INTERNSHIP REPORT

On

Nishat Textiles Limited

SUBMITTED TO

Mr.Syed Naeem Shah

SUBMITTED BY

Musaddiq Hussain

BC-09-242
8th Semester
SUBMISSION DATE

July 2013

Hailey college Of Commerce

University of the Punjab

Lahore

LETTER OF TRANSMITAL

1
Syed Naeem Shah

Professor in Hailey College of Commerce,

University of Punjab, Lahore Pakistan

Being a reasonable student, I want to oblige my honorable and ambitious teacher.

Whose heroic step found our hidden capabilities and mental caliber and save us from brain rust
and provide us a chance to explain and elaborate this intern ship report.

He has skill of sharpening a diamond after filtering it from stones. It is only possible by
her matchless, amicable and devoted support. Not only, he encouraged me but he also guided
me with flying colors. I am feeling proud on finding a chance to visit the organizer closely. We
observed all the process and the concerned management. It endowed a opportunity to assess
and visualize the management and administration of the organizer. Being I was unable to guess
the very foundation of the structure. Practically view enhances the action of entire evaluation.
This project made it possible that the learning process is complete only with the help of keen
observation and experiment.

A major theme of this internship report is awareness of organizational structure,

Marketing/management, Finance (Import-Export-Re-Finance).

Regards; Signature

Musaddiq Hussain Musaddiq Hussain

2
Acknowledgements

All the praises are for the almighty, Allah who bestowed me with the ability and potential to
complete this Internship. I also pay my gratitude to the Almighty for enabling me to complete
this Internship Report within due course of time.

Words are very few to express enormous humble obligations to my affectionate Parents for
their prayers and strong determination to enabling me to achieve this job.

I take this opportunity to record my deep sense of gratitude and appreciation to my Internship
Advisor Mr. Naeem Shah, Hailey college of Commerce University of the Punjab, Lahore for his
constant encouragement and inspiring guidance with his Wisdom.

I also appreciate the cordial co-operation from all my concern Managers in the different
departments of Nishat Mills Ltd especially Mr. Tahir Imran (Assistant Manager Export) Mr.Ijaz
Ahamd (Senior Manager Export) Mr. Ghulam Rasool (import Officer) Mr. Tasneem Haider
(Senior Import Manager) Mr. Yasir Abbasi (Marketing Manager) for providing me requisite
information and knowledge for compilation of my complete Internship.

Musaddiq Hussain

3
Contents
 SWOT Analysis
 Corporate
 Detail of SWOT Analysis
 The internee
 PEST Analysis
 Acknowledgements
 Finance
 Contents
 Financial Highlights
 Executive Summary
 36 Horizontal Analysis
 Vision
 37 Vertical Analysis
 Mission
 Ratios Analysis
 Quality Policy
 Notes to Financial Statements
 Introduction
 Conclusion
 Nishat Group
 Recommendation
 The Company
 Glossary
 MARKETING STRATEGY 12
 References
 Marketing process

4
Executive Summary

Nishat has grown from a cotton export house into the premier business group of Pakistan with
5 listed companies, concentrating on 4 core businesses; Textiles, Cement, Banking and Power
Generation. Today, Nishat is considered to be at par with multinationals operating locally in
terms of its quality products and management skills.

I recently have done my internship in Nishat Mills Limited, in which I got training from its
different departments. The internship basically revolved around the product knowledge
training. The system, the style of working & the commitment of the employees in NML is really
exemplary.

The difference between the success & failure is doing things right and doing things nearly right,
& NML has always tried for success & that is why it is known to be one of the leading
organizations in Pakistan. Irrespective of all these positive points of Nishat Mills Limited, I have
noticed a few areas where the improvement can really increase the efficiency of NML.

In this report I have given a very brief review of what I have seen during our internship I have
mentioned all these as I have made an internship as according to the schedule. I also
mentioned about the Textile industry in Pakistan and vision of its industry. Then I have done a
detailed SWOT analysis as well as PEST Analysis. Finance (Import, Export, Re-Finance)

Then I have discussed about my learning in the whole internship that is all about the Textile
Terminologies and process of import export and a little touch about Marketing. I have made it
possible to write each and every thing that I have learnt there. I have all my practical efforts in
the form of this manuscript that’s the asset for my future career.

5
Vision

To transform the company into a modern and dynamic yarn, cloth and processed cloth and
finished product manufacturing company with highly professionals and fully equipped to play a
meaningful role on sustain able basis in the economy of Pakistan.

To transform the company into a modern and dynamic power generating company with highly
professionals and fully equipped to play a meaningful role on sustainable basis in the economy
of Pakistan.

Mission

To provide quality products to customers and explore new markets to promote/expand sales of
the company through good governance and foster a sound and dynamic team, so as to achieve
optimum prices of products of the company for sustainable and equitable growth and
prosperity of the company.

Quality Policy

We work together as a team for implementation and continual improvement of total quality
system in order to achieve satisfaction of our internal and external customers.

