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Reliance Weaving Mills Ltd.

INTERNSHIP REPORT

RELIANCE WEAVING MILLS LTD

Khanewal Road, Multan

Submitted by:

MUHAMMAD ADNANMBA (Finance)

Registration #: 22Session 2009-11

DEPARTMENT OF BUSINESS ADMINISTRATION

THE UNIVERSITY OF LAHORE

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It is with great respect that this work

is dedicated to

MY PARENTS

whose blessings serve as

inspiration to me

without whom nothing would be

possible.

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ACKNOWLEDGEMENT

Praise to Almighty Allah and His Prophet, Muhammad (PBUH) Who

blessed me with the potential and ability to complete this study.

I am also indebted to the eminent academicians my teachers,

Mr. Khalid Aziz, Mr. Malik Mubashir from whom I have learned a great

deal of knowledge, at different stages during my stay in the

Department. In addition, my class-fellows, particularly deserve my

deep and sincere gratitude for their cooperation, and assistance during

this research.

In the end, I find no words to express my feelings of gratitude

and profound admiration to my affectionate father and mother for their

invocations and benedictions, my brother for his moral support to

carry myself through noble ideas of life, and my sisters for their

devotions, innocent smiles and love. I can do no more than reaffirm

my devotions to all members of my family.

M. Adnan Nazir

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RELIANCE WEAVING MILLS LTD is located in Multan. Relianceweaving Mills Ltd. (RWML) is part of the Fatima Group. Fatima Group

established RWML on April 7, 1990 as a public limited company and

obtained certificate for commencement of business on May 14, 1990.

I visited RELIANCE WEAVING MILLS LTD three times for my

report and was always warmly welcomed by their management and

employees. All machinery installed in the mill is American. Plans andstrategies are made in the head Office. Raw materials purchase

decision is also made in the Head Office. Employees work in three

shifts, whereas these are both permanent and on daily wages.

The mills units is supported by different facilities as canteen, store

room, laboratory, godown, and many others. The production process

is divided into two sections:

In this report I have done SWOT analysis of RWML. Good quality

with reasonable price is the major strength of RWML. Export sales

cover major portion of total sales due to good quality. They contain

very low portion of local market. Centralized decision-making is one of

the weaknesses of the RWML, but good management covers this

weakness in an appreciable manner. So for as Account department is

concerned though there is a little bit workload on the employees, but

inside friendly environment helps a lot to cover these tasks without

fatiguenes and boredom.

Finaly I have given some recommendations to cover these threats. My

suggestions were highly appreciated by the management of RWML.

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INTRODUCTION TO TEXTILE SECTORInternship Report 6


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Textile includes all the business related with yarn and cloths, so all the

business from Cotton Ginning to Cloth and Apparel manufacturing

comes under the Textiles. There are different functions of Textiles,

which are as under:

Ginning

This is the first stage where cotton is separated from the seeds. Raw

material of this stage is Cotton Seed. RELIANCE WEAVING MILLS LTD

does not deal in this function.

Spinning

Raw material of this stage is Ginned Cotton. This cotton is spun to

make yarn. Yarn produced in various qualities, this is the main raw

material of RELIANCE WEAVING MILLS LTD, which is purchase from

local market.

Weaving

In weaving unit yarn is converted into cloth through power looms orthrough hand driven machines. RELIANCE WEAVING MILLS LTD,

engaged in this function.

Processing and Dying

Cloth is further processed and it could be used for a lot of purposes,

like Bed Sheets and Garments etc.

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Cutting and Stitching

This is a final use of cloth in which Cloth is cut and stitching made by

the exporter than it commercializes to various importers of the

garments through wide world marketing department.

History of the Textile Industry

Whilst farmers were developing new and better methods of

agriculture, life in other areas of work had changed little for hundreds

of years. Early in the 18th century, most of the population still lived in

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small, rural settlements. Few people lived in towns, as we now know

them.

Many people worked as producers of woolen and cotton cloth. They

cleaned, combed, spun, dyed and many people worked as producers of

woolen cloth. They cleaned, combed, spun, dye and wove the raw

material into cloth. They did this work in their own houses. This type of

production has become known by the general term of the Domestic (or

Cottage) Industry.

Work within the Cottage Industry was usually divided up between the

members of one family. The women and girls were responsible for

cleaning the sheep fleeces, carding the wool and spinning it. The

process of weaving was physically hard work and, traditionally, it was

the men who were responsible for it.

Generally, at regular intervals, a cloth merchant visited each handloom

weavers cottage. He would bring the raw material and take away the

finished cloth to sell at the cloth hall.

As soon as the new wool arrived, it was washed to clean out all the dirt

and natural oil. After this, it was dyed with color and carded. This was

the process of combing the wool between two parallel pads of nails,

until all the fibers were laying the same way.

Next, the carded wool was taken by the spinner and, using a spinning

wheel, the thread was wound onto a bobbin. The unmarried daughtersof the household who were called spinsters often performed this part

of the process. The term spinster still exists in English to mean an

unmarried lady. The spun yarn was then taken to the loom to be

woven. In a weaver's cottage, the loom was often to be found on an

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upper floor. There were large windows in the room to let in plenty of

daylight. The loom was worked by both hand and foot movements.

Working the loom was quite strenuous work, which is why it was

traditionally the work of the men of the household.

TEXTILE INDUSTRY IN PAKISTANTextile is the important sector of Pakistans economy. It is playing the

important t role in economy of Pakistan and fulfilling the 65% export

target.

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PERFORMANCE

The textile industry which is endowed with a strong base of

weaving had started its journey from almost non existence in 1947

with a meager size of 3000 shuttle looms that is too in the

unorganized sector with only 10 textile units. The industry has gone

through a long way and now possesses 220 units, 45000 looms in

which include more or less 30000 shuttles looms. The textile industry

is not only catering to the entire local requirement but sharing out

65% of the total foreign exchange earning.

Pakistan being the fifth largest cotton producing country

provides a strong base for development sustenance of the textile

industry. In spite of tremendous growth in all the peripheral areas of

the textile industry includes cotton, ginning spinning, processing and

made up sector. This industry which is the main pillar of the economy

has not attained its optimum potential so far.

The textile industry at present is passing through a transition

phase. It is sailing smoothly under the protected cover of quota

systems. How ever it has to face the rough water to open the sea

when globalization of trade is implemented under` WTO agreement in

2004.

