24088362 kohinoor textile mills

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Kohinoor Textile Mills Internship Report

EXECUTIVE SUMMARY

K.M.L has grown from a cotton export house into the premier business group

of Pakistan with 5 listed companies, concentrating on 3 core businesses; Textiles,

Cement and Power Generation. Today, K.M.L 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 Kohinoor Mills Limited, in which I got

training from its H.R Department. The internship basically revolved around the

employee relation with the organization. The system, the style of working & the

commitment of the employees in KML is really an example. The difference between

the success & failure is doing things right and doing things nearly right, & KML 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 Kohinoor Mills

Limited, I have noticed a few areas where the improvement can really increase the

efficiency of KML. I also mentioned about the Textile industry in Pakistan and vision

of its industry. Then I have done a detailed PEST analysis as well as SWOT Analysis.

Then I have discussed about my learning in the whole internship that is all about the

Textile Terminologies and process of the human behavior. 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 thats the asset for my future career. I have also given the

scenario of the whole divisions and also gave the detailed processes that are been

running in my internship division (Hosiery including all the departments that are

working under Hosiery). I have also mentioned the exporting countrys names to

which K.M.L is exporting their products. I have also mentioned the procedures to

make salary slips, how to maintain transportation data, colony data etc. I have also

given the analysis of the organization according to the ratio, horizontal and vertical

analysis and findings on the basis of this analysis. Finally I have also made my

findings and suggestions and if I were the manager of the organization then what

would be my decision.

Kohinoor Hosiery Page 1


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INTRODUCTION OF TEXTILE SECTOR

THE PAKISTAN TEXTILE INDUSTRY

According to the Pakistan Ministry of Textiles, an export target of 13 billion

USD has been fixed for the year 2007-08. Hence, the textile units in Pakistan have an

opportunity to expand the scope.

ESTABLISHED CAPACITY

The textile industry of Pakistan has a total established spinning capacity of

1550 million kgs of yarn, weaving capacity of 4368 million square meters of fabric

and finishing capacity of 4000 million square meters. The industry has a production

capacity of 670 million units of garments, 400 million units of knitwear and 53



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million kgs of towels. The industry has a total of 1221 units engaged in ginning and

442 units engaged in spinning. There are around 124 large units that undertake

weaving and 425 small units. There are around 20600 power looms in operation in the

industry. The industry also houses around 10 large finishing units and 625 small units.

Pakistans textile industry has about 50 large and 2500 small garment

manufacturing units. Moreover, it also houses around 600 knitwear-producing units

and 400 towel-producing units.

CONTRIBUTION TO EXPORTS

According to recent figures, the Pakistan textile industry contributes more than

60% to the countrys total exports, which amounts to around 5.2 billion US dollars.

The industry contributes around 46% to the total output produced in the country. In

Asia, Pakistan is the 8th largest exporter of textile products.

CONTRIBUTION TO GDP AND EMPLOYMENT

The contribution of this industry to the total GDP is 8.5%. It provides

employment to 38% of the work force in the country, which amounts to a figure of 15

million. However, the proportion of skilled labor is very less as compared to that of

unskilled labor.

FINISHING LOOK AND CONTROL COMPONENTS

The products manufactured locally, when displayed against foreign goods -

offer a poor look primarily because of the unsightly finishing of welding seams,

electroplating, painting and other surface treatments. In addition, the adoption of

wrong design parameters, or the attempt to reduce the cost of production, lead to the

incorporation of under-sized electrical motors and electric / electronic control panels.

NEED FOR TRAINING INSTITUTIONS



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Diploma Level Courses on the pattern of Pak-Swiss Training Centre in

Karachi should also be opened in the Textile Institutions in Faisalabad and Karachi

and more such courses should be introduced in the Polytechnics in areas like Multan,

Hyderabad, Lahore and Gujranwala.

EXHIBITIONS

Most of these small workshops are shy or afraid of getting registered or

displaying their products, mainly from the fear of the revenue collection, labor

controlling and other government regulating agencies. This fear keeps them away

from the mainstream Industry. This also leads to the lack of interaction among the

small scale, medium scale and higher level industry for a purposeful vendor

development.

National Exhibitions held annually can be very helpful in bringing out the

skills, the range of products and opportunities of group collaboration. It will help the

planners and large scale engineering industry in defining the way for developing skillsin order to make this sector strong and viable.

The interaction between the foreign textile manufacturing industries could also

be enhanced by facilitating the indigenous Textile Engineering Industry to participate

in the specialized Exhibitions and fairs being held in those countries.



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INTRODUCTION OF ORGANIZATION

The Kohinoor Maple Leaf Group was born from the trifurcation of the Saigol

group of companies and is a reputable and leading manufacturer of textiles and

cement. KTMG comprises of Kohinoor Textile Mills limited (KTML) and Maple

Leaf Cement factory limited (MLCF). Both companies are incorporated in Pakistan

and are listed on three stock exchanges of the country.

CEMENT

Maple Leaf Cement is the third largest cement factory in Pakistan. It was set

up in 1956 as a joint collaboration between the West Pakistan Industrial Development

Corporation and the government of Canada. It is strategically located at Daudkhel

(District Mianwali) in Northern Pakistan, which is an area rich in raw materials

required for the production of cement. Kohinoor acquired the ownership and

management of Maple Leaf Cement under the privatization policy of the government

of Pakistan in 1992. Presently Kohinoor Mills Ltd is the holding company for Maple

Leaf cement...

TEXTILES

KML was incorporated in 1987 at Mangamandi and is one of the oldest

companies of Pakistan with over 50 years experience in textile manufacturing. It was

initially set up as a weaving project with 256 looms. However, after decades of

aggressive expansion and modernization KML has emerged into a fully vertically

integrated home textiles company with state of the art capabilities for Weaving,

Dyeing, Hosiery, Genertek, and Hometex. The company has a diverse customer base

with sales in both the local and export markets. The main international markets

include Asia, Europe, USA and Australia.

Kohinoor Mills Limited was incorporated as a Public limited Company on December

21st, 1987 and is located at 8th K.M., Manga Raiwind Road, and District Kasur. The

Company produces greige cloth from cotton, blended and synthetic yarns.

The project was initially established with 48 Sulzer Ruti shuttles-less looms of 153"



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width from Switzerland with modern ancillary machinery to produce high quality

fabric for export markets. Further expansions saw the installation of an additional 96

Tsudakoma air jet looms from Japan in 1990 and a third shed comprising 60 state of

the art Picanol Omni 340 cm wide looms was installed in July 1998, twelve with

batching motions. Another twelve Picanol Omni 340 cm wide looms were installed in

1999.

In 2000-2001 old 48 Sulzer Ruti looms were replaced by 48 lated Picanol

Omni Plus 380cm looms. In addition to that latest Picanol Omni plus Jacquard Looms

were also added as well as a yarn conditioning machine from Zorella was alsoinstalled.

The entire manufacturing process from warping to fabric inspection is

monitored through an on-line process control system from Barco. The marketing

strategy is to explore new markets both in quota and non-quota countries.



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COMPANY INFORMATION

BOARD OF DIRECROTS

Mr. Aamir Fayyaz Sheikh Chief Executive/ Chairman

Mr. Asad Fayyaz Sheikh

Mr. Ali Fayyaz Sheikh

Mr. Rashid Ahmad

Mr. Aamir Ameen NIT Nominee

Mr. Salman Akram Raja

Mr. Syed Mohsin Raza Naqvi

AUDIT COMMITTEE

Mr. Rashid Ahmad Chairman

Mr. Aamir Fayyaz Sheikh Member

Mr. Ali Fayyaz Sheikh Member

CHIEF FINANCIAL OFFICERS:-

Mr. Syed Mohsin Raza Naqvi

HEAD OF INTERNAL AUDIT

Mr. Zeeshan Khurram

COMPANY SECRETARY

Mr. Muhammad Rizwan Khan

AUDITORS

M/S Riaz Ahmad & Company

Chartered Accountant

BANKERS

AL BARAKA ISLAMIC BANK B.S.C (E.C)

ALLIED BANK LIMITED

ASKARI BANK LIMITED

BANK AL-FALAH LIMITED



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HIERARCHY OF HOSIERY DIVISION


M.D

G.M

Operations

G.M

Marketing

H.R/Admin Finance Engineering Q. AI.T D.G.M

Production

MarketingCommercial

PPC WIPC Packing/

Ins ection

Boarding Dying Linking Rewinding KNITTING


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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.



