internship report of hbl2

7/31/2019 Internship Report of HBL2

1/52

-----------------------Page1-----------------------

ANINTERNSHIPREPORTANINTERNSHIPREPORT

ONON

HABIBBANKLIMITEDCORPORATE

CENTERFAISALABAD

BYBY

ASMAYASINASMAYASIN

AREPORTSUBMITEDINPARTIALFULFILLMENTOFTHEREQUIREMENTFORTHEDEGREEOF

MASTERINBUSINESSADMINISTRATION(MBA)

DEPARTMENTOFBUSINESSMANAGEMENTSCIENCES

UNIVERSITYOFAGRICULTUREFAISALABAD

-----------------------Page2-----------------------

EXECUTIVESUMMARY

Mydepartmentrequiresthisreport.Thepurposeofreportistowritedownallthemajor

activitiesthatIperformedinthatparticularbranchduringmyinternshiptraining.It

Comprisesof:

Formalpart

Introductionoftheorganization

SWOTAnalysis

PESTAnalysisandEnvironmentalScanning

Productsandservices

Depositdepartment

Remittancedepartment

ExportRefinanceScheme(Part1,Part11)

Importandexportdepartment

HRMdepartment

Creditandadministrativedepartment


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FinancialAnalysisoftheclient

Workdonebyme

Suggestionsandrecommendations

-----------------------Page3-----------------------

CONTENTS

Sr.No.Title

1.Executivesummary

2.Contents

3.Acknowledgement

4.Introduction

5.ProductsofHBL

6.SWOTandPESTAnalysis

7.Spanofmanagement

8.Departmentalization

9.FinancialAnalysisoftheClient

10.Suggestions

-----------------------Page4-----------------------

Acknowledgment

AllpraisesbelongtoalmightyAllahwhothesupremeauthorityknowstheultimat

erelation

underlyingallsortsofphenomenongoingoninthisuniverse&whoseblessing&exaltation

flourishedmythought&thrivedmyambitionstohavethecherishedfruitofmymodest

effortsmyhumblestthankstotheHolyProphetHazratMuhammad(PBUH)whoisforevera

torchofguidance&knowledgeforhumanityasawhole.

Wedeemitourutmostpleasuretoavailthisopportunitytoexpressgratitude&

deepsenseofobligationtomyreveredteachersandHBLsrelationshipmanagerMr.

ZaiuddinandMr.WaseemBhatifortheirvaluableanddexterousguidance,untiringhelp,

compassionateattitude,kindbehavior,moralsupportandenlightenedsupervision


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duringthis

wholeproject.

Finally,Iwouldliketoextendhurtfulthankstomyadoringparentsandfriendsfortheirday

andnightprayerssacrificesandencouragement,moralandfinancialsupportthroughoutthe

courseofourstudy.

Mayallofthemlivelongandenjoyahappylife!

-----------------------Page5-----------------------

BANKSANDSCOPEOFBANKING

WHATISBANK?

Abankisaninstitutionforthecustody,loanorexchangeofmoneyforsanctioning

credit,fortransferringfundsbydomesticforeignbillsofexchange.Itisapi

pelinethrough

whichcurrencymovesintoandoutofcirculation.

Asitisclearfromthedefinitionofbanking,themainactivityorfunctionof

bankingisborrowingandlendingofmoneywithamarginofgain.However,asfarasthe

presentdaybankingisconcerned,thereareanumberofdifferentbanks,setupunderspecific

differentobjectives,performingvariousfunctions.

INTRODUCTIONOFHBL:

HABIBBANKGROUPisaleaderinPakistansservicesindustry.Anextensive

networkof1425domesticbranchesthelargestinPakistanand55internationalbranchesto

meetcustomerneeds.PerhapstheHABIBBANKLIMITEDestablishin1941atBombay.

Butitshistorystartsin1841whenayoungboynameIsmailHabibreachBombayforjob.

Aftersometimehegotthejobwithadealerinutensilsandnonferrousmetals.IsmailHabib

wasverykeenandintelligentandbecamepartnerofhisboss.Lateronhewaselectedasa

presidentofthemarket.Manyyearslaterheexpendedhisbusiness.Heenga


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gedinprivate

-----------------------Page6-----------------------

banking.SoHBLhascomealongwayfromitsmodestbeginningsinBombayin25august,

1941whenitcommencedbusinesswithafixedcapitalof25000rupees.

Impressedbyitsinitialperformance,Quaid-e-AzamMuhammadAliJinahaskedthe

banktomoveitsoperationtoKarachiafterthecreationofPakistan,HBLestablishitselfin

theQuaidscityin1943andbecameasymbolofprideandprogressforthepeopleof

Pakistan.Duringtheearlydaysofnewlybornstate,governmentofPakistanfacesthegreat

problemoffundshortage.ThistimeHBLagainhelpedthegovernanceofPakistanandcame

torescuetoprovidePakistanwithassistanceofnotlessthan8crore.

Besidesthis,HABIBBANKhasbeenapioneerinprovidinginnovativebanking

servicessuchasfirstinstallationofmainframecomputerinPakistanfollowedbyATMand

moreInternetbankingfacilitiesinallbranches.ThemainstrengthofHBLbrandisitsgreat

servicestoallcustomersespeciallytothecorporatecustomersanditsprominentheadoffice

buildingthathasdominatedKarachisskylinefor35years.

-----------------------Page7-----------------------

Missionstatement

ToberecognizedastheleadingfinancialinstitutionofToberecognizedastheleadingfinancialinstitutionof

Pakistanandadynamicinternationalbankintheemergingmarkets,Pakistanandadynamicinternationalbankintheemergingmarkets,

providingourcustomerswithapremiumsetofinnovativeproductsprovidingourcustomerswithapremiumsetofinnovativeproducts

andservices,andgrantingsuperiorvaluetoourstakeholdersandservices,andgrantingsuperiorvaluetoourstakeholders

shareholders,customersandemployees.shareholders,customersandemployees.

-----------------------Page8-----------------------


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ValuesofHBL

Humility:Humility:

WeencourageacultureofmutualrespectandtreatbothourteammembersandWeencourageacultureofmutualrespectandtreatbothourteammembersand

customerswithhumilityandcare.customerswithhumilityandcare.

Integrity:Integrity:

Forus,integritymeansasynergicapproachtowardsabidingourcorevalues.UnitedForus,integritymeansasynergicapproachtowardsabidingourcorevalues.United

withtheforceofsharedvaluesandintegrity,weformanetworkofawell-integrated

withtheforceofsharedvaluesandintegrity,weformanetworkofawell-integrated

team.team.

Meritocracy:Meritocracy:

Ateverylevel,fromselectiontoadvancement,wehavedesignedaconsistentsystemAteverylevel,fromselectiontoadvancement,wehavedesignedaconsistentsystem

ofhumanresourcepractices,basedonobjectivecriteriathroughoutallthelayersofofhumanresourcepractices,basedonobjectivecriteriathroughoutallthelayersof

theorganization.Weare,therefore,abletoachieveaspecificlevelofperformanceattheorganization.Weare,therefore,abletoachieveaspecificlevelofperformanceat

everylayeroftheorganization.everylayeroftheorganization.

TeamWork:TeamWork:

Ourteamstrivestobecomeacohesiveandunifiedforce,toofferyou,thecustomer,aOurteamstrivestobecomeacohesiveandunifiedforce,toofferyou,thecustomer,a

levelofservicebeyondyourexpectations.Thisforceisderivedfrompart


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icipativelevelofservicebeyondyourexpectations.Thisforceisderivedfromparticipative

andcollectiveendeavors,acommonsetofgoalsandaspirittosharethegloryandtheandcollectiveendeavors,acommonsetofgoalsandaspirittosharethegloryandthe

strengthtofacefailurestogether.strengthtofacefailurestogether.

CultureofInnovation:CultureofInnovation:

weaimtobeproactivelyresponsivetonewideas,andtorespectandrewardtheweaimtobeproactivelyresponsivetonewideas,andtorespectandrewardthe

agents,leadersandcreatorsofchange.agents,leadersandcreatorsofchange.

-----------------------Page9-----------------------

PRODUCTSANDSERVICESOFFEREDBYHBL

PRODUCTS:

oHBLMuhafizRupeeTravellersCheques

oHBLAutoFinance

oHBLFlexiLoansforsalariedpersonnel

oHBLLifeStylesFinancingScheme

oHBLi-Card

oHBLHouseFinancingLoans

oHBLEasyAccess

oHBLFastTransfer

oHaryaliAgriculturalLoans

oHBLE-Bank

SERVICES:

oRetailBanking

TheRetailBankingnetwork,with1425branches,isthecorestrengthof

HabibBank.ThenetworkprovidesHBLwiththelargestdiversifiedlowcostdepositbaseof

anybankinPakistan,andformsthebasisformanyofourotherbusinesslines:


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corporateand

investmentbankingandtreasuryactivities.ThenetworkprovidesHBLwiththelargest

diversifiedlowcostdepositbaseofanybankinPakistan,andformsthebasisformanyofour

otherbusinesslines:corporateandinvestmentbankingandtreasuryactivities.

-----------------------Page10-----------------------

oCommercialBanking:

Enterprisesoperatinginthemiddlemarketcontributesignificantlytothe

economyofacountry.DuringFY-2000HBLsmanagementdecidedtoaddressthisissue.

OnNovember1,2000CommercialBankingcameintobeing.