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 Introduction

The Textile Industry:

Over the years, Pakistan is said to be the single crop economy i.e. cotton and textile that claims
the lion's share in terms of the contribution in the national economy of Pakistan.

Despite efforts to bring in diversification in country's overall economic get-up the textile sector
continues to be the most important segment of the national economy. Its share in the
economy, in terms of GDP, exports, employment, foreign exchange earnings, investment and
revenue generation altogether placed the textile industry as the single largest determinant of
the economic growth of the country.

Despite harsh and hard international economic conditions, Pakistan's textile industry has
weathered the storm by coming out of the international crisis in a very positive manner.

During the year exports were controlled from falling and significant investment was made in
value-added expansion and in Balancing-Modernization- Replacement (BMR).

Besides fall out of the events of September 11, the implementation of WTO's agreement,
various bilateral agreements have been signed and implemented.

As a result global scenario has changed. Government and the corporate textile sector adjusted
their policies to achieve maximum benefits of free trade. So, local structure of the corporate
culture, investment pattern and fiscal and monetary policies were significantly changed.

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Nishat Group

*The Nishat Group* Mian Muhammad Mansha Yaha is the captain of this splendid ship having
around 30 companies on board. Mansha, who owns the Muslim Commercial Bank as well, is
now setting up a billion rupee ($ 17 m) paper sack project too. He is one of the richest
Pakistanis around. Nishat Group was country's 15th richest family in 1970, 6th in 1990 and
Number 1 in 1997. Mansha is on the board of nearly 50 companies. Chinioti by clan, Mansha is
married to Yousaf Saigol's daughter.

He is deemed to have made investments in many bourses, currency and metal exchanges both
within and outside Pakistan. He has had his share of luck on many occasions in life and has
recently been awarded Pakistan's highest civil award by President Musharraf. He could have
bought the United Bank too, but then who doesn't have adversaries. Nishat Group of comprises
of textiles, cement, leasing, insurance and management companies. If Mansha was bitten by
Bhutto's nationalization stint of 1970, his friends think he was compensated by Nawaz Sharif's
denationalization programme to a very good effect. There is no stopping Mansha and he is still
on the move!

The history of Nishat Group dates back to 1951, when Mian Muhammad Yahya founded Nishat
Mills Limited.

This man of vision, courage and integrity, Mian Mohammad Yahya was born in 1918 in Chiniot.
In 1947 when he was running leather business in Calcutta, he witnessed by the momentous
changes that swept the Indo-Pak subcontinent.

This is story of success through sheer hard work and an undaunted spirit of enterprise.
Beginning with a cotton export house, he soon branched out in to ginning, cotton and jute
textiles, chemicals and insurance. He was elected Chairman of all Pakistan Textile Mills
Association. He died in 1969, at the age of 51 having achieved so much in so short time.

After almost half a century of undaunted success, Nishat group is among the leading business
houses of the country and ranks among the top 5 groups in terms of assets and sales revenue.

The Company

Nishat Mills Limited is a public Limited Company incorporated in Pakistan under the Companies
Act, 1913(Now Companies Ordinance, 1984) and listed on Stock Exchanges in Pakistan

Nishat Mills

Nishat Mills Limited (“Nishat”) is a public company incorporated in Pakistan and listed on all
three Pakistani stock exchanges. Nishat is engaged in textile manufacturing.
8
Which involves spinning, combing, weaving, bleaching, dyeing, and printing, stitching, buying,
and selling of textiles? They deal with yarn, linen, cloth and other goods including fabrics made
from raw cotton, synthetic fiber and cloth.

The Company is engaged in the business of textile manufacturing and of spinning, combing,
weaving, bleaching, dyeing printing, stitching, buying, selling and otherwise dealing in yarn,
linen, cloth and other goods and fabrics made from raw cotton, synthetic fiber and cloth, and to
generate, accumulate, distribute and supply electricity.

Company is providing quality products to its customers within the Pakistan and outside the
Pakistan. Presently company is exporting its all kinds if apparel products.

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 Subsidiary

Companies

Following is a brief description of all subsidiary companies of Nishat Mills Limited:

Nishat Power Limited

The Company owns and controls 51.01% shares of this subsidiary. The subsidiary is listed on
Pakistan Stock Exchange Limited. The principle business of the subsidiary is to build, operate
and maintain a fuel powered station having gross capacity of 200MW in Jamber Kalan, Tehsil
Pattoki, District Kasur, Punjab, Pakistan. The subsidiary commenced its commercial production
on 09 June 2010.

Nishat Linen (Private) Limited

This is a wholly owned subsidiary of the Company. The principal objects of the Subsidiary are
to operate retail outlets for sale of textile and other products and to sale the textile products
by processing the textile goods in own and outside manufacturing facilities. The subsidiary
started its operations in July 2011 and is presently operating 90 retail outlets in Pakistan.

Nishat Hospitality (Private) Limited

This is a wholly owned subsidiary of the Company. Subsidiary’s object is to run a chain of hotels
across the country. Currently it is operating a four star hotel in Lahore on international
standards under the name of “The Nishat St. James Hotel”. The subsidiary started its operations
on 01 March 2014.