CAPACITY INSTALLED

OPERATIVE

PERIOD. UNITS LOOMS LOOMS

1999-00 55 6600 55002000-01 59 7080 61002001-02 91 10920 91282002-03 105 13125 11125



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2003-04 115 14375 129502004-05 153 19125 195562005-06 166 20750 198402006-07 157 19480 17850

PRODUCTION

PERIOD GREY CLOTH

IN METERS (000)

2000-01 6022502001-02 6679502002-03 9995162003-04 12181872004-05 1428025

2005-06 21413822006-07 2172400

CURRENT POSITION OF TEXTILE

INDUSTRY

With the exception of the period from 1958-59 to 1974-75; the textile

industry could not maintain, a sustainable growth, and registered its

growing rate at the nominal level in the country. In the organized

sector there are 452 textile companies of which 212 are not listed and

240 textile units are listed on KSE/LSE comprising of 157 spinning

units, 29 weaving units and 54 composite units. While the total



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number of textile units both listed and unlisted is however is around

452 approximately.

The weaving capacity of the textile industry in our country is static at

9000 shuttle looms for past many years. The capacity of conventional

looms is also around 19840, which have no match with quantum jump

the industry ahs taken in this spinning sector. Instead of going for

value added products the frenzy for setting up spinning projects

dictated the mind of the textile industry over the years which took the

4.1 million spindles in 1996-97 instead of going to more value added

textile products like dying bleaching units in the country.

CAPACITY UTILIZATION (%)

PERIOD LOOMS1999-00 79.502000-01 81.002001-02 82.90

2002-03 85.102003-04 86.202004-05 87.002005-06 88.002006-07 90.00



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EXPORTS

The textile exports projection in the trade policy 1999-00 worth

6.5 billions $ of major textile products include cotton yarn with the

target of 1800 million $, grey cloths 1680 million $, ready made

garments 1050 million $, tent and canvas 55 million $, knit wear 950

million $ and made-ups 965 million $.

The industry has to achieve these targets in the face of difficult

t6rading conditions especially the disturb economies of Asian

countries, threat of imposition of anti dumping duties on our gray

cloths by the European Union countries, (E.U. has withdraw and anti

dumping duty w.e.f 1.01.2002) cotton yarn of 20/s in Japan and

constant decrease in imports from South Korea, all together posting an



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uphill task of achieving the export targets for the textile industry

during the financial year. Duty drawback (rebate) is reducing from

time to time and changing in sales tax refund to export oriented units,

which is very poor sigh for the exporter of the value added items.

PROBLEMS OF THE TEXTILE SECTOR

The textile industry has been crisis ridden for some time because of

shortage of raw material due to three successive cotton crop failures.

The main problems it is facing are as under;

1) The production of lint cotton ahs remained below the target.

2) The shortage and non-availability of the lint cotton in the

domestic market has led to the price-hike in domestic market.

3) Competitors installation of over capacity in some production

lines or closure of spinning capacity due to higher prices and

short supply.

4) Docile labor-intensive technology, needed to be changed to cost

efficient capital intensive.



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5) Lack of institutional finance for modernization efforts.



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RELIANCE WEAVING MILLS LIMITED

MULTAN

GROUP PROFILE

The company has been sponsored by FATIMA GROURP in Multan.

The sponsors are already engaged in the field of manufacturing Sugar,

Cotton lint yarn, Grey cloths. Their company, RELIANCE COMMODITY

PVT. LTD has been awarded Best Performance Trophies for the years

1997-98 to 99-00 in the field of export of Molasses declared the top 5

company of the Pakistan. The sponsors have also taken up the

managing control of a band new spinning unit at Rawat Distt.

Rawalpindi form UBL through bidding.

Following are the companies included in the group:

Sr. # Company Name1. FATIMA SUGAR MILLS LTD.

2. RELIANCE WEAVING MILLS LTD.

3. RELIANCE COTTON PVT. LTD.

4. RELIANCE COMMODITIES PVT. LTD.

5. RELIANCE EXPORT LTD.

6. RELIANCE FIBRES LTD.

7. FATIMA FERTILIZER COMPANY LTD.8. FAZAL CLOTH MILLS LTD.

9. AHMED FINE TEXTILE MILLS LTD



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COMPANY PROFILE

Reliance weaving Mills Ltd. (RWML) is part of the Fatima Group. Fatima

Group established RWML on April 17, 1990 as a public limited company

and obtained certificate for commencement of business on May 14,

1990.

Authorized capital of RWML at the time of incorporation was Rs.250

million and presently RWML has authorized and paid up capital of

Rs.700million which has gradually increased and at present

subscribed share capital of company stands at Rs. 308109370 , listed

at Karachi and Lahore Stock Exchanges and also inducted into Central

Depository Company (C.D.C). The company has issued 1st tranche of

Term Finance Certificate (TFCs) of Rs. million in February 2002,

which has been fully subscribed. These TFCs are listed at Karachi

Stock Exchange and has also been declared as eligible security in

C.D.C.

The principal business of the Company is manufacture and sale of

cotton yarn and grey woven fabric. RWML production capacity consists

of two main segments, Weaving and Spinning, both are ISO-9002

Certified for its quality. Today Reliance weaving Mills Limited is the 3 rd

largest weaving mill in Pakistan with modern and technologically

advanced greige weaving plant. The we4aving units are situated at

Multan and the Spinning unit at Rawalpindi. The details are as under:



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Weaving units:

Weaving unit is situated at Fazalpur; Khanewal Road, Multan

commenced its commercial production on May 01, 1993 with 96

Tsudakoma air jet weaving machines imported from Japan along with

modern auxiliary machinery to produce high quality cloth for export

markets. Further and additional 20 Tsudakoma air jet weaving

machines form Japan were installed in 1999 coupled with yarn

doubling and twisting machines to produce value added fabrics. The

installed production capacity of the unit is approximately 16.085

million meters per annum. Further more, a captive power plant

consisting of 2.5 MW

Capacities are also installed in the weaving unit-1 by which the

company is saving power cost and production losses.

During the last financial year, the company has implemented and

expansion project for its weaving unit at a cost of a about Rs.500

million, comprising 108 Tsudakoma air jet weaving machines from

Japan along with modern auxiliary machinery to produce high quality

cloth for export markets. The project started its commercial production

from October 01, 2001. The installed production capacity of the unit is

approximately 21.70 million meters per annum.



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Another 48 air jet looms expansion plan in existing weaving unit # 2 is

at advance stage, which will result in increase in production

approximately by 9.00 million meters per annum. Now weaving unit

comprise of 295 Tsudakoma with production capacity of 57.6 million

meters of grey cloth annually.

Spinning Unit:

The spinning unit of the RWML is located at Mukhtarabad, Rawat, and

District Rawalpindi in the province of Punjab. The unit commenced its

commercial production on October 01, 1999 with 14400 spindles with

a very good combination of European and Japanese machinery with

allied accessories. It produces high quality yarn for in-house

consumption and for export markets. The installed capacity after

conversion into 20/s count is approximately 4.849 million kgs.

The spinning unit has 35,520 spindles with an installed capacity of

12.30 million kgs of yarn converted at 20/s count. Cotton yarn

produced is used in weaving units for manufacturing of fabric being

sold in local and export market.