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DIVISIONS OF K.M.L

Kohinoor mills has five divisions

KOHINOOR WEAVING DIVISION

KOHINOOR HOSIERY DIVISION

KOHINOOR DYING DIVISION

KOHINOOR GENERTEK DIVISION

KOHINOOR APPAREL DIVISIO

EXPORTING COUNTRIES

U.S.A

Banana Republic GAP

LEVIS Target

Tommy VF

Liz Claiborne Hagger Arrow Wal-Mart

K-Mart White Stag

Europe

Next Mango

Zara Brushka

C&A British Home Store

Hema Carrefour

Rose By French Connection

Farah UK Tema

Amadues Jeans

Australia

Yakka King Gee

Charles Parsons Farah

South Africa:

Wools Worth



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VARIOUS DEPARTMENTS

Marketing Department

Finance Department

H. R Department

Production

Quality Assurance

P.P.C Department


KOHINOOR HOSIERYMILLS LIMITED


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MAJOR FUNCTIONAL AREAS WHERE INTERNSHIP

CARRIED OUT

HUMAN RESOURCE DEPARTMENT

The H.R Department is the key strength of any organization in motivating

employees, managing HRMIS system, dealing external affairs, handling with each

departments performance, making promotions etc..so my major area was Human

Resource Department.

1st THREE DAYS

MANUAL WORK

My start was from manual work as I have been given the task to sort out resigned

employees files which were almost 8,000 and to rearrange the present employees list in

the drawers. I completed my work with in 3 days and got appreciation from my boss. I

got my internship letter from the first day of my joining.

4th DAY

VEHICLE DOCUMENTATION

After my manual completion I have been given the chance to use their system and

they assigned me a task to enter the record of employees who are using vehicles of

K.M.L.

And it was oracle based program in which the software was already installed of

H.R related activities. This was H.R.I.S, it included

Appraisals

Transportation

Wages



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Bonuses

Etc..And I enter the data of transportation of almost 400 employees in a day. This data

included

Employee I.D

Route

Stop

Vehicle Number

5

th

DAYOn 10th of June I did some more data entry of transportation along with some

handling of documents in files and arrange the files in drawer. This work is all about the

activities which we have read in our semester but there is a difference in the practical

work and bookish knowledge.

SUMMARY OF TRANSPORTATION

After entering data related to transportation, I had to sort out the members of other

functions like weaving, dyeing, apparel(Home Tax), Genertek, Q- Mart, Pool, because

we are dealing with hosiery function so we got to make data related to the concerned

function.

6TH DAY

REIGNED EMPLOYEES FINAL SETTLEMENT

That day was the big day for me because I was given the chance to do the main

work of Hosierys H.R. There were 59 people who resigned from their job and they had

their final settlements. There were following major things that we had to look.

REARRANGE

First I had to rearrange the files according to their department in Hosiery like

linking, boarding, boarding hall#1, 2, 3, engineering, knitting team A, B, Quality

Assurance, W.I.P.C.



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EMPLOYEES DETAILThe employees details was based on

Employee I.D

Employee Name

Father Name

Date of Joining

Date of Leaving

PresentsPRESENTS

Then I had to enter the presents in the month of April, May and June in the system

and calculate in the system.

BREAK UP OF SALARIES

The break up of salaries was based on the basic and the allowances, there were

categories of 6,000, 8000, 8100, 21000, 28000 and the basic was 55% of the gross pay

and I had to calculate the settlement according to the days presents of the employees in

the month.

G.P.FUND

The G.P.Fund also had to pay back to the resigned employees and thats been

added by 10% of the basic in the sum of G.P.Fund and it added doubled each month. For

example if the amount of G.P.Fund is 500 for the month, then it will be added 500+500.

And 500 once deducted from the basic salary.

DEDUCTIONS

The deductions included

Advance salary

Zakat (applied on 16,228 or above of G.P.Fund)

Advance G.P.Fund

Interest on G.P.Fund



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Canteen Expense

MANUAL CALCULATIONIf the data is not available in the system then we had to calculate the settlement by

manually.

SYSTEM CALCULATION

If the data is available in the system according to the employee I.D. Then we

simply had to give the print option and got the settlement slips.

8th DAY

ACCOMMODATION FACILITY FOR EMPLOYEES

Employees are also facilitated with accommodation facility

EXECUTIVE ACCOMMODATION

Executives are been given hostel facility with respect to the flats which included.

Luxurious Bed Rooms

Attached Bath

T.V

A.C

Canteen

Mosque

Guest Room

FAMILY ACCOMMODATION

Families of employees are also been facilitated in hostel.

WORKERS ACCOMMODATION FACILITY

Workers in the mill are also facilitated with residence facility with some

necessary needs of lower level employees.

Entry of Employees in Colony.

There are following three Blocks in the colony and each has held a lot space. And I

have entered their data according to their Block and Room Number in the oracle

Block -A (90 Rooms)



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Block B (53 Rooms)

Supervisory-Block (49 Rooms)

HEALTH & SAFETY MEASURES

Each company has its own health and safety measures according to the

compliances regulated by the regulatory bodies. So, K.M.L also has the safety measures

so they have to inspect their safety measures morning and evening and it inspects in

different areas like

Boarding

Yarn Godown

Linking

Dyeing

Knitting

Etc..

And the things to inspect are

1. PASSAGE 2. FIRE EXITS

3. HOUSE KEEPING 4. SMOKE DETECTORS

5. FIRST AID BOX 6. FIRE HYDRANTS

7. CONTROL PANEL 8. FIRE EXTINGUISHER

9th DAY

AUDIT

The external audit team came today in the Hosiery function and they checked the

whole scenario regarding to the activities been doing in K.M.L documentation in other

departments as well as our department H.R. they have asked for the following matters to

be disclose for their report, these are

Health & Safety

List of All Employees

Salary Slips (Randomly selected I.Ds from a list of employees)

Employees Personal Files (Randomly Selected from a List of Employees)



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10

th

DAYOVER TIME DATA

The time that the employees have worked extra hours in the mill.

This need to be entered in the system for the month of May & June regarding to

their

I.Ds Shift (A,B,C,G)

Over Time Hours Double Shift

Date

11th DAY

STAFF PAY ROLL SLIPS

The salary slips of staff of different departments had to be executed in hard copy

and that was almost of every concerned department.

12th DAY

NEW EMPLOYEES DATA

K.M.L hires new employees from time to time and these employees have to make

their personal files it includes..

Appointment Letter

I.D Card

Academic Documents

Domicile

K.M.L Form

So all the detail related to the employee need to be entered in the oracle system it

includes

Division Code (Hosiery 5) Department Code (Including sub departments)

Shift (A,B,C,G) Designated Code

Employee I. D Joining Date



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Name of employee Father Name

Card Number Salary Break UpDate of Birth Status

Religion Sex

Address I.D Number

Over Time G.P.Fund

Qualification Detail

LEAVE POLICY

To grant different kinds of leave to its employees in order to facilitate them to

attend, to their domestic and social responsibilities.

