPUS [SUMAD PURA ROAD OKARA] 71 .  Company’s registered office located away from main business cities so it creates hurdles for company to carry its operations efficiently.  More ease for internationally integration because of the lower tariff barriers and  Removal of quantitative trade restrictions.  Company can hire specialized people with innovative approach will help to Differentiate its products and maintain an edge over competitors.  No strong brand name can decrease company’s sales level.

UNIVERSITY OF EDUCATION OKARA CAMPUS [SUMAD PURA ROAD OKARA] 72 .MAHMOOD TEXTILE MILLS LTD  As company has its own cotton forms. so in case of low input. it can effect its production.

and due to inconsistent policies of government every new government set different trade policies with make difficult for the businesses to grow and be consistent in their performance. UNIVERSITY OF EDUCATION OKARA CAMPUS [SUMAD PURA ROAD OKARA] 73 .MAHMOOD TEXTILE MILLS LTD PEST ANALYSIS PEST ANALYSIS OF Mahmood Textiles Political instability The political situation of Pakistan is not stable and after the war on terror it has gone worse especially for the business sector.

Technological factor Technological advancement in all the sectors of the country has changed the entire socio-economic environment. Economic situation The economic condition of Pakistan affect the textile industry directly and due to week economic condition textile industry is also not performing well.MAHMOOD TEXTILE MILLS LTD Govt. Especially in the textile sector there is a lot of technological development. Social situation The change in the lifestyle of the people affects the demand of MTM product and especially the demand for exports is affected by the changing fashions and style in the importing countries so the company is needed to be contemporary to meet the changing demand of customers. UNIVERSITY OF EDUCATION OKARA CAMPUS [SUMAD PURA ROAD OKARA] 74 . should apply sustainable policies for the beneficial of the exporters as well as the investors. Increasing inflation rate make the cost of production high and thus reduce the profit margin of the investor. but we still need more development to meet the demand of outside world.

MAHMOOD TEXTILE MILLS LTD UNIVERSITY OF EDUCATION OKARA CAMPUS [SUMAD PURA ROAD OKARA] 75 .

The Boston Consulting Group Matrix has 2 dimensions: UNIVERSITY OF EDUCATION OKARA CAMPUS [SUMAD PURA ROAD OKARA] 76 . To ensure long-term value creation.MAHMOOD TEXTILE MILLS LTD BCG MATRIX THE BOSTON CONSULTING GROUP (BCG) MATRIX The BCG Matrix method is the most well-known portfolio management tool. a company should have a portfolio of products that contains both high-growth products in need of cash inputs and low-growth products that generate a lot of cash. The BCG Matrix can be used to determine what priorities should be given in the product portfolio of a business unit. It was developed in the early 70s by the Boston Consulting Group. It is based on product life cycle theory.

high market share) Stars are using large amounts of cash. high market share) UNIVERSITY OF EDUCATION OKARA CAMPUS [SUMAD PURA ROAD OKARA] 77 .MAHMOOD TEXTILE MILLS LTD  Market share  Market growth The basic behind if a idea it is: product has a bigger market share. Stars are leaders in the business. product's The four segments of the BCG Matrix Placing products in the BCG matrix provides 4 categories in a portfolio of a company: • o Stars (high growth. However if needed any attempt should be made to hold your market share in Stars. because the rewards will be Cash Cows if market share is kept. o Stars are frequently roughly in balance on net cash flow. or if the market grows faster. • Cash Cows (low growth. Therefore they should also generate large amounts of cash. it is better for the company.

such as a generic growth target (9 percent per year) or a generic return on capital of say 9. Either these SBUs should receive enough UNIVERSITY OF EDUCATION OKARA CAMPUS [SUMAD PURA ROAD OKARA] 78 . In such a scenario: • Cash Cows Business Units will reach their profit target easily.5% for an entire corporation. Question Marks will simply absorb great amounts of cash. These are hopeless attempts to "turn the business around". • As a result all Question Marks and Stars receive only mediocre investment funds. Cash Cows are often the stars of yesterday and they are the foundation of a company. Because of the low growth. In this way they can never become Cash Cows. Question Marks (high growth. or invests nothing and generates any cash that you can. These inadequate invested sums of money are a waste of money. If the market share remains unchanged. low market share) Question Marks have the worst cash characteristics of all. low market share) o • o o o • o Avoid and minimize the number of Dogs in a company. Either invests heavily. because of their low market share. • Dogs Business Units are fighting an impossible battle and. or sells off. even worse. Even worse. Dogs must deliver cash. Their management have an easy job.MAHMOOD TEXTILE MILLS LTD o Profits and cash generation should be high. Watch out for expensive ‘rescue plans’. Increase market share or deliver cas o o The BCG Matrix and one size fit all strategies The BCG Matrix method can help to understand a frequently made strategy mistake: having a one size fits all strategy approach. they are often allowed to reinvest substantial cash amounts in their mature businesses. investments which are needed should be low. otherwise they must be liquidated. because they have high cash demands and generate low returns. now and then investments are made. The executives are often praised anyhow. Dogs (low growth.