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ORGANIZATIONS (RWML)

HIERARCHY

Internship Report

CHIEF EXECTIVE

21

FINANCE

MANAGER

MKTING

MANAGER

PURCHASE

MANAGER

ACCOUNTS

MANAGER

INTERNAL

AUDITOR

C.F.O.

DCA ASSISTANT

ACCOUNTANT

CHAIRMAN

CHIEF

ACCOUNTANT


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VISION STATEMENT

The company is interested to install complete textile finishing plant

including bleaching, dyeing, mercerizing, calendaring, folding, printing

plant in the existing weaving units at Multan to make it a complete

composite unit, which can explore local and international market of

high value products. The company would keep its emp0hasis on

product and market diversification, values addition and cost

effectiveness. We want to fully equip the company to play a

meaningful role on the sustainable basis in the economic development

of the country.

MISSION STATEMENT

The mission of the company is to operate state of the are textile plants

capable of producing yarn and fabrics.

The company will conduct its operations prudently assuring customer

satisfaction and will provide profits and growth to its shareholders

through:

Manufacturing of yarn and fabrics as per the customers

requirements and market demand. Exploring the global market with special emphasis on Europe

and USA.



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Keeping pace with the rapidly changing technology by

continuously balancing, modernization and replacement

(BMR) of plant and machinery.

Enhancing the profitability by improved efficiency and costcontrols.

Recruiting, developing, motivating and retaining the

personnel having exceptional ability and dedication by

providing them good working conditions, performance based

compensation, attractive benefit program and opportunity for

growth.

Protecting the environment and contributing towards theeconomic strength of the country and function as a good

corporate citizen.

COMPANYS QUALITY POLICY

COMMITMENT TO EXCELLENCE

All of our priorities action and products must be recognized

as an expression of unique quality.

We are dedicated to produce fabrics and yarn of the best

export quality to meet the requirement and expectations of

our customers.

We strive for continuous improvement in day-to-day

quality work; organize the training and necessary feedback

on our performance.



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THE PROJECT

The project of setting up 96 looms was successfully completed and the

company commenced commercial production on May 01, 1993. The

capacity of the project is 15.50 million Mtrs. Grey Cloth per year. In

addition to further 20 looms was a installed in 1997 along with

doubling machine and self power generation plant of 2.5 MW was

installed in 1999.

PLANT AND MACHINERY

IMPORTED

The imported plant and machinery for the project are purchased from

world renowned manufacturers of textile industry machinery. The

production facilities are supported bay a very modern quality control

department equipped with laboratory and testing equipment based on

latest technology.

The imported plant and machinery includes:

120 Shuttless Looms from Tsudakomna.

Humidification Plant & Chilly Equipment from Luwa

Switzerland.

Overhead Travelling Cleaner from Luwa Switzerland.

Sizing machine from Sucker & Mullar Germany.

Knotting machine from Tomen Corp. Germany.

Air Compressor & Dryer from Atlas Capco Belgium.



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Warping Machine from Benninger Switzerland.

Vaccum Cleaning plant from Germany.

Power Generator from UK.

3 sets power Generator (Gas) from Caterpillar Switzerland.

The above plant and machinery was imported with the foreign

currency financial assistance of Muslim Commercial Bank Limited.

LOCAL

The plant and machinery locally purchased up to 20% of the total

machinery, which is as under:

Bailing Press

Motor Lifter 2 Nos.

Beams 100 Nos.

Electric material from semins.

Folding Machines 3 Nos.

Equipment for workshops.

Electric appliances.

Fire fighting equipment.

Both the imported and local machinery was brand new at the time of

purchase.



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COST OF PROJECT AND MEANS OF FINANCE

ESTIMATED COST

Pak. Rs. In (Million)

Imported machinery 210.50

Import incidentals 25.20

Local machinery 13.50 Land, Building, Others 44.80

Total Estimated cost 294.00

ACTUAL COST

Imported machinery 199.00

Imported incidentals 22.40

Local machinery 5.60

Land, building, others 47.00

Total actual cost 284.00

The company has successfully completed the project within the

projected cost by saving at least 11.00 (m) from the imported

machinery due to forward booking of US $ on L/Cs through speculation

with the bank.



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FINANCING

The project has been financed through;

Pak.Rs. In (M)

Share holders equity 109.55

Redeemable capital 3.00

FC loan I.BR.D Line world bank 146.45

Local Bank Loan 13.60

Directors Loan 4.80

Local suppliers 6.60 Actual project cost 284.00



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COMMERCIAL PRODUCTION

The company has commenced commercial production from May 1,

1993.

FINANCIAL YEAR

The financial year of the company is from October 1st to September

30th.

RAW MATERIAL

The basic raw material for the company is cotton yarn, which is easily

available in Pakistan.

LABOUR AND TEACHNICAL KNOW-HOW

The textile industry, being the oldest and largest industry in the

country, there is cheap labor available, both skilled as well as

unskilled. The company has hired experienced team, which is

engaged in the running of existing manufacturing facilities.

BUILDING AND CIVIL WORKS

Main factory building

Godowns 4 Nos.

Office buildings admin and ISO

Labor and staff quarters

Power house



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The total covered area is approximately 120,120sq. Feet (13,345sq.

meters).

UTILITIES

SELF POWER GENERATION

The project has a self-powerhouse of 2.5MW consisting of 3 power

Generators imported from caterpillar to provide smooth power to the

Mills.

FEUL

Fuel requirement of the powerhouse is Sui Gas which is special

installed by company on self finance scheme by cost of Rs.10.055 (M)

and also have a diesel generator in case of any electric failure.

WATERThe total requirement of water for the project is met out of regular

supply form the Tube- well.



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PRODUCTIONYear/Month

Ended

Production

(000 Mtrs.)

Capacity

Attained %30 September, 1998 12104 78.0030 September, 1999 13255 85.0030 September, 2000 13065 84.0030 September, 2001 13530 87.0030 September, 2002 13680 88.0030 September, 2003 13193 85.00

30 September, 2004 14339 89.0030 September, 2005 15539 96.0030 September, 2006 15980 96.0030 September, 2007 16587 97.20

It is difficult to describe precisely the production capacity in weaving

mills since it fluctuates widely depending on various factors such as

count of yarn spun looms speed, width and construction of cloth. It

also varies according to the production pattern adopted in a particular

year.



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SALES (Cloth)

Year Total sales

Rs. (million)

Export sales

Rs. (million)

% of Export

sales

To Total sales1999 123415 54260 43.962000 402426 295639 73.462001 448905 395895 88.192002 667242 614060 92.032003 727163 660883 90.89

2004 723822 714587 98.722005 800382 755064 94.342006 1306888 1228367 93.992007 1252560 1115277 85.34

Exports are increasing due to increase in demand in various markets

because of with drawl of quota.

COMPANY DIVIDEND POLICY



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The company is declaring regular dividend to its shareholders

since previous 5 years.

The shareholders of the company are fully satisfied by the

company management decisions regarding dividends as wellas operational matters.