Nishat Commodities (Private) Limited

This is a wholly owned subsidiary of the Company. The object of the subsidiary is to carry on the
business of trading of commodities including fuels, coals, building material in any form or shape
manufactured, semi-manufactured, raw materials and their import and sale in Pakistan. The
subsidiary started its operations in March 2016.
10
Lalpir Solar Power (Private) Limited

Lalpir Solar Power (Private) Limited is a private limited Company incorporated in Pakistan on 09
November 2015. It is a wholly owned subsidiary of Nishat Power Limited which is a subsidiary of
Nishat Mills Limited. The subsidiary has not yet started its commercial operations. The principal
activity of company will be to build, own, operate and maintain or invest in a solar power
project.

Nishat Linen Trading LLC

Nishat Linen Trading LLC is a limited liability company incorporated in Dubai, UAE. It is a wholly
owned subsidiary of the Company. The subsidiary is principally engaged in trading of textile,
blankets, towels, linens, ready-made garments, garments accessories and leather products
along with ancillaries thereto through retail outlets and warehouses across United Arab
Emirates. The subsidiary started its commercial operations in May 2011 and is presently
operating 12 retail outlets in UAE.

Nishat International FZE

This is also a wholly owned subsidiary of Nishat Mills Limited. It was incorporated as a Free
Zone Establishment limited Liability Company in Jebel Ali Free Zone, Dubai according to the
laws of United Arab Emirates (UAE). It has been registered in the FZE register on February 07,
2013. The principal activity of the Subsidiary Company is trading in textile products such as
blankets, towels & linens, ready-made garments, garments accessories and leather products
such as shoes, handbags and all such ancillaries thereto.

Nishat Global China Company Limited

Nishat Global China Company Limited is incorporated in Yuexiu District, Guangzhou, China, as
Foreign Invested Commercial Enterprises “FICE”, in accordance with the Law of Peoples
Republic of China on Foreign-Capital enterprises and other relevant Laws and Regulations.
Nishat Global China Company Limited is a wholly owned subsidiary of Nishat International FZE
which is a wholly owned subsidiary of Nishat Mills Limited. The principal business of the
Subsidiary is wholesale, commission agency (excluding auction), import and export of textile
goods and women fashion accessories. The subsidiary started its commercial operations in
January 2014.

Nishat USA Inc.

The subsidiary is a corporation service company incorporated in the State of New York. It is a
wholly owned subsidiary of the Company and was acquired by the Company on 01 October

11
2008. The corporation is a liaison office of the Company’s marketing department providing
access, information and other services relating to US Market.

Nishat UK (Private) Limited

Nishat UK (Private) Limited is a private limited company incorporated in England and Wales on
8 June 2015. It is a wholly owned subsidiary of Nishat International FZE which is a wholly owned
subsidiary of Nishat Mills Limited. The primary function of Nishat UK (Private) Limited is sale of
textile and related products in England and Wales through retail outlets and wholesale
operations. The Company has not yet started its operations.

Concept Garments and Textile Trading FZE

Concept Garments and Textile Trading FZE is incorporated as a free zone establishment with
limited liability in accordance with the Law No: 9 of 1992 and Licensed by the Registrar of Jabel
Ali Free Zone Authority. It is a wholly owned subsidiary of Nishat International FZE which is a
wholly owned subsidiary of Nishat Mills Limited. Date of incorporation of the Company was 11
October 2016. The registered office of Concept Garments and Textile Trading FZE is situated at
Jabel Ali Free Zone, Dubai. The principal business of the Company is trading in readymade
garments and textile products.

Major competitors

Nishat competitors are

Crescent

Chenab

Arzoo

Alkarms

Sitara

Kohinoor

Amtex

But main competitors of Nishat Mill are

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“Crescent Textile Mills”

“Chenab Textile”

The export department performs 3 major functions.

Shipment of fabric

After receiving packing list from shipping department, export departments starts its
main functions. It usually prepares the following documents to ensure the timely
shipment.

The most commonly documents which export department has to prepare and deal with
are:

1. Letter of Credit (L/C)

2. Bill of Exchange
3. Commercial Invoice
4. Export Declaration Form
5. Certificate of Origin
6. Packing List
7. Customs Invoice
8. Textile Declaration Form
9. Inspection Certificate
10. Shipping Bill/Bill of lodging/Air Way Bill
11. Manufacture's Certificate

Letter of Credit

Letter of credit is the conditional undertaking on the request of the importer/buyer. It is also
called documentary credit defined as;

“A written undertaking by the bank of importer i.e. issuing bank at the request of buyer or
importer to make payments at sight or at determinable future date upto stated sum of money
within prescribed time against stipulated documents”.

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FNML parties are involved in the payment of the goods, i.e., the buyer, buyers bank,
beneficiary, L.C. advising bank.

After clearance of the export documents, export department negotiate the papers with bank
receive payments from the bank. Then NML local bank sends documents to the buyer bank and
foreign bank release payment to NML bank with the permission of the buyer.

