On

Name:

MUHAMMAD ASLAM

Session: 2013-15

Submission date of report: SEP 03,2015

DEPARTMENT OF COMMERCE
BAHAUDDIN ZAKARIYA UNIVERSITY,
MULTAN

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 TABLE OF CONTENTS

i. Vision and mission

ii. overview and history of organization

iii. organizational structure

iv. Purpose and principle

v. Internship plan (list of department)

vi. Department wise discussion, hierarchy and structure

vii. Theatrical knowledge and practical theory

viii. Financial analysis ( horizontal , vertical, ratio analysis)

ix. SWOT analysis

x. Conclusion

xi. Recommendation

xii. References

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 DETAIL OF CONTENTS

1.Vision and Mission

Mission:

To be a dynamic, profitable and growth oriented company through market leadership,

excellence in quality and service optimizing value for the shareholders and maximizing
exports.
To give attractive returns to business associates and shareholders as per their
expectations. Be a responsible employer and reward employee according to their ability
and performance.

To be a good corporate citizen to fulfill its social responsibilities.

Vision:

To remain Market leader in Textile and Ghee and emerge as a globally competitive
centre of production and exports.

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2.Overview of the Organization

AHMAD HASSAN TEXTILE MILLS LIMITED is a fully integrated organization. The

company's shares are quoted on Stock Exchange. The company's registered Head Office is
located at 46-Hassan Parwana Colony Multan. The company's mills are situated at, Sarwar
Shaheed Chowk Muzaffargarh. The management body of the company consists of persons, who
are highly qualified and have vast experience in the field of Textile.

Introduction:

This department is run and controlled by the purchase manager. One purchase assistant and one
helper are also performing their duties in this department. This department makes arrangements
for the local purchases of machinery & other items i.e. spare parts which are used in the repair of
machinery, electric goods, packing materials, oils and other general items including printing of
stationary.

The commercial or purchase manager is responsible for reporting directly to the purchase
committee. The purchase incharge is responsible to work for this department but take very much
care in checking purchase orders.

Comparative statements and rejection are also prepared by the assistant. The duties of helpers
include the collection of quotations and dispatch of goods. Generally purchase department is
concerned with purchase of raw materials, machinery, chemicals, tin plates, tin, cotton, woolen,
oils etc.

Members of the board are

Chairman Mian Muhammad Javed Anwer

Chief Executive Mian Muhammad Pervez

Directors Mr. Muhammad Haris

Mr.Muhammad Aurangzeb

Mrs.Salma Javed

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3.Organizational Structure

Directors

Chief Executive

Import and Marketing Finance Accounts Purchase IT Dept.

export Dpt Dept. Dept. Dept.
Dept.

4. PURPOSE AND PRINCIPLE

The following are the objectives and functions of this department:-

To enter demands in demand register.

To classify the out stations demands and local demands.
To collect quotation inquiries.
Dispatch the purchase orders.
Enter goods when received in the challan book.
Recording of approved rates of the goods in the relative register.
Dispatch goods to the mill's staff with delivery challan.
To meets requirements of the urgent demands.

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 To sends checks to the selling parties approximately within 15 days.
To keep records of all information about purchases and sale items in the
concernedregisters.

5. List of Department

Account Department
Purchase Department
Sale Department
Marketing Department
IT Department
Export Department

6. Department wise Discussion

Weaving

AHMAD HASSAN TEXTILE MILLS is producing Grey Cloth. The process of Weaving starts
from the Placement of Order by the buyer (The buyer places the order at the Head Office).
When the buyer places the order he/she makes specifications in the order as;

Count specification for Warp and Weft.

Number of Ends and Picks per inch.
The Pattern of Warp and Weft.
The ratio of chemicals used for Sizing.
Kind of Packing required.
Net Weight and Gross Weight of the Packing.

After the buyer places the order, the Director decides whether the yam should be purchased or it
should just be transferred from AHTMLs one of spinning unit to the Weaving unit.

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Yarn Store

When the yarn reaches the mills, it is sent to the Yarn Store. A Yarn Store Assistant is there who
is responsible for receiving the yam and shifting it in the Yarn Store. He also maintains proper
record for Yarn. The documentation of the Yarn Store is done in the following manner.

Production Process

Warping

The production process starts from Warping. From here the Preparatory section starts. Yarn is
transferred from the store to the Warping

Department

In Warping department, there are two machines;

1. Machine on which cones are attached i-e Creel.

2. Other one is warping machine. It takes the yarn from the cones and then according to the
specification it wraps the yarn on the beams. Here only warping is done (lengthwise yarn is
enrolled). On the machine every kind of detail about the requirement is fed. Also the workers do
continuous reporting during the process of Warping. After Warping is performed for a certain
quality, a detailed report is prepared about the whole process that explains;

1. For what Quality, Warping is done.

2. What was the Duration of the Process.

3. No. of Break Downs.

4. Workers' names.

5. Length of Yarn Enrolled.

6. No. Of Beams Produced.

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7. Weight of Beams.

8. Date in which the Process was carried out.

If in any case like when cotton sticks in the yarn or when yarn breaks, the machine
automatically stops working so that the workers can correct the problem. During the process a
floor cleaner cleans any cotton, which flies of from the machines and falls on the floor (Fluff).
It causes disruption.

After the process the cones left over, which are partially used, also called The company also
keeps control of Non Conforming Products. For Warping Department proper documentation is
done which is explained as under; Reporting done for Warping Department

(1). "Daily Yarn Performance on Warping Report

This is very important report. The success of the whole Warping process can be judged from this
report because this report contains very important information. With the help of this report, one
can calculate the Amount of Yam consumed for the process. Weight of Beams produced and the
Amount of Yarn Wasted during the process etc.

(2). Stock Report (Beam Stock)

The Stock Report gives information as;

No. of Beams Produced.

Quality Code of the Beams and
Length of the Beams.

Sizing

Sizing department is the second department in Preparatory Section

Process

Basically here first large type of activities are performed in the process.

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First, the ends of the Warped Beams are dipped into the Chemicals so that the yarn could
become tense strong and it could bear any jerk in the next department. There are various
chemicals used in this process.

Boiler

Boiler plays very important role in the Sizing department. The job of Boiler is to boil the water
with the help of certain fuel to convert it in Steam. This steam is then sent to the Sizing
department for the purpose of heating the Chemicals. Boiler is run by different things such as.
Furnace Oil, Coal and Sui Gas but at AHTML it is run by the Sui Gas. The Boiling Point is
maintained at 100 degree centigrade. The pressure with which the steam is sent to the Sizing
dept. is kept at 150 Pounds/Square Inch. An FD (Force Drive) fan is there to push the fuel into
the Boiler. During the working of the Boiler, the level of water is kept at a certain level. The
water of the steam comes back from the sizing department to the Boiling Room and is then
reused.

Reporting for Sizing Department Reporting at the Production Spot

Two types of reports are prepared at the production spot.

(1). One report is prepared "Set Wise". When a certain set ends, then after that a report is
prepared on which different information is listed such as;

No. of Beams produced with their specification.

No. of Beams brought in from the previous deptt.
Yam Count and Quality Code
Machine Stoppage.
Date and Duration of the Set etc.

(2). A second report is prepared when the beam is issued to the Weaving dept. The information
on the report contains details as;

No. of Beams moved to Weaving dept. along with their specification.

Weave (Drawing Department).

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 Yam Count and Quality Code for each Beam.

Weaving

Introduction

Weaving department is the most important department for any textile mill. The basic and huge
investment of installation I-e LOOMS is done in this department. Scale of operation is
dependent on the working of this department. Efficiency of the whole unit depends upon the
efficiency of the looms in this department.