TYPES OF LEAVE

The types of leave available to employees are

1) Causal leave

2) Sick leave

3) Earned leave

4) Leave without pay

5) Maternity leave

1. CAUSAL LEAVE

Every employee will be eligible for ten days causal leave in each calendar year.

1) Causal leave can be granted on pro-rata basis, proportionate to the length of

service.

2) Un-availed causal leaves shall lapse automatically at the end of every calendar

year.

3) Causal leave cannot be combined with any other type of leaves except sick leave.

4) Causal leave can be availed for a maximum period of 3 days at one time.

2. SICK LEAVE

Every employee will be eligible for eight days sick leave in each calendar year.

1. Sick leave will be granted on pro-rata basis, proportionate to the length of service.



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2. Sick leave exceeding 2 days must be supported by a medical certificate from a

registered medical practitioner.3. Sick leave may be Accumulated up to a maximum of 16 days

3. EARNED LEAVES

Every employee will be eligible for earned leave as follows

Workers-14 days

Staff-15 days

1. Earned leave will be due only after completion of one years continuous service

with the company from the date of joining.

2. Earned leave shell be credited to the employee account at the end of each year of

service

3. It is incumbent for management staff in grade M-12 and above to avail a

minimum of 15 days earned leave in a calendar year.

4. Earned leave lying to the credit of an employee will be encashed at the time of

separation for the company for employee up to Grade-12.

4. LEAVE WITHOUT PAY

There is no provision of leave without pay in Law. How ever extra-ordinary leave

without pay may be granted at the discretion of the competent authority in special

circumstances involving absence from duty.

5. MATERNITY LEAVE

1) Female married employees who have been employed for more than one year will

be granted maternity leave.

2) Maternity leave of 12 weeks, 6 weeks each before and after the delivery will be

granted on production of medical certificate from a registered medical

practitioner.

TRANSPORT POLICY

Company Maintained Car will be provided to the following categories of

employees, as indicated against each.

Grade Designation Type of Vehicle



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M-19 Director 1600 C.C (Honda VTI) or equivalent

M-18 General Manager 1500 C.C (Honda Civic EXI) or equivalent

M-17 Sr. Manager 1300 C.C (Corolla XE-Honda City EX) or

Equivalent

M-16 &

M-15

Manager & Deputy

Manager

1000 C.C

ALLOTMENT

The Human Resource Department will issue allotment letter to the eligible official

at the time of handing over the car.

INSURANCE/TAXES

The cost of token, comprehensive insurance policy, registration charges, radio

charges, radio license fee etc, will be borne by the company.

PETROL/DIESEL

The limit of petrol/Diesel is as follows:-

Grade Monthly Yearly

M-19 300 Litres 3600 Litres


M-17 175 Litres 2100 LitresM-16 150 Litres 1800 Litters


1) The bills with detail of the expenditure incurred on the repairs of the car will be

submitted to HR department.

2) Vehicle maintenance card shall be maintained for each vehicle by H.R

department.

3) The bill will be forward to finance department for re-reimbursement after making

necessary entry in the maintenance card.

4) In case of any damage/accident the allottee will forward Vehicle Accident

Report to finance department who will arrange repairs/maintenance through

comprehensive insurance policy.

5) For other employees company provide the facility of air conditioner buses and

vans.



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6) The vehicle may be sold to the allottee, after the expiry of the stipulated

replacement period on market rates.TIME OFFICE

Time office does the following activities

Keep the daily attendance of employees.

Make the settlement of the resigned employees to be further proceeded to the H.R

Department.

Gives the half leaves or temporary leave for about 1 to 2 hours.

TRAINING ROOM

Training room does the following activities..

It makes the training arrangements of the newly employed persons and the related

department supervisor delivers the training.

It also prepares employees personal file and allot the employee number.

It makes the employee card with scanned picture.

It also finds the people who are involved in unhealthy activities in the

organization.

ATTENDANCE ALLOWANCE

Completion of monthly standard working hours is a must to become eligible for

full monthly salary, and attendance allowance. Only piece rate employee get attendance

allowance.

Kohinoor mills limited set criteria for attendance allowance.

3000 rupees company pay as attendance allowance.

One absence =3000-500=2500

Two absence=3000-1000=2000

Three absence=3000-2000=1000

Four absence=3000-3000=0

EO.B.I CONTRIBUTION



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Employee old age benefit institution is as follows for employees who will be

given this amount when they will reach to age of 60 for male and 55 for females. Paid by company = 5% of minimum Wage i.e. Rs. 300

Paid by Employee = 1% of minimum wage i.e. Rs. 60

Total Contribution = 6% of minimum wage i.e. Rs. 360

SOCIAL SECURITY

Employees who have salary limit up to Rs. 10,000 are covered under Punjab

Employees Social Security Institution.

Rs 360 i.e. 6% of minimum wage paid by company every month. Employees and their dependants are covered under this institution.

Employees are eligible for benefits (medical facility) under this fund.

HR department generate reports every month and after verification send to

finance department.

Finance department prepare Cheques for social security.

Prepare this report under the HR Officer.

HEALTH INSURANCEEmployees having salary more than Rs: 10000 are covered under Adam jee

Health Insurance.

Same as social security employees who have salary limit up to Rs. 10,000 are covered

under Punjab Employees Social Security Institution.

ADAM JEE POLICY

Insured persons stay in hospital for a minimum period of 24 hours for either

necessary medical treatment of any disease, sickness or accidental bodily injury or

treatment admissible in terms of this policy.

Following benefits are covered under Adam jee...

Daily room and board charges

Intensive care unit (ICU) charges

Physicians visit charges



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Surgical charges

Miscellaneous hospital expenses

Day care surgery charges

Local ambulance cover

Emergency accidental outpatient cover

Emergency accidental dental treatment

EFU LIFE INSURANCE

All employees are covered under EFU life insurance. Under this policy all

employees are eligible for benefit of life insurance. Sum assured under this policy is

equal to minimum Rs.500, 000 and 36 gross salaries of employee.

RESIGNATIONS

The resignation is the major problem of most of the organizations, this turnover

increases day by day as the policies and conditions been changed with time. So, the

employees who have left the organization due to their own problems, terminations, S.O.S

need to settle their final dues that company has to pay. There are following rules that

need to be followed by the company in order to settle the accounts of resigned

employees.

NOTICE PERIOD

It is the period to which the employees have to inform the organization about his

resignation. There are two ways to intimate the organization.

One Month Notice Period

24-Hour Notice Period

Termination

P-Fund

1-ONE MONTH NOTICE PERIOD



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In one month notice period the employee must inform the company one month

before his resignation, for this he has to give the notice to the company that he will leavethe organization one month after the intimation is given.

The basic pay which is almost 56% of the net pay will not be deducted from

employees account.

2-24-HOUR NOTICE PERIOD

In 24-hour intimation from employee, will loose the basic pay of 56% of the net

pay. And this could happen in an emergency decision from employee, when he has an

emergency or he has settled the things with another organization.

3-TERMINATION

In the termination process the employee has been terminated due to his unhealthy

activities in the organization or lack of interest in working. In termination the employee

has been given the basic pay and its not been deducted in notice period deduction.

4-P-FUND

Provident fund also been given in the final settlement of employee and it was

been deducted each month by 10% of the basic pay. Zakat is been deducted 2.5% of the

net P-fund and its been applied on Rs: 16,228.

SALARY BREAK-UPS

Employees salary break-ups has the following steps

BASIC PAY

The basic pay is the 55% of the grand/net pay.

ALLOWANCES

Following are the allowances that are been added in the basic.

Utility

House Rent

Medical

Other Benefits

COLAS



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Following deductions are been made

Income Tax (Not Refundable) E.O.B.I-% of Gross (Employee Old Age Benefit Institution)

Its been given at the age of 60. Its % depends upon the gross variation.