QUOTA SYSTEM

Most of the customers are American and U.S. Government allocate quota to third world.
Infect quota is a quantitative restriction and more than that can't be shipped to America
from a particular country

CLAIM FOR REBATE

Rebate is actually a "Duty Draw Back". The duty which an importer pays to government for the
product that is re-exported after some process, then government pays back some of its part.
This pay back of duty is called rebate.

MARKETING STRATEGY

The past year has been tough for the textile industry as competition is steadily and margin of
profits is becoming smaller day-by-day. Our competitors from Asia have come up in a big way
with lower prices resulting from lower overhead, cheaper and better raw materials and
machinery.

Countries like China, Indonesia, India and Bangladesh played an active role in the fabric market.
Improvement in quality and production capability was the main area of concentration.

Market for Yarns and Grey fabrics was diversified to increase the customer base and reduce
dependency on the Far East. In this effort business with Malaysia, Korea, Taiwan, UK and South
America was initiated in case of Yarns.

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A new spinning unit of 21,672 spinning has also commenced, which caters to the weaving units
in Sheikhupura.

In case of Grey Fabric market business was initiated in South Africa, North America, Japan, Italy,
France, and Sri Lanka etc. Product range was also increased to cater to the differing needs of
the buyers. Fancy and special items like Dobby Designs, Bedford Cords, and Cavairy Twills and
stretch fabrics were developed which are being sold at premium prices.

NML has constantly updated our machinery, replacing old machines with new ones upgrading
the existing set-up, leading to better efficiencies and quality products.

Nishat has established its name in new markets be creating specialized fabrics, designs and also
by providing our customers with efficient service and excellent quality.

Leaving behind the traditional way of doing business and in our journey towards excellent it has
consistently expanded its buyer base and explored the different markets around the world.

Keeping in view demand of the World market, Nishat Mills Ltd pursued its strategy of value
addition and reducing the dependency on Grey Fabrics and Grey Yarn.

Having the foresight to assess that in coming year’s value addition will be the thing of the
future, Nishat Mills Limited worked towards the achievement of its goal of future increasing its
capability in value addition.

The export of processed fabric and made-Ups has shown market improvement as compared to
last year. In Europe, Nishat has made the most growth in the year 1999.

It has placed us successfully in the middle to upper end of the market. Our strength in Europe is
the curtain division.

This included yarn dyed dobbies, engineered confections, different finishes and embellished
products. The plan is to continue with this winning strategy and at the same time we are trying
to find new clients in the high end.

We are also exploring business opportunities in countries like Spain and France where Nishat
has very little business at the moment.

North America is the star market for Nishat; it’s a new market for it after breaking up the
exclusive arrangement with our previous sale set-up. The quota is coming down in 2005 and we
have started to prepare for it internally as well as for the external environment. Bedding is the
bulk of the home textile business.

The marketing department of Nishat issues yard rates for every deal. They present their
products through internet in all over the world to other companies.
15
Marketing Mix
Marketing mix is the set of marketing tool that the firm uses to get its marketing objective in
the target market.

4P’s

1. Product
2. Price
3. Place
4. Promotion

Product

The company is committed to produce and achieve excellence in high quality products. The
products range is extensive and include all sort of curtains, kid’s bedding, fashion bedding,
traditional bedding, basic bedding and kitchen articles. As a fully integrated textile
manufactures, the company’s products range is extensive. It includes various types of
fabrications and blends, such as 100% cotton, cotton lycra, cotton polyester, cotton silk, etc.
The focus is to make differentiated products by using different types of fabrics, such as solids,
dobbies jacquards, etc, and creative styling in the make-up to give high value for money.

16
Price

Pricing is an important element in the marketing process for any company. The price policy of
company must be in such a way that it should produce a reasonable profit, for the company
and should satisfy the customer. Following two factors are very important.

• Fixed Cost
• Variable Cost

Fixed Cost

Fixed cost is the cost which remains always same in total whether produce large quantity or
small quantity. Fixed cost per unit rises as the quantity produced decreases and vice versa.
Some companies always try to use their full capacity of production because with increase in
production the fixed cost decrease. Following are some important factors of fixed cost. Some
examples are:

• Salaries & wages

• Rent
• Local Taxes
• Fixed cost in value, the cost related to the machinery.
• Building cost
• Electricity change
• Insurance expenses
• Plant cost

Variable Cost

Variable cost changes in total with the change in quantity produced. It increases as the level of
activity increases. Per unit variable cost remains same whether to produce large or small
quantity. Some examples are:
17
• Material Cost
• Factory Overhead
• Part time Workers
• Transportation Charges
• Miscellaneous

Fixed cost + Variable cost + Desired profit = Total cost

Place / Distribution

NT export more then 90 % or its product. So, they are using two types of distribution channels
in export.

• Direct Channel
• Indirect Channel

Direct channel

NT is also dealing directly with the customers. As in the local market and the foreign, the buyers
direct contact with the NT. So the export department fulfill their orders by the transformers.
The transporter help in delivering the products. The transporter are helping a lot in progressing
the textile industry. The comely delivery to the buyer is the greatest service to the customer,
timely delivery is important for the success and development of the organization.