• • • • BCG model is helpful for managers to evaluate balance in the firm’s current portfolio of Stars. Limitations of the BCG Matrix Some limitations of the Boston Consulting Group Matrix include: • It neglects the effects of synergy between business units. BCG method is applicable to large companies that seek volume and experience effects. or otherwise companies are advised to disinvest. The model is simple and easy to understand. it is destined to be profitable.MAHMOOD TEXTILE MILLS LTD investment funds to enable them to achieve a real market dominance and become Cash Cows (or Stars). The model uses only two dimensions – market share and growth rate. it should be able to manufacture and sell new products at a price that is low enough to get early market share leadership. Once it becomes a star. A high market share does not necessarily lead to profitability all the time. They can then try to get any possible cash from the Question Marks that were not selected. or to divest prematurely. High market share is not the only success factor. The problems of getting data on the market share and market growth. A business with a low market share can be profitable too. Market growth is not the only indicator for attractiveness of a market. It provides a base for management to decide and prepare for future actions. Other uses and benefits of the BCG Matrix • If a company is able to use the experience curve to its advantage. The model neglects small competitors that have fast growing market shares • • • • • • • • • BCG Matrix of Mahmood Textiles Mills UNIVERSITY OF EDUCATION OKARA CAMPUS [SUMAD PURA ROAD OKARA] 79 . Cash Cows. This may tempt management to emphasize a particular product. Sometimes Dogs can earn even more cash as Cash Cows. There is no clear definition of what constitutes a "market". Question Marks and Dogs.

Therefore according to BCG matrix product lines of Mahmood textiles lies in Cash Cows due to large market share and high potential to grow. BALANCE SHEET UNIVERSITY OF EDUCATION OKARA CAMPUS [SUMAD PURA ROAD OKARA] 80 .MAHMOOD TEXTILE MILLS LTD Mahmood Textiles Mills has strong market position in Pakistan because of their evergreen selling nature throughout the year that’s why it has large market share and its products has till very strong potential to grow and penetrate not only in local markets but also in foreign markets.

MAHMOOD TEXTILE MILLS LTD MAHMOOD TEXTILE LIMITED Balance Sheet UNIVERSITY OF EDUCATION OKARA CAMPUS [SUMAD PURA ROAD OKARA] 81 .

813 304.302 Liabilities Short term liabilities 1.015 317.685 17.520.700 Long term Payables 86.499 1.739.349.354 95.725 27.885 134.664.600 Total Long term Liabilities Capital and UNIVERSITY OF EDUCATION OKARA CAMPUS [SUMAD PURA ROAD OKARA] 82 Reserves 99.908.185.760.Assets Current Assets Cash and bank balances MAHMOOD Advances.680.223 550.058 19.405.557.908.108.486.730.77 6 65.679.267. deposits and other receivables Trade debtors (net) Stock-in-trade Raw material Work in process Finished goods Stock-intrade(net) Sales tax refundable Short term investments Stores.628.324 388.076 2009 Rs 1.865 55.443.101.833.441 715.738.745.638.426 12.890 99.739.363 13. spares and loose tools Total current Assets Fixed Assets Operating Fixed Assets Investment Property capital work-inprogress Long term Investment Long term Deposits Total fixed Assets Total Assets 2005 Rs.394.557.638.942 169.001 67.689.417 53.259 88.454 92.405 current portion of long term liabilities 297.266.075.370 177.804.079 94.609 126.523.828 1. 9.900.563.966.896 97. 16.804.802.978 66.855.609 1.598 146.049.849.341.478 29.600 53.587.771.446.814.449 3.542 131.950 169.344 1.179 1.430.504 31.098.837 701.847 366.605.281.580.093.068.894 887.177 117.203 47.354.167 239.861 18.739.176.058 444.807.221 584.569.853 2008 Rs.956 3.804.889 594.665.767.180.999 2.640.037.473.030 876.000 1.791 6.737 6.685 1.646.465 1.484.570 813.775.068.022 768.440.84 5 207.890 99.806.686.607 136.995.031.975 1.672.596 45.344.002.848.930 9.394.228.806.846 Creditors 86.313.055.242 2007 Rs.316 accruals and other payables 1.692 2.461.648 2.632.875.493.357.310.394 26. 172.662.952. 7.584.642 69.191.746 Dividends 248.000 1.156 53.339 138.568 696.574 854.085.990 939.708 385.410 1.804 1.552.741.371.043.912 220.411.036.176.520.300.733 97.084.569.941 TEXTILE MILLS LTD 48.260.626.110 307.326.350 1.644.325.535 14.132 57.227.120 2006 Rs.171 1.049 146.650 Provision for taxation 40.951.708.793.433.263 3.143 1.739.809 1.579 Short term finances 42.271 583.042 14.618.703 69.686.370.354.048 33.589.890 99.347.007.494.886 Total Current Liabilities Long Term Liabilities 66.824.339 187.544.547.029 74.066 11.330.900 Long term loans and finances 20.879.062.729 4.284 15.310.159 146.646 24.291.806.827.000 .546.172 117.879 40.942.812.005.458 21.311.396 57.06 8 738.196.447 39.471.030 861.404.890 Issued’ subscribed and paid-up capital 4 9.509 134.924.090 interest/markup on loans 75.451 1.129 44.252 30.116.403.437 2.506.386.164.999.536.000 678.198.518 146.018 1.601 708.000 1.591.