Theobjectiveofsetting-upCommercialBankingwastwo-fold:Theobjectiveofsetting-upCommercialBankingwastwo-fold:

Firsttostoptheerosionofmarketshareinthemiddlemarket;Firsttostoptheerosionofmarketshareinthemiddlemarket;

Second,toregainthelostmarketshare

CommercialBankingismakingheadwaywithimprovementnotonlyintermsofthebusiness

figuresbutalsoinitsambiance.Renovationofisbeingcarriedoutinordertogivea

professionallooktoalltheCommercialBankingCenters.

oCorporateBanking:

TheCorporateBankingGroupserveslargeinstitutionalcustomerswho

requiresophisticatedproductsinanenvironmentofintensecompetition.HBLCorporate&

InvestmentBankingGroupisnowrecognizedasamarketleaderandregularlyarrangesand

participatesinmostlargestructuredfinancedeals.

oInternationalOperations:

HBLsabilitytooperatesuccessfullyindiversifiedmarketsandculturesis

afunctionofalonghistoryininternationalbankingwhenfirstinternationalbranchwas


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openedin1951.TheBanksbranchesinfinancialcenterscontinuetoprovideefficienttrade

settlementandreimbursementservicestotheentirenetworkandbusinesswithotherbanks.

-----------------------Page11-----------------------

SWOTANALYSIS

STRENGTHS:

Goodwill&historicalbackground

Professionalandwelltrainedstaff

Largestcustomerbase

HBLisPakistan'slargestcommercialbank

HBLhasadomesticnetworkof1,425brancheswithaninternationalnetworkof48

branchesin26countries

20%shareofHBLinfinancialmarket

LargeBalancesheetsize

Decentralizedauthority

WEAKNESSES:

Unfavorableunionactivitiesandmanagementconflicts

CheckingSystemisatintra-departmentlevel

Weakmarketingpolicies

Nepotism&Favorism

Infectedportfoliostillexistsasbaddebts

Centralizedmanagementinparticularareas

-----------------------Page12-----------------------

OPPORTUNITIES:

Opportunitiesforgrowthandexpansionincashmanagement.

Fastermarketgrowthrepresentsopportunitytogrowanddiversify

Restorationofinvestorsconfidenceandpickupinprivatesectorinvestmentflows.

Largedepositbaseandfundsflowcanhelptoavailrelatedmarketopportunities


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THREATS:

Adverse&unstablegovernmentpolicies

Politicalinstability

Advancetechnology

Competitionfromotherbanks

-----------------------Page13-----------------------

PESTANALYSISANDENVIRONMENTALSCANING

Abroadviewofmarketisimportantwhenmanagementisinterestedinintroducing

betterservicesforcustomers.Rapidtechnologicalchange,globalcompetitionandthe

diversityofbuyerspreferencesinmanymarketsrequiretheconstantattentionofthemarket

voucherstoidentifypromisesbusinessopportunities,seetheshiftingrequireme

ntsofthe

buyers,evaluatechangesincompetitorspositioningandguidethechoiceofwhichbuyersto

targetandclassifythemaccordingtorespectivesegments.

Identificationofexternalandmacrofactorsthatinfluencebuyersandthuschangethesize

andcompositionofmarketovertimeinvolvesinitiallybuildingcustomerprofiles.These

influencesinclude:

Politicalandlegalenvironment

Economictrends

Socioculturalenvironment

Technologicalfactors

POLITICALANDLEGALENVIRONMENT

Banksarestronglyaffectedbythepoliticalandlegalconsiderations.This

environmentis

composedofregulatoryagenciesandgovernmentlawthatinfluenceandlimitvarious

organizationsandindividuals.Mostlytheselawscreatenewopportunitiesforbusiness.

Businesslegislationhasfollowingmainpurposes


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Toprotectbankingcompaniesfromunfaircompetition.

Toprotectconsumersfromunfairbusinesspracticesadoptedbybankingcompanies

Toprotecttheinterestofthesocietyfromunbridledbusinessbehavior.

-----------------------Page14-----------------------

ECONOMICTRENDS

Abankingmarketrequiresbetterconsumermarketinvolumealongwithhigher

borrowingpower.Theavailableborrowingpowerdependson:

Consumerincome

Savingrates

Consumptionpatrons

Ratesofinterest

Budgetdeficit

Exchangerates

Costofliving

Inflation

SOCIO-CULTURALENVIRONMENT

Asocietyisshapedbybeliefs,normsandvalues.Peopleinasocietyconsciouslyand

unconsciouslyinteractwith:

Themselves

Others

Organization

Society

Nature

Followingarethemainfactors.Whicharisebecauseofchangeinsocio-cultural

environment?

Consciousnessaboutservices

Concernforenvironment

Improvedcustomerrelation

-----------------------Page15-----------------------


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CPCSCREDITPOLICYANDCOMPANYSECRETARY

RBGRETAILBANKINGGROUP

CIBGCORPORATEANDINSTITUTIONALBANKINGGROUP

ARMASSETSREMEDIALMANAGEMENT

AGAAUDITANDGENERALINFORMATION

-----------------------Page18-----------------------

ORGANOGRAMOFCORPORATECENTER,FAISALABAD

RGM&EVP

AVPFINCON

Officer

AGMMarketingManagerHR/Admn.AGMOperations

VPOfficerAVP

AVP/RMs

ManagerTarde

Officer

RMs

Mgr.Cash&Rem

Officer

ITIncharge

Officer

O/ITeasury-Officer

-----------------------Page19-----------------------

DEPOSITDEPARTMENT

Bankdealsinmoneyandtheyaremerelymobilizingfundswithintheeconomy.They

borrowfromonepersonandlendtoanother,thedifferencebetweentherateofborrowing

lendingformstheirspreadorgrossprofit.Thereforewecanrightlystatethatdepositsarethe

bloodofthebankwhichcausesthebodyofaninstitutiontogettowork.Thesedepositsare

liabilityofthebanksofrompointofviewofbankwecanrefertothemasliabilities.

TYPESOFACCOUNT:


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1)CURRENTACCOUNT:

Inthistypeofaccountstheclientisallowedtodepositorwithdrawmoneyasand

whenhelikes.Hemay,thus,depositsorwithdrawsmoneyseveraltimesinadayifhelikes.

Thereisalsonorestrictionofamounttobedepositedorwithdrawn.However,thereis

requirementofminimumbalancemaintenanceofRs.5000/-.Usuallythistypeofaccountis

openedbythebusinessmen.Noprofitispaidbythebankandnoservicechargesare

deductedbythebankoncurrentdepositsaccount.

Eligibility:

i.AllPakistanisResident/Non-Resident,Individuals(Single-Jointly)Companies/Firms

etc.canopenandoperatetheAccountbutheshouldbeacorporatecustomer.

ii.AnyForeignNationalIndividuals(Single-Jointly)havingvalidResidentPakistan

VISA/WorkPermitcanopenandoperatetheAccount.

-----------------------Page20-----------------------

RequirementsforOpeningofAccount:

DulyfilledprescribedA/CopeningFORM.

AttestedphotocopyofN.I.C./PassportofAccountHolder(s),Proprietor,Partners,

DirectorsandofficeBearersasthecasemaybe.

Certifiedtruecopyofthecertificateofincorporationorregistration(incaseoflimited

companies&registeredbodiesonly).

Certifiedtruecopyofthecertificateofcommencementofbusiness(incaseo

fpublic

limitedcompaniesonly).

Certifiedtruecopyofthememorandumandarticlesofassociation(incaseoflimited

companies).

CertifiedtruecopyofrulesandregulationsorBy-Laws(incaseofassociati


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onetc.).

CertifiedtruecopyoftheresolutionoftheBoardofDirectors/Managing

Committee/GoverningBodyregardingconductoftheaccount.

Features:

AccountcanbeOPENEDwithMinimumBalanceRs.1000/-withnomaximumlimit.

Checkingbalanceatanytimeduringbankinghours.

Noprofitispaid.

StatementofAccountdispatchedonrequestletter.

Thereisnorestrictionforwithdrawalsofamountandnumberofcheque.

-----------------------Page21-----------------------

2)Profitandlosssharingsavings:

Thistypeofaccountisforthosepersonswhowanttomakesmallsavings

'.Thistype

ofaccountisopenedwithaminimumdepositofRs.1000/-ortheamountprescribedfrom

timetotime.Theprofitispaidontheseaccountsontheminimumbalanceduringamonthfor

thewholeofthatmonth.Zakat&othertaxesaredeductedasperrulesofthegovernment.

TherequirementsforthisaccountisdulyfilledprescribedA/CopeningFORM,PhotoCopy

ofNationalIdentityCard(ResidentPakistani),twoPassportsizephotographswith

Signatures/ThumbImpression(ResidentPakistani),PhotocopyofPassportwithPage

bearingResidentVisaoftheCountrywherePakistaniResiding,twoPassportsize

photographsandsignaturesonA/COpeningFormforNon-ResidentPakistaniwith

Signatures/ThumbImpressionetc.

Features:

AccountcanbeOPENEDwithMinimumBalanceRs.1000/-orprescribedlimitthat

isannouncedtimetotimewithnomaximumlimit.

Profitispayableatmonthlysubjecttoadjustmentondecelerationofactualprofitrate


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declaredeveryhalfyear.

Profitiscalculatedonmonthlyproducts

Zakatwillbedeductedonvaluationdatesofaccount.

ProfitisPaid/CreditedinAccountonhalfyearlybasisincaseofsixmonthlyPLS

savingaccounts.

StatementofAccountdispatchedonhalfyearlybasisafterpostingofprofit.

Thereisnorestrictionforwithdrawalsofamountandnumbersofcheque.

-----------------------Page22-----------------------

3)PLSspecialnoticedeposit:

Specialnoticedepositispaidondailyproductbases.Underthisdepositscheme,a

depositisreceivedfromthedepositorundertheconditionthathewillintimatethebank

beforeacertainperiodincaseofwithdrawals.Therearetwotypesofspecialnoticedeposit,

theyare7daysand30daysnoticedeposits.Theprofitispaidonthesedepositsbutitis

nearlyequivalenttosavingaccountratethatispaidonspecialnotes.

4)PLStermdeposit:

Atypeoftermdeposit,inwhichareceiptisissuedforvaryingtenors

rangingofdeposit.Itisintheformofreceiptsandprofitonthesereceiptsispaidbiannually.