Process

A loom prepares the "Fabric". On every loom, maximum two beams can be attached. The loom
draws the yam from the beams and then weaves it and the finished Grey Cloth is then, wrapped
on a rod called "Cloth Roll". Here, the system of Reed, Heilds, Droppers along with manually
adjusted yam in them is brought from the drawing dept. by a machine and is fixed over the
looms. The loom weaves the cloth in the same manner as it is designed by the drawers. So the
design and construction of cloth made on looms depends upon the design and construction that
the workers of drawing department give to it.

Folding

Next to the weaving department, is the Folding Department. After the cloth is prepared on the
looms, it is thoroughly inspected to ensure quality.

Inspection, Cutting and Packing is done in the same shed i-e "Folding Department".

Inspection

Unrolling the Cloth

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First of all, in Inspection, the cloth is unrolled on the Unrolling Machine.

Then this unrolled cloth is taken to the machines where "Inspection Supervisors" check, correct
and mark the faults in the cloth. If the fault can be corrected at the spot, it is fine otherwise it is
marked and passed on to the cutting area.

The workers on the unrolling machine list various details about the process. Whenever a Cloth
Roll enters the Folding department, all the information related to it is listed in a report. A Daily
Roll Cutting Card is also made. This card gives details about the length of certain quality cloth
cut in a day and other related information. After the cloth is unrolled, it is sent for inspection.
There, the Inspection Supervisors inspect the cloth on machines and give points to the faults in
the cloth. On a chart called "Cloth Inspection Chart", they write different information as I

Inspector name
Shift
Loom no.
Quality
Width
Total yards/meters
Type of faults and their points
Grade of cloth.

Also the amount of cloth inspected by each inspector is written there. (See Cloth Inspection
Chart in Appendix E). There is a formal procedure for "Fabric Inspection". The procedure
follows one of two choices of standards. One is "Ten Point Standard (J.I.S. Standard)". It is
followed by Japanese. The other is "Four Point Standard". It is followed by Americans. In both
the standards the "Grading" done is different.

Hence when the cloth is inspected, it is Graded by counting the number of points in a specific
count of yards. More are the Points, lower is the Grade. Note that the fault which is corrected at
the inspection spot is not given any point. Only the fault that cannot be corrected is given point.
There are 17 kinds of faults that can be in a cloth If the fault is serious and repetitive, then an

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"Action Slip" is made. This is to take strict notice of the fault so that B and C quality cloth must
be avoided.

Cutting

After folding. Cutting is performed. The Inspection Supervisors give the Cloth Inspection Chart
to the personnel of the cutting area that specifies the fault i-e place from which the cloth is to be
cut. Hence at the time of cutting, in order to ensure quality, the faulted fabric (that is of either B
or C quality) is separated from A Grade fabric. At a place of fault, the Inspection Supervisors
attach a Strip that gives the detail about the fault. Moreover, whenever the buyer places an order,
he specifies the cutting of the cloth. For example he can say that he wants his fabric in ten
cuttings each of 110 meters, or he can say that the cloth should be in ten cuttings each one
greater than 100 meters. Hence according to this specification the cloth is cut.

When the cutting activity is performed, all its detail is entered in a register.

For example; Quality of Cloth, Cutting Length (specified by the buyer). Loom number.

Length of A Grade Cloth.

Length of B Grade Cloth.
Length of C Grade Cloth.
Length of Fents and
Total Length.
olding is done on the Folding Machine. A Folder is there to do that activity on the
machine. Every fold of cloth is of one meter.

Packing

When the cutting is done, then "Packing" starts but before packing, the cloth is weighted to
calculate its "Net Weight". After that according to the buyer's requirement the cloth is packed
either in the form of a Roll or Bail. After the packing the cloth is again weighted to calculate its
"Gross Weight". Before packing, cloth is first pressed to bring it in proper shape. This activity is
carried out by the "Hydraulic Pressing Machine".

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After the packing is performed, a list is made that is called the "Packing List". It is given to the
buyer when the cloth is dispatched.

Moreover on the bale or roll a Sticker is attached that gives information about the packing for the
organization's proper record, a "Daily Summary of Packing" is made to know the amount of
cloth made with reference to the Quality. A "Damage Report" is prepared daily. It explains the
cloth damaged in daily production (in every shift). Based on this report the performance and
efficiency of employees in every shift is calculated and Rewards are given. Dispatch

After the packing, the cloth is shifted to the "Fabric Godown". There, proper record is kept
about the amount of cloth and its quality and weight. At the day of dispatch, the cloth is
dispatched from the mill.

Spinning

The procedure for making "Yarn" is called Spinning. Spinning is a delicate process because the
yarn produced in this process should be exactly of the same quality and count as specified by the
buyer. There are many technical aspects involved in this process. At each and every stage of yarn
production, one has to take care of all the instructions and technical things to produce a good
quality yam.

Issuance of Bales

The production process starts from the issuance of cotton bales. Based on the order (Contract) of
yam, an estimate is made for the amount of cotton required for the process. The cotton is then
transferred from one of the Ginning factories to the Spinning unit or it is purchased from the
outside parties. When the cotton reaches the unit, the bales are weighted and their moisture is
checked. After that they are shifted to the Cotton Godown. The moisture of cotton bales is again
checked when they are issued for the production process. At this time the laboratory personnel
came to know that exactly how much cotton would be needed for the production process with a
particular amount of moisture. Relating to this a Daily Moisture Report is also prepared

Blow Room

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Blow Room is the first stage in the making of Yarn. Here there are different machines on which
different activities are performed in order to clean the cotton. So, the basic objective of this room
is to clean the cotton to assure quality in the product. First of all in the blow room, there is a
machine called "Plucker". In this, 20 bales of 20 different lots are placed. It means that from
every one lot one bale is taken. The role of this machine is to separate the cotton layers because
the cotton is in form of layers when the ginning factory packs it. The machine does this role by
sucking the cotton into it, sending it in a "Condenser" which forwards the cotton to other place.
The dust in the cotton is sent outside the blow room through a pipe. After the Plucker has done
its job then the job of women start who clean the cotton by removing different impurities from it.
Impurities may include jute, leaves, plastic bags and other impurities. The cotton cleaned by
ladies is gathered on one side. Near this gathering of cotton there is a machine that is called
"Breaker". In this, cotton is loaded which is cleaned and its wastage called "Dropping" is
removed. It is first wastage that is removed with the help of machines. After that the cotton
moves along a path and reaches another machine called "Exi Flow". This machine also cleans
the cotton. After this the cotton reaches another machine called "Multi Mixer". In this machine
cotton is mixed. As explained before that cotton taken is from 20 different bales. So the cotton is
mixed together so that the mixed variety produced should be good enough to produce a high
quality yarn. After that the cotton reaches a machine called "RM" which further purifies the
cotton. After this machine has done its job there are two workers who remove any impurity like
jute left over by the machine. After this, there is another machine, which is called "TX". This
machine exerts a very strong pressure on the cotton in order to remove any impurity and then
sends it to the "Filter Room". In the Filter room there are different machines that clean the
cotton very thoroughly to make sure that the cotton passed to the "Carding Section" is clean to
produce a high quality yam.

Carding Department

After the blow room, the job of Carding department starts.Basically in this department three
different major activities are performed.They are "Carding, Drawing and Simpering".

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Carding

In Carding "Slivers" are made. These are long, soft and thick ropes of cotton. These Slivers are
placed in drums called "Cans".

The cotton passed to the "Carding Section" is clean to produce a high quality yam. Here
cleaning the cotton gets different kinds of wastage. These are

Simplexing

In the Simplexing section the Frames of carded yarn and comber are separately run. Here, from
slivers, "Roving" is made. This is basically thick yarn from which later the yam with specified
counts is made. These Roving are wrapped on specially made thing called "Bobbins". These
Roving are then carried over to the Ring department.