82523603 229.1872447 152.8734818 131.42915523 445.24 646.96 96.7253762 92.9438783 722.52327028 100 105.4961406 98.77 141.93551145 35.9324316 105.9452793 75.3994497 829.81651186 151.42 UNIVERSITY OF EDUCATION OKARA CAMPUS [SUMAD PURA ROAD OKARA] 83 .61 441.9720432 104.5874655 187.94 458.44 202.9782838 70. 9.589225 115.1525714 100 117.71 717.30 2009 Rs 859.87 366.2166882 235.52 73.23630483 45158.2863547 74.93183821 100 111.98481603 66.03976232 176. deposits and other receivables Trade debtors (net) Stock-in-trade Raw material Work in process Finished goods Stock-in-trade(net) Stores.1602345 837.7023039 139.7066208 100.04 543.1973735 0 91.18 31.6901805 93.8509983 2007 Rs.56 84.388660454 91.38 264.68763033 117.3840745 205.8190281 1171.76 63.9438783 181.6037875 99.22808059 977.563. 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 2006 Rs.0797177 0 357.2178706 96.8583719 176.9011634 216.1102869 139.287364904 174. spares and loose tools Total current Assets Fixed Assets Operating Fixed Assets Investment Property capital work-in-progress Long term Investment Long term Deposits Total fixed Assets Total Assets Liabilities Short term liabilities interest/markup on loans current portion pf long term liabilities Short term finances Creditors accruals and other payables Provision for taxation Dividends Total Current Liabilities Long Term Liabilities Long term loans and finances Long term Payables Total Long term Liabilities Capital and Reserves Issued’ subscribed and paidup capital capital reserve Inappropriate Profit Total capital and reserves Total Liabilities and owner's equity 2005 Rs.88682214 425.4556949 345.5608991 116.2560093 117.01 1.7511122 552.084.1418799 233.0369213 98.115 156.8509983 73.9692474 387.3854229 136.20 104.99996804 87.5066285 109.3639287 92.26024051 105.50 468.10104945 142.5647272 216.167569 205.604943338 120.9487405 211.9772237 163.92 2.069501 123.8923 127.38 386.49316981 0 425. 5.0596617 127.44067 112.2110762 2265.39 25.20 197 .51885693 196153.7637826 59.35 395.06 494.1602345 2008 Rs.0810146 117.98445269 57.46 86 . 4.8029651 175.16214885 258003.4070269 104.844335 100 71.0195124 176.8691604 674.2293421 0 123.MAHMOOD TEXTILE MILLS LTD TREND ANALYSIS Assets Current Assets Cash and bank balances Advances.

MAHMOOD TEXTILE MILLS LTD VERTICAL ANALYSIS OF BALANCE SHEET UNIVERSITY OF EDUCATION OKARA CAMPUS [SUMAD PURA ROAD OKARA] 84 .

626246524 5.69575933 2007 0.523064987 2.62653462 11.4668282 77.89076653 4.432207527 2.08435331 17.127878225 5.889205114 45.848922448 0 47.42651544 0 48.780270812 0 70.428161281 0.045562162 4752865846 100 0 0 0.040755967 0 33.965350787 3.25368522 1.126049455 0 34.868338269 0.617254658 2.035426859 18.45107347 1.45888034 0 52.370785802 5.74787535 6.303057435 4.02437616 0.196284836 0.439938941 4.880646167 6.074884758 6.147149279 0 19.88581382 0.86024794 2008 0.24709901 6.224123575 0.117720682 3075350639 100 0 0 0.848632977 0.704231058 8.555085949 24.118169053 6444298032 100 0 0 0.639145125 3.509860365 1.105052783 21.874256294 2006 1.334206901 9.066952528 6341156204 100 0 0 0 2.035589046 0.06930094 4.27460615 48.020250082 2.00513294 0 0 3.979802833 0.52215518 1.14101313 0.04941759 22.045031502 43.422274041 18.771804572 40.16110992 5.237653334 2.339743019 3.719234815 14.68967261 8.770963174 2.000902832 0.72748592 2.030758396 10.73020623 9.47905976 0.42 1.01917972 0 4.26464517 14. spares and loose tools Total current Assets Fixed Assets Operating Fixed Assets Investment Property capital work-in-progress Long term Investment Long term Deposits Total fixed Assets Total Assets Liabilities Short term liabilities interest/markup on loans current portion pf long term liabilities Short term finances creditors accruals and other payables Provision for taxation Dividends Total Current Liabilities Long Term Liabilities Long term loans and finances Long term Payables Total Long term Liabilities Capital and Reserves Issued’ subscribed and paid-up capital capital reserve Inappropriate Profit Total capital and reserves 2005 11.038285931 7.000542493 17.129759598 5.006662923 29.19882703 0 0 4.885394123 2009 22.091343199 0.106274115 0 24.111760386 3129801661 100 0 0 0.373785695 4.08265366 2.08025429 0 3.658492361 32.18475991 1.72774666 4.69863282 0 45.595393729 15. deposits and other receivables Trade debtors (net) Stock-in-trade Raw material Work in process Finished goods Stock-in-trade(net) Sales tax refundable Short term investments Stores.351684704 15.9711305 0 6.556343183 1.87225482 4.198339922 4.720066599 1.405485941 0 70.34008485 24.98013828 0 0 3.17126881 76.MAHMOOD TEXTILE MILLS LTD Assets Current Assets Cash and bank balances Advances.57675475 3.665184801 0.3867664 2.08399392 Total Liabilities and owner's equity 100 100 100 100 100 UNIVERSITY OF EDUCATION OKARA CAMPUS [SUMAD PURA ROAD OKARA] 85 .64486642 0 28.128803917 0.09063535 1.14771444 0 1.31301669 0 0 24.47339977 0.119350361 0.139416147 3.14908421 0 0.741393226 16.054981913 6.687054201 0.54840573 2.119565164 0.223124544 45.445284902 44.525425784 48.598645144 3.46488667 0.28911208 16.118692191 2.72 1.064814203 15.4827342 0.729304279 26.02618444 3.174476904 25.