Thesereceiptsareencashableafterexpiryoftheperiodforwhichtheywereissued.Different

profitratesareappliedtodifferenttypeoftermdeposit.Ithasnomaximumlimitbutnotless

than1month.Accountopeningrateis1000andthezakatisdeductedontherule

sand

regulation.

Eligibility:

AllPakistanisResident/Non-Residentindividuals,Firms/Companies,Govt/Semi

Govt.DepartmentscanpurchasetheTD.


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AnyForeignNationalhavingvalidResidentPakistanVISAcanpurchaseTD.

RequirementsforPurchaseofTD:

DulyfilledprescribedFORM.

PhotoCopyofNationalIdentityCard(ResidentPakistani).

TwoPassportsizephotographswithSignatures/ThumbImpression(Resident

Pakistani).

PhotocopyofPassportwithPagebearingResidentVisaoftheCountrywhere

PakistaniResiding

-----------------------Page23-----------------------

TwoPassportsizephotographsandsignaturesonA/COpeningFormforNon-

ResidentPakistaniwithSignatures/ThumbImpression.

PhotoCopyofPassportwithPagebearingResidentVisaofPakistan(Foreign

Nationals).

Features:

TDcanbepurchasedwithminimumofRs.1000/-withnomaximumlimit.

Profitispayableatyearlyratedeclaredeveryhalfyear.

ProfitisPaid/CreditedinAccountonhalfyearlybasis.

Theholderoftermdepositreceiptmustkeepthereceiptunderlockanylossofreceipt

mustinformthebankbecausewithoutitthebankwillnotpaytheamount.

5)PLSkhastermdeposit:

Plskhastermdepositsareacceptableforaperiodrangingfromoneandhalf

yeartofiveyearsinmultipleofsixmonths.Inthisregardtheprofitisdecla

redfromtimeto

timebutwillbepaidonlyonceatthetimeofencashmentofreceiptofmaturity.Zakatwill

bedeductedonlyonceatthetimeofmaturityorbeforematurity.

Accountopeninginspecialcases

Blindpersonaccount:


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Ablindpersoncaneasilyopenanaccountinthebanklikeotherpersonsbutitis

preferredthatheshouldopenajointaccountwithanormalperson.Ifhewantstoopenthe

accountindividually,thereshouldbeanauthorizedpersonwithhimwhocheckedthe

signatureandtheamountfilledbyblindperson.Thebankercannotfilltheamountand

checkthesignature.Theonethingthatisprovidedextrabytheblindpersonistwo

photographsdulyattestedbyanauthorizedperson.

-----------------------Page24-----------------------

Nonresidentpersonaccount:

Non-residentpersonsarethosewhodonotliveinPakistanpermanently.

Accordingtothetaxauthoritythenon-residentpersonsarethosewholiveinPakistan:

Incaseofforeignernotmorethan180days.

IncaseofPakistaninotmorethan90daysetc.

Inproceeding4yearsnotmorethan365days.

Allthingswillremainsame,onlyonethingthatispassportcopyofthepersonwillhaveto

providetothebank.Thelogicbehindthisisthatthebankinsurestheentryandtheexitdate

ofthepersoninPakistan.Thepersonhastoinformbank15daysbeforeenteringinPakistan

andthebankalsosendthisinformationtoStateBankofPakistan.Aftergettingthis

informationStateBankgiveinstructionstobankabouthandlingofnotresidentpersons

account.

Zakattreatmentonallaccounts

Zakatwillbedeductedonallaccountsexceptthefollowings:

FiqahGafreiaaccount.

NonMuslimsaccount.

Trustaccount.


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Governmentaccount.

Providentfund.

Defenseaccount.

NonPakistanisaccount.

-----------------------Page25-----------------------

SWIFT

Societyforworldwideinterbankfinancialtelecommunication.[SWIFT]

Onlyforbanks

Telecommunicationnottransition

HeadofficeinBelgium

Runbydifferentcountrymembers

Leaseliningbyheadoffice

Startinpak1995-96

Awarenessseminarsstartin1997

Workthroughcoding&decoding

Swiftprovidetomembersanid&passwordforconnect

Chargesfromcustomersdependonmessagesize

Minchangesis120

ChangesforoneLCis1400

Codenotmorethanthreedegits(IDandPasswardcode)

Authenticmode,peoplesatisfied

Lesschancesoffraud

WorkasEMail

Version2relatetobanktobankinformation

Version4relatetobanktobankDocument

Version7relatetobanktobankLC

InHBLuseindomestic----------70branches

Inoverseasbranches----------21

Centralizedsystem(sendmessagetodifferentcountriesatonce)

-----------------------Page26-----------------------


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REMITTANCES

DEMANDDRAFT:

Demanddraftisawrittenorderdrawnbyabranchofabankuponthebranchofsame

oranyotherbanktopaycertainsumofmoneytoortotheorderofspecifiedperson.Itcanbe

issuedtothecustomersaswellasnoncustomeragainstcashchequeandletterofinstruction.

Demanddraftisnegotiableinstrumentsthatcanbenegotiatingatanytimebeforeits

cancellation.ItsLegalprovisionsaresameasthatofcheque.

Followingpartiesareinvolvedindemanddraft:

Applicant

issuingbranch

draweebranch

Beneficiary

Ademanddraftmaybeissuedagainstthewrittenrequestofthecustomerbeforeissuingit

mustbeseenthatthedemanddraftisinorder.

TheDDapplicationmustbescrutinizedbythecounterclerkinrespectoffollowingpoints.

Thereshouldbebranchwherepaymentistobemade.

Fullnameofpayershouldbementioned.

Amountinwordsandfiguresmustbesame

Theapplicantontwoplacesshouldsignapplication.

TELEGRAPHICTRANSFER:

Telegraphictransfermeansthetransferoffundsfromonebranchtoanother

branchofthesamebankoruponotherbankunderspecialarrangementsjustlikea

telegram.Telegraphictransferisnotnegotiableandthefundsarenotpayabletobearer.

-----------------------Page27-----------------------

Minorcannotavailthisfacility.Intelegraphictransferthebankersusesecretcodes.One


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codeiswithissuingpersonandthesecondiswithanotherperson.Whentheycombine

thecodesitsbecomeanamountthatiscalledcheck.Thepaymentismadeafterthe

confirmationofthecheck.

FollowingpartiesareinvolvedinTT

Applicant

Drawingbranch

Draweebranch

Beneficiary

FollowingimportantthingsshouldbeincludedinTT:

Fullnameofthebeneficiaryoraccountnumbershouldbementionedinthe

applicationform.

Instructionregardingmodeofpaymentshouldbeobtained.

Arecordintheremittanceoutwardregistershouldbemaintained.

Alltheremittancemustbecontrolledthroughnumberorcodes.

PAYORDER:

Payorderisaninstrumentthroughwhichpaymentcanbemadefromonebankto

anotherbank.Payorderismeantforbankownpaymentbutinpracticetheyarealsoissuedto

customers.

Followingpartiesareinvolvedinpayorder:

Applicant

issuingbranch

Payee

-----------------------Page28-----------------------

MAILTRANSFER:

Mailtransferisnotnegotiableandtheprocedureofitissamewiththeprocedureof

DD.Whenacustomerrequestthebanktotransferhismoneyfromthisbanktoanyother


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bankofthebranchofsamebankinthecity,outsidethecityofoutsidethecountrythefirst

thinghehastodoistofillanapplicationform.InwhichhestatesthatIwanttotransferthe

moneyfromthisbanktothatspecificbankbymail.Ifthecustomeristheaccountholderof

thisbank,thebankwilldebithisaccountandtheconcernedofficerwillfillformstomake

themailtransfercomplete.

Ifthecustomerisnottheaccountholderofthebank,thenfirstlyhehastodepositthe

moneyandthenrestoftheprocedurewillbeadoptedtotransferhismoney.

-----------------------Page29-----------------------

SBPERFScheme

SBPhadintroducedthisschemetopromotecountrysexportandtoear

nforeignexchange.ThisschemeisoperatedthroughauthorizeddealersunderSBPcontrol.Thisschemehadbeenamendedbytimetotime.

Features:

Concessionsrateofmarkupascomparetocommercialbanksrateofmarkups.Exportrefinanceallowtoexportersviaauthorizeddealers.Incaseofdefault,theSBPrecoveritsprincipalloanamount,markup&penaltythroughthebanktowhichexporterhassubmittedhisrefinanceclaim.Refinanceallowsagainstvalueaddedproductsi.e.garments,print,dyedcloths,bed

sets.Proceedsrepatriatedthroughbankingchannels.Allowcreditloanamountwithin248hrs.MisutilizationofSBPfundshasbeenprohibited,ifanyviolationoccursSBPimposedpenalty.

Risk:

Iftheexporterhasbeen/willbedefaultedthelapsoffundsofauthorizeddealers.Cheatingormisuseoffunds,SBPmaycausetoimposenotanypenaltybutalso

terminationofbankemployeeorchangeofmanagementorauthorizeddealersreputationmaydestroy.

-----------------------Page30-----------------------

Howtooperatethisscheme?

SBPERFscheme


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PartIPartII

PostshipmentEEEFPreshipmentPartyrequeststatementstatementPartyrequestletterL/CsalescontracttotalrealizationitincludeL/CsalescontractUndertaking&negotiationtotalUndertakingDPnoteSBPfinancedrealizationDPnoteFormDFormE&notbutonwhichFormDCommercialinvoiceavailedSBPfinanceFormESBPProofofpurchaseBillofLadingfinanceofrawmaterialFormEavailednotinclude.

PartI:

Thismeansaftermakingashipmenttheexporterprepareallrelevantshippingdocumentsandevidenceofshipment.Theexportercontacthisbankw.r.ttolodgethedocumentsandsendaonesetofshippingdocumentstoexportfinancesdepartmenttoallowhimpostshipmentpartIunderSBPscheme.RequireddocumentsatthetimeoffinanceallowtopartyD/PnoteUndertakingonnonjudicialstamppaperL/C

PartyrequestletterFormDCommercialinvoice

-----------------------Page31-----------------------

Penalties:

Nonshipment37paisa/1000perdayShortshipmentDelayedshipmentLatesubmissionofdocumentstoSBP

Howtoavoidfrompenaltyofnonshipment?