Indirect channel

NT to agent & to customer. In the export of textile products, the agents are the back bone of
textile industry. They receive order on the behalf of buyer, give to the seller. They receive their
commission from the buyer and the seller.

• The agents also purchase the products; sell them directly to other buyers. So in this trading
they earn enough profit.
• There has been a large number of agents which are working for their organization in foreign
countries as well as in this country.
• Mostly the export business is through these agents. The agents have been successful due to
credibility and honesty of their work.
• NT mostly receives orders through agents.
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• NT pays commission to them.
• Mainly the responsibilities lie on the agents in case of delayed shipments, payment problems
and the quality problems.
• As most of the product of Nishat textiles are exported. So, they use different modes of
transportation to transfer the product from Nishat to customer’s country.

• Trucking
• Shipping
• Air Lines

Promotion

BT promotes its products, but to a limited extent.

• NT provides the company broachers to the buyers.

• NT provides the samples of the grey fabric. The yarn to the customers.
• NT has a direct contact with the local and the foreign agents, so they also promote the
company products.
• Visits to the customers.
• NT marketing manager also visits its customers.
• Their high quality of the products on the fine count the grey cloth is also promoting the
company and establishing image and goodwill.
• NT provides the timely information to the customers which help in promoting.

RISKS AND OPPORTUNITIES

Nishat Mills Limited takes risks and creates opportunities in the normal course of business.
Taking risk is important to remain competitive and ensure sustainable success. Our risk and
opportunity management encompass an effective framework to conduct business in a well-
controlled environment where risk is mitigated and opportunities are availed. Each risk and
opportunity is properly weighted and considered before making any choice. Decisions are
formulated only if opportunities outweigh risks.

Following is the summary of risks and strategies to mitigate those risks:

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STRATEGIC RISKS

Nishat mill is operating in a competitive environment where innovation, quality and cost
matters. This risk is mitigated through continuous research & development and persistent
introduction of new technologies under BMR. Strategic risk is considered as the most crucial of
all the risks. Head of all business divisions meet at regular intervals to form an integrated
approach towards tackling risks both at the international and national level.

BUSINESS RISKS

The Company faces a number of following business risks:

Cotton Supply and Price

The supply and prices of cotton is subject to the act of nature and demand dynamics of local
and international cotton markets. There is always a risk of non-availability of cotton and
upward shift in the cotton prices in local and international markets. The Company mitigates this
risk by the procurement of the cotton in bulk at the start of the harvesting season.

Export Demand and Price

The exports are major part of our sales. We face the risk of competition and decline in demand
of our products in international markets. We minimize this risk by building strong relations with
customers, broadening our customer base, developing innovative products without
compromising on quality and providing timely deliveries to customers.

Energy Availability and Cost

The rising cost and un-availability of energy i.e. electricity and gas shortage is a major threat to
manufacturing industry. This risk, if remains unmitigated, can render us misfit to compete in the
international markets. The Company has mitigated the risk of rising energy cost by opting for
alternative fuels such as coal, furnace oil, bio-mass and diesel. The measures to conserve
energy have also been taken at all manufacturing facilities of the Company. Likewise, risk of
non-availability of the energy has been minimized by installing power plants for generating
electricity at almost all locations of the Company along with securing electricity connections
from WAPDA and installation of 1.2 MW solar plants at new Apparel Denim Plant.

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FINANCIAL RISKS

The Board of Directors of the Company is responsible to formulate the financial risk
management policies which are implemented by the Finance Department of the Company. The
Company faces the following financial risks:

Currency risk

The Company is exposed to currency risk arising from various currency exposures, primarily
with respect to United States Dollar (USD), Arab Emirates Dirham (AED), Euro and Japanese Yen
(JPY). The Company’s foreign exchange risk exposure is restricted to the bank balances and the
amounts receivable / payable from/to the foreign entities.

Interest rate risk

The Company’s interest rate risk arises from long term financing, liabilities against assets
subject to finance lease, short term borrowings, loans and advances to subsidiary companies,
term deposit receipts and bank balances in saving accounts. Fair value sensitivity analysis and
cash flow sensitivity analysis shows that the Company’s profitability is not materially exposed to
the interest rate risk.

Credit risk

The Company’s credit exposure to credit risk and impairment losses relates to its trade debts.
This risk is mitigated by the fact that majority of our customers have a strong financial standing
and we have a long standing business relationship with all our customers. We do not expect
nonperformance by our customers; hence, the credit risk is minimal.

Liquidity risk

It is at the minimum due to the availability of enough funds through committed credit facilities
from the Banks and Financial institutions.

Capital risk

When managing capital, it is our objective to safeguard the Company’s ability to continue as a
going concern in order to provide returns for shareholders and benefits to other stakeholders
and to maintain an optimal capital structure to reduce the cost of capital. The Company
maintains low leveraged capital structure. We monitor the capital structure on the basis of the
gearing ratio. Our strategy is to keep the gearing ratio at the maximum of 40% equity and 60%
debt.