MAHMOOD TEXTILE MILLS LTD UNIVERSITY OF EDUCATION OKARA CAMPUS [SUMAD PURA ROAD OKARA] 86 .

MAHMOOD TEXTILE MILLS LTD INCOME STATEMENT MAHMOOD TEXTILE LIMITED INCOME STATEMENT UNIVERSITY OF EDUCATION OKARA CAMPUS [SUMAD PURA ROAD OKARA] 87 .

95 6 2 2 4 0 4 4 6.626.461 3.433.494.233 (1.549.681.127.205 351.727.508) 2.957 438.726 396.354.172.35 5.621.93 UNIVERSITY profit (carried to 4 B/S) EPS 19.078.437 135.516 88.260 2.247.198.882.397.432 75.096.811 564.326.324.691.130.982 46.630.376.366 (6.267 2.709.654.691.965 261.547 91.373) (2.539 36.836) 46.332.007.64 4.111 135.278 123.795 257.990 1. 3.732 22.609 133.712. 3.909.47 5 221.683.349.53 0 106.606 3.168.990 14.905.804 5.024.414 42.697.303 1.209.424.67 5 4 150.700 280.477.167.895.879.585.201.967 8.435.15 8 28.072.581.588.326.693 697.759 321. 2.730 153.411.189.100 20.272.955.052.079.735.776.607 (4.027.709 432.390.297.720.909.048.630.454 2.121.597.74 110.538.864.064 20.372 16.730.878.969.177 2.036.035 276.716.34 5 6 36.111.728 119.977 8.839.163.791 404.327 497.297 29.738 436.546 7.657.461.029 21.836 3.789.337 73.553.450.285 236.213.03 - 88 9.349.56 .834 3.420 75.125.696.80 97.90 19.673.832.936.389 466.003 (21.623.35 15.745 59.394 3.247.779 17.689 121.30 6 8 187.915.075.961 193.325 132.708.332 2006 Rs.025 38.63 41.720.407.66 3 67.450.419 123.63 284.255.092 1 .020.990. 3.920.781.748.169.569 122.571 3.93 Inappropriate OF EDUCATION OKARA CAMPUS [SUMAD PURA ROAD OKARA] 1.116.173.865 95.569.065.13 11.066 2008 Rs.657.692.036.286.559) 2.454 92.279.651.820 2009 1.699.769.484.92 3 5.07 0 883.751.153.176 28.811.92 8 271.928 32.355 4.416.704.837 131.11 116.297 1.43 18.402.70 6 0 229.264 257.749 5.046.82 0 1.883 3.896 142.718 2007 Rs.89 0 39.MAHMOOD TEXTILE MILLS LTD Sales (Net) Cost of goods sold Material Labor Foh total factory cost Work in process Finished Goods Cost of goods sold Gross profit Less Operating Expenses Admin expenses Selling expenses other operating expenses total operating expenses Operating Profit Add Other incomes Export rebate on packing material Exchange fluctuation gainnet Income on bank deposits dividend income others total other incomes Less Other Expenses Profit before Interest and taxes Less Interest Expense profit before taxation Less provision for taxation Profit after taxation Add inappropriate profit Profit available for appropriation Less Appropriation 2005 Rs.230 153.424.321 20.63 3 50.963 63.563) 1.99 56.67 0 2 4.479.235.799 390.669.151.921 4.143.607 110.406 270.692 133.504.076.65 1 4 42.747.62 15.08 8 192.107 89.018 1 .487.978.400 9.783.295.86 177.130.652.520 2.579.375 15.

100 2006 Rs.708. 3839168820 2009 Rs.163.709 UNIVERSITY OF EDUCATION OKARA CAMPUS [SUMAD PURA ROAD OKARA] 89 . 1.153.332. 2878130066 2008 Rs.MAHMOOD TEXTILE MILLS LTD TREND ANALYSIS INCOME STATEMENT 200 5 Sales (Net) Cost of goods sold Material Labour Rs.092 100 100 3173235325 132789205 2111626689 121751406 2730669961 193020389 1 .837 131.036. 3909712718 2007 Rs.

018 1 .795 257.811 564.861 100 5.62 15.111 135.437 135.779 17.072.167.450.749 5.704.354.56 UNIVERSITY OF EDUCATION OKARA CAMPUS [SUMAD PURA ROAD OKARA] 90 .024.834 6169977 8326372 34420914 97769634 41720992 4.454 92.623.420 100 56048642 150920670 110127922 263.03 9.607 110376900 15.697.944.MAHMOOD TEXTILE MILLS LTD Foh total factory cost Work in process Finished Goods Cost of goods sold Gross profit 100 100 100 100 100 100 351691836 3657716366 -6882563 1735461 3652569264 257143454 270811260 2504189355 4936003 -21397559 2487727799 390402267 466581883 3390272233 -1579836 46424394 3435116791 404052029 432.905.569 122832728 1657745 59957 438693 697730 153432 75546 7078700 280967 8286375 57811012 187130345 36209675 4321 20419 123921 4121025 38699414 42969100 102438924 177681666 67553744 5.909.520 21.549.759 321.297 Less Operating Expenses Admin expenses Selling expenses other operating expenses total operating expenses Operating Profit Add Other incomes Export rebate on packing material Exchange fluctuation gain-net Income on bank deposits dividend income others total other incomes Less Other Expenses Profit before Taxation Less provision for taxation Profit after taxation Add unappropriated profit Profit available for appropriation Less Appropriation Unappropriated profit (carried to B/S) EPS 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 32247865 95151804 5879609 133279278 123864176 28621516 88692539 36433230 153747285 236654982 46198337 98500306 22201896 166900539 237151490 20.247.007.691.13 11.963 63.327 497.