ProvideproofofshipmentagainstrelevantsalescontractorL/ConwhichfinanceobtainSubstitutedtheoldL/CorcontractwithnewoneafterassurancethatagainstnewL/C.

Restrictions/prohibitions


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EvidenceofshipmentsubmittoSBPwithin180daysorwithintimeperiodfixedbySBPIncaseofsubstitutionagainstnewL/Corsalescontractmakesurethattheexporterhasnotavailedpreorpostshipmentfinancethroughanyotherbank.

Howtocalculatepenalty?

Nonshipment180days*1000000*0.37/1000=66600ShortshipmentFinanceamount1000000Shipment800000Shortshipmentamount=200000

180days*200000*0.37/1000=13320Incaseofpostshipmentonlylaterepaymentoffinancepenaltyisinvolved.

PartII:

Theauthorizeddealersprovidethisfinancefacilitytoexportersagainst

theirEEstatement.FromtheexportearningduringofonefiscalyeartheSBPsanctionalimitof50%fortheavailmentoftheERFpartII.IntheEEstatementallforeignbillsrealizedandnegotiatedduringaperiodof01-07-04to30-06-05areincludedinthisstatement.DocumentsrequiredatthetimeofsanctionoffinanceD/PnoteUndertakingonnonjudicialpaperPartyrequestletter

-----------------------Page32-----------------------

ShortfallinEEstatementpenalty:

Days*amountoffinance*rate(0.37)/day/1000

ShortfallinEF:

SBPcalculatecasetocasebasisdailyproductandmatchthiswithhisEFperformance,ifheavailexcessRefinancefromSBPandBusinessperformanceisshorttheSBPimposedashortfallpenalty.Totalshortproduct*numberofdays*0.37/180

DemandFinance&RunningFinance:

Demandfinance:

Thisiscommonformoffinancingtocommercialindustrialconcernsandismadeavailableeitheronpledgeorhypothecationofgoods,produceormerchandise.Indemandfinancethepartyisfinanceuptocertainlimiteitheratonceorasandwhenr


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equired.Thepartyduetofacilityofapayingmarkprefersthefinancinguponlyontheamountitactuallyutilizes.

RunningFinance:

ThisformoffinancingwasknownasOverdraftwhenabankcustomerrequirestemporaryaccommodation,hisbankerallowswithdrawalsfromhisaccountandrunningfinancethusoccurs.Theaccommodationsgenerallyallowedagainstcollateralsecurity.Thecustomerisinadvantageouspositioninarunningfinancebecausehehastopaymarkuponlyonbalanceoutstandingagainsthimondailyproductsbasis.

Pledge:

Itisentitledtotheexclusivepossessionofthepropertyuntilthedebtischarged.

Hypothecation:

Whenthepropertyinthegoodsischargedassecurityofloanfromthebankbuttheownership&possess

-----------------------Page33-----------------------

FAPC&FAFB:

FAPC(financeagainstpackingcredit):

Itisatypeofbanksownsourcefinanceprovidedtoclientsengagedinexporttrade.Asthetermpackingindicatesthatthecreditlineisgrantedtoanexpor

terforthepurposeofpackingmerchandiseforshipmenttoanimporterabroad.AnexportershouldgivedocumentaryprooftothebankconsistofL/Cinfavorofexporterindicatingthedescriptionofthemerchandise,thepurchaseprice,dateofdeliveryalongwithotherterms.

FAFB(financeagainstforeignbills):

Itisapostshipmentfinancefacilitywhichisprovidedbythebankstoitsclientsafterprovidingtheevidenceofshipment,hecontactshisbanktorequesthimto

lodgethedocuments.Hethenprovidetherequestletterwithsalecontracttogranthimfinance&thisdepartmentgranthimfinance(90%valueofcommercialinvoice).

-----------------------Page34-----------------------

Importsandexportsdepartment:

Exports:


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Introductionandregistration:

Importsandexportsact1950haveempoweredthefederalGovttocontroltheimport

andexportinPakistan.Pakistanisdevelopingcountryandlikeotherdevelopingcountriesits

importsexceedsthanexports.Tocontrolthissituationtheregistrationofimportandexport

hasbeenmadeobligatoryundertheregistrationorder1993.Theauthorityofregistrationhas

beengiventoexportpromotionbureau.Noimporterandexporterwhohasnogranted

registrationshallindent,importandexportofanygoodintooroutofPakistan.The

requirementsforgettingregistrationareasunder:

Applicationform.

PhotocopyofI.Dcard.

Copyofmemorandumandarticleofassociation(incaseoflimitedcompany).

Ownershipdeedofoffice.

Feepayment.

Certificateofincorporation.

Applicantshouldregulartaxpayer.

ThemajorexportsfromPakistanaresurgicalgoods,sportsgoodshandnotedgoods,leather

goods,textilegoods,etc.

-----------------------Page35-----------------------

Exportprocedure:

Alltheexportsworkundertheimportsandexportsactthatischangedbythestatein

everyyear.WhentheimportersendtheL.Ctobankinrespecttoimportorwhen

theL.C

comestotheadvisingbankfromtheissuingbankthentheconcernedofficerallotthenumber

totheL.Candgetregistered.Theconcernedofficerwritedownthenameofissuingbankand

thepartynameinaregisterandintimatethepartyaboutL.C.theexporterafterreceivingthe


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L.CfrombankwillpreparethedocumentsaspertheL.Cusuallythefollowingdocuments

havetobepreparedbytheexporter:

Billoflading

Coveringletter

E-Form

Billofexchange

Packinglist

Commercialinvoice

Quotadocumentsincaseofquotacountry

Certificateoforigin

Specialcustominvoice

Theexportform(E-FORM):

E-FORMmeansexportformwhichisthefirstandforemostrequirementforthe

exportsfromPakistan.ItiscontrolinstrumentbyGovtofPakistanbywhichitmonitorsthe

receiptsfromexportsandchecksthegoodsthataretransferredwithoutforeignexchange.all

bankswhichareengagedwiththeforeignexchangearerequiredtoprintandmaintainedthe

EformthatischeckedbythestatebankofPakistan.Forexportaneformisissuedbythe

bankontherequestletterofacompany.Twoseparateregistersaremaintainedbythebank

oneforhisuseandtheotheronearefortherequirementoftheSBP.OnissuanceofEforms

thebankerlistsitintheregisterandmakessignfromtheexporters.Banksrecordthenameof

party,amount,thegoodsdescription,portofdestination,importernameportofloadingetc.

-----------------------Page36-----------------------

ThefunctionalutilityofE-FORM:

Theexportformhasfourcopies.Theexportersandbanksuseit.Withoutitthe


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exportercannotmakeexport.Thesecopiesareusedas:

OriginalcopyisforSBPthatischeckedbythehigherauthority.

Duplicatecopyisforthebankusethatisupraisedbythecustomauthorities.

TriplicatefortheusetoreportofSBPatthetimeofpaymentreceived.

Quartiplacteisforthecompanyused.

UsageofE-FORM:

E-FORMisanimportantdocumentforexport.Ithasitsownimportancesuchasthis

formisusedasacheckermeansitmonitorthatwhatthingsaregoingabroadandinreturn

whatthingswearegetting.Soitcreatesacheckandbalanceontheforeignexchange.It

showsthetotalquantityandqualityofthegoodsthatissendingtoanothercountry.AnE

Formshoethepartyworththatisveryhelpfulforthepartyandthebank.Bankcancreatea

partylimitforthecreditonthebehalfofitandapartycanarrangealoanforitsfuture

requirementsfromthebank.Itshowsthetermsofpaymentbytheimporterandthedelivery

termsbythebothpartiesthatishelpfulincaseofanydiscrepancyduringthecontact.

Shortshipmentnotice:

Ashipmentmaybecancelledbytheimporterorexporterduetomanyreasons.

Thecancellationoftheexportletteriscalledshortshipmentnotice.Inthissituationthe

companyhastoinformthebank.Companyhastogiveawrittenlettertothebankthatheis

nottheexportsopleasecancelledtheireform.Ontheotherhandbankatthetimeof

receivingtheletterwillstoptheeformandcancelledthealldocuments.

-----------------------Page37-----------------------

IMPORTS

Importsregulation:

Importisbeingregulatedbytheministryofcommerceandthegovernment


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of

Pakistanundertheimportandexportact:

Categoriesofimports:

Importsareclassifiedintothefollowingcategories:

Commercialsectorimports

Industrialsectorimports

Publicsectorimports

Registrationofimporters:

Apersonwhowantstoapproachthebankforimportinggoodsfromabroad,he

shouldhavetogethimselfregisteredwiththeexportpromotionbureauunderregistration

ofimportsandexportsact.Hemustfulfillthefollowingconditionsbeforegettinghimself

registered:

NICNUMBER

NATIONALTAXNUMBER

MEMBEROFREGISTEREDASSOSITATION

Documentaryletterofcredit:

Adocumentaryletterofcreditisaninstrumentordocumentissuedbythebankon

thebehalfofacustomer,authorizingabeneficiarytodrawadraftanddraftsor

sometimestherequirementofadraft,whichwillbehonored,onpresentationbythebank

ifdrawnaccordancewiththete3rmandconditionspecifiedintheletterofcredit.

Itisthewrittenundertakingbythebank(issuingbank)paytotheseller(beneficiary)

attherequestoraspertheinstructiongivenbytheopener(applicant)payatsightorat

-----------------------Page38-----------------------

thefuturedate,astatedsumofmoneyagainsttherequireddocuments.Thedocuments

includethecommercialinvoice,certificateoforigin,insurancepolicyorcertificateand


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thedocumentsoftransportrelatingtothemodesendinggoods.L/Cisthereforeisan

arrangementofsecurityfortheparties.Theconditionalguaranteeisrelatedtothe

documentsonlyandnotontheunderlying

goodsorservices.