Due to regular payment of dividend in each year to the

shareholders the market value of the companys share has

increased to its face value to Rs.23 per share.

Following dividends paid by the co.

2004 10% cash dividend

2005 23.50% cash dividend



SHAREHOLERSS RIGHTS

None of the holders of the issued shares of the co. has any special or

other interest in the property of profits of the company other than of

as holder of ordinary shares in the capital of the company.

PROCESS OF WEAVING UNIT

RWML UNIT-2 is engaged in the following functions.



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WEAVING

Different types of the cloths are produced in the Weaving department.

Weaving process includes the following steps.

Yarn receiving and issuing

Doubling/twisting

Loading on sizing

Sizing

Loom shed

Cutting/Folding and Packing

Yarn Receiving and Issuing

Following is the process of yarn receiving and issuing:

Yarn receive

Yearn tested through lab

Yarn record maintained in computer

Yarn requisition/issuing

Yarn Receive

First of all in weaving unit yarn received by yarn clerk from the

spinning unit. Yarn clerk check and count the bags and arrange its

stacking in very arrange manner.

Yarn Tested In LabAfter receiving the yarn at least 2 cones are send to the lab to check

the weight/quality count and length.



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Yarn Record

After receiving the correct result of the yarn from lab, it is recorded in

stock register maintained in computer.

Yarn Requisition/Issuing

Yarn is issued to warping department after receiving the requisition

from the General Manager/Production Manager.

YARN DOUBLING/TWISTINGThe company has own doubler and twister machine in which yarn is

doubled and twisted before issuing to warping section. But it must be

noted that this process can only be operated due to demand of the

certain construction to the cloth.

WRAPING

After receiving the yarn it is loaded on creel frame for the purpose of

warping. There is one set in one time comprising of 12 Beams in which

yarn warped for sizing. It is called one set ready.

SIZING

In this department one set consisting of 12 beams loaded on the sizing

machine where all the chemicals are mixed and thread passed way

from this mixture and prepare one full beam at the required length,

which is commonly consisting of 55000 to 60000.

Following are the chemicals used in the sizing machine:



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There are two concepts of warp and weft in the looms shed.

Warping is called the running of sized beam in state away and

weft is called running of yarn cones in side away.

Machinery operation

In the looms shed there are more or less 40 workers are

appointed on the looms. Each person is responsible for his three

looms regarding breakage of thread, quality of cloth and

efficiency of the loom production.

This department has all the technical as well as maintenance

staff in the loom shed so that any discrepancies may timely be

removed and production may not suffer.

PACKING

There are two kinds of cloth packing one is bales shape band and

other is in roll. All these packing are made with polythene bags

which received from the store room bales are exported to Japan,

Hong Kong, China and Taiwan. While roll packing are exported to

USA and European countries.

Normal packing

1 Bale = 500 Meters and 600 Yards

1 Roll = 350 Yards

Piece length



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1to 10 mtrs use in cut piece sale

11 to 20 mtrs use in local normal sale

21 to 50 mtrs use for export

The packing may be changed in accordance with the demand of

customers as well as the nature of consignment.

PRODUCTION REPORTS

Different reports are prepared when yarn is received from sizing

section to completion of cloth. All records are maintained

completely.

Yarn receipt report in weft

Sized beam receipt report

Waste report

Leno (cuttari)Rags (cloth)

Cut pieces

Daily used report

Efficiency report

Daily production report



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MARKETING MIX

Marketing mix is the marketing tasks that the company is to acquire

its objectives in the target market.

4 PS

1. PRODUCT

2. PRICE

3. PLACE

4. PROMOTION

1. PRODUCT

RWML produces high quality cloth only. They produce all kinds of

construction as demanded by to customers. Its exports are more

than 90% of its produce and remaining they sell in the local

market. They sell to the well known local buyer like Al-Abid Silk

Mills ltd. Fateh Textile Ltd. Chenab Ltd., which are the top

leading companies of the Pakistan subsequently they export the

cloth after processing. RWML take the advantage of second

exporter from the govt. department.

TYPES OF CLOTH BEING PRODUCED

100% Cotton Grey Cloth of the following main types is being

produced.



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20*20/108*56=63

20*16/128*60=61.5

10*10/80*54=55

30*30/100*60=72

2. PRICE

Pricing is an important element in the marketing process for any

company. The price policy of co. should be in such a way that it

should produce a reasonable profit for the co. and should satisfy

the customer. Following tow factors are very important.

Fixed cost

Variable cost

FIXED COST

Fixed cost is the costs which remain always same in total

whether produce large quantity or small quantity. Fixed cost per

unit rises as the quantity produced decreases and vice versa.

Some of the important factors of fixed cost are;

Salaries

Rent

Local taxes



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VARIABLE COST

Variable cost changes in total with the change in quantity

produced. It increases in total as quantity increases but remains

same on per unit basis. Some examples are;

Material cost

Labor cost

FOH

RWMLS PRICING STRATEGIES

RWML adopts following pricing strategies:

Direct selling

Through agent selling.

Direct selling

If co. sells directly then price components will be as follows;

Fixed cost+variable cost+Desired profit

Through agent selling

Through agent selling pricing components are:

Fixed cost+variable cost+Desired profit + Middlemans

commission



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Pricing Procedure in Local Market

RWML sells only extra quality left from the foreign order in the

local market. They call tenders when they want to sell the

production in the local market. They sell to those person whose

tender price will be high.

Pricing Procedure for Export

Pricing procedure for export is different from the local procedure

they charging the price in foreign factors before charging the

mind certain factors before charging the price in foreign market.

When any customers want to purchase the products after

negotiation they fix the price. Some important factors are inland

freight, sea freight clearing charges etc.

3. PLACE ( Distribution Channels)

RWML exports more than 90% of its product. They are using

two types of distribution channels in export. Direct channel.

RWML====Customer

Indirect Channel.

RWML==Middleman=====Customer

Mostly RWML exports its products through ship. They are also

using other modes of transportation as well:

Trucking

Shipping

Air line



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PROCEDURE

Inquiry

Customer inquiries are received via telex, Fax and letters and E-mail.

These are directly sent to C.E for review. After C.Es review these are

sent to export dept. in charge. After careful analysis, these inquires

are replied after C.E.s approval.

Costing

Costing sheet prepares for C.E.s approval. In absence of C.E. dept. in-

charge approves price.

Costing approval

C.E. gives approval or may suggest any other price to be offered.

Contract review and issue

Section in charge takes following steps before issuing a contract;

prepare contract review check sheet.

1. The requirements are adequately defined and involvements of

production areas are specified.

2. In house/ out house have the capacity to meet the order

requirements?

Prince quotation

In getting approval of costing and review of customers requirements,

prices are quoted to customers for confirmation.



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Confirmation of sale contract

If customer confirms the price offered, sale contract is issued to the

customer with complete details of price, quality, delivery, payments,

terms etc.