Ring Department

Here at the ring department, the yam with specified count is made. The Bobbins made in the
previous department are carried to this department where these are run on "Spindles". At
spindles the yarn is made which is of the count specified by the buyer. These Spindles are run
in frames. Each frame is of 480 spindles.

Auto Cone Department

After the yam is made on "Rings", it is carried over to this department which is called "Auto
Cone". Basically in the previous department the yam has been made and the only objective of
this department is to join the yarn and bring it on the cones. The "Rings" are placed on the
machines that draw the yam from them one by one, joins it and wraps it on the cones.

Packing Department

Here at the Packing dept, the cones are packed. The packing is of two types. One is the Export
Packing and the other is the Local packing. Export packing is finer than the Local packing. At

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this department a certain amount of moisture is maintained to add a certain amount of weight to
the yarn.

Yarn Godown

After packing, the yarn is transferred to the Yam Godown. In this Godown, all the record is kept
about the amount of yarn, its quality and the count. Packing is of25.21K.gs. (Gross weight) and
of 22.68 Kgs. (Net weight). At the time of dispatch the yarn is dispatched from the Godown.

Cotton Stock Report

This report is prepared about the daily stock of cotton. This report contains information
as;

Daily Incoming Cotton

Cotton in Opening Balance
Previous Outgoing Cotton
Daily Outgoing Cotton and
Remaining Stock of Cotton

Daily Cotton Issuance Report

This report is prepared when the bales are issued to the Blow Room. This report contains
information as;

Date of Issuance of Cotton.

No. of Bales Issued.

Station (Ginning factory from which the bales are transferred or purchased).

Purchase Weight of Bales.

Mills Weight of Bales.
Shortage or Excess in Weight of the Bales (due to the moisture).

Shortage and Excess Report

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Due to the moisture in the bales Shortage or Excess occurs in the bales. Shortage occurs when
the moisture is lessened due to heat in the mills. Excess occurs if the bales are kept exposed to
any rain in the mills. That is why a report is prepared about "Shortage and Excess". This report
contains information as;

Lot No.
No. of Bales.
Shortage.
Excess.
Station and Moisture.

Production Accounts of each Month

In Production Accounts for a month, two reports are prepared.

(1). One report contains information as;

No. of Spindles, Installed, Available And Worked.

Moisture in Cotton and Yam.
Cotton Opening Work in Process.
Cotton Issued.
Net Cotton Consumed.
Recovery of Cotton from the Waste and
Detail of Cotton Waste.

(2). Another report of Production Accounts gives details about Yam Opening, Yarn Received,
Yarn Produced, Yarn Clearance (Export, Local) and Closing Balance of Yarn, for the whole
month It also gives detail about the "Doubling of Yarn" for the whole month and the
"Efficiency of the Spindles" for the whole month.

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 EXPORT

Introduction

Export is the most distinctive recognition of Ahmad Hassan Textile Mills. It is the most powerful
weapon that AHTML has got in the field of Textile. It is due to the export that today AHTML
has got a distinction in the production of textile products. AHTML exports both, the Yarn and
the Grey Cloth but major export is in the field of yarn. Hence yarn is the major contributor to
the earnings from the export. Currently Ahmed Hassan Textile Mills has four brands of yarn.
They are;

1. Cotton King

2. Palm

3. Zaitoon

4. Engine

The activity of Export is carried out at the Head Office of Ahmad Hassan Textile Mills. For
export, there is a separate department for export known as Export Department.

Procedure for Export at AHTML

There are various steps involved in export. These are explained below.

Receipt and Checking of Letter Of Credit (Lc)

At Ahmad Hassan Textile Mills, the export procedure begins by the Sales Contract. After the
contract, the buyer opens Letter Of Credit (explained below). The concern person of AHTML
studies the Letter Of Credit on receipt and makes sure that its particulars are according to the
sales contract. If there is any discrepancy between the sales contract and LC, it is removed.

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Letter of Credit

After the contract is developed, the buyer opens Letter of Credit in his bank (foreign bank) and
that LC is sent to AHTML's bank by that foreign bank. Then AHTM's bank forwards the LC to
it.

It is a document that is cashed when exporter hands over the negotiable documents (explained
later) to its bank. In an LC the buyer quotes following important explanation;

Product Specification.
Amount of the transaction in US dollars.
Shipment detail
Packing detail.
Bank detail (that opens LC)

Finalization of Production and Shipment Schedule

Then the preceding procedure is over, then the concern responsible person f the export
department prepares the Shipment Schedule keeping in view i.e. booking. This schedule is
finalized by the director and then it is sent to i.e. GM at the mill who makes the Production
Schedule by keeping in view i.e. Shipment Schedule.

Custom Clearance, Shipment, Buyer Information

When the goods are produced, the Office Manager finalizes and discusses all programs
with Manager Export before dispatching the goods from mills and makes arrangements
accordingly.
When the goods are dispatched from mills the office manager informs the export
manager about the dispatch and gives Performa Detail Of Dispatch (It is a small report
that gives the details about the dispatched products) which is used in maintaining the
export record.
The Clearing Agent is also informed accordingly about the dispatch and all the
documents are sent to him after they are checked by the Audit Department.

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 When the goods are dispatched from the mills, the buyer is informed
The clearing agent arranges custom clearance and sends the Bill Of Lading (explained
below) to the export department.

Bill of Lading

When the goods are cleared from the custom and reach shipment, then the shipping company
issues Bill of Lading to the exporter. Bill of Lading entrains following important information;

Shipper and Consignee's particulars.

Place of Receipt, Loading and place of Delivery.
Forwarding Agent.
Country of Origin of Goods.
Port of Discharge.
Description of Goods and Packages.
Container Numbers.
Weight of Goods and
Total Freight (in US $ and local currency).

Checking of bill of lading and Buyer Information

Against the Letter of Credit to make sure that there is no discrepancy between them. If
there is some, then it is the job of the agent to get it removed from the Shipping
Company.
An Export Register is maintained where all the information is entered about When the
agent sends the Bill of Lading to export department, it is checked the documents.
After checking the Bill of Lading, the buyer is also informed about the shipment by Fax
or by Phone.

Now, before explaining the next step, it is necessary to tell you about the Negotiable and Non-
Negotiable Documents.

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Negotiable and Non-Negotiable Documents.

Negotiable Documents

These are the documents without which exporter cannot take payment from its bank. These are
the documents without which the buyer cannot receive the goods he imports. exporter transfers
the negotiable documents to its bank and receive the payment which is specified in the LC. This
process is called Negotiation of Documents. Our bank sends the documents to the foreign bank
and the foreign bank transfers them to the buyer and the buyer receives the goods from the
shipping company and gets them cleared from the custom.

Following documents are the Negotiable Documents',

Letter of Credit.
Bill of Lading.
Invoice.
Bill of Exchange.
Packing List.
Certificate of Origin.
Insurance Policy.
Form E and
Beneficiary Certificate.

Non-Negotiable Documents

These are the non-original documents (either photocopies or faxes) of legotiable documents that
are given to the buyer just for providing him nfbrmation about different steps. With the help of
these documents, exporter cannot take the payment from the bank and the buyer cannot receive
the goods.

These documents are sent directly to the buyer while the Negotiable documents are always sent
via banks.

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Negotiation of Documents

After receipt/correction of Bill of Lading, export department prepares the documents for
negotiation/collection of the payment and sends them to the audit department for
checking.
If the documents are passed by the audit dept., the director and the export manager sign
the Bill of Exchange (explained below). After their approval, the documents are sent to
the bank for the negotiation. Two copies of the Invoice (explained below) and Bill of
Lading are sent to the account section for Freight and Sale Booking.
After this, a person appointed by the export department follows up the documents in the
bank, removes any discrepancy, if pointed out by the bank and receives the payment from
the bank on the same day.
After this, negotiation file is sent to the Rebate Assistant for the preparation of the rebate
cases.