Establishmentofletterofcredit:

Procedure:

ThepersonapplyingfortheletterofcreditmustberegisteredwiththeEPB.Theopening

bankverifiesthisregistrationorotherwiseexemption.ThisismentionedintheIform.The

importeralsoshowsthevalidcertificateofanorganizationmembership.Acategorypass

bookisissuedbytheEPBforregisteredimporterspecifyinghiscategory.Thisbookis

centralizedbythecentralizedbanksinthecity.Itisnotnecessaryforthebanktoholdthe

originalcopyofthepassbookofalltheimporters.ButsometimestheimportergetsL.C

frommorethanonebanksothebankhavetoholdthephotocopyofthispassbook.The

applicantcangettheapplicationfromanybranchoftheHabibBankLimited.How

everonly

somebranchesareauthorizedtoopenL.C.Thatbrancheshowarenotauthorizedhaveto

contactwiththeauthorizedbranchestoopenanL.C.Theauthorizedbranchesinsuchcase

requirethecertificatefromtheapplicantbranchthattherequiredformalitiesarefulfilledand

theapprovalwasobtainedwithrequiredmargin.

Forestablishmentofletterofcredit,theimporterrequeststheopeningbankwiththe

followingdocuments:

-----------------------Page39-----------------------

1)ApplicationandagreementformIB-8:

Creditapplicationformisanagreementbetweenthebankandthecustomeron


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the

basisofwhichtheletterofcreditisopened.Thisformcontainstheundertakingofthe

importerthatgetthedocumentsfromthebankatthemarkupprice.Itcontainsthe

followinginformation:

Nameandaddressofimporter.

Nameandaddressofexporter.

Amountinforeigncurrency.

Termsofcredit.

Descriptionofgoods.

Originofgoods.

Portofloadinganddischarge.

Lastdateofshipment.

Foreignbankcharges.

Termsofshipment.(Partialshipmentortransshipment)

Insurancecovernote,policyno,andnameofinsurancecompany.

Forwardbooking.

Modeoftransmission.

Importregistrationno.

Anyotherdocumentsrequired.

Detaileddocuments.

-----------------------Page40-----------------------

2)Performainvoice/purchaseorder:

APerformainvoiceisquotationofsellercontainingthedescriptionandthe

specificationofthegoods,price,andtermsofthesale.Sometimestheexp

orterhastheir

agentinthecountry.TheagentmustberegisteredfromtheEPB.

3)Insurancecovernote:

Allthegoodsimportedunderthedocumentarycreditmustalwaysbeinsured.In

accordancewithourcountryimportpolicy,insuredmustbeissuedbyaPakis


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tani

insurancecompanyortheforeigncompanyoperatinginPakistanandsuchcompanymust

beapprovedbythebank.Insurancecoveredbasedonthefollowing:

ItisissuedinthenameofissuingbankA/Cimporter.

Theridershouldcoveragainstwar.

Theportofshipmentandtheportofdestination.

Amountofpremiumprepaid.

Shipmentperiod.

Thedescriptionofgoodsshouldbethesameaspertheform.

4)AppendixB:

ThisPerformareplacestheimportlicenseandissubmittedalongwithL.C

applicationformdulyfilledintriplicate.Itisconditionalundertakingthattheimportsgoods

arenotbanned,notsmuggled.Itisalsoanundertakingthatifthebankisunabletoarrange

thesaidcurrencytheimporterhavetopurchaseitfromotherbanksorfromanyotherplace.

Itincludesthedetailsanddescriptionofgoods,codes,class,type,sourceofimport,country

ofimport,Performainvoicenoetc.

-----------------------Page41-----------------------

5)IFORM:

ThisformisusedatthetimeofretirementofdocumentsagainstL.Cestablished

earlierforreportingtothetransactiontoSBPthroughthebillofentrydeptt.Ithasfour

copiesthatisusedasfollows:

OriginalisfortheuseofSBP.

Duplicatefortheauthorizeddealertobeusedforprocessingexchangecontrol.

Triplicatefortheauthorizeddealerrecord.

QuartiplacteisforthesubmissioninSBPinthecaseofimportwherethe


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documentsarenotretired.

Approvalforestablishmentofletterofcredit:

Afterscrutinyofthedocuments,IB-8alongwithattacheddocumentsisput

beforethecorporateheadforapproval.Iftheamountofapplicationexceedsthepowerof

thecorporateheadthebranchconcernedpreparedthememorandumforthecorporate

bankingheadforobtaininghisapproval.

Incasepartyenjoyingregularlimit,theL.Cisestablishedwithoutadoptingtheprocedure

mentionedabove.HowevertheamountofL.Cshouldnotexceedtheregularlimit.

Typesofletterofcredit:

1)Revocablecredit:

Theletterofcreditthatcanbecancelwiththeconsentofimporter,without

givinganypriorinformationtotheexporter.

2)Irrevocableletterofcredit:

Theletterofcreditthatcanbecancelledbythemutualconsentoftheboth

parties.Onlyonepartycannotcancelit.

-----------------------Page42-----------------------

3)Irrevocableconfirmedletterofcredit:

Whenanissuingbankauthorizesandorrequesttoanotherbanktoconfirm

hisirrevocablecreditandaddsitsconfirmation.Suchconfirmationconstitutesadefinite

undertakingofsuchbankinadditiontothatoftheissuingbank.Therearefollowing

otherletterofcredits:

1.RevolvingCredit

2.TransferableCredit

3.BacktoBackCredit

4.GreenClauseCredit


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5.RedClauseCredit

6.CleanDocumentaryCredit

7.TransitCredit

8.StandbyCredit

9.SightCredit

Partiestoacredit:

Theapplicant:

Theapplicantoftheletterofcreditiscalledtheimporterorbuyer.Thebuyerrequests

tothebanktoopenadocumentaryletterofcreditinfavoroftheseller.

Openingbank(issuingbankorimporterbank):

Attherequestoftheimporteranissuingbankissuesacreditundertheinstructionsin

thefavoroftheseller.

Advisingbank:

Anadvisingbankisabankinthesellerscountry.Theissuingbankforwardsthe

adviceofthecreditbymailorbyanymodetothecorrespondentbankintheexportercountry

asinstructionsoftheopener.

-----------------------Page43-----------------------

Beneficiary(exporter):

Thepersonorbodyreceivingtheletterofcreditfromtheimporterthatisopenedin

favorofhim.

Confirmingbank:

Thebankthatontherequestsoftheissuingbankaddsconfirmationtoacredit.Itis

definiteundertakingoftheconfirmingbank,inadditiontotheissuingbank.

Negotiatingbank:

ItMayormaynotbetheadvisingbank.Anauthorizedbankthatgivesthevalueto

thedraftforprocessingandpayment.

Reimbursingbank:


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Reimbursingbankisthebank,whichonthebehalfoftheopeningbank,honorsthe

Reimbursingclaimlodgedbythenegotiatingbank.

Modesofpayment:

Sightletterofcredit:

Thesellersubmitallthedocumentswithdraftintheimportercountry

Complyingwiththealltermsandconditions.Thepaymentsaremadeonthepresenceof

thedocuments.

Usanceletterofcredit:

Underthesecircumstancesitisagreedthatthepaymentwillbemadeaftera

specifiedperiod.Sothepaymentismadeafterorontheexpiryofthatdate

.

-----------------------Page44-----------------------

Risksforimporterandexporter:

Importersrisks:

Hedoesnotknowtheseller.

Hedoesnotknowthatgoodswillbedeliveredintime.

Hedoesnotknowhowtocheckthegoods.

Exportersrisks:

Hedoesnotknowthebuyer.

Hedoesnotknowthecreditworthinessofthebuyer.

Hedoesnotwaitforpayment.

Hedoesnotwaitforexchangecontrol.

Buyersandsellersobligations:

Thesellersobligations:

Provisionofgoodsaspercontract.

Licenseauthorizationandformalities.

Contractofcarriageandinsurance.

Deliveryattime.


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Transferofrisk.

Divisionofcost.

Noticetobuyer.

Proofofdelivery.

Goodcheckingmarkingandpacking.

Otherobligations.

-----------------------Page45-----------------------

Buyersobligations:

Paymentofprice.

Licenseauthorizationandformalities.

Contractofcarriageandinsurance.

TakingDeliveryattime.

Transferofrisk.

Divisionofcost.

Noticetoseller.

Proofofdelivery.

Inspectionofgoods.

Possibleproblemsininternationaltrade:

Non-payment.

Delayindelivery.

Financing,howandagainstwhat.

Currencyrestrictions.

Regulatoryrestrictions.

Documentationandmodeofsettlement.

ICCrulesandINCOterms.

-----------------------Page46-----------------------

HUMANRESOURCEDEPARTMENT

FUNCTIONALRESPONSIBILITIES:FUNCTIONALRESPONSIBILITIES:

RightNowtheresponsibilitiesassignedtoHRdepartmentatCorporateCentercanRightNowtheresponsibilitiesassignedtoHRdepartmentatCorporate


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Centercanbecategorizedunderthreeheads:becategorizedunderthreeheads:Staffmatters/BasicHRFunctionsStaffmatters/BasicHRFunctionsExpensescontrolExpensescontrolSecuritymattersSecuritymattersNowIlldiscusstheseonebyone:NowIlldiscusstheseonebyone:

Background:Background:

ThebankingcouncilofPakistanwasresponsiblefortherecruitment,selectionandallocationofhumanresources.AfterthedissolutionofthePakistanBankingCouncil,theBanking&FinancialServicesCommissionofPakistanisresponsiblefortheseactivities.