21
OPPORTUNITIES

As the leading textile company of the country, the Company is in a position to avail and exploit
a number of opportunities. Following is the summary of some exciting opportunities.

• Regionally diversified customer base across the world provides a sustainable growth
to export sales;

• Vibrant local and international subsidiary companies create demand for our products;

• Vertical integration makes it possible to exploit operational synergies;

• Abundant supply of cotton in the country;

• High population growth of the country is a source of suitable manpower and a

stimulus in creating the demand for textile products.

PEST Analysis

Political Instability:

The political situation of Pakistan is not satisfactory. Due to the rapid change in the
Government every government sets its own new trade policies.

Govt. should apply sustainable policies for the beneficial of the exporters as well as the
investors.

Economic situation:

The economic condition of Pakistan can also affect the foreign investors increasing inflation
rate make the cost of production high and thus reduce the profit margin of the investor.

Social situation:

The change in the lifestyle of the people affects the growing demand of the NTM products. The
change in the lifestyle and needs in different demographics also affect the demand of the
customers.

Due to all these changes NTM is performing excellent for the excellence organization as well as
for the customer.
22
Technological factor:

Technological advancement in all the sectors of the country has changed the entire socio-
economic environment. Especially in the textile sector there is a lot of technological
development.

NTM Excellent computerized machines and devices are installed in the NTM \has made
extension in its present setup by installation of well advanced technology imported from Japan
China and France.

Learning as internee

It was a tremendous experience that I have availed with devotion and

commitment. I have an interest in textile industry that’s because Textile is the
back bone of the economy of the country. But one thing I want to share its not
easy that looks it has a great toughness and complications in its process but the
overall it was nice and great. Here I am sharing some of my learning regarding
my internship in different departments.

First of all as entering in the office I met Mr. Tasneem Haider the Senior Import
Manager who conducted a little interview of e and reffered me to Mr. Ijaz
Hassan who is Senior Export Manager. He interviewed me as well and then
adjusted me with his subordinate Mr. Tahir Imran who is Senior Export Officer

Custom:

Mr. Tahir Imran and his partner Mr.Naveed had introduced me towards some
basic terms about export. And provided me some notes as well. These terms are
price terms and payment terms. He told me about 3 major price terms which are
used by Nishat in the Import and Export of cloth. These terms are C&F, CIF and
FOB. Then he told me about the payment terms which are CAD, L/C and Advance
Payment. He has also introduced me with the following terms.

C&F:

This term is formerly known as CFR. This term defines the two distinct and separate
responsibilities –one is dealing with the actual cost of merchandise “C” and the other “F” refers
to the freight charges to a predetermined destination point. It is the seller’s responsibility to get
goods from their door to the port of destination. It is the buyer’s responsibility to cover
insurance from the port of origin or port of shipment to buyer’s door.

CIF:
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this arrangement is similar to CFR, but instead of the buyer insuring the goods for the maritime
phase of the voyage, the shipper/seller will insure the merchandise. In this arrangement, the
seller usually chooses the forwarder. “Delivery” as above, is accomplished at the port of
destination.

FOB:

FOB means that the shipper uses his freight forwarder to move the merchandise to the port or
designated point of origin. Though frequently used too describe inland movement of cargo, FOB
specifically refers to ocean or inland waterway transportation of goods. “Delivery” is
accomplished when the shipper releases the goods to the buyer’s forwarder. The buyer’s
responsibility for insurance and transportation begins at the same moment.

Custom Clearance:

When the mall is released from mill, the mill staff prepares a dispatch and sends it with a copy
of contract to head office. The office staff prepares a commercial invoice and forwards it with
other necessary documents to Karachi agent who will clear the delivery from custom
department of Pakistan.

FCL:

FCL stands for Full Container Load. If an exporter intends to pack a container to its full capacity
or full payload with the consignment of only one consignee for a particular destination, the case
is FCL and the carrier will charge the FCL rate for the consignment.

LCL:

Stands for less than container load or loose container load. If an exporter intends to pack a
container to its full capacity or full payload with the consignments of two or more consignees
for the same destination, the case is LCL and the carrier will charge the LCL freight rate on each
consignment.

Form-E:

It’s an export form as clearly can be described by Form-I. This form has for copies, “Original”,
“Duplicate”, “Triplicate” an “Quadruplicate”. Original and quadruplicate are kept as record in
office and Duplicate and Triplicate are sended to bank. The purpose of this form is to give the
record of what kind of foreign currency and in what amount are coming in the country. This
form is then forwarded to State Bank Of Pakistan to maintain balance of payments. When the
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payment is received by the bank, then they endorse the Form-E. actually it’s a confirmation that
the payment is being received.

HS-Code:

It’s a specific code for a specific type of product under which the product is recognized and the
custom department charges the custom.

EX-Works

One of the simplest and the most basic shipment arrangements places the minimum
responsibility on the seller with seller with greater responsibility on buyer. Goods are made
available for pick-up at the shipper’s factory. Delivery is accomplished when the merchandise is
released to the consignee’s freight forwarder the buyer is responsible for making arrangements
with their forwarder for insurance, export clearance and handling all other paper work.