P-Fund-(Provident Fund)

P-Fund is deducted each month by 10% of the basic pay and refundable.

Advance Salary

Interest on Advance Salary- 60%

Advance P-Fund Interest on Advance P-Fund- 5%

TRANSFER OF EMPLOYEES

As K.M.L has five Divisions, so in accordance to the employees is concerned,

transfers been done if require between these divisions, so it is also the responsibility of

H.R to update the transfer record in the oracle system. They also got to change their

employee I.Ds, because the I.D in which they were working will be changed in

accordance to the other divisions requirement.

For example, an employee who had employee I.D in weaving was 149 and he is

been transferred in hosiery division in the same designation but with different I.D like

9464.

PIECE RATE SYSTEM

As we know very well that the organizations uses different modes of employment,

one of them is the piece rate system, so K.M.L has changed its two of the departments

mode of employment to the piece rate. The Following departments are.

Linking

Boarding

Linking

Linking is the department in which the socks need to be linked from the palms.

Total 50 employees have been converted to piece rate. So, they got to give the resignation



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to start their piece rate job for this they got to give their final settlements and make their

new files, because the piece rate registration form is different from their permanentemployment.

RATE

The rate for per dozen pieces is Rs: 1.75/- for linking employees.

BOARDING

In the boarding the socks need to be flexible with the help of the sizes been

attached on machines. And 128 employees have been converted to the piece rate system.

So their process of mode is same as linking.

RATE

The rate for per dozen pieces is Rs: 2.50/- for boarding employees. Their pay will

not be as fixed as of the permanent employees and the new employees dont have the

facility of social security for the 1st 3 months but the employees who has been transferred

from permanent to piece rate has the facility of social security. There is no system of

provident fund in piece rate.



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OTHER DEPARTMENTS

MARKETING

In every organization marketing department plays a vital role for prevailing the

organization in the marketing. In Kohinoor the marketing department is also performing

his responsibility for the best of the organization. It is engaged in getting orders from

customer and fulfills the order according to the requirements of the customer by the

follow up of the entire departments.

ACTIVITIES PERFORMED BY THE MARKETING DEPARTMEN

Following procedure is been used

SEND SAMPLES

Marketing department send the samples to the customer after getting his

requirements by three ways.

Specification

Actual sample

And by weight

Then the customer sends back the sample by some changing required in that

sample, the marketing department again generates the sample and send to the customer.

GETTING THE ORDER

If the customer accepts the second sample then he sends the order for production.

The order includes, rate per dozen and the number of dozen to be purchased by him, with

the final specification, which includes the following things:



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1. Sock Size 2. Shoe Size

3. Welt Length 4. Welt width

5. Top length 6. Top Width

7. Boot Length 8. Foot Length

9. Foot Width 10. Weight

11. Drawing of Sock

SETTING OF PRICE

When the sample is accepted by the customer then marketing department set the

price with customer after discussing with general manager. The profit in price is

generally set in the range of 30-40k.

MANUFACTURING OF ORDER

Then the order is send to the planning department for running in the production

department and the packing requirement is also send by marketing department which is

followed by the packing department.

SHIPMENT OF GOODS

When the production is ready for the shipment, the marketing sends the request to

the shipping department which makes the shipment of that order.



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SAMPLING DEPARTMENT

It works under marketing department and engages in the production of the

sampling of marketing department.

WORKING PROCEDURE OF SAMPLING

It gets the requirements from the marketing department and makes the production

according to the specification of the customer and sends it to the Q.A department after

passing from the related manager of sampling.

QUALITY ASSURANCE

WORKING OF Q.A

Q.A precedes the samples by knitting, linking, dyeing and boards it according to

the requirement given to them and checks it step by step at each place and at the end it

reached to the marketing department which sends it to the customer.

PRODUCTION PLANNING & CONTROL (P.P.C)

P.P.C is the main and the most involving department because it manages the other

departments activities, as the order been placed and been approved by the customer

through the marketing department so, it has to mange the order with in the time as it

manages the Knitting, Linking, Bleaching (Dyeing), Drying, Boarding, Packing to the

end customer.

They have to plan all these activities about how much yarn is required, packing

accessories management, and the planning about the fulfillment of the customer

requirement.



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COMMERCIAL DEPARTMENT

The commercial department is the bone of every manufacturing concern. It playsa vital role in the manufacturing of the products such as purchase of the raw material and

sold of the scrap in the market at the best prices.

MAIN ACTIVITIES DONE BY THE COMMERCIAL DEPARTMENT

The following activities performed by the commercial department. These are

SENDING THE PURCHASE ORDER

The commercial department sends the order for purchasing the yarn from the

market. At the best price and the quantity required for the production as well as the

quality of the yarn required. The yarn is purchase on the request of the planning

department for the specific job and style.

RECEIVING OF THE YARN

Then the godown office receives the yarn as per the quantity ordered and stores it

in the yarn store. According to the IGP number and the supplier. Only that yarn is

received whose IGP is generated at the gate and which is order by the commercial

department.

ISSUING OF THE YARN

Then the yarn is issued as per the demand of the production department. The yarn

issued is recorded in the computer. As the record purpose and to find out the balance of

the yarn.

RETURNING OF YARN

The excess or the rejected yarn is received back by the commercial department.And recorded it in the record to increase the stock.

SENDING OF THE REJECTED YARN

The rejected yarn is send to the supplier to get the new yarn. And the record is

made for the yarn return to the supplier.



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MAKING OF THE INDENT

The indent is created from the demand of the yarn on the daily basis and is used tocreate the oracle record. It shows the issuance and the ending balance of the yarn.

RECEIVING OF THE SCRAPE

The scrape is received from the WIPC department after the weight of every thing

and make it inventory in the store. The scrape is arranged according to the quality and the

identification.

SALE OF SCRAPE

The scrape is sold to the customer after the bidding of each product the customer

who give the higher bid get the contract and lode the scrape in the conveyance, then

weight it and made the payment in the form of pay order.

PAYMENT TO THE TRANSPORTER

It is the duty of the godown office people to pay the rent of the transporter after

receiving it from the finance department. The payment is made to those who bring the

yarn for the factory from the supplier.

GENERATION OF THE REPORT

The godown office generate the different reports required for the different

purpose

These reports are.

Daily issuing report of yarn

Scrape received report from the WIPC department.

Report of the sold of scrape

Report of the balances of the yarn and the scrape

IGP report

Yarn indent report

Bleach report

Report of the received of the yarn

Lab test report



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And the at the end of month the all related reports

GENERATION OF THE OUT WARD GATE PASSThe generation of the out ward gate pass is also responsibility of the commercial

department; it is generated when the scrape is sold or the rejected yarn send back to the

supplier.

PUBLIC DEALING

The commercial department is also engage in the public dealing in the market for

the purpose of making the different contract about the purchase of yarn and sold of the

scrape.

SENDING REPORTS TO THE FINANCE DEPARTMENT

It is also responsibility of the commercial department to send the report of the

daily consumption and the wastage of the production to the finance department for the

purpose of generates different reports for the finance department.

SENDING DETAIL OF THE PAYMENT TO THE SUPPLIER OF YARN

It is the responsibility of the commercial department to send the detail of the

payments made to the supplier of the yarn to the factory and then the finance department

made the payment on the specify date.

LOCATION OF THE STORE

The material is located in the store IGP vise and then issued it according to the

requirement of the job, from the WIPC department.



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FINANCE DEPARTMENT

The finance department is the main department which deal all the transaction

related to the finance such as the current transaction of cash, future forecasting of cash,

and preparing of the books of account for the daily purpose as well as for the audit

purpose. So we can say that for audit purpose it is the main department.