Procedure:

Staffrequirementsaremetaccordingtothechangingneedsofmacroenvironmentscenarioandparticularlythearisingneedsofthebankitself.Aneedanalysisisconducted.Afterassessingthehumanresourcesrequirementsandscreeningoftheapplications,mostprobably,thesuspectsareinvitedforawrittentest.Shortlistedcandidatesarecalledforaninterviewforpersonalityandsocialappraisal.Interviewsareamixofdirectandindirectinterviewingtechniquesandinformationrequired.TheselectedcandidatesaresentfortrainingofsixmonthstrainingfromMDIs.Thetrainingisthroughthelecturesregardingbankingproceduralg

uidelinesandotherbehavioralaspects.Afterthecompletionoftrainingemployeesareallocatedtodifferentoffices.Theeffectivemanagementofpeopleinanorganizationrequiresanunderstandingofmotivation,jobdesign,rewardsystems,andgroupinfluence.

RecruitingRecruitingRetentionRetentionSuccessionplanningSuccessionplanning

RiskManagementRiskManagementDiversityinourworkforceDiversityinourworkforceManagementinformationManagementinformationProgressivecompensationandbenefitsdesignandimplementationProgressivecompensationandbenefitsdesignandimplementationEmployeecommunicationsandrelationsEmployeecommunicationsandrelations


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Trainingneedsanalysis,programdesignandimplementationTrainingneedsanalysis,programdesignandimplementationPerformanceevaluationPerformanceevaluationWork-lifeinitiatives

-----------------------Page47-----------------------

CREDIT&ADMINISTRATIONDEPARTMENT

TheresponsibilityofprovidingadministrativesupportforthelendingactivitiesoftheTheresponsibilityofprovidingadministrativesupportforthelendingactivitiesoftheBank,andday-to-daymonitoringofcredit-exposure,isvestedintheCreditAdministrationBank,andday-to-daymonitoringofcredit-exposure,isvestedintheCreditAdministrationDepartment(CAD).Department(CAD).

FUNCTIONALRESPONSIBILITIES:FUNCTIONALRESPONSIBILITIES:

Themainresponsibilitiesunderthisdepartmentare:Themainresponsibilitiesunderthisdepartmentare:ImplementationofcreditfacilityandtheirmaintenanceaccordingtotermsofcreditImplementationofcreditfacilityandtheirmaintenanceaccordingtotermsofcreditapproved.approved.EnsurethatstandardloandocumentationforeachcreditfacilityismaintainedandtheEnsurethatstandardloandocumentationforeachcreditfacilityismaintainedandthe

correctness&completenessofsuchdocumentationandalsoresponsibleforcustodycorrectness&completenessofsuchdocumentationandalsoresponsibleforcustodyofallcreditfiles.ofallcreditfiles.MaintainthesafecustodyofallcollateralasperbanksstandardoperatingMaintainthesafecustodyofallcollateralasperbanksstandardoperatingprocedures;undertakeperiodicevaluationandinspectionofhypothecated/pledgedprocedures;undertakeperiodicevaluationandinspectionofhypothecated/pledgedinventoriesinaccordancewiththetermsofcredit.

inventoriesinaccordancewiththetermsofcredit.EnsurecompliancewithEnsurecompliancewithoInstitutionalcreditpolicies&proceduresoInstitutionalcreditpolicies&proceduresoLocalregulatoryrequirements.oLocalregulatoryrequirements.PreparevariousportfoliocompositionreportsandotherdocumentationforPreparevariousportfoliocompositionreportsandotherdocumentationforsubmissiontoGRMs&RMs.


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submissiontoGRMs&RMs.

CREDITFACILITYIMPLEMENTATIONPROCEDURE:CREDITFACILITYIMPLEMENTATIONPROCEDURE:

Uponapprovalofcreditproposal,thecreditproposalandapprovalarehandedovertoUponapprovalofcreditproposal,thecreditproposalandapprovalarehandedovertoCAD.NowCADdeterminesthenatureofdocumentationrequiredandonreceiptofsameCAD.NowCADdeterminesthenatureofdocumentationrequiredandonreceiptofsameensuresthatalllegaldocumentsareobtainedandarelegallyenforceable.Afteralltheseensuresthatalllegaldocumentsareobtainedandarelegallyenforceable.Afteralltheseactivitiesitcanreleasethefacilityforutilization.activitiesitcanreleasethefacilityforutilization.

-----------------------Page48-----------------------

MARKETINGDEPARTMENT

ThemarketingdepartmentinHABIBBANKLIMITEDisverystrong.Itisthemainsourceofgainingandmaintainsthecustomersthatcangivealargeprofittothebank.TherearefiverelationshipmanagersinHabibbankandeverypersonisresponsibleforthecreditofhisparty.

CUSTOMERDEALING:

HBLcorporatecenteronlydealwiththefollowingcategoriesofbusiness:

Theorganizationthathaveminimum250millionsalesinayear.

Theorganizationthathaveavailed80millionfinanceAgribasedindustry.HBLdonotdealwiththeagriculturesector.

PROCEDUREFORCREDITAPPROVAL:

Itistheresponsibilityoftherelationshipmanagertoprovideorfulfilltherequirementofthecustomerbycheckinghisfinancialandposition.Theprocedureofcreditapprovalstartswiththecreditproposal.FirstofallthecustomerrequesttothebankforcreditandonthebehalfofhimtheRMcheckthememorandum.The

Memorandumincludes:

Thecompanyinformation.Purposeofcredit.Assessmentofmanagement.Risks.Financialanalysis.Thirdpartyorotherbankinformation.Conclusionandrecommendations.


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ThentheRMsendsittotheauthoritieswhoacceptorrejecttheproposal.Iftheyaccepttheproposaltheyannouncedacreditrangefortheparty.AttheendRMsendstheproposaltoCADdepttcustodyandcheck.

-----------------------Page49-----------------------

EXCESSFACILITYCREDITBYRM:

Relationshipmanagerisauthorizedtoprovidetheexcessfacilitytothecustomerthanthecreditline.Itmaybeupto

10percentofexcessamount

OR

12.5millionWhicheverisless?

Itisnotmorethan15daysifthecustomerwantstoincreasethisfacilityhehastocontactwiththeheadoffice.

TYPESOFCREDITFACILITY:

1)fundbased:Itisfirsttypeofcreditfacility.Inthisfacilitythebankactuallyprovidesfundtocustomers.2)nonfundbase:Secondtypeofcreditfacilitythatdoesnotprovidesfunbutonlygivetheguarantee.Ifthecustomerisunabletomakethepaymentatmaturitydatethenbankwillberesponsibletomakethepayment.

-----------------------Page50-----------------------

WorkdonebymeinHBL

ACCONTSOPENINGDEPARTMENT:

InthisaccountdepartmentIgaintheparticleknowledgeaboutopening.This

departmentdealswithopeningaccountandsavingaccountforitscustomerandallmatters

regardingthereoff.Thecustomeropeningaccount/savingaccounts

canbecategorizedas

following:

1)individual

2)firm

3)company


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4)trust

5)staff

6)others

OPENINGANACOOUNT:

Inordertoopenanaccountfirstofallthecustomerhastofillaformprescribedby

thebank.Thepersonisrequiredtobringsomereferenceorintroductionforopeningthe

account.IntroducermaybeapersonwhohasanaccountwithHBL.

Someimportantinformationregardingintroducere.g.thenameandaccountnumber

oftheintroduceriswrittenonthespaceprovidedonthespecimensignaturecards.Thenin

ordertofindoutwhetherheisatrueintroducerornotaletterissenttohimthankinghimfor

thisintroduction,sothatanythingwrongmaycomeintonotice.

Therearedifferentrequirementfordifferenttypesofaccountsandaccountholders.

Animportantthingisthatthecustomershouldhaveacorporatecustomer.Thecorporate

customerlimitis40millionandthisbranchalwaysdealsthecorporatecustomer.

-----------------------Page51-----------------------

Generalrulesforopeninganaccount:

Onepersoncanopenonlyoneaccountinthesamebranchwiththesamecategory.

Intheeventofdeathofanaccountholderthecreditbalancewillbetransfertothe

heirsofthediseasedindividualaccount.

Serviceschargeswillbedeductedperiodicallyasprescribedfromtimetotimeonthe

accountsthatareunderthelimitofspecificaccount.

Serviceschargesarenotapplicableonthataccountsthatareprescribedasexempted.

Adistinctivenumberwillbeallottedtotheeachaccount.

Thebankcanclosethoseaccountsthatareundertheminimumlimitofthebank.


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Anysumtobedepositedintheaccountshouldbeaccompaniedbypayinginslip

showingthepartyaccountnumberandthename.

Accountholdercanonlywithdrawthesumofmoneybyhisownaccountbycheque.

Chequeshouldbesignedbytheaccountholderbythespecimengivenbythebank.

Postdatedanddefectivechequeisnotaccepted.

Ifstatementofaccountspoiledanewwillbeissuedoncost.

Anychangeintheaddressshouldimmediatelycommunicatetothebank.

Theaccountholderwishingtoclosetheaccountmustsurrenderthechequebook.

Accountmaybetransferfromonebranchtoanothersamebranchwithoutany

chargesetc.

-----------------------Page52-----------------------

DEPOSITDEPARTMENT

DepositarethebloodofaBank

Iworkedinthisdepttforoneweekandlearnedthattheacceptanceofdepositisthe

realsourceofincomeofabank.DepositDepartmentisthebackboneofcommercialbanking.

Depositisoftenusedtodescribethemoneywhichcustomersofallkindsleavewiththe

bank.Depositaccountcanbedefinedasanaccount,whichisopenedtoearninterest.

Thetermdepositishighlymisleading.Itisnotsomethingdepositedforsafedepositbox.

Bankdepositisnotlikethat;whenonebringscurrencytothebankfordepositthebankdoes

notputthecurrencyinthevault.Itmayputsmallfractionof

thecurrencyinthevaultas

Reservebutitwilllendmostofdepositstosomeoneelse.