Letter of credit (L/C)

Customers establish/ open L/C well before shipment time. In case of

delivery in receipt of L/C, concerned section in charge reminds

customer. After receipt of L/C, these are checked with regard to

ordered goods, prices, shipment details, marketing, shipment

negotiation etc. discrepancies in L/C are noted and informed to

customer for rectification.

Dispatch of goods/cloth

Packed cloth is dispatched to the customers. If the shipment is to be

custom cleared from Multan dry port, goods are sent to Karachi on

trucks with all necessary records. Dispatched goods are detail noted in

relevant registers.

Shipment

RWML is having all well-known shipping companies namely;

Samin Enterprises

Pre-shipment documents are sent to Samin enterprises next day by

dept. these goods are custom cleared at Multan dry port. Documents

are sent to clearing agent same day or next6 day and followed up to



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ensure that these goods are custom cleared without any unnecessary

delay. In case of dry port, original bill of loading and 4 th copy of

shipping bills are collected from office agent for obtaining the rebate

timely. If the consignment is cleared from Multan dry port than there

is no need of follow up the consignment.

Following are the companies, which are used for sea shipment.

1) APL CO. USA

2) UNITED MARINE AGENCIES

3) UNIQUE MARITIME AGENCIES

4) RIAZEDS PVT. LTD.

5) CHUGTAI BAOS. KARACHI

RATE OF SEA FREIGHT

HONGKONG 350$

JAPAN 450$

MANILA 375$

USA 950$

CHINA 350$

MIS Reports

Balance order instructions are updated periodically. Balance order list

up dated fortnightly for their information. Sale comparison reports are

updated in computer network on monthly basis, it comprises one

months status of shipment, party wise and country wise invoice

values, complaints and claims.



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Customer Complaints

After receiving goods, if customer find and defect / fault in the quality

of cloth, he complains the same. Complaints are entered in complaint

received register after taking complaint it is raised on corrective action

and issued to responsible person/ dept. after getting reply, it is

informed to the customer. Case is taken to remove the defects and to

further restrain the faults. Complaints are processed quality and

efficiently. After that claim is valued in US $ and Pak Rs. Than credit

the customer account by couching the accounting entry and

subsequent paid to customer in shape of FDD or FTT subject to

realization the amount of concerned consignment.



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company. All the keys relating to the mills office, labor colony,

(quarters) are lying into the responsibility of the security officer

No out side visitor can enter in the mills premises without the

permission of the Admin Manager.

a) Whenever any visitor wants to enter into the mill, security

guard firstly contact with the authority in the mill top grant

the permission to enter into the mills premises.

b) They are the guardians of the every thing of the co.

c) They are in uniform of dark army color.

d) They sere and check the outward going pass of certain

things when these going to out of the mills premises.

GATE OFFICE

This office has been made to keep the record of each and every thing

coming in and going out of the Mills gate.

For this purpose gate office clerk maintains two type of registers

called;

1) Outward going pass register

2) Inward coming pass register

When every thing including raw material, stores supplies, or any other

things comes into the mills premises a document named as I.G.P is

made in which information like date of supplier, description, quantity

of the material and any other remarks are written. In the same way

O.G.P is prepared for out going things etc. and they made a summary

on daily basis and fax to head office.



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PREPARATION OF ACCOUNTS

Following accounts are prepared in the Accounts Department of

RELIANCE WEAVING MILLS LTD.

1. Store Creditor/Purchases

2. Export Debtor/Realization

3. Store Consumption

4. Fuel and Power

5. Salary and Wages

6. Site Expansions

7. Inter Unit

8. Administration Expenses

9. Selling Expenses

10. M/up on T.F.C.

11. Social security/E.O.B.I

12. Banks

HBL

FBL

FBL (LOAN)

ABL

SPCB

PETTY CASH FUND

Cash is given to Mr. Afzaal Hussain the site cashier for meeting the

different site expenses and these are;

Yarn freight

Store freight



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Building capitalized/repair and maintenance

Labor welfare charges

The balance is maintained up to Rs. 100000 minimum every time.

PURCHASE PROCESS

First of all purchase requisition is issued to the different suppliers.

Then the quotations are received from the different supplier and

evaluated by the purchase manager Mr. Subhan sb. (C.A) then a

purchase order is made. Three copies are maintained for the purchase

order;

One to the supplier

One to the accounts department

One is remained with the purchase department

Purchase includes;

Raw material (Local)

Starch (Local)

Beveloid (Local)

Softner-52 (Local)

Chemical PVA imported (Duepont USA)

Yarn (Australia)



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MAJOR MARKET OF RWML

Major market of RWML is differentiated on the basis of sale;

Export sale (85%)

Export sale is made to;

Europe

Hong Kong

Local sale (15%)

Local sale is made to;

Nishat

Chenab

Bismillah

Nishat (Chunian)

INTERNAL AUDIT

Inter audit is done by Mr. Sabir Bhatti Sb. is the Internal Audit

Manager with his four Assistants; on daily basis of all the vouchers.

STORE INVENTORY SYSTEM

A daily purchase report of Store and Spares is received at the Head

Office from the site and then it is booked in a bill payable

voucher/Store Purchase Voucher by the accounts officer Mr.

Muhammad Sulaiman Sb.



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Site stock inspection is also done at the end of each month by 3 or 4

accountants.



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L/C TREATMENT IN RWML

The company has to import following items for the continuation of its

operation.

1. Machinery

2. Spare parts and Chemicals

The company has to request to open L/C for these imports. All the

work related to the L/C is prescribed in the purchase order and send it

to bank duly signed by import department.

For opening of L/C amount of margin 10% of the total invoice cost and

L/C opening charges are deducted by L/C opening bank. This amount

is debited to the L/C account created for that particular L/C # , by

debiting the margin and charges recovered by the bank.

An entry is made.

L/C # XYZ Dr.

Margin Dr.

Bank Cr.

When the imported items come into the counter, bank inform to get

release the documents. By depositing the amount of the L/C is of sight

nature. If the L/C is of deferred (30, 60, 90, 120 days) nature then

the rate of the currency or the mark up required to deposit by the

company in addition to L/C value is decided between the bank and the

company provide some guarantee to the bank or the bank decides on

the credit worthiness of the company.

Amount deposited to the bank is then debited to the L/C account by

debiting the bank is then debited to the L/C account by debiting the

bank or payable. An entry is made:



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L/C # XYZ Dr.

Bank/Import bill payable Cr.

After releasing the documents these are sent to the agent sitting in

Karachi who then release the shipment from the port by paying all the

expenses to cargo, carriers, customs, sales tax, income tax

authorities.

The company sends time to time the amounts to the agent for the

particular L/C #. If there is no payment is made to the bank then bank

create the PAD is favor of the company and recovered form the RWML

otherwise make the loan duly a mutual consideration.

L/C # XYZ Dr.