MAHMOOD TEXTILE MILLS LTD UNIVERSITY OF EDUCATION OKARA CAMPUS [SUMAD PURA ROAD OKARA] 91 .

MAHMOOD TEXTILE MILLS LTD RATIO ANALYSIS UNIVERSITY OF EDUCATION OKARA CAMPUS [SUMAD PURA ROAD OKARA] 92 .

490.000 1.491 2006 388825995 2007 372644995 2008 331083510 2009 1336685015 "Working Capital" 1.491 388825995 372644995 331083510 1336685015 INTERPRETATION: The working Capital is showing decreasing trend for the last two years because of rapid increase in account payable and also due to short-term borrowings.000.000.000 1.000. Working capital is decreased in 2009 as compare to previous years UNIVERSITY OF EDUCATION OKARA CAMPUS [SUMAD PURA ROAD OKARA] 93 .000.000.000.200.000 600. In year 2009 there is high increase in liabilities as compare to the current assets.000.000.000 1.600.490.Current Liabilities Years Ratio 2005 346.000 400.000 0 2005 2006 2007 2008 2009 346. Net Working Capital Ratio: Formula: Current Assets .400. hence decreasing its profitability.000 800.MAHMOOD TEXTILE MILLS LTD Liquidity Ratios: 1.000 200.000.

83 Current Ratio 3 2.83 Interpretation: Current Ratio of the company has a decreasing trend.5 0 2005 2006 2007 2008 2009 1.5 2 1.42 1. It was quite good in 2005 but then current liabilities of the company increased in the proceeding years so it went down.26 1.42 2008 1.31 2. Over all although the current ratio is decreasing yet it is showing the good ability of firm to pay its current liabilities from current assets.39 2.MAHMOOD TEXTILE MILLS LTD 2.39 2006 2.26 2007 1.5 1 0.31 2009 1. Current Ratio: Formula: Current Assets / Current Liabilities Years Ratio 2005 2. UNIVERSITY OF EDUCATION OKARA CAMPUS [SUMAD PURA ROAD OKARA] 94 .

9 0. Quick (Acid-test) Ratio: Formula: Current Assets + marketable securities + A/R / Current Liabilities Years Ratio 2005 0.07 2008 0.1 0 2005 2006 0.27 2007 0.07 2009 0.7 0. It shows that the most liquid assets of the company are not in a position to payoff the current liabilities.05 2009 INTERPRETATION: Quick ratio of the company has a decreasing trend. UNIVERSITY OF EDUCATION OKARA CAMPUS [SUMAD PURA ROAD OKARA] 95 .4 0. In 2006 there is a significant decrease in the quick ratio which shows company has a very large portion of least liquid asset (inventory) in its current assets.06 2008 0.05 Quick/Acid test ratio 1 0.MAHMOOD TEXTILE MILLS LTD 3.5 0.2 0.6 0.3 0.89 2006 0.89 0.06 2007 0.8 0.27 0.

01 2008 0.052 2007 0. A significant decrease can be seen in 2006.7 0.5 0.01 0.7 2006 0.08 Cash Ratio 0.2 0.3 0.4 0.MAHMOOD TEXTILE MILLS LTD 4.1 0 2005 2006 2007 2008 2009 0. Cash Ratio: Formula: Cash+ Cash equivalent+ marketable securities / Current Assets Years Ratio 2005 0.007 2009 0.8 0. UNIVERSITY OF EDUCATION OKARA CAMPUS [SUMAD PURA ROAD OKARA] 96 .007 0. After this there is a continuous decrease which shows firm is using cash up to its best and maximum advantage.052 0.7 INTERPRETATION: Cash ratio is showing a decreasing trend.6 0.08 0.

86 49. As this ratio tells that hoe many times the credit sales are being converted into cash.59 64.59 2006 64.98 A/R Turn Over 70 60 50 40 30 20 10 0 2005 2006 2007 2008 2009 62. the company is showing a very good trend which shows the good management of the company.83 2009 64. Accounts Receivable Turnover Ratio: Net Sales / Average Gross Receivables Formula: Years Ratio 2005 62.83 64.98 INTERPRETATION: A consistent trend in account receivable ratio can be seen.29 2008 64. So.29 64.86 2007 49.MAHMOOD TEXTILE MILLS LTD 4. UNIVERSITY OF EDUCATION OKARA CAMPUS [SUMAD PURA ROAD OKARA] 97 .

Accounts Receivable Turnover in Days: Formula :( Average Gross Receivables / Net Sales) x365 Years Ratio 2005 5.83 2006 6. It is 5.8 5. Then it is again decreased and it became 6. The company’s overall collection period is good as there is a slight difference in figures.8 days in 2008.94 2008 6.83 2005 2006 2007 2008 2009 INTERPRETATION: A mix trend can be seen. UNIVERSITY OF EDUCATION OKARA CAMPUS [SUMAD PURA ROAD OKARA] 98 .52 6.83 days in 2005.52 days.8 2009 8.MAHMOOD TEXTILE MILLS LTD 6.52 2007 5.94 5. Then in 2006 it is increased and became 6.9 "Day's sales in A/R" 10 9 8 7 6 5 4 3 2 1 0 8.9 6.