FINANCIAL STATEMENTS INCLUDES

Balance sheet Profit & loss account

Cash flow Statement of equityNotes to the financial statement

TYPES OF ASSETS

Non Current Assets Current Assets

NONCURRENT ASSETS

Comprise those assets which have the future benefit more than one year. Thereare two types of Non Current Assets:-

Tangible Assets E.g. equipment, building.

Non Tangible Assets E.g. good will, patient, trade mark etc..

CURRENT ASSETS

comprise those assets which have the future benefit of one year. E.g. prepaid

expense, account receivable, etc

TYPES OF LIABILITIES

Current Liabilities Non Current Liabilities



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CURRENT LIABILITIES

Which have to pay within one year. It includes trade creditors, interest notespayable accounts payable current portion of long term liabilities.

NONCURRENT LIABILITIES

Which have to pay more than one year .it includes long term financing long term

deposits security deferred taxation.

PROCESS OF PURCHASES STOCK

Indent Store

Purchaser Purchase order

Supplier Inward Gate passes

Store User

EXPLORING THE STORE ADMINISTRATION WORK

STORE ADMINISTRATION

GENERAL STORES

RAW MATERIALS STORES

FINDINGS

In Kohinoor Mills Limited store operations controlled by Store Manager. The

function of store is to issue and receive items needed by different departments. So we can

subdivided these functions into following categories.

1. GENERAL STORE

PROCEDURE OF RECEIVING GENERAL STORE GOODS

In this regard, production department sends demands of various items to General

Manager and he checks the demands that whether it is required by the production

department or not. After this he signs on these demands. Then these demands are written

on a duplicate book. One copy of these demands is being kept in his record and one copy



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is being sent to the store in charge. If demanded items are present in the store, then the

store keeper issues the same.If the demanded items are not held in the store, then the store in charge writes

required items on a slip called "Indent Slip" and then this slip is presented to the General

Manager, who signs the slip and send to the head office. Then head office purchases

samples of demanded items and sends to the mills. At the mills, store in charge informs

the production department that the required or samples of demanded items have come

from head office. The section that requires these items checks these samples as to

whether these are according to their requirements or not. Then, the order is given by the

General Manager.

The head office sends these demanded items along with their bills and then these

items are recorded by store in charge on Store Receipts Note. It is also recorded on store

received ledger. From store received ledger these items are also recorded on the Bin-

Card, while these Bin-Cards are attached with every type of item. Due to this Bin-Card it

is very easy to check each item.

The demanded items which are available in the local market are purchased by the

Assistant Manager. While Store In charge checks all these items and then records on

Store Receipt Register.

PROCEDURE FOR ISSUE OF GOODS

There is a book of requisition slip in every section of the production department

which contains requisition slip in triplicate. If any section of production department

requires anything, they have to fill requisition slip on which the signature of the head of

the department is essential. Then the store keeper issues the items required after recording

it in Daily Issue Register.

REPORTS OF GENERAL STORES

The following two reports are prepared by the Store In charge.



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DAILY STORE ISSUE REPORT

This report is maintained daily and kept in a file. In this report issuance ofdemanded items to every department and balance of items are given. This report is

presented daily to Assistant Manager and General Manager.

Purchase Report

This report is prepared monthly. In this report the value of all items in the store is

recorded at the end of every month. After preparation, report is presented to Assistant

Manager who checks it and then sends to the head office.

PRODUCTION DEPARTMENT

Production department is concern with the production of the products. Here in the

Kohinoor the product is only socks, so it is engaged in the production of the socks of all

the styles.

There are two types of machines in Kohinoor with 84, 108,132 needless and with

three types sinker on the machines. These are small tyre medium tyre and large tyre.

There are four feeders on every machine which supply the yarn according to the

requirement.

It includes the following different department, such as

1. Knitting department

2. Linking department

3. Bleaching department

4. Boarding department

5. Packing department

KNITTING DEPARTMENT

The knitting department is the main department of the production which is usedto knit the socks according to the requirement and send to the WIPC department.

ACTIVITIES OF THE KNITTING DEPARTMENT

The knitting department is engaged in the following activities



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MAKE THE STYLE WISE PROGRAM

It is the first activity performed by the knitting department to make the programfor the production according to the specification of the marketing department which is

actually given by the customer.

LOUD THE PROGRAM

When the style is conformed, then the knitting master loud the program with

the help of floppy drive on each machine engaged in that style.

SPECIFICATION OF YARN

The yarn running on the machines for every style is specific, so the people in

the knitting department check the specification of the yarn.

MAKING PRODUCTION

The production department gets the yarn and makes the production according to

the requirement and specification given by the planning department.

CHECKING OF THE QUALITY

The production operator checks the quality of the socks one by one and makes

the difference in the form of A and B pairs according to the quality.

MAINTENANCE OF THE MACHINES

If a machine is stopped or giving the bad quality production then the operator

check the machine and set them accordingly.

USAGE OF PARTS OF MACHINES

If an operator under the foremen is using more quantity of spare parts as

compared to the standard, then he is answerable for that material.

CHECKING THE EFFICIENCY

The efficiency of each foreman is checked by the knitting manager from the

Performa giving by each foreman at the end of the day.

SENDING THE PRODUCTION TO WIPC

The production of the knitting department is send to the WIPC which deal all

the procedure of the production.



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LINKING DEPARTMENT

After the production is send to the WIPC it received by the linking departmentand start its working according to the specification of the planning department.

ACTIVITIES OF THE LINKING DEPARTMENT

The linking department performs the following activities. These are

RECEIVED THE PRODUCTION

It received the production of the knitting department every day and links it in

three shifts.

LINKING OF SOCKS

The socks are linked on 39 automatic machines. One operator links the 280 dozen

in a day, which is the standard for every operator but more dozen are given to every

operator.

TURNING PROCEDURE

The socks are turned by two ways. First one is by machines and second one by the

manually, those which can not be turned by machines are due quality to quality problems.

TRANSFER PRODUCTION TO WIPC

After the socks are linked those are send to WIPC for further processing.

REPORTS OF LINKING DEPARTMENT

Following reports are generating by the linking department. These are

Daily linking department

Turning report

Efficiency report

Needles report Monthly reports

Yarn consumption report



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BLEACHING AND DYINGBleaching and dying department gets the production from WIPC department,

bleach and dye it according to the requirement of the customer. The tunnel is used for the

purpose of bleaching of socks. Which bleach a lot after 6 minutes with computerized

system.

REPORTS OF BLEACHING DEPARTMENT

This department generates different report. Such as

Daily production report

Comical consumption report

Efficiency report of machine

BLEACHING PROCEDURE

The procedure of bleaching includes the following steps. The worker lode the

socks on the conveyer of specific quantity which is 45kg and machine automatically get

the socks; bleach it according to the specification given to it by the operator of the

machine.

BOARDING DEPARTMENT

The boarding department is engaged in the activities of pressing the socks after

bleaching and online packing of socks in the department.

ACTIVITIES PERFORMED IN THE BOARDING DEPARTMENT

The boarding department is engaged in the following activities.

RECEIVING OF SOCKS FROM THE BLEACHING DEPARTMENT

The boarding department received a quality socks from WIPC.

SETTING OF THE MACHINESThe machines are set according to the requirement of the customer and the type of

the socks. Some socks needs a steam and some with out of it. Specific temperature is set

according to the requirement.

CHECKING OF THE QUALITY



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The quality of the socks is check after the press if there is any quality problem

then the socks are rejected by the quality people.The problem includes.

The length of sock

Any whole in sock

Pressing problem

Any knitting problem not explore first.

Packing problem(related packing material)

Setting of pairs.GENERATION OF REPORTS

The boarding department generates different reports. These are

QUANTITY PACKED

The reports related to the packing and the units board is generated for record

purpose and for the daily efficiency of the worker.

COMPENSATION REPORT

The compensation report is also generating by the boarding department. It is

needed if the worker made work more then the standard. Then the fixed amount of

compensation related to per dozen, is given to the related worker. It is good way to

motivate the employee.