Import bill payable Cr.

Clearing agent after releasing the consignment dispatched it to the

company and along with all documents (bill of entry and receipts ofthe expenses stated above). The company after checking all the

documents sends the remaining amount if any to the agent. By

making the same treatment in the companys account.

When all the amounts are paid to the agent for that certain L/C then

the entry is made to close the account of the agent for that particular

L/C. the entry is:

L/C # XYZ Dr.

Agent Cr.



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MY LEARNING ARE AS FOLLOWS

1. How we have to respond and quote prices upon difference

inquires from the customer.

2. How the working is being done.

3. Issuance of selling contract to customers

4. After looking on contract, how we have to proceed further in

order to fulfillment of desired requirement.

5. How correspondence has to against different orders and

different customers.

6. The important matter is to understand the perception from

customer and his expectation because it differs from customer

to customer and to order.

7. Push up the processing team to help in making timely shipment.

8. Preparation of different sorts of reports

9. How to respond to the assignments given by the CEO.

10. Purchase of yarn and its recording in the books of

accounts

11. Payment of petty cash expenses and their recording.



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Purpose of Financial Analysis

The purpose of financial statement analysis is to make a quick

assessment about a firms financial situation .It is also used to identify

the major strengths and weaknesses of a business enterprise.

Tools of Financial Statement Analysis

(1) Financial Ratio Analysis

(2) Common Size Income Statements

Financial Ratios

Financial ratios are a ratio of 2 numbers, at least one of which

comes from the firms financial statements. A financial ratio has

very little meaning unless it is compared to some other ratio. Two

types of comparisons are cross-sectional analysis and time-series

analysis.

Cross-Sectional

Analysis

Compare ratio for firm A at time t to industry

averageTime-Series Analysis

Compare ratio for firm A at time t to

ratio for firm A at time t-1, etc.



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Financial ratio analysis is a fascinating topic because it can tell us so

much about accounts and businesses. When we use ratio analysis we

can work out how profitable a business is, we can tell if it has enough

money to pay its bills and we can even tell whether its shareholders

should be happy!

Ratio analysis can also help us to check whether a business is doing

better this year than it was last year; and it can tell us if a business is

doing better or worse than other businesses doing and selling the

same things.

What do we want ratio analysis to tell us?

We have to start working on ratio analysis with the following question

in our heads:

What are we trying to find out?

We can use ratio analysis to try to tell us whether the business

is profitable

has enough money to pay its bills

could be paying its employees higher wages

is paying its share of tax

is using its assets efficiently

has a gearing problem

is a candidate for being bought by another company or investor

And more, once we have decided what we want to know then we can

decide which ratios we need to use to answer the question or solve the

problem facing us.



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Users of Analysis Information

Now we know the kinds of questions we need to ask and we know the

ratios available to us, we need to know who might ask all of these

questions! This is an important issue because the person asking the

question will normally need to know something particular.

Of course, anyone can read and ask questions about the accounts of a

business; but in the same way that we can put the ratios into groups,

we should put readers and users of accounts into convenient groups.

The list of categories of readers and users of accounts includes the

following people and groups of people:

Investors

Lenders

Managers of the organization

Employees

Suppliers and other trade creditors

Customers

Governments and their agencies

Public

Financial analysts

Environmental groups

Researchers: both academic and professional

The users of accounts that we have listed will want to know the sorts

of things we can see in the table below: this is not necessarily

everything they will ever need to know, but it is a starting point for us

to think about the different needs and questions of different users.



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Investors To help them determine whether they should buy

shares in the business, hold on to the shares they

already own or sell the shares they already own.

They also want to assess the ability of thebusiness to pay dividends.

Lenders To determine whether their loans and interest will

be paid when due.

Managers Might need segmental and total information to see

how they fit into the overall picture.

Employees Information about the stability and profitability of

their employers to assess the ability of the

business to provide remuneration, retirement

benefits and employment opportunities.

Suppliers and

other trade

creditors

Businesses supplying goods and materials to other

businesses will read their accounts to see that

they don't have problems: after all, any supplier

wants to know if his customers are going to pay

their bills!

Customers The continuance of a business, especially when

they have a long term involvement with, or are

dependent on, the business.

Governments and

their agencies

The allocation of resources and, therefore, the

activities of business. To regulate the activities of

business, determine taxation policies and as the

basis for national income and similar statistics

Local community Financial statements may assist the public by

providing information about the trends and recent

developments in the prosperity of the business



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and the range of its activities as they affect their

area.

Financial analysts They need to know, for example, the accounting

concepts employed for inventories, depreciation,

bad debts and so on.

Environmental

groups

Many organizations now publish reports

specifically aimed at informing us about how they

are working to keep their environment clean.

Researchers Researchers' demands cover a very wide range of

lines of enquiry ranging from detailed statistical

analysis of the income statement and balance

sheet data extending over many years to the

qualitative analysis of the wording of the

statements.

Which ratios will each of these groups be interested in?



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Interest Group Ratios to watch

Investors

Return on Capital Employed

Lenders

Gearing ratios / Leverage Ratio

Managers Profitability ratios

Employees

Return on Capital Employed

Suppliers and other trade

creditors

Liquidity

Customers Profitability

Governments and their

agencies

Profitability

Local Community This could be a long and interesting list

Financial analysts Possibly all ratios

Environmental groups Expenditure on anti-pollution measures

Researchers Depends on the nature of their study



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Non-current

assets

Property,

Plant and

equipment

Intangible

assets

Long-term

investmentLong-term

deposits

Current

assets

Stores, spares

and loose

toolsStock-in-trade

Trade debts

Loan and

Advances

Trade deposits

and payments

Short termInvestment

Mark-up

accrued

Other

1,906,640,987

1,033,593

69,999,586

2,421,340

103,050,338

772,397,644157,754,493

187,188,985

1,122,041

125,667,584

7,088,261

8,289,791

45,560,675

41,794,462

1,963,229,490

-----------

69,999,586

2,421,340

92,855,401

746,643,801229,707,309

142,601,992

5,804,422

523,546

7,088,261

1,612,193

49,793,062

32,572,103

(56,588,503)

1,033,593

-----------

------------

10,194,93725,753,843

(71,952,816)

44,586,993

(4,682,381)

125,615,238

------------

6,677,598

(4,232,387)

9,222,359

-2.88

100

-----

-----

10.98

3.45-31.32

31.26

-80.67

23993

-------

414.1

-8.50

28.31



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and Equity

Profit and Loss AccountCommon size Horizontal analysis

2010 2009

(Rupees) in %



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Sales

Cost of sales

Gross profit

Other operating income

Administrative expenses

Distribution and selling

costs

Other operating expenses

Finance costs

Profit / (loss) beforetaxation

Provision for taxation

Profit for the year

Earnings per share

3,400,998,361

(3,054,593,695)

346,404,666

39,344,127

(50,282,001)