Bill of Exchange

Bill of Exchange is a document that is used to draw money from the foreign bank. Exporter
sends this bill to its bank which forwards it to the foreign bank that opens LC.

Settlement/Payment of Expenses

With each shipping company, the Director or the Export Manager settles the rate of Sea
Freight in American dollars for each destination.
After or before receipt of Bill of Lading, Sea Freight Payment Performa
(explained below) is filled by the export department which is then sent to the account
section for necessary action.
The Performa is checked by the account and audit department and is sent to the Director
for approval of Demand Draft Issuance. After approval account section arrange Demand
Draft.
After that the Demand Draft is sent to the shipping company along with.
The Performa and its two copies are kept at the export department for recording purposes.

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Other documents involved in Export Form E

Form E is attached with the documents when the goods are being cleared from the custom.

In this Form, the exporter informs the government that its specified bank will collect the payment
from the buyer within 120 days. It is so because there is a law in our country that the proceeds
from exports should be realized within 120 days after shipment, otherwise State Bank Of
Pakistan takes strict notices to know, where is the foreign exchange going. On this Form,
exporter's specified bank also gives its statement about the exporter that it knows the exporter
and will collect the proceeds within 120 days. In case of no realization, it will inform the State
Bank about the circumstances. On Form E, other information is made available as;

Description of Goods in detail.

Quantity (In bales, bundles, pieces, tons, Ibs., etc.)
Invoice Value (In $) and Terms.
Destination, Port, Station.
Name and Address of Consignee.
Name of Steamer or Air company.
Reference of Bill of Lading or Airway Bill.
Port of Shipment/Post Office of Dispatch.
Land Custom Post.

Packing List

For the purpose of Custom Clearance and later on providing it to the buyer, a Packing List is
prepared. It contains information as;

Description of Goods.
Bales numbers.
Measurement.
Total number of Packages.
Total Gross Weight.
Total Net Weight.

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It is a negotiable document and is sent via bank.

Certificate of Origin

Certificate of Origin, as it is clear from the name is to certify that the goods being exported to the
importing country are of Pakistan origin. There are some countries in which goods of certain
other countries are banned. Hence this is to make sure that the imported goods are not banned in
the importing country, by the government. This is also a negotiable document and is sent via
bank.

Bill of Export

When the exporter submits different documents to the custom office for the purpose of Custom
Clearance, the Custom Office, issues a Bill of Export. Based on this bill, goods are cleared from
the custom. It contains each and very information about all the transactions.

Purchase

Every organization has the need to purchase the raw material, heavy machinery, daily used
products etc., so has Ahmad Hassan Textile Mills. At AHTML there is a separate department for
purchase known as "Purchase Department"

At AHTML the purchase falls in four categories.

1. Import

2. General Purchase

3. Cotton Purchase and

4. Yarn Purchase

Let's first have a look on AHTM's Import.

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 Import

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

Import at Ahmad Hassan Textile Mills

The necessity to Import arises from the need. When the need of some thing arises at the
mills, they make Purchase Demands and send it to the Import Department.
When Purchase Demand reaches the Import Department, the Import In charge studies the
demand carefully and then sends the detailed information about the required item(s) to
the Indenture (Agents of foreign Manufacturers. They act as middleman) for
Indent/Performa Invoice (explained later).
When the Indenture sends the Indent/Performa Invoice to the Import In charge. The
Import Incharge sends it to the concerned department at the mills for the verification and
the confirmation of the demanded goods. The Head of the concern department evaluates
it after his approval sends it back to the Import In charge.
When the Performa Invoice is confirmed. Import In charge sends application for opening
of Letter of Credit to the bank along with insurance Cover Note (Insurance is necessary
for import. Without insurance, bank refuses to open LC). The Indenture informs the
manufacturer about it and asks him to send the items.
When the shipment clearing documents come at the bank, the Import inharge receives
them from the bank and gives them to the Clearing Agent or Custom Clearance.
The Clearing Agent, after clearing the document form the custom, makes delivery
Challan and sends them to the mills. Import In charge notes each and every detail about
the Import in the import Register.

27
Performa Invoice

The Performa Invoice is made by the Indenture to confirm the goods and r particulars, the
organization is demanding. Moreover it tells the importer about the Price, Payment, and other
Terms and Conditions. Forma Invoice has following contents;

Exporter's Name and Address.

Importer's Name and Address.
Description of items.
Quantity.
Terms and Conditions.
Country of Origin.
Delivery Date.
Mode of Payment.

Bill of Entry

The Bill of Entry is just like Shipping Bill. With the help of this document, import department
clears the goods from the custom. It carries all the information about;

The Importer.
Letter Of Credit.
Freight.
Goods (Their price, units, weight, packages).
Shipment detail.
Sales Tax, Income Tax, Custom and Excise Duty.

General Purchase

The Purchase department of Ahmad Hassan Textile Mills purchases different parts and daily
used products from the local market too. But Installations and other heavy machinery are
imported, because they offer high-class quality and prolong warranty periods. The goods
purchased locally, fall in the category of General Purchase.

28
General Purchase at Ahmad Hassan Textile Mills

Whenever some locally produced thing is required at the mills, the concern department
inchargr checks that whether the thing lies in Mill's Store. If it is there, he gets it issued
from the store. If it is not there, then Purchase Demand (Purchase Demands contain
detailed information about required items like Quantity, Quality and other specification)
is made, which after approval of the Head of the department goes to the Purchase
department.
After analyzing the Purchase Demand, Purchase In charge asks for Quotations from
various suppliers and makes Comparative Statements. Based on them he makes Purchase
Order which is then sent to the director for his approval.
After Director's Approval, Purchase order is sent to the Approved Supplier.
When the goods are received, they are sent to the mills with a Delivery Challan.

Store sends Goods Receipt Note after receiving the goods, to the

Purchase Department

Note that Chemicals and Packing Material for Weaving and Packing Material for Spinning is
purchased on the basis of Daily Stock Report. For them Purchase demand is not raised from
mills.

In Ahmad Hassan Textile Mills, the goods are only purchased from Approved Suppliers. There is
a formal system for the evaluation of the Suppliers/Subcontractors. After the suppliers are
evaluated the Approved Suppliers' names are entered in Approved Supplier List. Those items
that do not affect the quality of the product can be purchased from unapproved suppliers. Also in
case of emergency this can be done.

Yarn Purchase

As mentioned earlier, Ahmad Hassan Textile Mills also purchase the yarn from outside parties
inspite of its own Spinning units. The yarn is only purchased from the approved suppliers and it
is made sure that the yarn purchased is of high quality to produce a good high quality fabric.

29
Yarn Purchase at Ahmad Hassan Textile Mills

Yarn Purchase is responsibility of the Director for Weaving. He receives

Daily Yam Requirement and Daily Yam Stock Report (explained later) from weaving
mills and based on them he finalizes the purchase of yarn. The Brand is selected by the
Director
Yam Purchase Assistant prepares the Purchase Order of Yam withconcern of Director
and the Director approves the order after analyzing it.
After Director's approval, order is placed to the supplier.
When the goods reach at mills. Yam Go down Incharge receives them and sends
confirmation of receipt of goods to the Head Office.

Cotton Purchase

AHTML also carries the activity of Cotton Purchase. Inspite of the owners' own Ginning
factories, cotton is purchased from outside parties due to heavy requirement of cotton for four
(4) spinning units.