GETTING THE PACKING MATERIAL

The boarding department gets the packing material from the sub-store called

Packing store, when the socks are in the process of boarding. Only that person gets the

material which is specified by the in charge.

RETURNING OF REJECTED PRODUCTION

The socks which are rejected by the quality people are sending to WIPC

department.

SOLVE THE QUALITY PROBLEMS



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The quality problems which can be set by the setting of the machines are set by

the shift in charge of the boarding department.

PACKING DEPARTMENT

There are two method of packing, first one is on line packing and second one is

off line packing. The off line packing is made by the girls hire by the company and on

line packing is made in the boarding department when the socks are pressed.

SHIPPING DEPARTMENT

This department is basically deals with the shipment of goods to the customers.

DOCUMENTS USED BY SHIPPING DEPARTMENT FOR EXPORTS

PACKING LIST

Packing list is detail of goods packed according to complete specification of

product.

COMMERCIAL INVOICE

Issued by the exporter for the full realizable amount of goods as per trade term.

CERTIFICATE OF ORIGIN

It is required to certify on the invoice that the goods are of a particular origin or

manufactured/ packed at a particular place and in accordance with specific contract.

PACKING LIST

It shows the details of goods contained in each parcel / shipment.

CERTIFICATE OF INSPECTION

This document describes the condition of goods and confirming that their quality

& quantity is according to order.

BILL OF LADING

Bill of Lading is of different types but Kohinoor mills mainly using two types of

transportation sources i-e Sea and air cargo.

SHIPPING DOCUMENTS

When company sends through sea then use shipping documents.



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AIRWAY BILL

When company use air cargo then airway bill of consignment.

E-FORM

E-form issued by bank. It is the requirement of state bank of Pakistan to fill E-

form and submit to state bank for record and any subsidy.

BILL OF EXCHANGE

An unconditional order issued by Kohinoor Mills which directs the recipient to

pay a fixed sum ofmoney of their consignment to their bank at future date. The future

date may be either fixed ornegotiable.

CERTIFICATE OF SHIPMENT

It signifies that a certain lot of goods have been shipped.

SHIPPING ORDER

Issued by the Shipping (Conference) Line which intimates the exporterabout the

reservation of space of shipment of cargo through the specific vessel from a specified

port and on a specified date.

CART/ LORRY TICKET

It is prepared for admittance of the cargo through the port gate and includes the

shipper's name, cart/ lorry No., marks on packages, quantity, etc.

SHUT OUT ADVICE

It is a statement of packages which are shut out by a ship and is prepared by the

concerned shed and is sent to the exporter.

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FINANCIAL ANALYSIS



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FINANCIAL ANALYSIS

The accounts of any company either a manufacturing concern, trading concern or

a banking company are amongst the most easily accessible collections data concerning

their performance. However, if they are to be thought of as data they should convey some

genuine information about how the firm is doing. That is to say, there must be some

useful meanings that can be extracted from the figures in the accounts.

Well-known technique for extracting such information from accounts is known as

financial statement analysis. Financial Statements of any concern which are frequently

used for financial analysis purpose are:

BALANCE SHEETA summary of financial position on a given date is called Balance Sheet.

INCOME STATEMENT

A summary of firms revenues and expenses over a specified period is called

income statement.

TYPES OF FINANCIAL ANALYSIS

Most practiced types of financial analysis include the following

COMMON SIZE ANALYSIS (VERTICAL ANALYSIS)INDEX ANALYSIS (HORIZONTAL ANALYSIS)



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VERTICAL ANALYSIS

INCOME STATEMENT

2006 2007 2008

sales 100 100 100

Cost of sales 87.56 85.22 86.92Gross profit 12.44 14.77 13.07

Distribution cost 4.63 4.38 5.65

Administrative expenses .18 1.92 3.27

Other operating expenses .15 .42 1.67

Other operating income .63 .61 1.27

Profit from operation 6.49 8.66 3.75

Finance cost 6.39 6.39 8.15

Profit(loss)before taxation .09 2.27 (4.40)

Provision for taxation .93 .77 .79

Profit(loss)after taxation (.83) 1.50 (5.18)

BALANCE SHEET

2006 2007 2008

Assets

Non current assets

Fixed assts 52.46 47.15 44.73

Long terminvestment

.15 .02 2.72

Long term security .039 .04 .02

Current assetsStores, spares andtools

3.33 3.56 .42

Stock in trade 17.30 13.76 17.60

Trade debts 13.28 11.57 8.53

Loans and advances 2.94 3.10 6.21

Trade deposits .03 .08 .02

Other receivable 2.47 2.78 2.12



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Sales tax recoverable 2.30 1.55 1.26

Short term

investment 3.37 14.14 11.95Cash and bankbalance

2.32 1.54 .59

Equity and liability

2006 2007 2008

Share capital andreserves

Authorized sharecapital

14.06 12.88 12.11

Issued, subscribed

and paid up sharecapital

4.225 4.26 5061

Reserves 17.56 24.99 19.04

Non currentliabilities

Redeemable capital 1.53 .46 -

Long term financing 16.85 10.31 9.94

Deferred tax 18.39 2.97 2.76

Current liabilities

Trade and otherpayables

10.54 7.20 9.66

Accrued mark up 1.34 1.27 1.25

Short term borrowing 39.55 40.01 45.44

Current portion oflong term liabilities

7.03 7.66 5.83

Provision for taxation 1.37 .85 .45

Total equity andliabilities

100 100 100



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HORIZONTAL ANALYSIS

INCOME STATEMENT

2006 2007 2008

Sales 100 119.09 94.99

Cost of good sold 100 115.91 94.31

Gross profit 100 141.43 99.80

Distribution cost 100 112.57 115.79

Administrativeexpenses

100 127.55 173.31

Other operating

expenses

100 289.34 1045.57

Other operatingincome

100 116.31 192.39

Profit fromoperations

100 159.98 54.92

Finance cost 100 120.00 121.09

Profit before taxation 100 2860.66 (4415.37)

Provision for taxation 100 98.97 80.54

Profit after taxation 100 (215.24) 592.07

Balance sheet

2006 2007 2008

Assets

Fixed assets 100 98.09 98.97

Long terminvestment

100 12 2070.59

Long term security 100 100.99 58.34

Store, spare and tools 100 116.81 147.25

Stock in trade 100 86.78 118.07

Trade debts 100 95.12 74.60

Loans and advances 100 114.90 245.35

Trade deposits 100 264.15 95.82Other receivables 100 122.64 99.70

Sales tax recoverable 100 73.73 63.94

Shore terminvestment

100 458.02 411.68

Cash and bankbalance

100 72.67 29.53

Total assets 100 109.16 116.09



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Equities and

liabilitiesAuthorized sharecapital

100 100 100

Issued, subscribedand paid up sharecapital

100 109.99 153.99

Reserves 100 155.32 125.88

Non currentliabilities

100

Redeemable capital 100 33.33 -

Long term financing 100 66.76 68.45

Trade and otherpayables

100 74.62 106.42

Accrued mark up 100 105.88 111.06

Short term borrowing 100 110.41 133.36

Current portion oflong term liability

100 118.77 96.16

Provision for taxation 100 68.14 56.41

Total equities andliabilities

100 109.16 116.09



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RATIO ANALYSIS

Ratio analysis involves methods of calculating and interpreting financial ratios to

analyze and monitor the firms performance.