Theentirebankingsystemisbaseduponborrowing.Likeallbanks,depositdepartmenthas

acknowledgeditsworthasthemostimportant.Almostalltheoperationsgeneratedfromthe


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depositdepartmentandwithduecourseoftimereflectbacktothedepositdepartment.In

ordertoattractfundsbankhasintroducedvarioustypesofdepositschemesthatmaysuitthe

needandtastesofalargenumberofdepositors.

TYPESOFDEPOSITFACILITY:

Depositsarebroadlyclassifiedintothefollowingthreecategories:

i)Demanddeposits

ii)Savingdeposits

iii)Timedeposits

Theprocedureundertakenuponreceivingdepositsfromthecustomerisasfollows:

1)Examiningthedepositsliptoensurethatthenameandtheaccountnumbersareclearly

indicated.

2)Countingthecash/chequeandagreethetotalwiththeamountonthedepositslip.

3)Afterthatthepay-in-slipisvalidatedforcashtransaction/transfer/clearingtransferas

appropriatebeforethecounterfoilahandedoverthecustomer.

-----------------------Page53-----------------------

4)Chequeassignedbythedirector,partners,employeesofacompany,drawn

infavorof

themselvesandcreditedintheiraccountinthebankaretobescrutinized

WITHDRAWALS:

Anamountcanbewithdrawnbythecheque.Thewithdrawalscanbemadeonlyat

branchwheretheaccountismaintained.Allcashwithdrawalswillbemadeunderaccount

holdersfullsignature.Oneortwobankofficershavetoverifythesignature.

Incurrentaccountthebankdoesnotofferanyinterest.Wecandepositandwithdraw

anyamountduringthebankinghours.

ISSUANCEOFCHEQUEBOOK:

Theaccountholderrequestsforanewchequebookbypresentingtherequisitionslip


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alongwiththeauthoritylettertotheconcernedofficer.Hissignaturewasverifiedbefore

givinghimthenewchequebook.Oneortwobankofficershavetoverifythesignature

-----------------------Page54-----------------------

REMITTANCESDEPARTMENT:

Iworkinthisdepartmentforoneweek;thisdepartmentdealsintransferofmoney

fromoneplacetoanotherorcountryby:

1)Demanddraft

2)Mailtransfer

3)Telegraphictransfer

Inthisdepartmentinterneesareadvisedtoobservetheworkingoftransferofmoneyfrom

oneplacetoanotherplaceorcountrybytheabovemodeoftransferringmoney.Duringmy

stayinthisdepartmentIobservedthathowdemandsdraftbeissued.

Theprocedureisasfollows:

Firstabankreceivesarequestfromthecustomertoissueabankdraft.Thewritten

requestiseitherinabanksstandardfromorseparatepapersignedbytheapplicantwithcash

orchequecoveringtheamountofthedraftandotherchargesofthebank.

Whileissuingabankdraftitisnecessarythattheyshouldbefreefromalternations.

Allthedetailsmustbewrittenclearlyinink.Afterissuingademanddraftitishandedoverto

theapplicantanditadvicecontainingtheparticularsofthedraftissenttodrawerbranchwith

itisnecessaryinformationandpaymentofthedraftismadeonitspresentation

oraccording

tothetermsandconditionofthemodeoftransfer.

-----------------------Page55-----------------------

FinancialAnalysisoftheclient

GroupOverview:


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RafiqGroupisconsistingof:

1.MuhammadAnwar&BrothersCottonFiberRecoveryPlant.2.QutubTextileMills(Pvt)Limited3.RafiqSpinningMills(Pvt)Limited

1.MUHAMMADANWAR&BROTHERSCOTTONFIBRERECOVERYPLANT:

Thegroupstartedtextilewastebusiness20yearsagoandestablishedcottonfiberrecoveryplantinFaisalabad.Itistheparentcompanyofthegroup.Annualproductioncapacityoftheplantisapprox.150,000tons.Therawmaterialisprocuredmainlyfromopenmarketandaverynegligiblequantityisobtainedfromtheirtwosisterconcerns

2.QUTUBTEXTILEMILLS(PVT)LIMITED:

QutubTextileMills(Pvt)LimitedissituatedinSheikhupura.Theunitwasestablishedfiveyearsagowith1600rotors.RafiqSpinningMills(Pvt)Ltdi

sutilizingtheproductionfacilitiesofQTMunderleasearrangements..3.RAFIQSPINNINGMILLS(PVT)LIMITED:

Aftersuccessfuloperationoftheabovetwoprojects,thegroupestablishedanotheruniton11.11.1997inthenameofRafiqSpinningMills(Pvt)Limited,consistingof3,000openendedrotors.ItstarteditscommercialproductioninApril1998andisshowingprofitscontinuously.TheCompanyhasundertakenexpansionoftheunitbyinstalling16,980

spindles.Thecompanythroughtheirownsourceshasimportedthemachinery.Havingasuccessfulexperience,nowthecompanyisonceagaingoingintoexpansionbysettingup15,480spindles.

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MEMORANDUM

RAFIQSPINNINGMILLSPRIVATELIMITED

1.PURPOSE

Thismemorandumisbeingsubmittedforrenewalofexistingworkingcapitalfacilities,whichareasunder:

1.CashfinancePKR150.0Million2.RunningFinancePKR.50Million3.LetterofCredit


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PKR.10.0Million

2.CREDITFACILITIESANDTRANSACTIONSTRUCTURE

1.CashFinance(Pledge)forPKR150.0M:

ThecompanyhasbeenavailingregularfacilityofPKR.150MforcottonPledge,purposebeingtopurchasestockofcottonforfullyearrequirements.Presently16,980spindlesofthecompanysRingSpinningUnitareoperative.Consideringthecurrentyearscottonpricestheexistingfacilitystandssufficientforthecompany;companyhasrequestedforrenewalofthesame.

TocaterLiquidityneedsduringtemporaryslumpperiod,thefacilityforthepledgeofyarnbagstotheextentof10%ofoveralllimitwillalsobeavailable,however,thefacilitywillbesubjecttoamarginof25%forpledgeofyarn.

ThepledgedstockswillbestoredinGo-downs/opencompoundatmillpremises

dulyinsuredandundercustodyofourMacadam.ThepledgeshallbeallowedatKCAratesmaintainingMarginof10%andshallbereleasedagainstcashpayment.

Markup:

MarkupwillbechargedatBaseRateplus1.5%,Baserateisdefinedasthe6monthsKIBORwhereKIBORisdefinedastheAveragerate,Askside,fortherelevanttenor,aspublishedonReuterspageKIBORoraspublishedbytheFinancialMarketsAssociationofPakistanincasetheReuterspageisunavailable.

2.RunningfinanceforPKR50.0M:

Runningfinancefacilitywillbeutilizedtofinancecostofworkinprocess,StoresandSparesandotherdailyexpenses.ThefacilitywillbesecuredthroughourChargeonCurrentaswellasFixedAssetsoftheCompanyincludingpersonalguaranteesofdirectors.Markupwillbechargedat6MonthsKiborPlus1.5%.

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3.InlandForeignLetterofCreditforPKR10.0M:

Tomeetstores,sparesandimportedcottonrequirements,thecompanyintendstoavailL/CfacilityofPKR10.0M.ThefacilityshallbesecuredagainstourlienonimportshippingdocumentsinadditiontoourChargeonFixedAssetsoftheCompany.

LCCommission:LCCommission:


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LCcommissionontheproposedfacilitywillbeasperlatestscheduleofcharges.LCcommissionontheproposedfacilitywillbeasperlatestscheduleofcharges.

3.WAYSOUTANALYSIS:

PRIMARYSOURCE:

Throughsalesproceedi.e.internalcashflowsofthecompany.DuringFY05,companygeneratedgrossoperatingfundsofPKR.28.962M.

SECONDARYSOURCE:

JPPfirstchargeonallcurrentassetsofworthPKR.178M,oursharestandsat70.00M,whichistobeenforcedincaseneeded.Marketvalueofcurrentassetsis352.741M.JPPfirstchargeonallfixedassetsofworthPKR188M,oursharestandsat120M,whichistobeenforcedincaseneeded.

4.BUSINESSUPDATE/COMPANYSTRATEGY:

Thegroupisincottonwaste/spinningsectorforlasttwentyyears.Yarnproducedbycompanyisutilizedasrawmaterialintowelindustry.Buyersofcompanyarelocatedinallmajorcities;however,mostofthebuyersareresidinginKarachi.Companyispursuingthepolicyoflargenumberofbuyers.Daysreceivableshavebeennominalovertheyearssincesellingtermsofthecompanyareoncashbasis,thistrulyindicatesqualityandpenetrationofcompanysproductsinthemarket.Majorbuyersofcompanyareasunder:

MAJORBUYERS:

J.SONSTEXTILEKARACHIJ.K.SONS(PVT)LTDFAISALABADHIRATEXTILEMILLSLTDLAHOREJANNATAPPAREL(PVT)LTDFAISALABADSHARIFSONSFAISALABADAMTEXFAISALABADBABARHOISERYKNITTINGFAISALABAD

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MAJORSUPPLIERS:

ITTIFAQCORPORATIONSADIQABADSEVENSEASINDUSTRIESSADIQABADALAMINCOTTONFACTORTYBUREWALAREHMANCOTTONGINNERSBAHAWLNAGURINDUSGINNERSRAJUNPURYASIRSHAHZADCOTTONGINNERS

INDUSTRYANALYSIS:


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RefertoHOKindustryreport.

5.MANAGEMENT:

Mr.MuhammadAnwaristheChiefExecutiveandChairmanoftheCompany,havingmorethan20yearsofexperienceinthelineofbusinessbeginningwiththewasterecoveryunit.Heisresponsiblefortheprocurementofrawmaterialforallthegroupcompanies.

Mr.MuhammadSiddiqisyoungerbrotherofMr.AnwarislookingafterSalesandmarketingoftheCompany.Itispertinenttomentionthatdirectorsofthecompanyhavenoimpressiveeducationalbackground,yettheyhaverichexperienceoftheirlineofbusinessintheircredit.