For Cotton Purchase, Director selects Ginning factories based on their Site Location. On
demand of cotton from the mills, he calls for sample from his selected Ginning factories
and sends the sample to the mills for testing.
After testing, the sample is sent back to director for approval/disapproval along with the
Cotton Testing Report.
In case of approval, the Assistant for Cotton Purchase makes Purchase Order for Cotton.
After the Director's approval of the order, the order is sent to the supplier and the
Godown Keeper is also informed about the purchase order at the mill.
When the Cotton reaches the mill, Godown Keeper receives it and informs at the Head
Office about the receipt of goods.

Local Sale at Ahmad Hassan Textile Mills

30
 Local Sale Assistant receives Daily Stock Report for Cotton and Yam to see that the
stock is available for sale.
Local Sale Assistant discusses with the Director, daily, about the dispatch of products to
inform him about the amount of yarn and cloth to be exported and the amount of yarn and
cloth available for local sale.
When the buyer consults the director for purchase of either yam of cloth, the Local Sale
Assistant makes Purchase Order Detail for Cotton or Yam explained later) and sends it
to the buyer.
The buyer, after specifying his/her requirements in the Purchase Order, sends it back to
the Local Sale Assistant.
Local Sale Assistant sends this Purchase Order to the Office Manager, which then sends
the goods to the proper buyer.
Local Sale Assistant prepares the Invoice and sends it to the buyer after getting it
approved from the Director.

Purchase Order Detail for Cloth

Purchase Order Detail for Cloth is made to know the buyer's requirements. It is then sent to the
buyer and based on this the Cloth is prepared for dispatch. The Order contains following
contents;

Date and Buyer's Reference.

Quality of Cloth required.
Quantity of Cloth required.
Dispatch Schedule.
Number of Bales or Rolls needed etc.

Purchase Order Detail for Yarn

Purchase Order Detail for Yarn is also made to know the buyer's requirements about yarn. It is
sent to the buyer and based on this the Yam is prepared for dispatch.

The Order contains following contents;

Order Number.

31
 Buyer's Name.
Required Weight per Cone.
Required Net Weight per bag.
Required Cones per Bag.
Total Bags required.
Yarn Count(s) required.
Yam Quality required.
Required Brand(s).
Delivery Schedule:
o Date of Delivery.
o Bags per Container.
Type of Packing required.

FINANCIAL STATEMENTS

Financial statements are summaries of monetary data about an enterprise. The most
common financial statements include the Balance sheet, provides the user with data about
available resources as well as the claims to those resources. The Income Statement
provides the user with data about the profitability of the enterprise detailing sources of
revenue and the expenses which reduce profit. The Statement of Cash Flow shows the
inflow and outflow of cash. The statement of Retained Earnings, reconciles the owners'
equity section of successive balance sheets, showing what has happened to generated
revenue. These statements are used by management, labor, investors, creditors and
government regulatory agencies, primarily. Financial statements may be drawn up for
private individuals, non-profit organizations, retailers, wholesalers, manufacturers and
service industries. The nature of the enterprise involved dramatically affects the kind of
data available in the financial statements. The purpose of the user dramatically affects the
data he will seek.

Users of Financial Statements

The main user groups of financial statements include:

Investors / shareholders
Employees

32
 Lenders
Suppliers
Customers
Government
Public

FINANCIAL STATEMENTS OF AHTML

Ahmad Hassan Textile Mills Ltd

Balance Sheet

2010 2011 2012 2013 2014

(000) (000) (000) (000) (000)
Assets
Currents Assets
Cash and Bank 72934 131547 97094 154820 173006
Trade Debtor 282859 375300 662200 671637 332471
Stock in Trade
Raw Material 1034494 907530 1414114 1779452 1318058
Work in Process 32347 55221 76596 100631 75024
Finished Goods 263714 458966 614198 1900587 1426298
Total Stock in Trade 1330555 1421717 2104908 3780670 2819380
Store and Spares 56544 82578 72958 109830 93536
Advances and PrePayment 312935 1051880 107997 224567 295177
Total Current Assets 2055827 3063022 3045157 4941524 3713570
Non Currents Assets
Loans And Deposits 16336 18324 29806 28496 54137
Investments 59059 59059 59219 58459 58459
Fixed Assets 1510941 1538593 3052664 3267620 4546540
Capital WIP 15364 469927 5529 3399 2626

33
Total Non Current Assets 1601700 2085903 3147218 3357974 4661762
Total Assets 3657527 5148925 6192375 8299498 8375332
Liabilities And Owner Equity
Current Liabilites
Current Portion of long term 124218 149881 152892 352756 132141
liabilites
Creditor And Accural 189771 347641 344849 467584 847716
Short Term Financing 1699828 2437816 3143244 4675181 3882093
Others 129997 104729 163736 275294 206027
Total Current Liabilities 2143814 3040067 3804721 5770815 5067977
Non Current Liabilities
Long Term Financing 416139 1010133 1166632 1264804 1393675
Long Term Loans 215971 295091 473572 402223 597006
Lia Against Assets Sub to Finance 1617 0 310 134 0
lease
Total Non Current Liabilities 633727 1305224 1640514 1667161 1990681
Total Liabilities 2777541 4345291 5445235 7437976 7058658
Owner Equity
Issue Subscribed and Paid up 142310 142310 142310 142310 142310
Capital
Retain Earning 286773 214881 221936 279127 279127
Shareholder Equity 450903 446443 382894 440085 895237
Total Liabilities and Owner 3657527 5148925 6192375 8299498 8375332
Equity

34
 AHMAD HASSAN TEXTILE MILLS LTD

INCOME STATEMENT

2010 2011 2012 2013 2014

(000) (000) (000) (000) (000)
Sales 3506617 3971154 5963615 7632983 7654539
Less Cost of Sale
Raw Material 3015291 4049811 5286566 5722080 6637021
Direct Labour 105400 179411 279327 363975 450052
FOH 457266 561023 766199 1019546 1026277
Stock in Trade -1330555 -1421717 -2104908 -3562286 -3293669
Total Cost of Sale 2247402 3368528 4227184 3543315 4819681
Gross Profit 1259215 602626 1736431 4089668 2834858
Less Operating Expene
Admin Expense 48008 66094 77626 101280 117713
Selling Expense 68 15 20 35 15
Total Operating Expense 48076 66109 77646 101315 117728
Operating Profit 1211139 536517 1658785 3988353 2717130
Add:Other Income 2779 29197 5052 69497 534336
Earning Before Interst and
Tax 1213918 565714 1663837 4057850 3251466
Interest 113081 242930 362837 567395 770622
Others 5547 13941 12839 13187 27152
Total Financial Charges 118628 256871 375676 580582 797774
Profit Before Tax 1095290 308843 1288161 3477268 2453692
Less Provison for Tax 43576 37700 20000 49100 46500
Profit /Loss after Tax -148286 271143 1268161 3428168 2407192
EPS (10.4) 1.91 8.91 24.08 16.92

35
 AHMAD HASSAN TEXTILE MILLS LTD

HORIZANTAL ANALYSIS BALANCE SHEET

2010 2011 2012 2013 2014

000 000 000 000 000
Assets
Currents Assets
Cash and Bank 100% 180.36 133.12 212.27 237.20
Trade Debtor 100% 132.68 234.10 237.44 117.54
Stock in Trade
Raw Material 100% 87.72 136.69 196.74 127.41
Work in Process 100% 170.71 236.79 311.09 231.93
Finished Goods 100% 174.03 232.90 540.85 720.70
Total Stock in Trade
Store and Spares 100% 146.04 129.02 194.24 165.42
Advances and PrePayment 100% 17.87 34.51 71.76 94.33
Total Current Assets 100% 148.99 148.12 240.37 180.63
Non Currents Assets
Loans And Deposits 100% 112.17 182.46 174.44 331.40
Investments 100% 100 100.27 98.98 98.98
Fixed Assets 100% 101.83 188.80 216.26 502.83
Capital WIP 100% 30.59 35.98 22.12 17.09