UNIVERSITY OF EDUCATION OKARA CAMPUS [SUMAD PURA ROAD OKARA] 99 .89 9.65 2.65 2009 2. There is a significant decrease in 2007. The cost of sales showed a massive fluctuation because of intensive change in total factory cost.39 2007 2. The reason behind this low turnover is the high fluctuation in cost of sales. Then in 2008 a slight increase can be seen.58 9.91 3.MAHMOOD TEXTILE MILLS LTD 7.91 2008 3.89 Inventory Turnover Ratio 14 12 10 8 6 4 2 0 2005 2006 2007 2008 2009 2. This ratio has decreased in 2006. Inventory Turnover Ratio: Formula: Cost of Goods Sold / Average Inventory Years Ratio 2005 2006 12.58 INTERPRETATION: Inventory turnover ratio is showing random trend.39 12.

01days in 2005.01 38.86 days in 2006. UNIVERSITY OF EDUCATION OKARA CAMPUS [SUMAD PURA ROAD OKARA] 100 . 125.36 2008 99.36 days.86 125. This shows the firms poor management to convert its inventory into sales.86 2007 125.86 days. A significant increase can be seen in 2007 i.86 89. It is 29. Inventory Turnover in days: Formula: (Average Inventory / Cost of Goods Sold) x365 Years Ratio 2005 2006 29.MAHMOOD TEXTILE MILLS LTD 8.86 2009 89. Then it is increased to 38.01 38. Then there is a slight decrease in 2008 and it became 99.36 99.67 INTERPRETATION: A continuous increase can be seen.67 Day’s sales in inventory 140 120 100 80 60 40 20 0 2005 2006 2007 2008 2009 29.e.

43 6. After 2006 a decreasing trend is shown in the ratio up to 2008. Time Interest Earned Ratio: Formula: Earning Before Interest and Tax / Fixed Finance charges Years Ratio 2005 2006 5.43 6.66 Time Interest Earned Ratio 7 6 5 4 3 2 1 0 2005 2006 2007 2008 2009 2.42 INTERPRETATION: The times interest earned ratio of the company was good in 2005 and in 2006. UNIVERSITY OF EDUCATION OKARA CAMPUS [SUMAD PURA ROAD OKARA] 101 . instead of massive decrease.34 5.MAHMOOD TEXTILE MILLS LTD Long Term Debt Paying Ability: 1.66 5. company is still able to generate 2 times the expense of interest from its operations. But in 2006. In 2009 it’s again increasing.66 3.42 2008 2.34 2007 5.66 2009 3. It is because of the increase in the interest expenses of the company.

37% 2009 52.00% 40.MAHMOOD TEXTILE MILLS LTD 2. Debt Ratio: Formula: Total Debts / Total Assets Years Ratio 2005 22.00% 2005 2006 2007 2008 2009 22.00% 0.42% 49.42% 2007 49.37% INTERPRETATION: Debt ratio of the company is increasing in all the years.00% 30. It is all because of a massive increase in the liabilities of the company. UNIVERSITY OF EDUCATION OKARA CAMPUS [SUMAD PURA ROAD OKARA] 102 .75% 23. It reached its highest of 52.75% 2006 23. In 2006 there is a slight increase but in 2007 a significant increase can be seen.00% 20.00% 50.37% in 2009.37% Debt Ratio 60.12% 51.00% 10.37% 52.12% 2008 51.

Debt Equity Ratio: Formula: Total Debts / (L. This shows that the business is risky to make investments in such business. UNIVERSITY OF EDUCATION OKARA CAMPUS [SUMAD PURA ROAD OKARA] 103 . This ratio shows that company is continuously increasing the debt portion in the business.MAHMOOD TEXTILE MILLS LTD 3.T.Liabilities + Equity) Years Ratio 2005 2006 335% 365% 2007 1276% 2008 1642% 2009 1376% Debt to Equity Ratio 1800% 1600% 1400% 1200% 1000% 800% 600% 400% 200% 0% 2005 2006 2007 2008 2009 1642% 1276% 1376% 335% 365% INTERPRETATION: The ratio indicates the proportionate claims of owners and the outsiders against the firm’s assets.

56% 2008 10.48% 13.58% 2007 13.56%.00% 6.00% 0.00% 2.00% 14.00% 2005 2006 2007 2008 2009 12. UNIVERSITY OF EDUCATION OKARA CAMPUS [SUMAD PURA ROAD OKARA] 104 . The reason behind this fluctuation is the change in cost of goods sold and in sales.58% 9.52% 6.54% Gross Profit Margin 16.52% 2009 9.56% 10.54% INTERPRETATION: An Irregular trend of gross profit can be seen.48% 2006 6.00% 10. This increase is due to decrease in sales and in cost of goods sold.00% 4.50%. In 2007 it is increased to 13. In 2006 it is decreased to 6.MAHMOOD TEXTILE MILLS LTD Profitability Ratios: 1. Gross Profit Margin: Formula :( Gross Profit / Net Sales) x100 Years Ratio 2005 12.00% 12.00% 8. In 2008 it is again decreased.