CATEGORIES OF FINANCIAL RATIOS

Financial ratios can be divided for convenience into five basic categories

Liquidity

Activity

Debt

Profitability

Market

LIQUIDITY RATIOS

A firms ability to satisfy its short-term obligations as they come due is called

liquidity. Liquidity refers to the solvency of the firms overall financial position the ease

with which it can pay its bill. These ratios are viewed as a good indicator of cash flow

problems. The two basic measures of liquidity are:

CURRENT RATIOA measure of liquidity calculated by dividing the firms current assets by its

current liabilities. It measures the firms ability to meet its short term obligations. It is

expressed as follow:

` Current assets

Current ratio =

Current liabilities

INTERPRETATION

As our current ratio is less than 1 so it is not the favorable situation for the

company.


Years 2006 2007 2008Current ratio .79 .93 .84


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QUICK (ACID TEST) RATIO

The quick ratio measures the liquidity and is calculated by dividing the firmscurrent assets minus inventory by its current liabilities. It is calculating as follow:

Current assets Inventory

Quick ratio =

Current liabilities

years 2006 2007 2008

Quick ratio .45 .61 .49

INTERPRETATIONAs quick ratio of 1.0 or greater is occasionally recommended but in 3 years data

quick ratio is less than 1 its mean firm is not in better measure of overall liquidity.

ACTIVITY RATIO

It measures the speed with which various accounts are converted into sales or

cash inflows or outflows.

A number of ratios are available for measuring the activity of the most important

current accounts which includes inventory, account receivable, and account payable.

It includes following ratios:

Inventory Turnover

Average Collection period

Average Payment period

INVENTORY TURNOVER

It commonly measures the activity, or liquidity, of a firms inventory. It is

calculated as follows.

Cost of goods sold

Inventory turnover =

Inventory

Years 2006 2007 2008

Inventory turnover 4.86 5.14 3.80



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INTERPRETATION

Inventory turnover is meaning full when it is compared with other firm in thesame industry.

TOTAL ASSETS TURNOVER

It indicates the efficiency with which the firm uses its assets to generate sales. It

is calculated as follows:

Sales

Total assets turnover =

Total assets

Years 2006 2007 2008

Assets turnover .82 .89 .67

INTERPRETATION

Higher a firms total assets turnover more efficiently its assets has been used.

Company uses its assets more efficiently in year 2006 and 2007 rather than 2008.

DEBT RATIO

The debt position of a firm indicates the amount of others peoples money being

used to generate profits. The more debts a firm use in relation to its total assets, the

greater its financial leverage.

FINANCIAL LEVERAGE

The magnification of risk and return introduced through the use of fixed cost

financing, such as that debt and preferred stock.

There are two types of measuring debt ratio of a firm.

Degree of indebtedness (debt ratio)

Ability to service debts (time interest earned ratio)

DEBT RATIO



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It measures the proportion of total assets financed by the firms creditors. The

higher this ratio, the greater the amount of other peoples money being used to generateprofits. It is calculated as follows:

Total liabilities

Debt ratio = Total assets

TIME INTEREST EARNED RATIO

It is also called interest coverage ratio, measures the firms ability to make

contractual interest payments it is calculated as follows.

Earning before interest and taxes

Time interest earned ratio =

Interest

PROFITABILITY RATIO

There are many measures of profitability. As a group, these measures enable the

analyst to evaluate the firms profit s with respect to a given level of sales, a certain level

of assets, or the owners investment.

It includes the following ratios

Gross profit margin

Operating profit margin

Net profit margin

Earning per share

Return on total assets (ROA)

Return on equity (ROE)

GROSS PROFIT MARGIN

It measures the percentage of sales dollar remaining after the firm has paid for its

goods. It is calculating as follow:

Sale CGS

Gross profit margin =

Sale



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Gross profit

C.G.S =Sales

Years 2006 2007 2008

Gross profit margin 12.44 14.78 13.07

INTERPRETATION

The higher the gross profit margin the lower the cost of merchandize sold. Its

mean in 2007 gross profit margin is greater in 2007 rather than in 2006 and 2008.

OPERATING PROFIT MARGIN

It measures the percentage of each sales dollar remaining after all costs andexpenses other than interest, taxes, and preferred stock dividend is deducted.

It is also called pure profit earned on each sales dollar. It is calculating as follow:

Operating profits

Operating profit margin =

Sales

Years 2006 2007 2008

Operating profitmargin

0.09 2.27 (4.40)

INTERPRETATION

Operating profit margin represents pure profits earned on each rupee. Higher

operating profit margin is preferred in 2007 it is higher so company earned more profits

in 2007.

NET PROFIT MARGIN

It measures the percentage of each sales dollar remaining after all costs, expenses,

including interest and taxes have been deducted.

It is calculating as follow

Net profit

Net profit margin =

Sales



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Years 2006 2007 2008

Net profit margin (.83) 1.50 (5.19)

INTERPRETATION

Higher net profit margin is preferred which is greater in 2007.

EARNINGS PER SHARE

EPS represents the number of dollars earned during the period on behalf of each

outstanding share of common stock. It is calculating as follow:

Earning available for common stockholders

EPS =

No. of shares common stock outstandingYears 2006 2007 2008

Earning per share (1.29) 2.78 (6.34)

INTERPRETATION

It represents the rupees amount earned on behalf of each share. Company earned

much more rupees in 2007 rather than 2006 and 2008.

RETURN ON TOTAL ASSETS

It is also called the return on investment measures the overall effectiveness of

management in generating profit with its available assets. The higher the firms return ontotal assets the better the firm is.

Earning available for common stockholders

ROA =

Total assets

Years 2006 2007 2008

Return on assets (1.29) 2.84 (7.30)

INTERPRETATIONReturn on assets indicates that how much firm earned on each rupee of asset

investment.

RETURN ON EQUITY (ROE)



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The return on common equity measures the return earned on common

stockholders investment in the firm. It is calculating as follow.Earning available for common stockholders

ROE =

Common stock equity

years 2006 2007 2008

Return on equity (3.12) 4.58 (14.06)

INTERPRETATION

It represents that how much company earned on each rupee of common stock

equity.PRICE/EARNING RATIO

It measures the amount that investors are willing to pay for each dollar of the

firms earning. The higher the price earning ratio the greater is investors confidence.

Market price per share of common stock

P/E ratio =

EPS

Years 2006 2007 2008

Price/earning ratio (16.48) 9.37 (3.43)INTERPRETATION

It indicates that investors were paying 9.37 in 2007 for each rupee.

MARKET/BOOK RATIO

It provides an assessment of how investor views the firms performance. Firm

expected to earn high return relative to their risk typically sells at higher market/book

multiples.

Common stock equity

Book value per share of common stock =

Number of shares of common stock outstanding

years 2006 2007 2008

Market/book ratio .51 .43 .50

INTERPRETATION



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It indicates that investors are currently paying for each rupee.



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Industrial Analysis

SWOT ANALYSIS

STRENGTHS

HAVING OWN ELECTRICITY PLANT



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KML having own electricity power plant which is producing not only for the

KWML but also providing electricity to other companies and to govt. at subsidy rate.

ERP SOFTWARE

ERP (Enterprise Resource Planning) has been installed in KML thats why

company is saving all records in systems and having huge database.

POWER LOOMS

KML has purchased latest power looms Toyota Air Jet Power Looms. Thats why

they have reduced the production cost and have increased the quality and efficiency of

their textile products.

CROSS CULTURAL COMMUNICATION

In KML there are near about 4500 employees who are from different

environments and having different cultures but fortunately there is no cross cultural

communication.

MARKET REPUTATION

KML is one of the major Mills in Pakistan thats why they have little bit

reputation in local market and having trust from investors.

WEAKNESSES

EMPLOYEES MOTIVATIONAL LEVEL

The one weakness of KML is that their employees are not motivated thats why

they are getting off and putting their resigns in front of managers and executives. This is



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the responsibility of HR department to find out at to see at the time of hiring them that

what the thing is that their employees can be motivated.