Total Non Current Assets 100% 130.23 196.49 209.65 291.05

Total Assets 100% 140.77 169.34 226.92 228.99
Liabilities And Owner Equity
Current Liabilites
Current Portion of long term liabilites 100% 120.65 123.08 283.98 106.37
Creditor And Accural 100% 183.19 181.72 246.39 446.70

36
Short Term Financing 100% 143.41 191.30 275.03 228.38
Others 100% 80.56 125.95 211.77 158.49
Total Current Liabilities 100% 141.81 177.47 269.18 236.40
Non Current Liabilities
Long Term Financing 100% 41.20 304.37 303.94 334.90
Long Term Loans 100% 136.63 219.28 186.24 276.43
Lia Against Assets Sub to Finance 100% 0 19.17 8.29 0
lease
Total Non Current Liabilities 100% 205.96 258.87 263.07 314.12
Total Liabilities 100% 156.44 190.04 267.80 254.13
Owner Equity
Issue Subscribed and Paid up Capital 100% 100 100 100 100
Retain Earning 100% 74.93 77.39 97.33 97.33
Shareholder Equity 100% 83.94 85.52 98.29 199.95
Total Liabilities and Owner Equity 100% 140.77 169.30 226.92 228.99

37
 AHMAD HASSAN TEXTILE MILLS LTD

HORIZANTAL ANALYSIS OF INCOME STATEMENT

2010 2011 2012 2013 2014

Sales 100% 113.25 170.07 217.67 218.29
Less Cost of Sale
Raw Material 100% 134.31 175.33 189.77 220.11
Direct Labour 100% 170.22 265.02 345.33 426.99
FOH 100% 122.69 167.56 222.97 224.44
Stock in Trade 100% 106.85 158.2 267.73 247.54
Total Cost of Sale 100% 149.89 188.09 157.66 214.46
Gross Profit 100% 47.85 137.9 324.78 225.13
Less Operating Expene
Admin Expense 100% 137.67 161.69 210.96 245.19
Selling Expense 100% 22.05 29.412 51.47 22.05
Total Operating Expense 100% 137.51 161.51 210.74 244.88
Operating Profit 100% 44.29 136.96 329.31 224.35
Add:Other Income 100% 1050.6 181.792 2500.8 1922.8
Earning Before Interst and Tax 100% 46.60 137.06 334.28 267.85
Interest 100% 214.83 320.86 501.76 681.48
Others 100% 251.33 231.46 237.73 489.49
Total Financial Charges 100% 216.53 316.68 489.41 672.5
Profit Before Tax 100% 28.19 117.61 317.47 224.02
Less Provison for Tax 100% 86.51 45.89 112.68 106.71
Profit /Loss after Tax 100% 182.9 855.2 2312 1623
EPS 100% 18.36 85.67 238.46 162.69

38
 AHMAD HASSAN TEXTILE MILLS LTD

VERTICAL ANALYSIS BALANCE SHEET

2010 2011 2012 2013 2014

Assets
Currents Assets
Cash and Bank 1.99 2.55 1.57 1.87 2.06
Trade Debtor 7.73 7.29 10.69 8.09 3.97
Stock in Trade
Raw Material 28.28 17.63 22.84 21.44 15.74
Work in Process 0.88 1.07 1.23 1.21 0.89
Finished Goods 7.21 8.91 9.91 22.9 17.02
Total Stock in Trade 36.38 27.61 33.99 45.55 33.66
Store and Spares 1.55 1.6 1.18 1.33 1.11
Advances and PrePayment 8.55 20.43 1.74 2.71 3.52
Total Current Assets 56.21 59.49 49.18 59.54 44.33
Non Currents Assets
Loans And Deposits 0.44 0.35 0.48 0.34 0.65
Investments 1.61 1.15 0.96 0.7 0.7
Fixed Assets 41.31 29.88 49.29 39.37 54.28
Capital WIP 0.42 0.92 0.89 0.04 0.31
Total Non Current Assets 43.79 40.51 50.82 40.46 55.66
Total Assets 100% 100% 100% 100% 100%
Liabilities And Owner Equity
Current Liabilites
Current Portion of long term
liabilites 1.95 2.91 2.46 4.25 1.56
Creditor And Accural 5.18 6.75 5.57 5.63 10.12
Short Term Financing 46.47 47.36 50.76 56.33 46.35

39
Others 3.55 2.03 2.65 3.32 2.46
Total Current Liabilities 58.61 59.02 61.44 69.53 60.51
Non Current Liabilities
Long Term Financing 11.38 19.62 18.4 15.24 16.64
Long Term Loans 5.9 5.73 7.64 4.85 7.13
Lia Against Assets Sub to Finance
lease 0.044 0 0.05 0.06 0
Total Non Current Liabilities 17.32 25.34 26.49 20.08 23.77
Total Liabilities 75.94 84.39 87.93 89.61 84.28
Owner Equity
Issue Subscribed and Paid up
Capital 3.89 2.76 2.3 1.71 1.7
Retain Earning 7.84 7.84 3.58 3.36 3.32
Shareholder Equity 12.32 8.67 6.81 5.3 10.69
Total Liabilities andOwner
Equity 100% 100 100% 100% 100%

40
 AHMAD HASSAN TEXTILE MILLS LTD

VERTICAL ANALYSIS OF INCOME STATEMENT

2010 2011 2012 2013 2014

Sales 100% 100% 100% 100% 100%

Less Cost of Sale
Raw Material 85.99 101.98 88.65 74.97 86.71
Direct Labour 3.05 4.52 4.68 4.77 5.88
FOH 13.04 14.13 12.85 13.36 13.41
Stock in Trade -37.94 -35.8 -35.3 -46.67 -43.02
Total Cost of Sale 64.09 84.82 70.88 46.42 62.97
Gross Profit 35.91 15.18 29.12 53.58 37.03
Less Operating Expene
Admin Expense 1.37 1.66 1.3 1.33 1.54
Selling Expense 0.002 0.003 0.003 0.004 0.002
Total Operating Expense 1.37 1.66 1.3 1.33 1.54
Operating Profit 34.53 13.51 27.82 52.25 35.5
Add:Other Income 0.07 0.73 0.08 0.91 6.98
Earning Before Interst and Tax 34.62 14.25 27.9 53.16 42.48
Interest 3.22 6.12 6.08 7.34 10.06
Others 0.52 0.35 0.22 0.17 0.35
Total Financial Charges 3.38 6.48 6.29 7.61 10.42
Profit Before Tax 31.23 7.77 21.6 45.56 32.05
Less Provison for Tax 1.24 0.5 0.34 0.64 0.61
Profit /Loss after Tax -4.22 6.82 21.26 44.91 31.45

41
 Financial Analysis

Financial Analysis Tools/Techniques

The most common tools/techniques of financial analysis are,

Ratio Analysis
Common-Size Analysis
Differences of components of financial statements among industries
Review of descriptive material
Comparison of results with other type of data

RATIO ANALYSIS
The financial ratios are calculated using standardized financial methods to determine
company and industry performance. The main purpose of financial analysis is to provide
reasonable dues and answer to specific question posted by problem of interest to the
analyst. It is flexible approach tailored to the needs of specific situations.

The work of financial analysis will become much more meaningful and efficient if the
analyst acts its art of focus. His investigation desired refinement of the tools chosen may
substantially add to the insight gained into the financial picture of the company. Financial
analysis in this context keeps the analyst to appraise management performance corporate
efficiency financial strength and weakness credit worthiness and other aspects of the
company based upon its performance. When the company financial position and process
of the business is being considered three factors are of vital importance of significance.