82% 5.17% Operating Income Margin 10.00% 0.00% 9.00% 5.22% 6. In 2007 a great increase of 8.00% 3.71% 8. It is decreased significantly in 2006 to 3.MAHMOOD TEXTILE MILLS LTD 2. Although the operating expenses are increasing but low cost of goods sold supported this increase.00% 4.71% 2006 3.22% can be seen.00% 8.00% 6. UNIVERSITY OF EDUCATION OKARA CAMPUS [SUMAD PURA ROAD OKARA] 105 .22% 2008 6.17% 2007 8.82% 2009 5.00% 1. Operating Income Margin: Formula :( Operating Profit / Net Sales) x100 Years Ratio 2005 8. and in 2009 its again decreasing from previous year. And in 2008 there is a slight decrease of 6.17% 3.00% 7. The reason behind this decrease is the increase in operating expenses of the company. In 2005 the operating profit is 8.71%.17% 2005 2006 2007 2008 2009 INTERPRETATION: An irregular trend can be seen.82%. .00% 2. The reason behind this decrease is the increased cost of goods sold.71%.00% 8.

Another reason of this fluctuation can be that after 2003 there is no inappropriate profit.67% in 2005. A significant decrease can be seen in 2006.67% 2006 1.00% 20.98% Net Profit Margin 35.MAHMOOD TEXTILE MILLS LTD Net Profit Margin: Formula :( Net Profit / Net Sales) x100 Years Ratio 2005 32. Then it is again reduced to 2.00% 5.43% 5.00% 0. Then there is a slight increase of 5.00% 30.00% 25.67% INTERPRETATION: A great Variation can be seen in net profit ratio. It is 32.87%.87% 2009 3.43% 2007 5.00% 15.87% 3. The reason is the great fluctuation in interest and tax expenses of the company. UNIVERSITY OF EDUCATION OKARA CAMPUS [SUMAD PURA ROAD OKARA] 106 .00% 10.43%.00% 2005 2006 2007 2008 2009 1.98% 32.43% 2.43% 2008 2.

51 INTERPRETATION: An irregular trend can be seen.51 2007 1.16 2006 2.2 1.3 Total Assets Turnover 3 2.2 2009 1.MAHMOOD TEXTILE MILLS LTD 4. A good increase in turnover can be seen in 2006 which shows that the assets are being effectively used to generate sales. UNIVERSITY OF EDUCATION OKARA CAMPUS [SUMAD PURA ROAD OKARA] 107 .5 2 1.3 2. The reason of decrease in turnover in 2007 is that the assets have been increased but company is unable to increase its sales volume. In 2008 and 2009 there is a little bit improvement in turnover.16 2.5 0 2005 2006 2007 2008 2009 1.11 2008 1.5 1 0. Total Assets Turnover Ratio: Formula: Net Sales / Average Total Assets Years Ratio 2005 2.11 1.

9 in 2007 and then in 2008 and 2009 there is again decrease but its not significant decrease. This all shows that company is making productive use of its fixed assets by generating good volume of sales. It is all because of the greater increase in fixed assets as compared to the sales of the company.48 2006 5.31 INTERPRETATION: The ratio has shown an increasing trend in 2006 but then it again started to decrease and it reached to 3.31 2009 0.58 2007 3.48 3.9 5.96 4. UNIVERSITY OF EDUCATION OKARA CAMPUS [SUMAD PURA ROAD OKARA] 108 .58 2.96 "Operating Assets Turnover" 6 5 4 3 2 1 0 2005 2006 2007 2008 2009 0. Fixed Assets Turnover Ratio: Formula: Net Sales / Fixed Assets Years Ratio 2005 4.MAHMOOD TEXTILE MILLS LTD 5.9 2008 2.

MAHMOOD TEXTILE MILLS LTD 6.00% 20.00% 50.80% 3.40% and in 2009 it is slightly increased.00% 40.60% 2007 5. UNIVERSITY OF EDUCATION OKARA CAMPUS [SUMAD PURA ROAD OKARA] 109 . Return on Assets: Formula: Net Income / Average Total Assets *100 Years Ratio 2005 70.00% 30. There is significant decrease in return in 2006 of 3.60%.97% "Return on Assets" 80.00% 2005 2006 2007 2008 2009 3.00% 0.80% 2008 3.50% 2006 3.40% 2009 3. And in 2008 there is again decrease in return and it is 3.00% 70. This fluctuation is due to the continuous increase in assets and an irregular change in income.40% 3.97% 70.60% 5.00% 60.00% 10.50% Interpretation: A random trend can be seen in this ratio. In 2007 a slight increase can be seen.