6.FINANCIALANALYSIS:

AmountinPKRMillion

ParticularsSep30,2003Sep30,2004June30,2005

AuditedAudited(9-Months)

Audited

Sales568985691

Operatingprofit27.18215.21424.786

Gross-Margin12.4%7%9.1

Net-Margin1.7%0.4%0.5%

Interestcoverage1.7x1.3x1.3x

Debtservicecoverage1.5x1.2x

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INCOMESTATEMENT:

Sales:

SalesofthecompanyhavebeenimprovingovertheyearsandincreasedtoPKR985MINFY-04from568Minyear03owingtoincreased&f

ocusedmarketingefforts,establishmentofnewlocalmarketsbackedbyenhancedproduction.WhileFortheninemonthsauditedfinancialsofyear05salesstandat737.774M.Yarn.16single,20single,24single,40singlearethedifferentqualitiesofyarnbeingproducedbythecompanywithpricesrangingfrom3200perbagto5600perbag.

GrossprofitMargin:


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Grossprofitmarginincreasedfrom7%to9.1%inyear2005duetodecreaseincostofgoodssoldwhilecostofgoodssolddecreasedmainlyduetosubstantialdropinpricesofcottoninyear2005inadditiontothis,Lowerpower&fuelconsumptioncostisoneofthereasonssupportingcostefficiencyandeffectiveness,consequentlyleadingtohighergrossprofitmargininyear2005.

Operatingprofit:

Operatingprofitincreasedfrom15.214M(1.5%)inyear04to24.786M(3.4%)inyear05mainlyduetocarryforwardimpactoflowerCOGShappenedduetolowercottonpricesduringtheyearunderreview.

Netmargin:

Theprofitabilityshowninthefinancialsistaxtailored,actuallytheirnetmarginsfallbetween5to6%.Thereisnosignificantimprovementinnetmargin,intermsof

percentagebecauseofhighfinancialscostduringtheyear,asthesamehasimprovedto0.5%fromprevious0.4%.

DebtServiceCoverageRatio:

Debtservicecoverageratiostandsat1.5x&1.2xinyear04and05,themainreasonforrelativelylowerDebttoservicecoverageislowerprofitabilityshowninbookswhicharemoreoftentax-tailored.

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BALANCESHEET:

particularsSep30,03Sep30,04June30,05AuditedAudited9-MonthsAudited

Currentratio1.1x0.8x1.1x

Quickratio0.4x0.2x0.4x

Leverage(1.0x1.8x2.7x

TL/NW)DaysReceivable264

DaysInventory3060136

Dayspayable533

NetWorth172176180

LIQUIDITY:


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Thecurrentassetsincreasedfrom198.582MIn04to383.891Min05,thisincreaseincurrentassetsismainlyassociatedwithsubstantialriseincash&marketablesecuritiesandinventory.CashandmarketablesecuritieswerebuilttoaccommodatebanksfortheirJuneclosingfigures.InadditiontothistheamountofcashalsoincludesPKR74MlyinginescrowaccountofBankAlfalahassponsorsequitybecausethecompanyisunderprocessofexpansionforwhichtheyhavealsogoneforconsortiumfinancefromBAL&ABL.Sufficientstockatlowerpricesisinevitableforprofitabilityintextileindustry;pricesofcottonwentdowninearly2005whichpromptedthebuyerstostockcottoninordertomaximizegains.Receivableshavebeennominalovertheyears,whichhighlightcompanyspolicyofsalesoncashbasis.Receivablesstandat7.566Minyear05ascomparedto16.361M.Thecurrentliabilitiesincreasedfrom244.565Min04to342..120Min05,thisincreaseismainlyduetoincreaseinshorttermdebt(ExposureofWorkingcapitallinesfr

ombanks)andthisfactorisverymuchobviousduetoincreaseincompanysoperations.Moreprecisely,theshorttermborrowingswereraisedbyPKR100M,duringtheyearunderreview,andthe

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samehasbeeninvestedininventorywhichincreasedbyPKR100mfullycomplyingthematchingprinciplerequirement.

LONGTERMLIABILITIES:

TotalLongtermliabilitiesincreasedfrom62.513Min04to139.797Min2005,mainlyduetoincreaseinDirectorsLoanasthecompanyisunderprocessofexpansion(newRingspinningunit)andhasmadeinvestmentofitssharethroughdirectorsloanasauthorisedcapitalofthecompanyhasbeenmatured.InadditiontothiscompanyhasalsogoneforsyndicationwithBANKALFALAHLtdandALLIEDBANKLTDandcashinvestedbythesponsorsthroughdirectorsloanislyinginescrowaccountsparkedinthesebanks.

LEVERAGE:

Thecompanyhasbeenlowleveragedovertheyearswithleveragestandingat1.8x&2..7xinyear04&05respectively,TotalNetWorthincreasedduringtheperiod03-05from172MTO180Mduetoincreaseinretainedearningsovertheperiod.Paid-up-capitalstayssameat150Mduringtheperiod03-05.


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CASHFLOW:

Duringtheyear2005,grossoperatingfundsgeneratedwerePKR28.962M.ThecompanygeneratednetoperatingcashdeficitofPKR73.917Mduringtheyear.Theoperatingneedsincreasedby93.683Mowingtogrowthinsales,ontheothersideoperatingsourceswerereducedby9.196Mbecauseofcompanyspolicyofreplacingcostlymarketcreditthusrenderingincreaseinworkingcapitalrequirementsby102..879M.theinventoryrequirementsincreasedby99.771MwhichwerefinancedthruincreaseinshortttermborrowingsbyPKR.99.548Mandremainingthroughgrossoperatingfundsgenerated.CAPEXofPKR12.383wasmadeduringtheyear,whichwasfinancedthrugrossoperatingfundsgeneratedofPKR28.962M.

ProjectionsProjections

Thecompanyhasprojecteditstotalsalestobearo

und1034Mby30thJune2006.Theseprojectionsaresupportedbythefactthattheirsalesbytheendof31stDec

2005(fromJuly01,2005toDec31,2005)were503.479M.Thisyearcompanyhasalsoroutedexportbusinessof12MtoKorea.Netfixedassetsareprojectedtogrowaround614Msincecompanyisintendingtoundertaketheexpansionproject(NewRingSpinning)intheyearunderprojection.Onthesourcesidethelongtermliabilitiesareprojectedtobearound434M,thecompanywantstofinancetheproposedprojectthru

Directorsloan(222M),inadditiontothisthecompanyhasalsogoneforthesyndication(LongtermseniorDebtofPKR210M)withBAL&ABL.

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Grossoperatingfundsgeneratedareprojectedtobearound33.747M.TotalNon-Operatingneedsinyear06willbe366MduetoincreaseinproposedCAPEX,ontheotherhandtheNon-operatingsourcesidewillincreaseby289MtofinanceNon-operatingneed.

7.CRITICALSUCCESSANDRISKFACTORS

CriticalSuccessFactors:

1-LowerCosts(economiesoflargescale).2-AccesstorequiredWorkingCapitalLines.3-Longexperienceofspinning.4-EfficiencyofOperations.5-HighCapacityUtilization.


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CriticalRiskFactors:

1-RecessionintheGlobalTextileIndustry.2-GOPPolicies.3-DeteriorationinLaw&Orderinthecountry.4-Marginsdependtoanextentonsize&qualityofCottonCrops.5-ForeignCompetitioninwakeofWTO.

MitigatingFactorsMitigatingFactors

Mitigatingfactorstotheserisksinclude;

1.Newspinningunitwillenablethecompanytoenjoyeconomiesoflargescaleproduction,reducecosts,improvequalityoftheirproductsandenhancetheirproductiveefficiency.2.GOPpoliciesarecomparativelystableandaseparateministryfortextilehasbeenestablishedwithaleadingTextilefigurebeinginchair.3.Thecompanyhasalwaysemphasizedonsheercommitmentforqualityimprovementtocapturethemarket.

4.Regardingrisksassociatedwithsize/qualityofcottoncrop,theyhavesufficientliquidity(duetoavailabilityofrequiredcreditlines)whichallowsprocuringcottonattherighttimeandcompetitiveprices.5.ExperiencedtechnicalandoperationalstafftoensuresmoothoperationoftheUnit.6.Thecompanyenjoystheedgeofcomparativelycheaprawmaterialandlaborforcewhilemaintainingstrictqualitymeasuresatparwithinternationalstandards.Newspinningunitwillenablethecompanytoenjoye

conomiesoflarge-scaleproduction.

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8.THIRDPARTYINFORMATION:

Thesponsorsenjoyexcellentrelationshipwithbanksandarehighlyregardedfortheirreputationofmeetingtheirfinancialobligationsonti

9.ACCOUNTRELATIONSHIPSTRATEGY:

Rafiqisoneofourvaluedclientswithcleanhistoryofrelationshipspanningwelloverfouryears.Keepinginviewsufficientequityinjection,comfortablelevelofleverage,momentumofgrowthinsalesandateamofprofessionalstolookafterthetechnical,operational&marketingaspectsofthebusinessweshouldenhanceourrelationshipwiththecustomerwhileoptingtheGrowthstrategy.


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10.CONCLUSION/RECOMMENDATIONS:

RAFIQhasbecomeacreditablenameinthetextileindustryofFaisalabad.Inabidtoprepareitselfforthechallenges/opportunitiesofthebarrierfreetradeTextileVision2005,theirplannedspinningunitwillhelpthemreapthebenefitswithcompetitiveedgeofcosteffective,qualityproducts.Thecompanyhasalreadystartedexportingqualityyarntovariousbuyersintheregion.Wemayimprovenetreturnonfundedfacilitiesfromtherelationshipbyrationalizingthecreditportfolioinaccordancewiththeirfinancialrequirementsasproposed.Inviewoftheabove,werecommendtheproposalforapproval.