(49,671,260)

(6,048,989)

(232,381,335)

47,365,208

(15,447,181)

31,918,027

1.04

3,122,414,478

(2,699,848,853)

422,565,625

17,840,572

(48,421,073)

(39,031,369)

(9,584,861)

(199,406,645)

143,962,249

(20,433,058)

123,529,191

4.01

278,583,88

3

354,744,84

2

(76,160,959

)

21,503,555

1,860,928

10,639,891

(3,535,872)

32,974,690

(96,597,041

)

(4,985,877)

(91,611,164

)

8.92

13.21

-18

120

3.84

27.25

36.89

16.54

-67.10

-24.40

-74.16

BALANCE SHEET

COMMON SIZE HORIZONTAL ANALYSIS



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Tax refunds

due from

government

Other

receivables

Short term

Investment

Cash and

bank

balances

Total

Current

assets

1,379,688,590 1,354,249,406 25,439,184 1.88

TOTAL

ASSETS

EQUITY AND

3,345,339,420

3,392,763,283

2009 2008

(47,423,863) -

1.398



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LIABILITIES:

Sharecapital

and

reserves

Authorized

Capital

30,000,000

ordinary

shares of Rs

10 each

Issued, subs

and paid-up

capital

Reserves

Unappropriate

profit

Non-

current

liabilitiesLong term

Finance &

other Capital

Deferred

30,000,000

246,487,500

395,081,250

195,501,910

837,070,660

1,025,666,218

16,238,327

1,041,904,545

123,658,813

1,174,824,009

124,621,517

43,259,8761,466,364,215

3,345,339,420

30,000,000

246,487,500

395,081,250

96,621,469

738,190,219

1,158,062,811

18,400,700

1,176,463,511

139,361,140

1,193,844,369

109,756,482

35,147,562

1,478,109,553

3,392,763,283

------------

------------

98,880,44198,880,441

(132,396,593)

(2,162,373)

(134,558,966)

(15,702,327)

(19,020,360)

14,865,035

8,112,314

(31,745,338)

(47,423,863)

In %

------

------102.34

126.46

-11.43-11.75

-11.44

-11.27

-1.59

13.54

23.08

-2.15



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(Rupees in)

Sales

Cost of sales

Gross profit



Distribution and selling

costs


Finance costs

Profit / (loss) before

taxation

Provision for taxation

Profit for the year

Earnings per share

3,122,414,4

78

(2,699,848,8

53)

422,565,625

17,840,572

(48,421,073)

(39,031,369)(9,584,861)

(199,406,645

)

143,962,249

(20,433,058)

123,529,1

91

5.01

2,061,671,9

82

(1,803,756,7

82)

257,915,200

20,305,651,

(27,691,287)

(38,357,316)(7,248,742)

(93,157,973)

111,765,533

(15,789,023)

95,976,51

0

3.89

1,060,742,

496

896,092,0

71

164,650,42

5

(2,465,079

)

20,729,786

674,053

2,336,119

106,248,67

2

32,196,716

4,644,035

27,552,681

51.45

49.68

63.84

-12.14

74.86

1.76

32.22

114.05

28.81

29.41

28.71



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Vertical Analysis



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Non-current assets

Property, Plant and equipment

Intangible assets

Long-term investment

Long-term deposits

Current assets

Stores, spares and loose tools

Stock-in-trade

Trade debts

Loan and AdvancesTrade deposits and short-term payments

Mark-up accrued

Other receivables

Short term Investment

Tax refund due from government

Cash and bank balances

55.59 %

0.03 %

2.04 %0.07 %

3.00 %

22.52 %

4.6 %

5.46 %0.032 %

0.21 %

0.241 %

3.66 %

1.33 %

1.22 %

58.69 %

--------

2.04 %0.07 %

2.78 %

22.32 %

6.87 %

4.26 %0.17 %

0.21 %

0.048 %

0.016 %

1.49 %

0.97 %

Total Current assets 42.27 % 39.14%

TOTAL ASSETS

EQUITY AND LIABILITIES:

100.00%

2009

100.00%

2008

Share capital and reserves

Authorized Capital 30,000,000

ordinary shares of Rs 10 each

Issued, subscribed and paid-up capital 8.98 % 7.37 %



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Sales

Cost of sales

Gross profit



Distribution and selling costs


Finance costs

Profit / (loss) before taxation

Provision for Taxation

Profit for the year

100 %

(89.81 %)

10.19%

11.57 %

(1.48 %)

(1.46 %)

(0.178 %)

(6.83 %)

1.39 %

(0.45 %)

0.94 %

100 %

(86.47 %)

13.53%

10.57 %

(1.55 %)

(1.25 %)

(0.31 %)

(6.39 %)

4.61 %

(0.65 %)

3.96 %

BALANCE SHEETCOMMON SIZE VERTICAL ANALYSIS

ASSETS: 2009 2008



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Non-current assets

Property, Plant and equipment

Long-term deposits

Current assets

Stores, spares and loose tools

Stock-in-trade

Trade debts

Loan and AdvancesTrade deposits and short-term payments

Tax refund due from government

Other receivables

Short term Investment

Cash and bank balances

58.69 %

0.72 %58.76%

2.78 %

22.32 %

6.87 %

4.49 %

0.17 %

1.49 %

0.048 %

2.108 %

0.97 %

60.01%

0.07 %60.84%

2.37 %

20.83 %

6.03 %

8.45 %0.11 %

1.78 %

0.09 %

--------

0.25 %

Total Current assets 41.24 % 39.92%

TOTAL ASSETS

EQUITY AND LIABILITIES:

100.00%

2009

100.00%

2008

Share capital and reserves

Authorized Capital 30,000,000

Ordinary shares of Rs 10 each

Issued, subscribed and paid-up capital 7.37 % 7.27 %



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Reserves

Unappropriate profit

Non-current liabilities

Long term Finance and other payables

Deferred liabilities

Current liabilities

Current portion of long term liabilities

Finance under markup arrangements s

Trade and other payable

Interest and mark-up accrued

Total Liabilities and Equity

11.81 %

5.84 %

25.02 %

30.66 %

0.49 %

3.696 %

35.11 %

3.73 %

1.29 %

43.83 %

100 %

11.64 %

2.85 %

21.76 %

34.13 %

0.54 %

4.11 %

35.19 %

3.24 %

1.036 %

43.57 %

100 %

Profit and Loss Account

Common size vertical analysis

2009 2008

Sales

Cost of sales

Gross profit

100 %

(86.47 %)

13.53%

100 %

(87.49 %)

12.51%



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Distribution and selling costs


Finance costs

Profit / (loss) before taxation

Provision for Taxation

Profit for the year

10.57 %

(1.55 %)

(1.25 %)

(0.31 %)

(6.39 %)

4.61 %

(0.65 %)

3.96 %

10.98 %

(1.34 %)

(1.86 %)

(0.35 %)

(4.52 %)

5.42 %

(0.77 %)

4.66 %

INTERPRETATION

Horizontal Analysis

Horizontal analysis of 2007 and 2006 at RWML shows that sales

increased by 8.92 but CGS increased by 13.21% that show rising

prices of raw material. Due to this factor Gross Profit increased by



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18%, but firm was able to reduce its operating expenses, financial

charges, taxes and to increase other income by considerable amount.