658 3.387 0.376 "Degree of Financial Leverage" 4.483 2007 0.81 0. In next years the degree of financial leverage has slight changes that are in 2007 it has slightly increased to 0.5 1 0.483 0.483 which shows that company is earning less on the borrowed funds than it pays to use them. A conservative investor would look for favorable financial leverage.5 2 1. But in 2006 financial leverage decreased to 0.MAHMOOD TEXTILE MILLS LTD Investors Analysis: 1.81 times that amount.5 0 2005 0.658 2008 0.387 and 0.81 which indicate that as EBIT changes Net income will change y 3.387 2009 0.5 4 3.658 the in 2008 and 2009 again decreased to 0. UNIVERSITY OF EDUCATION OKARA CAMPUS [SUMAD PURA ROAD OKARA] 110 . If EBIT increases the financial leverage ill be favorable and if EBIT decreases the financial leverage will be unfavorable. Degree of Financial Leverage: % change in net income / % change in EBIT Years Ratio 2005 2006 3.376 2006 2007 2008 2009 INTERPRETATION: The degree of financial in the year 2005 is 3.81 0.5 3 2.376.

average no. Earning per Common Share: Formula: Net income –Preferred Dividend / Wt. is due to increase in net income.56 103. o/s Years Ratio 2005 2006 103.P.03 2009 9. The reason is a huge reduction in net income.62 11.93 INTERPRETATION: A mix trend is there.S. UNIVERSITY OF EDUCATION OKARA CAMPUS [SUMAD PURA ROAD OKARA] 111 . has decreased.S. In 2006 the E. of c/s.93 5.13 2008 11.MAHMOOD TEXTILE MILLS LTD 2.56 "Earnings Per Common Share" 120 100 80 60 40 20 0 2005 2006 2007 2008 2009 15.62 2007 15. has decreased. of shares is almost same over the years. The income in 2008 is slightly decreased and there is small increase in number of shares that’s why E.P. As the no.S.P. the increase in E.03 9.13 5.

No dividend has been declared in rest of the years. It is 96% in 2005 because the company has declared the dividend to its share holders. Percentage of Retained Earnings: Formula: Net Income – All Dividends / Net Income * 100 Years Ratio 2005 2006 96% 100% 2007 100% 2008 100% 2009 100% "Percentage of Retained Earnings" 101% 100% 99% 98% 97% 96% 95% 94% 2005 2006 2007 2008 2009 96% 100% 100% 100% 100% INTERPRETATION: The percentage of retained earnings is almost same in all the years.MAHMOOD TEXTILE MILLS LTD 3. That’s why a consistent trend can be seen. UNIVERSITY OF EDUCATION OKARA CAMPUS [SUMAD PURA ROAD OKARA] 112 .

Book Value per Share: Formula: Total share’s holder equity – p. equity / No.MAHMOOD TEXTILE MILLS LTD 4. o/s Years Ratio 2005 10 2006 10 2007 10 2008 10 2009 10 "Book Value Per Share" 12 10 8 6 4 2 0 2005 2006 2007 2008 2009 10 10 10 10 10 INTERPRETATION: There is no change in the company’s book value per share. UNIVERSITY OF EDUCATION OKARA CAMPUS [SUMAD PURA ROAD OKARA] 113 . of c/c.s.

4.34 2007 6.9 and in 2009 it decreased to 9. But in 2007 there is again decrease of 6. Price / Earning Ratio Market price per share Diluted EPS Years Ratio 2005 2006 3.9 9.34 10. This increasing trend is favorable for these investors who are interested in capital gain.89 INTERPRETATION: In the year 2005 the price earning ratio is 3.9 2009 9.89.48 2008 10.1. UNIVERSITY OF EDUCATION OKARA CAMPUS [SUMAD PURA ROAD OKARA] 114 .89 "Price/Earning Ratio" 16 14 12 10 8 6 4 2 0 2005 2006 2007 2008 2009 3.1 13.MAHMOOD TEXTILE MILLS LTD 5. In 2006it has jumped up to 13. In the year 2008 it has again increased to 10.48 13.1 6.48 which is favorable for those investors who are interested in dividends.

MAHMOOD TEXTILE MILLS LTD RECOMMENDATIONS RECOMMENDATIONS UNIVERSITY OF EDUCATION OKARA CAMPUS [SUMAD PURA ROAD OKARA] 115 .

UNIVERSITY OF EDUCATION OKARA CAMPUS [SUMAD PURA ROAD OKARA] 116 .  The company should cut its cost of production.  Training opportunity should be provided to the employees.  The company should not only depend on its own input resources rather it should make contacts with outside suppliers to meet any contingency.MAHMOOD TEXTILE MILLS LTD Followings are the suggestions that we recommend to company:  The Company should utilize its resources properly.  Modern methods of production must be used by the company to compete the others.  The company should involve the low level management in decision making.  They should hire highly qualified and well trained people.  The company should be self sufficient in gas and water storage.  The company must consider the long term benefits and should do long term planning for that.  Inventory should be managed properly.

Cotton is regarded as an UNIVERSITY OF EDUCATION OKARA CAMPUS [SUMAD PURA ROAD OKARA] 117 . by setting up a tanning unit. the group has grown immensely in the fields of cotton ginning. Since then.MAHMOOD TEXTILE MILLS LTD CONCLUSION CONCLUSION From this report I conclude that company is vertically based on integrated industries and started business in 1935. spinning and weaving.

also the company is depending more on debts to run the business that’s why we can say the company position is very risky. UNIVERSITY OF EDUCATION OKARA CAMPUS [SUMAD PURA ROAD OKARA] 118 . Instead of all this. if we see the profitability of the company it is not satisfactory. the company’s operating outflows are much more than their cash inflows. In short. the overall financial position of the company is not satisfactory.MAHMOOD TEXTILE MILLS LTD important crop of Pakistan. The company is not using its debts in a proper manner to make any expansion in the business that’s why the investors are hesitant to invest in such a risky business. A huge amount is being paid by the company in the form of interest. The company is not using its all assets efficiently that’s why they are not generating proper return. The Company is engaged in cotton ginning for the last 50 years and is running a number of ginning factories located in various parts of the country where best quality cotton is produced.

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