42
 Its solvency
Its stability
Its profitability

To be solvent a business must be able to meet its liabilities as they fall due. Stability is
judged by the companys ability to meet interest on its debts and ultimately to repay the
principal amount owed. Companys ability to pay divided regularly to its shareholders
profitability is measured by the company succession maintaining and increasing its own
quality as indicated by the income statements.

LIQUIDITY RATIOS

The liquidity of firm is measured by its ability to satisfy its short-term obligation as
they come due. Liquidity refers to the solvency of the firms overall financial position-the
ease with which it can pay its bills. Because a company precursor to financial distress
and bankruptcy is low or declining liquidity, these ration viewed as good leading
indicators of cash flow problems.

CURRENT RATIO

Current Ratio = Current assets / Current liabilities

Years 2010 2011 2012 2013 2014

CR 0.96 1.007 0.80 0.86 0.73

Also called the Working Capital Ratio, it measures the extent to which current assets are
available to meet current liabilities (due within the next 12 months). The increase in store spare
and loose tools together in stock in trade has resulted increase current ratio in 2011 as compare to
2010.Major purchase of stock spare and loose tools and greater volume of trade debts as cause
the increase of current ratio in 2013 as compare in 2012 and 2014. In 2011 greater volume of
stock in trade cause the current ratio to be increase. Potential creditors use this ratio a company
liquidity or ability to pay off short term debts.

43
 QUICK RATIO

Quick ratio = Current Assets - (Inventory + Prepaid exp.) / Current Liabilities

Years 2010 2011 2012 2013 2014

QR 0.19 0.20 0.22 0.16 0.51

The quick ratio, sometimes called the acid test ratio, is similar to the current ratio, but is
considered a more reliable indicator of a company's ability to meet its short-term financial
obligations. The increase in accrued mark up and trade payable has increase the amount of
current liability which resulted in the decrease in quick ratio in 2010 as compare to 2011 and
2012 . In 2013 the reduction in cash bank balances as cause the decline of quick ratio in 2008 as
compare to 2014. In 2014 increase in inventory as compare to 2013 so increase in quick ratio as
compare to 2013.

NET WORKING CAPITAL

NWC = Current Assets - Current Liabilities

Rupees in thousand

Years 2010 2011 2012 2013 2014

NWC -87987 22955 -759564 -829291 -1354407

Net working capital shows that how many assets remain after deduction of current liabilities. The
negative net working capital shows that in short-term the company is not good and the company

44
was not in a position to get short-term borrowing because it cannot repay them. The overall
position of net working capital is not satisfactory. The increase in store spare and loose tools
coupled with the increase in stock in trade and trade debtor force the working capital in favorable
position in 2011 as compare to other year. The net working capital was gradually increase in
2012 to 2014 but decrease in 2010 and 2011. In 2014 it increase in high proportion as compared
to current assets due to short term financing but in 2011 it is positive that is good.

ACTIVITY RATIOS

Activity ratio measure the speed with which various accounts are converted in to sales or cash.
With regard to current accounts, measures of liquidity are generally inadequate because
differences in the composition of a firms current assets and current liabilities can significantly
affect its true liquidity. It is therefore important to look beyond measures of overall liquidity
and to asses the activity (liquidity) of specific current account. A numbers of ratio are available
to measuring the activity of the most important current accounts, which include inventory,
accounts receivable, and accounts payable.

AVERAGE COLLECTION PERIOD

DSO = Accounts Receivable / (Sales / 360 days)

Years 2010 2011 2012 2013 2014

ACP(Days) 29.02 34.02 19.84 31.68 15.64

Measures the average number of days customers take to pay their bills,
indicating the effectiveness of credit and collection policies of the business. The increase in trade
debtor has resulted in the increase of average collection period in 2011 as compare to 2010.In
2013 increase in sale and decrease in trade debtor which resulted increase in average collection
period as compare to 2012 and it is also decrease in 2014.The over all collection period of the

45
company is not good it is due to good management of collection but it could also be the signal of
overly tight policy limiting sales and profit.

AVERAGE PAYMENT PERIOD

APP = Accounts Payable / (Purchases / 360)

Years 2010 2011 2012 2013 2014

APP(Days) 36.95 12.68 53.20 36.95 44.42

Measures the average number of days it takes to pay suppliers. The average payment period of
the company is greater than the average collection period this is due to ineffective payment
procedures or a poor cash position since last four years but in 2011 it is decreased to 13days.
High average payment period as compared to collection period creates problem to the company
for buying on credit.

TOTAL ASSET TURNOVER

Total Asset Turnover = Sales / Total Assets

Years 2010 2011 2012 2013 2014

TAT(Times) 0.96 0.77 0.96 0.99 1.12

46
Measures the number of sales dollars earned for each dollar invested in assets. A low ratio
compared to other businesses in the same industry can indicate an over-investment. A higher
ratio value than the industry standard can indicate an efficient use of resources favorable to
making profits. Increase in sale in 2014 and 2013 as compare to 2012 total assets turn over is
increase as compare 2012. In 2011 the sale is decrease the total assets turn over is decrease as
compare to 2010.

PROFITABILITY RATIOS

The profitability figures measure the ability of the business firm to earn a profit from its
operations through assets, sales, and equity. These ratios enable the analyst to evaluate the firms
profits with respect to a given level of sales, a certain level of assets, or the owners investment.
Without profits, a firm could not attract outside capital. Owners, creditors, and management pay
close attention to boosting profits because of the great importance placed on earning in the
marketplace.

GROSS PROFIT MARGIN

GPM = (Sales - Cost of Goods Sold)/ Sales

Years 2010 2011 2012 2013 2014

GPM (%) 7.54 6.47 6.30 9.65 12.00

Your gross profit ratio tells you how much of each sales dollar you can expect to use to cover
your operating expenses and profit. Gross profit margin ratio is gradually decreased in 2011 and
2012 due to increase of cost of goods sold. In cost of goods sold, the prices of raw material are
increased and wages of direct labor is gradually increased. Overall the cost of goods sold in 2013
and 2014 is decreased.

47
So the gross profit margin is increase in 2013 and 2014 it is good for the company.

OPERATING PROFIT MARGIN

Operating Profits = Operating Profits / Sales

Years 2010 2011 2012 2013 2014

OP (%) 6.17 4.81 4.50 8.32 10.46

Operating profit shows that what's left from your sales dollar after you've deducted your cost of
goods sold and your ordinary operating costs. The operating profit of the company decreased in
2011 and 2012 gradually due to increase in operating expenses. In 2013 and 2014 the operating
expense is decrease so the profit margin is increase in 2013 and 2014 that is good for the
company. .

NET PROFIT MARGIN

NPM = Net Profits /Sales

Years 2010 2011 2012 2013 2014

NPM (%) 1.2 (1.8) 2.08 8.00 5.9

Also called the Return on Sales Ratio, it shows the after-tax profit (net income) generated by
each sales dollar by measuring the percentage of sales revenue retained by the company after
operating expenses, creditor interest expenses, and income taxes have been paid. Due to decrease
in sale in 2010 the net profit margin is decrease in 2010 as compare to 2012. In 2013 and 2014

48
the profit margin is increase because the sale is increase so the net profit margin is increase. In
2011 net profit margin is negative because the lack sale and export and increase in expense so
the net profit margin is decrease.

SWOT ANALYSIS

SWOT analysis is a very valuable tool to judge the position of an organization within a given
environment. It helps to determine that what will be the response and strategies of the company
upon facing certain internal and external environmental stimuli. As a whole, this analysis best
captures the picture of the organization within a given context. To determine this picture of
Ahmed Hassan Textile Mills, I have done the following SWOT analysis, based on my own
observation during my internship program and on the comments and views of the organization's
one of top manager, (General Manager Finance).