GSP:

GSP stands for generalized system of preferences. Some countries grant incentives to their
importers and some grant to their exporters. The GSP helps on both ends. The importers and
exporters need GSP to claim these incentives to their governments. These incentives are known
as Drawback and rebate. Rebate is claimed to custom department and drawback is claimed to
government. GSP is certified by Export Promotion Bureau. There are some countries which are
registered in the list of GSP. This list is visible on the back side of every GSP form. If any
country’s name is not present in the list then we have to attaché a request letter to EPB within
GSP.

CO:

CO Is known as Certificate of Origin. This document is normally demanded by every importer.

This document shows that the goods are of Pakistan made. CO is certified by Chamber of
Commerce.

Bank Letter:

A letter contains the wording that all these necessary documents are attached according to L/C
requirements.

Draft:

It is a payment request by the exporter to make the payment at a required time. It is also
attatched with the export documents.

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Packing List:

Packing list contains the detailed information about packed goods. Colour, yards, roles, yards
on each role, code number of each role etc.

Period of Presentation:

It means within how many days from the date of B/l you have to present the documents in
Bank.

B/L:

Bill of lading is a document which is issued by the shipping line when the goods are shipped.
First the company send Bill of Lading specimen then First the shipping line send “Draft Bill of
Lading” to the company. It shows that if you want to make any change, you can inform us. Then
the original B/L is issued by the shipping line. The three documents are attached with B/L
specimen. These documents are C&F, Authority letter and NOC. On the bottom of B/L
specimen, the freight status is written that either it is collected or prepaid. If it is collected then
we will not attach C&F. if it is prepaid then we will attach C&F. the purpose of attaching C&F is
that the seller will pay the freight. if the consignee bank is our own local bank then we will not
attach NOC and if it is other foreign bank then we will attach NOC (showing that we have no
objection that this bank is dealing on behalf of this importer). Authority letter is attached to
authorize the agent to receive the original B/L from shipping line.

Fumigation Certificate:

Similarly it also contains the details about goods. One more thing is that it is certified that the
container is free from insects and pests.

Banking Documentation At A Glance:

First of all the department prepares bank invoice from dispatch, then the dispatch is verified by
another employee and then error free invoice is prepared. Now L/C is readed to attach the
required documents which are usually the packing lists, invoices, B/L, CO, GSP etc. after making
a file of all these documents, 5 to 6 copies are made of all these for forwarding Accounts,
Marketing, Finance etc.

L/C Readings:

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There are some codings showing a specific narration. These are provided by SWIFT (Society For
worldwide Interbank Financial telecommunication). These are shown at the end of every L/C.
every code shows a specific description.

20: DC number

31c: date of issue

31d: date and place of expiry

50: applicant

59: beneficiary

32b: currency code amount

43p: partial shipment

43t: trans-shipment

44e: port of loading

44f: port of discharge

44c: latest date of shipment

45a: description of goods

46a: documents required

71b: charges

These are some codes with descriptions which are usually written at the end of every L/C

Commission status:

In every transaction the middleman is mostly present who is making our transaction
convenientful. This middleman is called broker. The company is required to pay the commission
to the broker. A document named “Commission Status” is prepared and forwarded to Finance
department.

Shipping Advice:

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Shipping advice is a document in which we inform thet importer that these goods are posted,
this is a container # etc.

Tolerance Level:

The tolerance level is mentioned in L/C like that, “+3/-3”, or “+5/-5”. It means that you can ship
3% or 5% more or less. Because normally it is seen that while shipment the goods moved to the
importer more or less then the amount mentioned in L/C. if the goods moved up to 3% or less
then 3% then your receiving amount will be 3% more or less. If you will cross that limit, means
exporting more or less then 3% then the bank will mark discrepancy and will charge fine. The
export staff always take too much care while preparing export documents by reading from L/C.
as bank marks discrepancy on a very little mistake.

Import Documentation Department:

After learning all this, I was shifted to Import Documentation Department. Mr.Ghulam Rasool is
a Senior Import Officer there and Mr. Abdullah is as his junior. Both of them had guided me as
under.

There are three things in Import. Contract or CAD (Cash against Documents) based L/C and
Advance payment. First of al the purchase department prepares a Performa invoice. Then he
import department is requires to open the L/C. under the L/C opening process, first the
department fill up the L/C opening request form. Every bank has its own request form so we
can use our own choice. when the bank receives the L/C opening request form, then after
checking formalities the bank issues a draft L/C it shows that if you want to make any change
then you can mention in that draft L/C. The the data entry is made in the system so that we can
check that either any other L/C is opened against this Performa invoice or not. If the L/C
amount is of $25000 then GM purchase can sign and if the amount is more then $25000 then
Mr. Umer Mansha’s approval is necessary. When all the documents are received by the bank
then the bank prepares a bill of exchange in response to draft attached with the documents and
sends it to import department. The department signs it and gives the bank acceptance and
authorizes them to make a payment at a required date. The import department pays the
amount which is known as TT or DD.