This helped to fill gap created by CGS and as result NPAT increased by

74.25%. While looking to balance sheet, fixed assets decreased by

2.88% but long term investments increased by 30%. Investment in

stock in trade decreased by 19.18%. Firm account receivable

increased that means firm was not good to collect receivable. Cash

balance increased by 28.39%. Non-current liabilities decreased by

13% that shows efficiency. But in the short-term liabilities increased to

49%.

Horizontal analysis of 2006 and 2005 at RWML shows that sales

increased by 51.45% but CGS increased by 49.68% that show rising

prices of raw material. Due to this factor Gross Profit increased by

63.84%, but firm was able to reduce its operating expenses, financial

charges, taxes and to increase other income by considerable amount.

This helped to fill gap created by CGS and as result NPAT increased by

28.71%. While looking to balance sheet, fixed assets decreased by2.4% but long term investments increased by 30%.

Vertical analysis

In Vertical analysis, CGS size has decreased from previous year that isgood sign. Size of gross profit in proportion to sales has increased and

that is the case with operating profit as well. But taxes and other

charges size has decreased in proportion to sales. But important thing

to note is that NPAT has increased by 0.94%, 3.96% and 4.66% in



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2007, 2006 and 2005 respectively proportion to sales. Investment in

fixed assets look to increased slightly but this factor is due to

appreciation mainly and investment in fixed assets has increased but

element of depreciation has reduced its value. Long-term investments

and long term loans and advances are decreasing slightly in

comparison with previous year. Firm has more inventory than previous

year. This is because of increase in sales. Trade debts have lesser

weight in total assets than in 2007 a compare to 2006 and 2005. Now

interesting thing to note is that value of total current assets in total

assets has increased by 2% and 4% in proportion to total assets. SHE

has increased from 51% in 2007 to 43.82% in 2006 and 43.57% in

2005 that mean owners contribution is equal to that of creditor. Long-

term liabilities are decreasing from 34.138% in 2005 to 30.66% in

2006 and 29.56% in 2005.



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Marketability Analysis

LIQUIDITY ANALYSIS

FORMULAS

i. Current Ratio = Current Asset

Current Liabilities

ii. Acid test ratio or quick ratio = Current Asset- Inventory

Current Liabilities

ACTIVITY ANALYSIS

FORMULAS

i. Inventory turn Over = Cost of goods soldInventory

ii. Average Age of Inventory = No. of working days

Inventory turn over



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iii. Average collection period = Account Receivable

Average Sale per day

iv. Account receivable turn over = No. of working days

Average Collection period

v. Account Payable turn over = No, of working days

Average Payment Period

vi. Fixed asset turn over = Net sale

Net fixed Asset

PROFITABILITY RATIOS

FORMULAS

i) Gross Profit Ratio on Sale = G.P x 100

Net Sale

ii) Gross profit ratio on cost = G.P x 100

C.G.S



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EPS



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CALCULATION OF RATIOS

LIQUIDITY ANALYSIS

It shows the firm ability to pay its short-term obligation on time.

CURRENT RATIO

2008 2009 2010

1: 0.74times 1: 0.84times 1: 0.98times

The ratios show that the companys current liabilities and current

assets are almost equal. So the co. is in a position to meet its current

liabilities on time.

QUICK OR ACID TEST RATIO

2008 2009 2008

1: 0.75times 1: 0.59times 1: 0.48times

The companys quick ratio has increased. So the company is liquid

position is very strong.



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2008 2009 2010

10.3 times 11.50times 12.20times

This ratio shows that the co. is making payment to the creditors within

reasonable time period.

FIXED ASSETS TURNOVER RATIO

2008 2009 2010

0.93times 1.24 times 2.02 times

PROFITABILITY ANALYSIS



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There is little increase in profit of the co. It is because of hiring of new

employees which increases the salaries of the co.

RETURN ON ASSETS

2008 2009 2010

2.69% 3.48% 7.49%

Return on assets ratio has increased because of increase in

profits.

MARKETABILITY ANALYSIS

EARNING PER SHARE

2008 2009 2010



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Rs.2.48 Rs.2.67 Rs.2.82

The shareholders are earning Rs.2.82 against one share in 2010,

which is more than in 2009 & 2008.

DIVIDEND DECLARATION

2008 2009 2010

6.7% 7.50% 7.50%

LEVERAGE ANALYSIS

Leverage analysis is used to measure the degree of indebt ness

(up to what extent the firm is in debtness).

DEBT RATIO



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2008 2009 2010

57% 68.78% 76%

DEBT-EQUITY RATIO

2008 2009 2010

186% 322% 220%

RWML is heavily depending on the outsiders financing.

COVERAGE RATIO ANALYSIS

Coverage ratio is used to see the ability of a firm to pay its fixed

financial cost.i-e.

Interest payment

Lease payment t



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Dividend to preferred stockholders

TIME INTEREST EARNED RATIO2008 2009 2010

1.27times 1.36times 1.56times

RWML is paying interest 1.56times in a year, which is greater

than previous years.

DECISIONS ON THE BASIS OF RATIO

ANALYSIS

SHORT-TERM CREDITOR



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On the basis of analysis it is wise to invest as a short-term

supplier of funds in RWML because firms current ratio and quick

ratio are in positive. Moreover the firms working capital is

positive in both the years.

LONG-TERM INVESTOR

As the firms debt ratio is good in both the years I-e 76%,

72.54% and 68.78% in 2008, 2009 and 2010 respectively.. So,

on the basis of this it is wise to invest in RWML as long-term

supplier of funds.

LONG-TERM EQUITY INVESTOR

As the co. operating and net profit ratios are increasing in both

the years and earning per share ratio is also increasing. Moreover the

co. is declaring dividend every share and has a strong image in the

market, having a good market price of its stock. So RWML is quiet

suitable for the investor to invest in it.



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COMMENTS AND SUGGESTIONS

After a short careful analysis, I come to know that the

financial position of the co. is much better than the other

weaving units in textile industry.

There is tough competition in textile exports. Buyers are

demanding quality and economy in their purchase

contracts. They are becoming quality conscious. RWML has

vast markets of Japan, USA, Taiwan, H.K therefore co. is

going to the installation of 200 looms with complete back

up process as well.

RWML is saving a huge cost in the field of marketing

because its Chief Executive is extra vigilant. In this respect

co. is saving more of less.

RWML has no marketing department to promote and

introduce its products in international market. There is a

crucial need for having disciplined and coordinated