Strengths

Following are the organization's main strengths.

Good Governance and Policies

The owners of this organization lead the organization by good governance. They provide proper
guidance to each and every member of the organization. There is no communication gap between
the workers and the owners. Even a worker at the lowest level of the organization can come to
the owner(s) and can explain his problem or offer some recommendations for improving some
area. Once in the month of July, a sizer was hired for the weaving unit. He faced problems while
doing his job. Although he was passed through the trail session but he was not satisfied with the
kind of job he was asked to do. He came directly to the director for weaving and explained his
problem. The director encouraged him and placed him in another department of the weaving unit
where he could be satisfied. He also visited the worker, later on, to see that whether he was
satisfied at his job. Now, the worker could also go to the Foreman, or Office Manager or Mill
Manger or any other manager but the culture of the organization enabled him to go directly to the
director and explain his problem. So there is no communication gap between workers and

49
managers. Moreover the policies of the owners are good and timely. They take accurate and
timely decisions to help organization keep pace with the changing environment. The owners of
the organization also have a very strong control on the operations of the organization. Even a bill
of tea or ballpoints is first passed by the director and then they are purchased and used. The
owners also exert a tight control on the working and behaviour of the employees. The culture of
the organization as explained before is very hard working and rule oriented. So the owners have
maintained such a control that no body is ever seen sitting idle and having a chat with some one.

Communication between Units

Ahmad Hassan Textile Mills has four spinning units and one weaving unit. There is free
communication between these five units. The office manager of, say, weaving unit is fully aware
of the production and stock of yam in those units and efficiency of those spinning units. The
office manage receives various reports about output and stock of yam from the spinning units
through faxes, and through daily mail. This is very much necessary for a full-integrated
organization.

In addition, he maintains continuous contact with the managers of the spinning units through
telephone. The head office of the organization also has a strong contact with the five units. All
the managers in the export, purchase, audit, account and import departments have a continuous
contact with the managers of the production units regarding inventory stock out, purchase
requirement, dispatch and many other activities.

So this kind of communication binds the organization together and is a great strength for the
organization.

Healthy Resources

The organization has an authorized capital of 150,000,000 rupees which is a great strength for
the organization. The organization is not under pressure of creditors. The current ratio of the
origination for the year 1999 is 0.89 which is good. In addition, the organization has very
expensive and latest plants available in their various spinning and weaving units. In spinning
units, all the plant is fully automatic and computerized. This enables the organization to keep

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workers strength at a low level. All the workers have to do is to take readings from various
machines working there. So latest machinery is also organization's strength.

Product Quality

Quality is major strength of the organization. Due to latest plants and equipment installed,
organization is able to offer the local and foreign customers, tremendous quality. The level of
quality can be judged from the fact that among all the textile mills working in Multan, Ahmad
Hassan Textile Mills has high prices of its products (both yam and grey cloth) due to superior
quality as compared to other textile mills. This quality has not only been developed through
installing latest or modem equipment but this has occurred through organization's strong culture
in which workers and the managers are fully committed to quality. They put their best efforts to
enhance the quality of their products.

Direct Contact with the Buyers

Direct contact with the foreign buyers is much valuable than contact through trading houses.
Ahmad Hassan Textile Mill's major exports are through direct contact with the buyers. This has
enabled the organization to develop and maintain strong relationships with the buyers and secure
big orders.

Low Workers Strength

As compared with other textile mills, Ahmad Hassan Textile Mills has comparatively low
workers strength. But in spite of this the productivity of the mill is higher than other mills. The
quality of the products is also better than other mills. Hence all the employees in the organization
are being optimally utilized.

Weaknesses

As far as the views of the General Manager Finance are concerned, he finds no weakness in the
organization. But to my viewpoint, organization is unable to offer its middle managers a good
salary. Middle managers in every unit complain about their salary. There is a hell of difference

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between salary of the mill manager or general manager and the office manager or senior
accountant or chief accountant. Benefits offered to the general managers are good but the
benefits offered to middle managers are not at all satisfactory. It seems that the middle managers
are only working in the organization due to the prevalent rate of unemployment and poor
economic conditions in our country.

Opportunities

Current Markets

Currently, majority of the organization exports are in Japan, Korea and Hong Kong. There is an
opportunity to expand further in these markets. This opportunity has been given to the
organization by its products quality and on- time delivery. Japanese are especially quality
conscious people and mey don't tolerate any loophole in the quality. Moreover they also value on
time delivery of the product. Ahmad Hassan Textile Mills has the ability to offer superior quality
and quick delivery and this ability offers the organization opportunity to expand in the foreign
market.

New Markets

In addition to these countries, great opportunity lies in the Middle East countries. These countries
have markets with great potential and ability to pay quality premium. Organization has currently
started to exploit these opportunities. In July several orders were fulfilled from Bahrain.

Threats

Government Policies and Interference

No sector in our country is satisfied with the government policies and rules and regulations.
Textile sector is also unsatisfied with the governmental policies and restrictions. Every year,
government officials make policies and impose such rules and regulations that tend to hinder the
performance of textile industry. So government policies are a major threat to the organization.

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Recently government has made a rule according to which each textile mill has to give 40%
dividend from the profit. This makes a very huge amount. This rule is to be implemented from
current year. Organizations with low financial strength and weak resources will find it very
difficult to show their compliance with this regulation.

Moreover government has passed another rule according to which a textile mill has to give 10%
tax on its reserves. This is also a threat for the organization. So government policies, rules and
regulation are a continuous and ongoing threat to Ahmad Hassan Textile Mills and other
organizations, especially the organizations with low financial strength.

Non Availability of Raw Material

This is another threat. This year cotton rates are very high. In some areas cotton is being sold at
1100/40 kg. This is very higher rate as compared to the previous year's rate of almost 500/40 kg.
The rate is high due to shortage of cotton in the country. Hence cotton is not available at
reasonable prices. Moreover government has also not done any thing to make available to the
textile industry, the raw cotton at a reasonable rate.

Suggestion

The management should adopt the policy of wide span of control deliberating and reflecting the
number of hierarchy level as in the finance department.

The much of the work is repeated again and again wide span of control is possible by
standardizing the work method and practices.

The management should prepare a tentative plan which are acceptable by the all department at
all level.

The management should provide proper information for the guidance of the departments and the
individual must be clearing their rule by telling them.

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What is accepted them by giving the information about the aims and objective of the
organization.

The consult style of leadership is not suitable of this type of organization.

Manager need motivation and initiative in the scope of the work done by them and it should be
adopt by adopting the demarcating style of leadership style which implies that the manger joins
the subordinates and the decision is made the consensus

CONCLUSION
I got a lot of experience in Ahmad Hassan Textile Mills Ltd. During my internship i came to
know that how the different activities take place, what are the procedures. The Ahmad Hassan
Textile Mills Ltd is on the of progress. It has been earning profit since last five year. The
management is professionally qualified and experienced

The Ahmad Hassan Textile Mills Ltd should motivate their employee by providing different
incentives. Their salary package at sight is also not attractive for lower operatives. There is no
human resource department.

Ahmad Hassan Textile Mills Ltd product yarn is high quality. The demand of its product is
increasing with the passage of time. The company should expand its capacity as soon as possible
to satisfy the demand of its customer.

REFERENCES AND SOURCES USED

Collect data from Ahmad Hassan Textile Mills Ltd.

My experience
Ahmad Yar Account Manager.
M Waqas Assistant Accountant
Financial Management by Van Horne
Annual Report of Ahmad Hassan Textile Mills Ltd
Internet
My Supported Friends

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 Respected Senior

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