EVERY BOOKED ORDER IS DELIVERED LATELY

The delivery of each contract is always not done on time. The customer has to

wait for 4 to 5 weeks to get his/her desired product. The main reason is that late

purchasing of raw material. Raw material just like Yarn and Sizing material is not

available on time and some time it happens that there is shortage of raw material during

the running contract thats why production department has to wait for the raw material.

ADMINISTRATIVE EXPENSES

There are high overhead charges through out the year particularly administrative

expenditures. Management whether it is lower management or upper management, the

expenditures are same but company is getting equally profit from them thats why

expenditures are increasing.

RELIABILITYON FOREIGN CUSTOMERS

Always organization has to rely on foreign customers and it would become risk

especially in financial matters and possibility of fraud would be there. KWML is too

much depending upon their foreign customers. They have limited number of foreign

customers but these are also losing by lacking of quality and little bit high cost.

COMMERCIAL DEPARTMENT

Commercial department of KML is showing its little bit bad performance. Means

always the yarn is purchased late and on credit and payments are done by the department

always very late. There is no proper or pre-plan for the month or for couple of weeks so

that amount should be received to pay the suppliers. Each time purchasing of yarn is done

belatedly so that looms not run and hence per day cost increased and depreciation also.

GODOWN POSITION

There is no proper placing for final products to place them safely and at the time

of their dispatch there is possibility of mistake.

ERP SOFTWARE



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Its good that KML has ERP software in their systems. But there are number of

errors that are occurred much time. For example, during the dispatch of product, youhave to click all the rolls manually. There is no option to select them all and other

problem is to calculate the weight of packed rolls. You have to do all these things

manually.

COMMUNICATION GAP

There are a little bit gaps in communication between the departments. May be

these confirm each and every thing from each other but still they make mistakes and

blame each others to safe them.

TEAM BUILDING

A major problem is team building. There is almost no concept of team. Each

person is doing individually and performing his/her activities.

CASUAL ATTITUDE

The attitude among the employees is very casual. No one following the rules and

regulations of the company. Some implementation is done among the executives but not

at managerial level.

HR DEPARTMENT

HR Department is almost useless and only performing two activities. These

activities are making salaries and attendance of the employees and workers. They are not

working to train the employees and making appraisals to evaluate them.

MARKETING OF TEXTILE PRODUCTS

KML has no proper planning for the Marketing. They advertise about their selves

only from newspapers. Thats why limited number of people knows about them.

THREATS



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POLITICAL INSTABILITY

As we all know that the political situations of Pakistan are one of the worstsituations of the whole world. Each new government establishes its new rules and

regulations which impact the industries badly. Now a day there are many major issues

which are affecting the textile industry as well as other countries just like Musharafs

impeachment, PM Shaukat Aziz Fraud, New elections for Provisional and national

assemblies and the major issue was the murder of BB Benazir Bhutto. Now the new

government of Pakistan has implemented some new rules for the textile industry which

are almost of them are not in fever of the industrialists. These are

31% increment in the prices of Gas

Near about 10 rupees per liter increment in price of petroleum

Bann to export the raw cotton

No subsidy for the research and developments in the textile industry

Against these rules and implications, All Faisalabad Textile Mills boycott in July

2008 by shutting down their Mills and factories. Now the government has provided them

some subsidy in gas field.

HIGH CONSUMPTION OF PETROLEUM

The high consumption of the petroleum is also the major issues because in

international market, their prices are going up and touching sky, due to which the freight

costs are increasing day by day and hence the cost of production, is also increasing

rapidly which is becoming the reason of losing foreign customers of Pakistan.

SHORTAGE OF ELECTRICITY

The government of Pakistan still unable to provide the required quantity of

electricity, the usage of electricity has been increased. The companies who have their

own electricity plants are save but those who dont have are facing a major problem of

shortage of electricity.

EMPLOYEES



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Kohinoor Mills limited is facing a major problem of their employees because they

getting off from KML. They think that they are not getting reasonable and valuablesalaries and incentives from the company. The major reason is also that company is

losing its value and reputation in the local market as well as in international market, thats

why they are getting off from the company to secure their future and present as well.

POOR RESEARCH & DEVELOPMENTS

KML has not been working for better Research and Development Department for

some years. They are not focusing to improve their technology and expand their market

share. They just keep focus on their current systems which are producing not too much

good quality products thats why some of foreign customers are dissatisfied from them

and shifted towards other suppliers.

INCREMENT IN FREIGHT CHARGES

The prices of petroleum have been increased and still increasing rapidly. Thats

why the freight charges have been increased and the cost of productions has also been

increased by the huge amount. Due to these increments, the sale price has also been

increased but customers are not ready to pay more for a good quality instead of better

quality. And transport companies are demanding more increments to use their

transportation services.

INTERNATIONAL AND LOCAL COMPETITORS

One of the major threats at international level which KML and textile industry of

Pakistan has to face, is international competition which is growing up and competitors are

capturing the market share rapidly thats why Pakistans market share in foreign market

is cutting down gradually due to high cost but poor quality of their textile products.

In local market, there are many companies in Pakistan who are improving their

quality of textile products by acquiring new technologies. The big giants of Pakistan

textile industry are

NISHAT TEXTILE SAPHIRE TEXTILE

KTM TEXTILE COLONY TEXTILE

YUNIS TEXTILE AMTEX



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CHENAB TEXTILE AL-KARAM TEXTILE

GULISTAN TEXTILE FAZAL TEXTILELOWEST PRICE OF FABRIC IN WORLD FOR USA & UK COUNTRIES

This would surprise for all of us that Pakistan is offering lowest prices the UK and

USA market. But sorry to say that these prices are coming down gradually due to losing

the quality in their products and services as well. In USA the price per meter is $0.91

which is the lowest price in compare with other international and especially Asian

Suppliers.

OPPORTUNITIES

NEW TECHNOLOGY

The technology has been improved for the textile industry and these technologies

are being acquired by the international competitors as well as by local competitors so

they are producing good quality textile products and increasing the efficiency as well as

decreasing the cost of production. KWML has the opportunity to invest for the new

technology. By acquiring the latest technology, they can increase the production quality,

efficiency and can decrease the cost of production.

MOTIVATING THE EMPLOYEES

HR department can prove and show them they are here for employees by

motivating the employees performing their best. They can find the motivation level of

their employees and give them incentives to motivate them.

PROJECTS FOR THE LOCAL MARKETKWML has the opportunity to capture the market share locally by launching new

projects just like they have launched Dhanak in August 2008. They can start new

projects in garments, Apparel or Home Tax, Dyeing, Hosiery.

ADVERTISING



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KML has the opportunity to advertise about their selves to promote their textile

products.

They can advertise in international magazines about themselves

KML can publish its own local business magazine to promote themselves

Can also be advertised over the internet (electronic Marketing)

KMLS OWN SHOPS

KML can open its own shops in local market where they can display their

garments products (socks, Trousers) and Apparels as well as curtains.

ONLINE SHOPPING STORE

KML can open its online store where they can show their garments variety and

apparels. The advantage of this step would be

Online Marketing

Capturing the market over internet internationally

Capturing the market over internet locally

The material which you put on your fair price shop can be sold out at online shop

PEST ANALYSIS

POLITICAL FACTOR



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Uneven political conditions, deteriorating law and order situation and instability

in gas and electricity prices are adversely affecting the textile sector, while governmenthas hardly taken any step to give some relief or incentives to the mill owners. Textile mill

owners and exporter have strongly denounced the recent 31 percent increase in the

gasoline prices and demanded from the government to withdraw the recent increase and

take serious steps to help textile industry survive through difficult times According to the

sources, if prices continue to increase at current rate, the textile industry would find it

difficult to survive as the recent increase has already proven deadly and many mills have

started to shutdown in the wake huge price increase. It was also witnessed that due to

prices increase in gas has not only adversely affected the productivity of the textile

industry but has also caused s