In CAD when the bank receives documents the it informs the office to make payment. The
office makes the payment and releases the documents to discharge goods from the port.

In advance payment case, the TT request is come to the department and the department
checks the duplication that either the payment made against this invoice # before or not. Then
authorizes the bank to make the payment. We also give undertaking to the bank that is the
goods are not received within 4 months, we will repate back the advance payment and also pay
penalty @ 1% on the amount of advance payment.

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Non Negotiable:

When the original documents are late from the bank the Importer can release the goods by
showing the Non Negotiable documents which are received directly by the importer through
Couriers link. These documents are first endorsed from the bank and then these can be used to
release the goods from the port and payment can be made.

Debit Advice:

When the payment is made to the exporter’s bank, the importer’s bank sends an advice receipt
to the importer which shows that the payment is being transferred and the shipper’s account is
debited. This receipt is forwarded to the Accounts department.

Discrepancy Memo:

If any discrepancy is found by the bank in the documents prepared by the exporter then the
bank will send us a discrepancy memo that either we want to accept or reject the documents
because of discrepancy.

Finance

In my internship experience, I hadn’t any touch with finance activities. But I know a little bit
about this because I had a little gossip with those internees who were doing their internhip in
finance department. The finance department’s major work is the work of drawback and rebate.
As we already discussed above in export that the government gives incentive to the exporters
on export and we got the amount by claiming to he government. And this work is handled by
Mr.Ashraf, the Finance manager.

Hierarchy

The chief executive officer is Mr. Umer Mansha. Then the GM then senior managers and then
the employees with different designations as shown in the figure below.

purchase, import, export, accounts etc. each department has its GM. Then under each
department there are senior managers and then the staff.

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 Conclusion

Nishat Mills Limited is one of the leading groups in Pakistan. The system, the management
style, the policies & decentralized decision making environment is really remarkable. This
report is basically an attempt to identify the areas which need to be improved.

In this era of technology, the “Information” is the key to success in the business. This means
that the successful businessman will be who will have the right information at the right time.
This comment leads to the conclusion that the Information Sharing Process should really be
improved.

The overall analysis is indicating that the company’s progress has mainly attained through
dedication of employees. The effectiveness of its management, their willingness to take
advantage of opportunities and face challenges of changing economic picture, this all
contributes to the very much improved and sound position of company. This is really
appreciable for the devotion and hard work of all the employees of the company

30
Recommendations

Recommendations for Improvements are:

At present facility of bonus is given only to production staff but such

incentives should also be given to Head office Staff.

Medical facilities are given in mill but such facilities should also be given to
management.

Different training courses should be arranged for the up lifting and improving
the quality of work for employees

They provide transportation facility to only the unit employes and for female
employees in deadoffice. I think male should also be provided with conveyance
convenience. This will create the easiness for workers and reduce the wastage of
time.

There is also a problem of work overload for the employees and it should be
control properly so that the employees are motivated.

 Employees should be paid extra for the work which they done after
working hours.

Glossary of Terms
31
  AFS Available For Sale
 APTMA All Pakistan Textile Mills
Association
 Board Board of Directors
 CDC Central Depository Company of
Pakistan
 CEO Chief Executive Officer
 CFO Chief Financial Officer
 COCG Code of Corporate
Governance
 COO Chief Operating Officer
 CSR Corporate Social Responsibility
 EBIT Earnings Before Interest and
Taxation
 EBITDA Earnings Before Interest,
Taxation, Depreciation and
Amortization
 EOBI Employees’ Old Age Benefit
Institute
 EPS Earnings Per Share
 ERP Enterprise Resource Planning
 FBR Federal Board of Revenue
 GoP Government of Pakistan
 HR Human Resource
 HR & R Human Resource and
Remuneration
Appendix
Additional Material Attached with it
Bibliography
 Marketing Management By Philip Kotler
 Advance Accounts By Mukher G
 Consolidate Statements By Harry Simons & KerrenBrock
32
 IAS International Accounting
Standards
 ICAP Institute of Chartered
Accountants of Pakistan
 ICMAP Institute of Cost and
Management Accountants of
Pakistan
 IFRIC International Financial
Reporting Interpretation Committee
 IFRS International Financial
Reporting Standards
 ISO International Organization for
Standards
 IT Information Technology
 KG Kilo Gram
 KIBOR Karachi Interbank Offer Rate
 KSE Karachi Stock Exchange
 Lbs Pounds
 NRV Net Realisable Value
 SECP Securities and Exchange
Commission of Pakistan
 TFC Term Finance Certificate
 WPPF Workers’ Profit Participation
Fund
 WWF Workers’ Welfare Fund
References
1. www.nishatmillsltd.com
2. http/;google/nishat
3. google.com/Wikipedia-nishat-Groups-2007
4. KSE-Index100/nishat.aspx
5. SECP/Nishat+mills-aspx/pdf
6. Nishat annual report 2012 Google-Wikipedia
7. Companies Ordinance 1984 as amended upto date

33